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TDC: Be prepared for US trade actions

The healthy economic expansion of the US does not help to rein in the country's trade actions against exports from the Chinese mainland.

Earlier this week, the Committee for the Implementation of Textile Agreements (CITA) announced its plan to investigate three categories of textile imports from the mainland, including cotton knit shirts and blouses, cotton trousers, cotton and man-made fiber underwear, to safeguard US manufacturers' interest.

While the Chinese mainland is by far the most important production hinterland for Hong Kong, the US is Hong Kong's second largest export market. US trade measures against mainland goods are likely to affect Hong Kong exporters, the Trade Development Council (TDC) warns in its latest report entitled "A Revisit of US Trade Measures and their Implications for Hong Kong Exporters" just released.

The study updates Hong Kong companies on a wide variety of trade measures at the disposal of the US government.

Among various measures, two pose particular challenge to Hong Kong and are likely to be used more frequently than the others. These are the anti-dumping (AD) duty and the textile and apparel safeguards.

For example, textile and apparel safeguards were successfully invoked in December 2003 (on knitted fabrics, cotton and man-made fibre brassieres, and cotton and man-made fibre robes and dressing gowns) and in October 2004 (on cotton, man-made fibre and wool socks).

The purpose of these two trade measures is mainly to protect the domestic industry from an influx of imports.

Anti-dumping measures are beginning to extend from chemicals and raw materials to household consumer products.

In order to enable its enterprises to penetrate into the mainland market, the U.S. Government keeps a close eye on mainland's compliance of intellectual property right requirements. It is also possible for the US Government to take action against China according to Artilce 301 if it believes there is an infringement.

The slow growth of manufacturing jobs in the US has given rise to protectionist sentiment from certain quarters of the US public. US trade deficit with China has continued to soar, particularly in the past few years. This further complicates matters.

TDC advises Hong Kong exporters to be on their toes and to deepen their understanding of US trade measures, including their operation and timelines so as to plan ahead to meet changes that might affect them.

In the near-term, textiles and apparel exports face the biggest threat. Exporters should therefore watch closely the items that are likely to be subjected to US safeguards.

Since it takes time for the US government to process a safeguard petition, Hong Kong exporters, which proactively monitor the development, can respond properly in the interim to minimise disruption. To reduce the potential risks, Hong Kong exporters have the option of maintaining/setting up factories in other places. They can, of course, continue to produce in Hong Kong under outward processing arrangements so as to use Hong Kong as the origin of the affected goods.

In front of a contemplated AD action, the affected exporters should participate in the investigation so as to reduce the adverse effects of the action.

A separate AD rate may be available to an exporter, which submits a timely application to the US Department of Commerce (DOC). It would be advisable to seek assistance from experienced law firm in respect of making applications and submitting information to the DOC.

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For media enquiries, please contact TDC's Corporate and Media Communication Department at 2584 4333.

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Content provided by Hong Kong Trade Development Council