Publication Number: 3880

Report Title: Probable Effect of Proposed Definitions for Certain Baby Socks

Investigation Number: 332-475

Author's name(s): Jackie W. Jones, Andrea W. Boron, Kimberlie Freund, Dawn Heuschel, Laura Rodriguez

Date Published: August 2006

Report Description/Introductory Text: The U.S. International Trade Commission ("Commission") analyzed the probable effects of removing certain baby socks and booties from the quota on hosiery imports from China (category 332/432/632). This quota was established in the Memorandum of Understanding Between the Governments of the United States of America and the People's Republic of China Concerning Trade in Textile and Apparel Products (MOU), which became effective January 1, 2006. Specifically, the Commission analyzed the probable effects on U.S. imports of certain baby socks and booties from China, on total U.S. imports of baby socks and booties, and on U.S. producers of baby socks and booties for each of the two proposed definitions:

Proposed Definition No. 1:
For purposes of heading 6111, babies' booties are knitted or crocheted foot coverings without an applied sole glued, sewn or otherwise affixed to the upper. These articles have bulky embellishments, such as rattles or other attachments, which preclude wearing inside of footwear.

Proposed Definition No. 2:
For purposes of heading 6111, babies' booties are knitted or crocheted foot coverings without an applied sole glued, sewn or otherwise affixed to the uppers. These articles have embellishments, such as rattles, lace, appliqués, skid-proofing or kick-proofing properties.

The Commission's analysis indicates that removal of baby socks and booties provided for in Proposed Definition Number 1 (BSB 1) from the quota would likely have a negligible effect on the level of U.S. imports from China, on total U.S. imports, and on domestic producers of baby socks and booties. The Commission has found no evidence of U.S. production of BSB 1. U.S. importers of baby socks and booties stated that BSB 1 accounted for a small part of their total line of baby socks and booties.

With respect to Proposed Definition Number 2 (BSB 2), there may be some adverse impact on U.S. imports from China, total U.S. imports, and U.S. producers. However, owing to the short time that the quota has been in effect, and incomplete data to fully assess the trends, it is difficult to assess the full effect of removing BSB 2 from the quota. Based on the information available to date, it appears that the quota has had some disruptive effect on U.S. imports of baby socks and booties from China during 2006, despite the low utilization rate of the current quota to date.

There is evidence that some of the increased costs associated with the quota have been passed on to the retailers, particularly starting in the second half of 2006. To the extent that any increased costs associated with the quota are passed on to the retailers, it is possible that the removal of the baby socks and booties from the quota could result in declining import prices and an increase in the total volume of U.S. imports. Such an increase in total U.S. imports of BSB 2 could result in an adverse effect on U.S. producers of such products, particularly small contract sock knitters. While BSB 2 accounts for a relatively small share (an estimated 10 percent) of domestic production of baby socks and booties, BSB 2 are mostly sold to retailers as part of an assortment that includes other baby socks. Hence, a domestic loss in sales of BSB 2 would likely also affect sales of other baby socks.



Topics Covered: Baby socks, baby booties, safeguard, Memorandum of Understanding, MOU, China, quota, imports, trade

Countries: China, Korea (South), Taiwan, Costa Rica, Colombia, India, Honduras, Philippines, Turkey, Mexico, Pakistan, Indonesia, Cambodia, Hong Kong

HTS Numbers: 6111.20.6050, 6111.30.5050, 6111.90.5050

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