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After working diligently with government trade officials for the past five years, Unifi, Inc. (NYSE: UFI) and U.S. trade representatives announce today legislation providing a technical correction to the sewing thread provision in the United States-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The bill was passed in Congress on August 3, 2012, and will take effect on October 13, 2012.

The amended legislation will close a loophole that allowed for the use of non-originating sewing thread in the assembly of textiles and apparel under the DR-CAFTA. The technical modification clarifies that certain single ply synthetic sewing thread is required to be produced in the United States or the CAFTA-DR region in order for goods to qualify for preferential tariff treatment. All other sewing threads (cotton and acrylic, for example) already enjoyed the benefits of yarn forward rules of origin under the free trade agreement.

The bill is significant to Unifi and others U.S. textile manufacturers because it will encourage greater use of U.S. inputs in the DR-CAFTA countries. According to the National Council of Textile Organizations (NCTO), the U.S. textile industry, from textile fibers to apparel, employed 506,000 workers in 2011. North Carolina alone employed 43,000.

“Yarn forward rules of origin are crucial in free trade agreements so that the benefits go to U.S. workers and our trading partners in the region of the agreement,” said Bill Jasper, chairman and CEO for Unifi. “Thread manufacturers in the Americas lost business to Asian producers because of this oversight.”

Jasper added, “A significant portion of garment value comes from innovation in the textile inputs, such as the fiber, yarn and fabric formation. Unifi has made significant investments in our U.S.-based manufacturing facilities to develop and produce innovative, value added products such as our recycled Repreve® yarn. This technical correction provides an additional incentive for the Company to continue to bring new products to the market that help create a stronger and more sustainable supply chain in the Americas.”