The Commerce Department's Committee for the Implementation of Textile Agreements has agreed with a petition filed by U.S. sock manufacturers and will apply safeguard measures to surging imports of socks from China.
The safeguard provision, which is permitted under China's 2000 WTO Accession Agreement, will require importers to limit the growth of Chinese sock imports to 7.5 percent in 2005.
“This is a stop gap measure for one year, but it will at least avert a disaster to our industry in 2005,” said Charles Cole, chairman of the Domestic Manufacturing Committee of The Hosiery Association. “We are grateful for the decision finally taken today by the U.S. government. We had a very compelling case and expect the most stringent possible quota limit on Chinese sock imports as soon as possible.”
The socks safeguard petition was the fourth approved by the Committee on the Implementation of Textile Agreements within the last year. Last month, U.S. textile manufacturing groups filed five more such petitions to try to put a brake on skyrocketing Chinese textile imports.
“Due to the complexity of this case there were delays which allowed the Chinese to grow their imports enormously in the interim,” said Jim Schollaert, director of Senate relations for the American Manufacturing Trade Action Coalition. “The sock case clearly demonstrates the need for the new threat-based approach to the safeguard mechanism. A threat-based petition process should prevent these types of disruptive import surges.”
Washington-based AMTAC also signed the socks petition along with the National Textile Association and National Coalition of Textile Organizations.
Sock imports from China have soared from less than 1 million dozen pair in 2001 to 22 million dozen pair in 2003, and to 42 million dozen pair in the most recent 12 months ending in August 2004, according to The Hosiery Association.
U.S. sock manufacturers have also suffered under severe downward pricing pressures as the wholesale price of Chinese sock imports, which enjoy government subsidies, has dropped precipitously from an average of $9 in 2001 to $4.15 in 2003. Domestic sock production has dropped from 207 million dozen pair in 2001 to 166 million dozen pair in 2003.
Domestic sock mills still maintain about 40 percent of the U.S. market share for socks, the highest share of any major apparel sector left in the U.S. apparel industry. However, this share has dropped steadily from 76 percent in 1999. The domestic sock industry had never requested a specific quota limit on sock imports before.
The elimination of all textile quotas on Jan. 1, 2005, which was agreed to by U.S. negotiators in the 1995 WTO Agreement on Textiles and Clothing, will further benefit Chinese textile exporters above all others.