Industry Leaders Outline Trade Agenda

The National Council of Textile
Organizations’ (NCTO) Board of Directors has outlined an international trade agenda that industry
officials believe is vital to the survival of the industry and the 1.5 million US jobs in textiles
and apparel.

At the association’s annual meeting last week, its leadership called for government actions
in connection with the Doha Round of trade liberalization talks, some fixes in the

Central America-Dominican

Free Trade Agreement (CAFTA-DR) and
actions to modify or kill Vietnam’s effort to join the World Trade Organization (WTO). Those
attending the meeting fanned out across Capitol Hill to seek congressional support for their

The association’s board adopted what it called a new position regarding support for trade
agreements. While NCTO has supported a number of bilateral free trade agreements (FTAs) and
CAFTA-DR, the board said it would not support and could actively oppose upcoming FTAs and other
trade agreements if, in the judgment of the industry, they “compromise the integrity and intended
trade benefits of current and future agreements.” These include decisions on the pending Peru and
Colombia FTAs and the Vietnam WTO accession.

With respect to CAFTA-DR fixes, both textile manufacturers and importers feel the pact is
not working out as planned. Because not all of the six signatories are on board, the duty-free
provisions have not yet kicked in for all of the countries, creating problems where there is
coproduction in the CAFTA-DR region. The NCTO board also cited problems with the treatment of
pocketing and linings and called for “quick legislation” to correct the problems associated with
the pact, which both importers and manufacturers viewed as a means to prevent China from taking
over the US market.

In connection with the Doha Round, the industry is continuing to press for textile sectoral
negotiations whereby textile issues would be considered separate. Importers are opposed to sectoral
negotiations, and the US government has not yet taken a position.

Textile industry leaders are particularly upset over the agreement in principle reached by
the US and Vietnamese governments, although it is strongly supported by US importers of textiles
and apparel. While US Trade Representative Rob Portman has assured domestic manufacturers that
Vietnam will phase out its subsidization of textile and apparel manufacturing, the domestic
industry is highly skeptical. Vietnam’s textile and apparel quotas would be removed upon Vietnam’s
accession to the WTO. The US textile industry is insisting that a safeguard mechanism be instituted
or quotas extended until Vietnam has demonstrated it is not subsidizing its industries. NCTO
Chairman Jim Chesnutt, CEO of New York City-based National Spinning Co. Inc., said the Vietnam
agreement in its present form “is absolutely absurd and has the potential for undercutting the
benefits of CAFTA.”

May 23, 2006