WTO Rules Against U.S.'s Quota on Yarn From Pakistan 
in Latest Textiles Setback

Helene Cooper / Wall Street Journal 27apr01

WASHINGTON -- The U.S. lost its third big textiles trade case as a World Trade Organization panel ruled that a U.S. quota on Pakistani cotton yarn violates global trade rules.

The WTO will release the panel's decision Friday. Pakistani trade officials who have received copies of the report said it orders the U.S. to remove the quota, which affects cotton yarn used in underwear, socks and T-shirts. U.S. officials said they haven't yet received the WTO decision, and declined to comment until they do. The WTO won't release the report publicly for two more weeks, and typically doesn't comment on its decisions.

Pakistan and importers of Pakistani cotton were ebullient. "This decision reaffirms our belief in the WTO," said Asad Hayauddin, a spokesman for the Embassy of Pakistan. "It upholds free trade." Julie Hughes, a lobbyist representing importers, said that "textile quotas are going away, and this proves the process works."

Ms. Hughes and importers urged the Bush administration to abide by the ruling and lift the quota. If the U.S. doesn't remove the quota, the WTO could authorize Pakistan to impose retaliatory sanctions.

The Clinton administration imposed the quota in 1998, after U.S. yarn suppliers complained that cotton yarn from Pakistan was flooding the market. The U.S. put a ceiling on yarn from Pakistan, the second-largest supplier after Mexico.

Pakistan promptly complained to the WTO, which has been considering the case ever since. A WTO textile-monitoring panel in 1999 recommended that the U.S. lift the restrictions. The Clinton administration, under pressure from textile-state congressional representatives and labor unions, refused to do so.

The WTO decision chips away further at America's 40-year-old textile trade policy, which seeks to limit imports of textiles from countries with cheap labor. Since 1996, the WTO has heard three textiles cases against the U.S. policy. In 1996, the WTO ruled against U.S. quotas limiting imports of Costa Rican panties; the next year, the trade body ruled against U.S. quotas on wool shirts from India.