WTO Product-Specific China Safeguard Procedures Take the Form of Section 421 Investigations in U.S. Law (Could Affect Textiles and Other Products Until December 11, 2013)
In October 2000, the U.S. enacted Public Law 106-286 entitled Normal Trade Relations for the People's Republic of China which, among other things, codified into U.S. law the application of the World Trade Organization's product-specific safeguard for imports from China.
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This safeguard, made available to all WTO members at the time of China's accession to the WTO in December 2001, allows WTO members to withdraw concessions or limit imports when specific Chinese products cause or threaten to cause market disruption. It remains in effect until December 11, 2013.
(In its 2002 report analyzing China's WTO accession commitments, the Government Accounting Office (GAO) stated that the product-specific (and textile) China safeguards exceed the general obligations in the WTO agreement with their injury threshold of "market disruption" which is easier to establish than "serious injury" or "serious damage." See ITT's Online Archives or 10/10/02 news, 02101020, for BP summary of the GAO report.)
Textile and Product-Specific Safeguards Cannot Be Applied at the Same Time
WTO members cannot apply both the textile safeguard (which expires December 31, 2008) and the product-specific safeguard to the same China-origin product at the same time. (See ITT's Online Archives or 05/23/07 news, 07052318, for BP summary on the termination of China's agreed textile and apparel quotas on December 31, 2008.)
U.S. Has Not Yet Provided Import Relief Under Section 421
While several claims of market disruption for certain products from China have been presented under Section 421, none have resulted in provisional protective measures.
The President determined not to provide Section 421 import relief for the following cases, among others, for which the International Trade Commission (ITC) had recommended import remedies: circular welded non-alloy steel pipe from China, certain ductile iron waterworks fittings from China, pedestal actuators from China, and certain steel wire garment hangars from China.
(See ITT's Online Archives or 01/04/06, 03/05/04, 01/29/03 and 04/29/03 news, 06010430, 04030540, 03012930, and 03042930, for BP summaries of the President's determination in the above cases, respectively.)
According to USTR sources, the current Administration is not opposed to Section 421 action, but makes its determinations on a case by case basis.
ITC Determines If Market Disruption Exists, President Makes Final Determination
The ITC investigates market disruption and makes recommendations. Upon the filing of a petition, the ITC is required to investigate whether market disruption is threatened or caused by considering factors such as (1) the volume of imports of the product which is the subject of the investigation, (2) the effect of imports of such product on prices in the U.S. for like or directly competitive articles, and/or (3) the effect of imports of such product on the domestic industry producing like or directly competitive articles.
If the ITC makes an affirmative determination, it is required to make recommendations to prevent or remedy the market disruption, including the amount of increase in, or imposition of, any duty or other import restriction.
President determines what actions, if any, to take. After receiving the ITC report, the USTR is required to provide a recommendation to the President on what provisional measures, if any, to take. The President is subsequently required to provide import relief within 15 days after receiving the USTR's recommendations unless the President determines that provision of such relief is "not in the national economic interest of the U.S." or "would cause serious harm to the national security of the U.S."
(See ITT's Online Archives or 11/06/06 news, 06110630, for BP summary of 2007 China quota levels. See ITT's Online Archives or 04/21/05 news, 05042125, for BP summary of 2005 GAO report entitled: U.S.-China Trade: Safeguard Procedures Should be Improved. See ITT's Online Archives or 10/10/02 news, 02101020, for BP summary of 2002 GAO report entitled: World Trade Organization: Analysis of China's Commitments to Other Members.)
Public Law 106-286 available by query at http://thomas.loc.gov/