CITA to apply 5% tariff on cotton socks from Honduras

May 05, 2008 - United States Of America

The U.S. Committee for the Implementation of Textile Agreements (CITA) announced its decision to apply a textile safeguard on U.S. imports of cotton socks from Honduras. Pursuant to the provisions of the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR), the United States will apply a 5 percent tariff to U.S. imports of Honduran socks from July 1 to Dec. 31, 2008. In 2005, the last year before CAFTA-DR went into effect for Honduras, the average duty paid on cotton socks from Honduras was 4.4 percent.

“After an extensive investigation and careful consideration, the United States has decided to apply a safeguard measure on cotton socks from Honduras,” said Commerce Deputy Assistant Secretary of Textiles and Apparel Matt Priest. “I believe that this action will provide U.S. sock manufacturers an opportunity to adjust to increased import competition from our CAFTA-DR partners. The safeguard action expires at the same time as the current quota on Chinese cotton socks.”

“The United States has a long history of co-production with Honduras,” said Priest. “Approximately half of the cotton socks imported from Honduras were knit in the United States, primarily in Alabama and North Carolina, prior to finishing and packaging in Honduras. As our Hemisphere’s textile and apparel industries become increasingly integrated, we need to stick together to face growing competition from Asia. That is why we decided that the safeguard on socks from Honduras will end at the same time as the quota on Chinese products.”

The United States concluded that a 5 percent tariff on Honduran cotton socks will provide additional, temporary relief to domestic sock manufacturers. It is estimated that the duties collected during the six-month period of the safeguard will exceed the total duties collected on socks imported from Honduras during the five-year period 2003-2007.

Honduras is the second-largest supplier of cotton socks to the United States after Pakistan and ahead of China. Imports of cotton socks from Honduras were 27.3 million dozen pairs through the first eleven months of 2007, an increase of 99 percent from the same period in 2006.

Overall U.S. exports to CAFTA-DR partners increased more than 14 percent in 2007 over 2006. CAFTA-DR contains a special textile safeguard that allows the United States to temporarily re-impose tariffs on imports of apparel if they cause serious damage, or threat thereof, to American manufacturers. Based on available information, in Aug. 2007, CITA initiated a safeguard proceeding covering imports of Honduran cotton, wool, and man-made fiber socks. Today, after a thorough investigation and consultation with the Government of Honduras, CITA announced that the United States would re-impose a 5 percent tariff on Honduran cotton socks from July 1 to Dec 31, 2008.