United States Invokes Safeguards On Honduran Sock Imports

In a move that was sharply criticized by importers of textiles and apparel, the US Department of
Commerce (DOC) has invoked a safeguard mechanism on imports of cotton socks from Honduras. The move
will permit the United States to place a 5-percent tariff from now until the end of this year. The
safeguard tariffs will expire at the same time as the current quota on Chinese cotton socks.

Commerce Assistant Secretary of Textiles and Apparel Matt Priest said the action will give
US manufacturers time to adjust to increased import competition from its Central American trading
partners that participate in the Central America-Dominican Republic Free Trade Agreement. Priest
said US manufacturers have a long history of coproduction with Honduras, and that approximately
half of the socks imported from Honduras were knit in the United States prior to finishing and
packaging in Honduras. Honduras is the second-largest supplier of socks to the United States,
behind Pakistan but ahead of China.

Laura Jones, executive director of the US Association of Importers of Textiles and Apparel,
blasted the DOC’s action, saying it will do nothing to help US textile manufacturers. “Safeguards
are a dangerous mechanism, especially in these regional arrangements,” Jones said. “It is
tantamount to shooting yourself in the foot, especially when the US is the one supplying the yarns
used to make the targeted products.” She said Honduran manufacturers are not threatening the United
States and that Pakistan and China are the “real winners.”

She warned that importers of textiles and apparel need “certainty” in their sourcing, and
that actions such as safeguards in connection with a regional FTA could encourage importers to seek
products elsewhere in countries that would not use US yarn.

May 6, 2008