A Great Debate Over the Price Of a Pair of Honduran Socks

Schollaert said Gildan, with a sales office in Barbados, enjoys tax advantages that American manufacturers don't have. The company is "flush with cash" to buy domestic mills or expand in Honduras, as it plans to do if the preferences are not disturbed, he said.

Gildan, North America's largest T-shirt maker, has bought and closed American hosiery mills over the past two years. It purchased Kentucky Derby Hosiery of Mount Airy, N.C., in 2006 and closed all but one of its U.S. facilities.

Gildan recently acquired V.I. Prewett & Son in Fort Payne, Ala., acquiring a direct pipeline to mass retailers like Wal-Mart.

Gildan lobbyist Ron Sorini, of Sorini, Samet & Associates of the District, said the trade dispute is being portrayed as a battle against his client, especially by big competitors that support safeguards as a way to blunt competition.

Lobbying has won converts. Sorini, who was the textile negotiator in the U.S. Trade Representative's office, said many more domestic sockmakers now oppose government action than did two years ago.

Some manufacturers have sent parts of their sock production to Honduras while at least one, Kelly Hosiery in Fort Payne, is now Kelly Hosiery de Honduras because it moved its factory.

Top executives who led the fight for quotas against Chinese sock imports a few years ago now are free traders.

Jonathan Shugart, president of W.Y. Shugart & Sons in Fort Payne, said his small mill changed its business model. The company now knits children's socks in the United States, sends them to Honduras for labor-intensive finishing and packaging, and brings them back duty-free.

"It's still a plus to the U.S. manufacturing sector," he said in an interview.

William H. Jordan, the mayor of Fort Payne, the self-proclaimed Sock Capital of the World, shows the complexity of the issue. He first supported the tariff idea. After Gildan explained that it would be harder to operate the Prewett Hosiery in his town with the import tax, he backed off.

In a Dec. 19 letter to the committee, he said, "my position on the safeguard has been somewhat clouded" by the split in the local industry. "I want what is best for the people of Fort Payne because many families' livelihoods are touched by this situation."

He urged the committee to "review and investigate the issues as thoroughly as possible. Much depends on it."

Cindy Skrzycki is a regulatory columnist for Bloomberg News. She can be contacted atcskrzycki@bloomberg.net.