Textile Manufacturers Hit South Korea FTA Report

US textile manufacturers are concerned about an International Trade Commission (ITC) report that
predicts large increases in textile and apparel imports as a result of a proposed free trade
agreement (FTA) with South Korea. While the ITC says much of the increase would displace imports
from other countries, that is viewed as a double hit.

The report, mandated by Congress in order to help it assess the likely impact of FTAs on the
US economy, says the FTA with South Korea will likely result in a $6.4- to $6.9-billion increase in
imports from South Korea; and the bulk of that increase will be in textiles, motor vehicles and
parts, and wearing apparel. The ITC says as much as 90 percent of the increase could be at the
expense of other nations and will not directly displace US production and jobs.

Cass Johnson, president of the National Council of Textile Organizations (NCTO), says the
report is not an accurate portrayal of the true impact of the FTA on the US textile industry. He
says the “displacement” of goods from other countries would be highly significant in that it could
be at the expense of apparel made in Mexico and the Caribbean, which have become major markets for
US yarn and fabric. He says the report is a “flawed model” in that it does not take into account
that secondary impact on US textile trade.

US Trade Representative Susan C. Schwab says the South Korea FTA is the “most commercially
significant trade agreement the United States had concluded in over 15 years.”

However, it is under heavy fire from textile manufacturers, automakers and some agricultural
interests, and Rep Sander Levin, D-Mich., chairman of the House Ways and Means Committee’s trade
subcommittee, says he will oppose the measure because of its impact on the automobile industry.
That could be a major stumbling block in the way of ratification amd likely would preclude approval
this year and maybe forever.

October 2, 2007