Domestic socks industry in line of fire, USA

The Committee for the Implementation of Textile Agreements under the Department of Commerce had sought public comments through a notification dated August 16, 2207 soliciting public comments.

Jim Schollaert, Washington Representative of the Domestic Manufacturing Committee within the American Hosiery Association says, “Socks is the largest among the surviving US domestic apparel industries.”

“The domestic sock industry has over 100 companies in the US. This industry is highly automated yet the employment in this sector stands reduced to around 20, 000 employees today, with over 5,200 jobs lost in the domestic sock industry since January 1, 2006,” adds Schollaert.

For Schollaert and his trade fraternity, Honduran socks imports over the first seven months this year has caused heartburns and why not, when imports of these categories registered an astounding 75 percent rise in the first 7 months of 2007.

It is the tax structure and rebates offered to suppliers from CAFTA countries that have been the root cause of the US sock industry woes today.

"We have a lot of grass root support but the opposition has deep pockets. It is the big companies like Gildan who have suddenly emerged by buying their way into the sock industry, who are setting up in Honduras due to CAFTA’s duty free privileges. Gildan, as a Canadian company, knows how to exploit tax loopholes that are not available to U.S. companies, even those that move their own production to Honduras. Gildan’s use of a sales office in the tax haven of Barbados, resulted in a corporate income tax rate of about 4 percent in 2006. The US corporate tax rate is 35 percent. The generous terms of the Canada-Barbados tax treaty make this lucrative tax structure possible for Canadian companies in Barbados."

When asked what you is expected in the future, he replied, "The US yarn spinners , who have entered into joint ventures with Gildan, are also setting up spinning mills in Honduras, and they are opposed to this safeguard against Honduras. Also big retailers of the US have submitted opposition to the safeguard. But we will believe we have the merits of the case on our side, and our chances are very good for the safeguards on Honduras. What we want is a leveling the playing field for all."

On the question whether suppliers from Honduras will be rendered uncompetitive, Schollaert said, "The re-imposition of pre-CAFTA tariffs will simply level the playing field somewhat for three years. This is a modest trade remedy. There is a written promise from the Executive Branch not only to self-initiate and actively pursue a sock safeguard if warranted, but also to seek a carve-out of socks from the CAFTA Agreement for 10 years that is still on the table."

Jim rounded off stating, "We sincerely hope CAFTA sock safeguard will be invoked which will re-impose sock tariffs at pre-CAFTA levels for three years, as authorized by the explicit terms of under the CAFTA Agreement. To do otherwise would give the green light to unfair trade and tax avoidance strategies that are using the US market as a giant cookie jar."