U.S. Ass'n of Importers of Textiles v. U.S.

• Citation: 350 F.Supp.2d 1342
• Decision Date: 30 December 2004
• Docket Number: Slip Op. 04-162.,Court No. 04-00598.
• Parties: U.S. ASSOCIATION OF IMPORTERS OF TEXTILES AND APPAREL, Plaintiff, v. UNITED STATES, U.S. Department of Commerce, Secretary of Commerce Donald Evans, U.S. Department of State, Secretary of State Colin L. Powell, U.S. Department of the Treasury, Secretary of the Treasury John W. Snow, Office of the U.S. Trade Representative, U.S. Trade Representative Robert B. Zoellick, U.S. Department of Labor, Secretary of Labor Elaine L. Chao, and the Committee for the Implementation of Textile Agreements, Defendants.
• Court: U.S. Court of International Trade

350 F.Supp.2d 1342

U.S. ASSOCIATION OF IMPORTERS OF TEXTILES AND APPAREL, Plaintiff, v. UNITED STATES, U.S. Department of Commerce, Secretary of Commerce Donald Evans, U.S. Department of State, Secretary of State Colin L. Powell, U.S. Department of the Treasury, Secretary of the Treasury John W. Snow, Office of the U.S. Trade Representative, U.S. Trade Representative Robert B. Zoellick, U.S. Department of Labor, Secretary of Labor Elaine L. Chao, and the Committee for the Implementation of Textile Agreements, Defendants.

Slip Op. 04-162.

Court No. 04-00598.

United States Court of International Trade.

December 30, 2004.

Brenda Ann Jacobs, David J. Ludlow, and Sharon H. Yuan (Sidley, Austin, Brown & Wood, LLP) for plaintiff U.S. Ass'n of Importers of Textiles and Apparel.

Stuart E. Schiffer, Deputy Assistant Attorney General, David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, and Michael David Panzera, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; John Veroneau and Jason Kearns, Office of the U.S. Trade Representative; Anne Talbot, Linda Chang, and Ada Bosque, U.S. Department of Commerce; Howard M. Radzely, Katherine E. Bissell, and Tambra A. Leonard, U.S. Department of Labor; William H Taft, IV, U.S. Department of State; Arnold I. Havens and John G. Murphy, Jr., U.S. Department of the Treasury, for defendant United States, of counsel.

OPINION

GOLDBERG, Senior Judge.

Before the Court is a Motion for a Preliminary Injunction from plaintiff U.S. Association of Importers of Textiles and Apparel, dated December 1, 2004. Plaintiff requests that the Court enjoin defendant, during the pendency of this action, from accepting, considering, or taking any further action on requests filed under the procedures issued by the Committee for the Implementation of Textile Agreements ("CITA") in 68 Fed.Reg. 27787 (May 21, 2003) that are based on the threat of market disruption upon the elimination of quotas or safeguards on textile or textile products from the People's Republic of China ("China"). Defendant United States opposes the Motion and also moves to dismiss.¹ A hearing was held on Monday, December 20, 2004 concerning plaintiff's Motion for a Preliminary Injunction. As conceded by both parties at the hearing and in their briefs, the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1581(i)(3).

Background

On January 1, 2005, all quotas on the importation of textile and apparel products made in World Trade Organization ("WTO") member countries will be eliminated, pursuant to the Uruguay Round Agreements. See Agreement on Textiles and Clothing ("ATC"), Apr. 15, 1994, Agreement Establishing the World Trade Organization, Annex 1A; see also 19 U.S.C. § 3511 (codifying approval of and general provisions relating to the Uruguay Round Agreements). Although China is entitled to the benefits of the ATC, under the terms of China's accession to the WTO, the United States may impose temporary textile-specific safeguard measures on Chinese imports of textile and apparel products under certain circumstances ("textile-specific safeguards"). See Protocol on the Accession of the People's Republic of China, § 1.2, WT/L/432 (Nov. 23, 2001); Report of the Working Party on the Accession of China, paras. 241-42, 342, WT/MIN(01)/3 (Nov. 10, 2001) (together "China's Accession Agreement").

On behalf of defendant, CITA has assumed the administration of the textile-specific safeguards based on its general authority to "supervise the implementation of all textile trade agreements." Exec. Order 11651, 37 Fed.Reg. 4699 (Mar. 3, 1972), as amended by Exec. Order 11951, 42 Fed.Reg. 1453 (Jan. 6, 1977), as further amended by Exec. Order 12188, 45 Fed.Reg. 989 (Jan. 2, 1980); see also 7 U.S.C. § 1854 (delegating authority to executive branch to negotiate agreements with foreign governments limiting the exportation of textiles and textile products to the United States and to promulgate regulations to carry out such agreements). CITA is an interagency committee that includes representatives of the Office of the U.S. Trade Representative, the U.S. Department of Commerce, the U.S. Department of Labor, the U.S. Department of State, and the U.S. Department of the Treasury.

In May 2003, CITA published in the Federal Register a Notice of Procedures describing the rules that would govern CITA's consideration of requests from the public for textile-specific safeguards on Chinese imports (the "China Textile Safeguard Regulations"). See Procedures for Considering Requests from the Public for Textile and Apparel Safeguard Actions on Imports from China, 68 Fed.Reg. 27787 (May 21, 2003). As a procedural matter, CITA explained that it had determined that its Notice of Procedures was not subject to the Administrative Procedure Act ("APA") requirements to provide prior notice and opportunity for public comment, pursuant to 5 U.S.C. § 553(a)(1) (foreign affairs exception) and 5 U.S.C. § 553(b)(A) (exception for interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice). Id. at 27788. CITA further stated that it believed that any of its actions under the textile-specific safeguards were not subject to the APA rulemaking provisions under the foreign affairs exception. Id.

Substantively, in describing the scope of the China Textile Safeguard Regulations, the Notice of Procedures directed that:

A request [for a textile-specific safeguard] will only be considered if the request includes the specific information set forth below in support of a claim that the Chinese origin textile or apparel product is, due to market disruption, threatening to impede the orderly development of trade in like or directly competitive products.

Id. (emphasis added). Supporting information was specified as: (A) a product description; (B) import data, which "should demonstrate that imports of Chinese origin textile and apparel products ... are increasing rapidly in absolute terms"; (C) production data; and (D) market share data. Id. at 27788-89.

Further, the Notice of Procedures specified a three-tier process for CITA's consideration of requests under the China Textile Safeguard Regulations. Id. at 27789. First, upon receipt of a safeguard request from the public, CITA determines within 15 days whether the request falls within the scope of the China Textile Safeguard Regulations. Id. Second, if CITA determines that a request meets the necessary requirements, CITA publishes a Notice Seeking Public Comments in the Federal Register and opens a 30-day public comment period. Id. Third, within 60 days of the close of the public comment period, CITA determines whether to impose the safeguard. Id. In case of an affirmative determination, CITA simultaneously imposes the safeguard (calculated pursuant to the terms of China's Accession Agreement) and initiates negotiations with China "with a view to easing or avoiding market disruption." Id. (emphasis added).²

Beginning in July 2003, domestic textile producers filed four safeguard requests on a variety of textiles, including Chinese gloves that were still under quota. See 68 Fed.Reg. 49440 (Aug. 18, 2003). In August 2003, CITA agreed to consider three requests. See id. at 49441, 49445, 49449. However, CITA rejected consideration of the fourth request concerning Chinese gloves still under quota. In a letter to the National Textile Association, CITA's Chairman indicated that the request was rejected because CITA would not accept requests for safeguards on products still under quota. See Plaintiff's Memorandum of Points and Authorities in Support of Plaintiff's Motion for a Preliminary Injunction ("Pl.'s Br.") at Ex. 4 (Letter from James C. Leonard III to National Textile Association of 8/13/03). However, in June 2004, CITA accepted for consideration a request for safeguards on several merged categories of Chinese socks, including cotton socks that were still under quota. Thereafter, CITA decided to act on the merged request for safeguards because it determined that "imports of socks from China play a significant role in the existence of and threat of market disruption." 69 Fed.Reg. 63371, 63372 (Nov. 1, 2004) (emphasis added). CITA imposed quotas on the merged categories of Chinese socks, resulting in a double quota on Chinese cotton socks for the remainder of 2004, and initiated negotiations with the Chinese government. Id.

From July to August 2004, CITA and U.S. Department of Commerce officials made statements to various publications indicating that the China Textile Safeguard Regulations "were intended for cases of actual market disruption rather than the threat of such disruption." BNA Daily Report for Executives, No. 141, China Textile Safeguards to Focus on Market Disruption Cases, Official Says, at A-28 (July 23, 2004). Then, in September 2004, CITA announced that "existing U.S. regulations would allow safeguards based on threat of a possible surge in imports, rather than an actual surge." China Trade Extra, Aldonas Insists China Textile Regs Can Handle Import Threat Cases (Sept. 3, 2004). None of these statements were made in the Federal Register.

Since October 2004, CITA has accepted for consideration 12 requests for safeguards under the China Textile Safeguard Regulations which allege threat of market disruption (rather than actual market disruption) by Chinese textile imports ("threat-based requests"). See 69 Fed.Reg. 64034 (Nov. 3, 2004); 69 Fed.Reg. 64911 (Nov. 9, 2004); 69 Fed.Reg. 64912 (Nov. 9, 2004); 69 Fed.Reg. 64913 (Nov. 9, 2004); 69 Fed.Reg. 64914 (Nov. 9, 2004); 69 Fed.Reg. 64915 (Nov. 9, 2004); 69 Fed.Reg. 68133 (Nov. 23, 2004); 69 Fed.Reg. 70661 (Dec. 7, 2004); 69 Fed.Reg. 71781 (Dec. 10, 2004); 69 Fed.Reg. 75516 (Dec. 17, 2004); 69 Fed.Reg. 77232 (Dec. 27, 2004); 69 Fed.Reg. 77998 (Dec. 29, 2004). CITA has not yet acted on any of these requests.

Plaintiff commenced this action by filing a complaint on December...