NCTO Releases Report Calls For Government Commitment To Industry

In its year-end economic report for 2004, the National Council of Textile Organizations (NCTO),
Washington, reported that job losses and mill closings continued, but at a slower pace than the
previous year because US government-imposed safeguards limiting importation levels for knit fabric,
dressing gowns and brassieres from China went into effect at the end of 2003. The report stated US
textile and apparel companies shed 32,100 jobs in 2004, bringing the total down to 676,500. At
least 30 US textile facilities shut down during the year.

At the same time, textile corporate sales rose by 5.7 percent to $37.2 billion in 2004.
After-tax profits totaled $685 million, or 1.8 percent of sales, in 2004. Textile mill shipments
declined 6 percent to $34.3 billion. The safeguard action, allowed under the terms of China’s World
Trade Organization accession agreement, limited growth of imports from China in the above-noted
categories, which had been removed from quota restraints, to 7.5 percent over 2003 levels. By
contrast, NCTO said, imports of other Chinese apparel products no longer under quota grew from 9
percent of the US market in 2001 to more than 73 percent in 2004. China’s total share of the US
textile and apparel import market amounted to 25 percent in 2004.]

NCTO projects price drops of 50 percent and higher for Chinese textile and apparel products no
longer under quota, and blames China’s advantage on unfair and illegal trading practices. It warns
the remaining US textile and apparel jobs and 30 million such jobs globally could be lost if the US
government does not act to force China to stem these practices.

“The US textile and apparel industry has invested billions of dollars in order to improve
productivity, and has become one of the most highly automated and advanced manufacturing sectors in
our economy,” said Allen E. Gant, chairman, NCTO. “Nonetheless, our industry cannot be expected to
compete against countries whose governments continue to ignore international rules and obligations
by using unfair and illegal trading practices to gain market share.

“[I]t is critical that our government fulfills its commitment to this industry by working
expeditiously to overturn the recent injunction by the Court of International Trade so that action
can quickly be taken to approve our threat-based safeguard petitions,” he continued, referring to
the courts recent injunction blocking such actions.

February 2005