US imposes tariffs on Honduran socks

April 25, 2008 1:55:57 PM PDT
The Bush administration, responding to pleas from the U.S. textile industry, said Friday it was imposing a temporary tariff on socks imported from Honduras. The administration said the 5 percent tariff would take effect on July 1 and would last until the end of the year, providing domestic manufacturers time to adjust to a flood of sock imports from Honduras that has occurred after the Central American Free Trade Agreement went into effect.

Honduras is the second largest foreign supplier of cotton socks to the United States after Pakistan and ahead of China.

Matt Priest, Commerce deputy assistant secretary of textiles and apparel, said it marked the first time the United States had ever put textile tariffs back in place after they had been lifted by a free trade agreement. However, the action fell short of the 13.5 percent tariffs lasting for three years that the U.S. industry had requested.

The administration's decision to temporarily boost tariffs on Honduran socks comes as President Bush is trying to win congressional approval for three pending free trade agreements with Colombia, Panama and South Korea during his final year in office.

He recently submitted the agreement with Colombia to Congress for a vote under fast-track procedures that would have required action within 90 legislative days.

However, House Speaker Nancy Pelosi led a successful effort to stop the clock on the process. She argued that Congress should not take up the Colombia free trade agreement until it first addresses the economic problems of U.S. families.

With fears about job security rising in the wake of an anemic economy, Bush used a joint appearance this week with the leaders of Mexico and Canada to argue that the North American Free Trade Agreement had fostered prosperity in all three countries and to urge Congress to pass the three pending deals.

Congress approved the Central American Free Trade Agreement covering Honduras and five other nations after a hard-fought battle in 2005. The deal with Honduras went into effect in April 2006. Imports of cotton socks from Honduras rose by 99 percent from January through November of last year compared to the same period in 2006.

Before CAFTA removed the tariffs, the border tax on Honduran socks had been 4.4 percent. Priest estimated that the 5 percent tariff would bring in between $3 million and $3.5 million in taxes over the six months it is in effect.

He said that the decision to have the tariff in place only until Dec. 31 reflected the fact that after that date a number of temporary quotas on Chinese clothing imports including cotton socks would be lifted. He said that to keep Honduras from being at a competitive disadvantage with China, the decision had been made to lift the duty on socks from Honduras at the same time given that the much of the material included in socks from Honduras originates in the United States.

"As our hemisphere's textile and apparel industries become increasingly integrated," he said, "we need to stick together to face growing competition from Asia."