A top US trade official has expressed his disappointment that trade ministers at the World Trade
Organization (WTO) failed to meet an April 30 deadline to agree on how to proceed with trade
liberalization negotiations, which many say must be concluded by the end of this year.

Peter Allgeier, US Ambassador to the WTO, told a meeting of trade negotiators that failure to
meet the April 30 deadline was more than a disappointment; it raises serious questions about our
collective commitment to the Doha Round goals of significant liberalization and reform of trade
this year. Trade officials had set an April 30 deadline to complete the so-called modalities that
would set out the procedures for carrying out negotiations.

A new deadline of July 31 has been set, raising major concerns that it would not be enough time
to reach agreement on a wide range of agriculture, industrial and consumer trade issues.

The end-of-2006 goal to complete the negotiations is considered critical, as that would give the
US Congress time to ratify the agreement under the president’s trade promotion authority (TPA),
which expires in July 2007. Under TPA, what will likely be an intricate trade agreement can only be
given an up or down vote in Congress without any amendments permitted. With the present mood in
Congress with regard to trade, there is no assurance that TPA would be extended.

Both textile manufacturers and importers of textiles and apparel would like to see the Doha
Round move forward, but for different reasons. Textile manufacturers are braced for some tariff
reductions, but they hope the round would result in something more important to them – a
safeguard mechanism that would permit the imposition of import quotas where there is market
disruption or a threat of market disruption. Imports see the tariff cuts that will be proposed as
part of the Doha Round as a way to get the products they need at the best prices from a wide
variety of sources.

Looking at the new July deadline, Allgeier called for negotiators to get serious now and not
backload all the tough decisions until July through inaction. “We can bring the Doha Round to a
successful conclusion by the end of this year if we stay focused on the job at hand and make the
necessary decisions,” Algeier said. “We need to do this in the coming weeks. We do not have the
luxury of postponing decisions on agriculture and manufacturing modalities until the end of July –
we must start to see the shape of the overall package in July.” He added the trade ministers have
an enormous challenge in the days ahead.

However, he said the United States remains committed to the very highest level of success, and
it is prepared to exercise the will, devote the resources, provide the leadership and work with the
rest of the WTO membership.

May 1, 2006

Frontier Spinning Mills Inc.,
Sanford, N.C., and Cheraw, S.C.-based Cheraw Yarn Mills have merged their businesses. Cheraw now
operates as a division of Frontier, retaining its name and management team, according to Bill
Malloy, Cheraw’s vice president.

The merger with Cheraw comes on the heels of Frontier’s acquisition of the Columbus,
Ga.-based denim spinning operation of Swift Galey, an Atlanta-based apparel, home and hospitality
textiles manufacturer. Frontier will move the machinery from that operation to plants in North
Carolina, and will spin yarn for Swift Galey’s denim fabrics.

May/June 2006

Textile lobbyists have reacted sharply to the US Treasury Department’s decision not to label
China a currency manipulator. The administration opted instead to continue informal discussions on
what is viewed by textiles and other industries as a serious currency undervaluation.

In a semiannual report mandated by Congress, the Treasury Department said there is not
sufficient evidence that China is manipulating its currency in order to gain an unfair advantage in
international trade. The report did note, “[F]ar too little progress has been made in introducing a
flexible exchange rate.” The sticking point is that in order to label China a currency manipulator,
subject to actions by the US government, it must be determined there is an intent to gain an
advantage. The report said the technical requirements for China to be designated a manipulator
under US law have not been met.

The report said that in July 2005, China abandoned its eight-year peg to the dollar and moved to
a managed floating exchange regime. Since that time, China’s currency, the renminbi, has
appreciated 2.6 percent against the dollar. US textile trade officials contend that current
exchange rate amounts to as much as a 40-percent subsidy for China’s imports. Despite the
discrepancy and a surging US trade deficit with China, the report says China continues to take
steps to create market infrastructure and financial instruments for floating currency. It adds that
China’s commitment to move to a flexible exchange rate is clear and has been repeated at the
highest levels of the Chinese leadership.

Textile industry representatives in Washington and congressional supporters sharply attacked the
report.

Charging that the US government kowtows to China, the American Manufacturing Trade Action
Coalition (AMTAC), which represents a wide range of manufacturers including textiles and labor,
said, “[D]ialogue with China is not enough; the US industry needs action now.”

 AMTAC Executive Director Auggie Tantillo stated: “The US trade deficit with China was $202
billion in 2005, and the US manufacturing sector has lost more than 2.8 million jobs since the
beginning of 2001. Rome is burning. How much longer will the US government fiddle while the US
industry bleeds?”

Rep. Robin Hayes, R-N.C., challenged the conclusions of the report and cited what he called the
devastating effect the exchange rate problem has had on the domestic textile industry. In a letter
to Treasury Secretary John W. Snow, Hayes said, “I wholeheartedly disagree with this report, and I
can tell you on behalf of the constituents of the 8th District of North Carolina and manufacturers
across the nation we want action against China now.”

Cass Johnson, president of the National Council of Textile Organizations, said China has shown
it won’t do anything until the US government shows there are consequences, and he called for
Congress to enact legislation that would levy punitive sanctions on China. Sens. Charles E.
Schumer, D-N.Y., and Lindsey O. Graham, R-S.C., have introduced legislation that would levy a
27.5-percent duty on China’s imports unless it reforms its currency. Although Schumer says he is
unhappy with the Treasury Department report, he is willing to postpone a vote on the bill until
September. There also is legislation in the House that would enable US industries to take punitive
actions against China. That bill has more than 150 cosponsors, but action is not expected in the
near future.

On May 15, the Bank of China permitted a slight increase in China’s currency against the dollar
in a move that Treasury Department officials say is evidence that diplomacy can work.

May 1, 2006

Troy, Mich.-based automotive systems
and cockpit modules supplier Collins & Aikman Corp. announced it will exit the automotive
fabrics business, pending approval by the US Bankruptcy Court. The action will impact approximately
1,200 employees in three fabric manufacturing plants in Roxboro, N.C., one in Farmville, N.C., and
a laminating plant in El Paso, Texas. It will be implemented over a transitional period depending
on when the business can be transferred to other suppliers.

Collins & Aikman filed voluntary petitions to reorganize under Chapter 11 bankruptcy
protection in May 2005. The company plans to complete the shutdown of its Fabrics business before
the end of September 2006, when it expects to emerge from bankruptcy. Youngman said the company
could emerge as a stand-alone company, or it could be sold. Among those parties who have expressed
interest in the company, he said, is New York City-based financier and chairman of the Greensboro,
N.C.-based International Textile Group, Wilbur L. Ross Jr., whose recently formed International
Automotive Components Group has acquired Collins & Aikman’s European businesses.

May/June 2006

Wellman Inc., a Fort Mill, S.C.-based polyester product manufacturer, reports it will increase
the price of all polyester staple fiber by 3 cents per pound, effective June 4, 2006. The rising
costs of petrochemical-based raw materials led to the price increase, according to the company.

May 1, 2006

 The Textile Machinery Association of the German Engineering Federation (VDMA), Frankfurt,
reported the country’s textile machinery manufacturers exported machinery and accessories totaling
3.4 billion euros in 2005. Overall, exports declined by 5.3 percent for the year, but there were
significant increases in several markets, and the country remains the leading supplier globally of
textile machinery and accessories, according to VDMA.

Although Asia accounted for 46 percent or 1.6 billion euros of Germany’s textile machinery
exports, those exports declined by 7.6 percent. While exports to China were down by 27 percent,
that country remained the largest buyer of German machinery, with purchases totaling 742 million
euros and comprising 22 percent of Germany’s total exports. Exports to India, Iran and Pakistan all
rose considerably. India spent 232 million euros on German machinery, a 62.9-percent year-on-year
increase overall and up by 124.1 percent, 56.2 percent and 52.1 percent, respectively, for
spinning, weaving and finishing machinery. Iranian purchases totaled 89 million euros, up by 42.4
percent. Pakistani purchases grew by 31.1 percent, with specific increases of 98.3 percent and 42.7
percent, respectively, for finishing and spinning equipment.

Textile machinery exports to the Americas grew significantly to 587 million euros, accounting
for 17.2 percent of the total. Shipments to North America grew by 25.5 percent, with US purchases
up by 22.7 percent to 315 million euros. That figure represented 9.2 percent of total German
exports, the second-highest after Chinese purchases and the highest US total since 2001. In
particular, deliveries rose by 84 percent and 42.5 percent, respectively, for spinning and
finishing machinery. Exports to South America rose by 53.7 percent, and within that continent,
Brazil increased its purchases by 79.3 percent to 127 million euros.

Closer to home, Germany’s textile machinery shipments declined by 7.9 percent to countries
within the European Union and by 17.3 percent to the rest of Europe including Turkey, with a total
turnover of 1.1 billion euros or 33.3 percent of total exports. Turkish purchases accounted for 9
percent the third-largest portion by country of the total.

May/June 2006