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A Call For Action

Executive Forum: Chesnutt, Gant, Milliken, Shuster, Raynor and Dobbins

James A. Morrissey, Washington Correspondent

A rmed with what they believe are beefed-up lobbying organizations, US textile industry and labor leaders have embarked on a major effort to bring about what they call a "level playing field" in the arena of international trade (See " Washington Outlook," TW, this issue).

Below, six of these leaders tell Textile World readers how and why they expect to go beyond the rhetoric and achieve that goal.

chesnutt_CopyJames W. Chesnutt, CEO, National Spinning Co.; vice chairman, National Council of Textile Organizations (NCTO)
People are fed up with plant closings, with workers losing their jobs and families losing their savings. They are fed up with reading about Chinese and Vietnamese sweatshops taking their jobs away. They are fed up with trade deals that benefit Wal-Mart at the expense of good-paying manufacturing jobs. Since George Bush became president, we have lost 3 million manufacturing jobs nationwide. Since January 2001, we have lost one textile job every nine minutes. The big problem lies in Washington, which has made it easy for countries, especially China, to gain access to this market, despite the fact that they circumvent trade laws and create their own rules.

Secretary of Commerce Donald Evans told us George Bush is a "friend of the textile industry,"but we have seen little of that as we have lost one quarter of our entire textile workforce since President Bush took office. We have heard lots of promises made. It all comes down to honesty and integrity, and the Bush administration has not kept its promises.

We have set the base to make this election year the most political year in this industry's history. There will be more voter registration drives, more voter education efforts and more people speaking out so that this industry's issues and those of manufacturing workers in general will make a difference on election day. We must make it clear that we will hold our lawmakers accountable. If they are not willing to help us, we will seek someone else.

gantAllen E. Gant Jr., president and CEO, Glen Raven Inc.; chairman, NCTO
I am a great believer in the importance of international trade. My company does business in 124 countries. Trade is important to the United States and countries throughout the world, but their economies and ours are being undercut by the "free trade" of today that is no "fair trade." We have lost 86,300 textile and apparel jobs in this country just in this past year. This is due in large measure to our government's pursuit of free trade that disregards the importance of manufacturing here at home. Our government has failed to uphold the rules and regulations under our trade laws.

With NCTO, we have a broad-based coalition that will focus specifically on the need for fairness in international trade in textiles. We also will address government regulations that impose a cost burden on our competitiveness. We intend to be heard in this year's election campaigns. It's political peril for anyone, Republican or Democrat, who does not understand the textile trade problem and is not willing to stand up and protect the 1 million jobs in our textile and apparel industries.

milliken_CopyRoger Milliken, chairman and CEO, Milliken & Company; co-chairman, American Manufacturing Trade Action Coalition (AMTAC)
The US government has four major policy tools that shape and direct the overall economy - fiscal, monetary, exchange rate and trade policy. Today, fiscal policy is a much weakened macroeconomic tool because of the large federal budget deficit and the massive federal debt. Monetary policy is equally weak, to the point that even though the Federal Reserve's discount rate is at its lowest level since the Great Depression, it exercises little stimulative effect. Changes in exchange rates - that is, the creation of a strong or weak dollar - also now are greatly limited because of the vast hordes of dollars in foreign hands. Thus, over the past two decades, US policy makers have increasingly relied on a liberal trade policy to manage the US economy.

The current US economic policy is to permit a massive inflow of foreign-made goods, and by this suppress labor costs and deflate the price of consumer goods.

To enable US-owned producers to participate in this import-driven economic policy, the US government has joined several agreements including the North American Free Trade Agreement (NAFTA) and it supports the trade policies of the World Trade Organization (WTO) that protect US investments in developing countries such as Mexico and China. Once established in a penny-wage, low-regulation foreign manufacturing platform, corporations can then attack their remaining US-based competitors with inexpensive imports.

Today's liberal trade policies encourage the US companies to shift production abroad. It is happening on a massive scale. Consequently, the current US trade policy is decimating the US manufacturing base, destroying millions of US manufacturing jobs, undermining the business and related service sectors, fiscally stressing the manufacturing communities and states, and making the US defense industrial base dangerously dependent on foreign suppliers.

Our leaders need to balance US macroeconomic policies. The key to reducing the US trade deficit is to quickly stop the erosion of the remaining US manufacturing base. To this end, a US moratorium is required on entering into more trade pacts, such as NAFTA. Until this is US policy, we must oppose the negotiation and ratification of any such deals.

Any future trade agreements must be clearly reciprocal, negotiated in the open, and ratified in Congress using normal legislative procedures. All prior and future trade pacts must be enforced, reviewed by Congress on a periodic basis and changed wherever necessary. Finally, the goal of US trade policy must be the creation of trade arrangements that will substantially improve the prosperity and security of the American people. That is the test. Nothing less is acceptable.

shusterGeorge Shuster, CEO, Cranston Print Works; co-chairman, AMTAC
To exit a disaster requires understanding its basic cause. The gross excess of the US trade deficit is not the result of inevitable global forces. Rather, it is directly caused by the fact that US trade policy has established a world in which all the governmentally imposed conditions of trade (tariffs, non-tariff barriers, subsidies, regulations, state sponsorship of business, and others) are all heavily stacked against US exports and in favor of imports. For example, the average tariff facing US imports is 1.6 percent; that facing US exports is 40 percent. The other conditions of trade have equally dramatic disparities. The cumulative effect of these differences is what makes the US trade deficit no surprise.

To reverse our cartoonish over-consumption and re-establish domestic production, we need to correct these inequalities. First, the United States should prepare a Trade Deficit Impact Statement (TDIS) for every new trade proposal.

Second, the United States should not enter into any agreement for which the TDIS analysis predicts a larger deficit.

Third, the United States should insist that other countries begin to equalize all of the governmentally imposed conditions of trade before any further access to our markets is granted.

Fourth, the United States should consider, in targeted areas, policies to overcome the existing disparities by compensating measures, a list of which would be beyond the scope of this brief statement.

Finally, since the trade deficit is hollowing out all US industries, textile manufacturers should seek alliances with other sectors, such as the American Manufacturing Trade Action Coalition is doing. Only in this way can the broad political support needed to achieve the above economic objectives be assembled.

bruceBruce Raynor, president, Union of Needletrades, Industrial and Textile Employees (UNITE)
The first and by far the most important need of the textile industry is for an extension of the quota system that has regulated the global apparel and textile industry for more than 30 years. If this is not done, no matter what else is accomplished, the industry will continue to suffer serious losses.

Our government should also enact a strategic pause in the expansion of free trade agreements between the United States and other countries. More than 200 such agreements have been signed by the United States and its trading partners in the last decade alone. Our government has never evaluated the effect of these agreements on the nation's workers and economic well-being.

We also need global trade rules to protect internationally recognized workers' rights. Absent such roles, all US industries that compete internationally, and this is no longer restricted to manufacturing, will be locked in a race to the bottom with countries that brutally hold down wages by denying workers their rights.

The US government could also help by requiring that procurement policy, at all levels of government, be used to support crucial US industries, and that unfair competition from domestic prison-based industries be prohibited.

dobbinsSteven G. Dobbins Jr., CEO, Carolina Mills
In the last 3 1/2 years, we have had to close 10 plants and have been forced to let 1,400 workers go as the global textile trade picture continues to take a heavy toll. It all stems from what I call the hypocrisy of our international trade and regulatory policies. On the one hand, we in this country have environmental, health and safety, healthcare, and consumer protection regulations that increase our cost of manufacturing - some say at least as much as 20 to 25 percent - while our overseas competition does not have to meet these standards. No one is suggesting we should lower our standards, but our government must find ways to offset this differential. We all are sitting at the table of international trade, but at the present time, our end is tilted upward, while our competition is at a lower level.

If we don't correct this situation, everything will slide off the table in their direction.

We have trade laws that were passed, often with good intentions, but they are not working in today's environment. There are areas where our government can act if it has the will to do so. We need stronger Customs enforcement. There are $10 billion to $20 billion in illegal textile and apparel shipments entering this country every year. We need to have stronger penalties. Anyone who gets caught needs to be severely penalized, to make it clear to everyone that such practices are not worth the risk. That's one area where Congress can do something right now.

In addition, our government must address the problem of currency imbalances with countries like China, where their imports are in effect subsidized and our exports are more expensive. We need to revise our economic and trade policies to reflect what is really happening to world trade, particularly since China got into the WTO.

The world has changed dramatically since then. No one anticipated what is happening; other countries are concerned; we are deeply concerned. Change has to come about. If we don't like dealing with the 300-pound gorilla that China is today, just wait until China becomes a 600-pound gorilla!

May 2004