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Interim Procedures Under Panama FTA for Textile and Apparel Safeguards

Tuesday, May 28, 2013
Sandler, Travis & Rosenberg Trade Report

The Committee for the Implementation of Textile Agreements has issued interim procedures for the submission and consideration of requests for textile and apparel safeguard actions on imports from Panama. These procedures also allow CITA to launch safeguard investigations on its own initiative. CITA intends to use these procedures beginning May 28, and comments on them may be submitted no later than June 27.

The safeguard mechanism under the U.S.-Panama Free Trade Agreement applies when, as a as a result of the reduction or elimination of a customs duty under the agreement, a Panamanian textile or apparel article is being imported into the United States in such increased quantities, in absolute terms or relative to the domestic market for that article, and under such conditions as to cause serious damage or actual threat thereof to a U.S. industry producing a like or directly competitive article. In these circumstances, the U.S. may increase duties on the imported article from Panama to a level that does not exceed the lesser of the prevailing U.S. normal trade relations/most-favored-nation duty rate for the article or the U.S. NTR/MFN duty rate in effect on the day before the FTA entered into force. The maximum period for such relief is three years, and if the initial period is less it may be extended up to three years if necessary to remedy or prevent serious damage or actual threat thereof and if the domestic industry is making a positive adjustment to import competition.

If the U.S. provides relief under the textile and apparel safeguard it must provide Panama mutually agreed trade liberalizing compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional duties expected to result from the safeguard. Such concessions are limited to textile and apparel products unless the two sides agree otherwise. If there is no agreement on compensation, Panama may increase its customs duties equivalently on U.S. products.

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