The intersection between trade and jobs,
particularly textile jobs, is complex.
For the United States textile industry, trade is both
an engine for textile jobs and a source for major textile job
industry would not survive without access to foreign markets
and yet it has been pummeled by artificially low priced
imports from countries that provide government subsidies to
their textile exporters.
In carrying out trade
policy initiatives for the textile industry, NCTO supports
trade programs that provide new access for U.S. textile
products overseas and opposes trade programs that allow
subsidized products greater access to the U.S. market.
In the same vein, NCTO is pushing hard for punitive
actions against countries that use currency and subsidies to
give their domestic exporters an advantage over U.S. and other
U.S. Textile Industry -- The Third
Largest Exporter of Textile Products in the World
According to WTO
statistics, the United States textile industry is the third
largest exporter of textile products in the world with over
in exports in 2009. Most of these exports (75%) go to
countries in the Western Hemisphere that the United States has
free trade or preferential trade agreements. The
industry has also built up export markets in some surprising
places, including China, which now purchases half a billion
dollars a year in U.S. textile products. All told, the
U.S. textile industry has export markets in excess of $100
million in over 20 countries.
The Western Hemisphere -- A Critical
Over the past twenty years, the U.S.
textile industry has supported an expanding array of free
trade agreements and preference programs designed to bolster
textile exports to Western Hemisphere countries. Because
of trade agreements such as the CAFTA, NAFTA and Andean
program, U.S. exports of yarns and fabric can be turned into
garments in the Western Hemisphere, which are then re-exported
back duty-free to the United States.
The duty free component is essential.
Average tariffs on imported garments are relatively high --15
percent -- which means that duty savings can be significant for
companies that choose to source out of the Western Hemisphere.
These duty savings help Western Hemisphere producers maintain
a competitive balance against Asian producers where labor
costs are generally lower but also where government sponsored
subsidies, including currency manipulation, are offered to
The result has been immensely successful --
until recently. Over the past twenty years, U.S. textile
producers have joined in partnership with apparel producers in
the region to build up two-way trade in textiles and apparel
that exceeds $25 billion a year. As a result,
nearly two million textile and apparel workers are now
employed throughout the Western Hemisphere, including nearly
500,000 textile and apparel workers in the United States.
These workers supply about 15 percent of the apparel that is
sold in the United States. Most of that apparel is made
from yarns and fabric made in U.S. textile mills by U.S.
Over the past five years, however, the
success of this regional partnership has been put in jeopardy.
Exports from the region have declined and, consequently, U.S.
textile production has declined as well. The decline has
come as large Asian producers, particularly China, have
dramatically increased the subsidies given to their textile
Apparel Imports to the United States ($)
and Apparel Exports to the World ($)
Apparel Trade Balance ($)
Supporting Trade Policy & Programs
that Benefit U.S. Textile Workers
As noted above, the Western Hemisphere is
by far the largest export market for U.S. yarns and fabrics.
This is not by accident but is the result of U.S. government
policy that has encouraged the exportation of U.S. yarns and
fabric to the region in exchange for duty free entry of the
final finished product -- a piece of apparel.
The U.S. textile industry has strongly
backed these government initiatives because they have
preserved and expanded export markets for U.S. textile
products and U.S. textile workers.
The key to making these initiatives work
for U.S. textile producers is something called the "yarn
forward rule of origin." The "yarn forward" rule means that
all products in a garment from the yarn stage forward must be
made in one of the countries that is party to the agreement.
For example, under the CAFTA FTA "yarn forward" rule, the
yarn, fabric, sewing thread and the final garment itself must
be made in the region, either in the United States or one of
the six Caribbean or Central American countries that is party
to the agreement. In simple terms, the "yarn forward"
rule means that the benefits of the agreement accrue to
regional producers rather than outside players such as China.
The Western Hemisphere
The Western Hemisphere Trade
Initiatives date back more than twenty years and include the
Caribbean Basin Initiative (CBI), Caribbean Basin Economic
Recovery Act (CBERA) and Caribbean Basin Trade Partnership Act
(CBTPA) programs for the Caribbean and Central American
region; the 807A and Special Regime programs for Mexico and
Central America and the Caribbean region; the NAFTA agreement
with Mexico and Canada; the CAFTA agreement with the Dominican
Republic, Guatemala, El Salvador, Honduras, Nicaragua and
Costa Rica; the Andean trade program with Peru, Colombia,
Ecuador and Bolivia and the Peru and Chile FTA.
Opposing Trade Agreements that
Threaten U.S. Jobs
The U.S. textile industry opposes trade
agreements and initiatives that give countries that unfairly
subsidize their export sectors more access to the U.S. market.
The U.S. market is by far the largest market in the world and
represents a rich prize, particularly for Asian countries such
as China and Vietnam that have built their economies around
export platforms. The U.S. textile industry believes
that these countries should be required to remove their
subsidies and play by international trading rules before they
get more access.
For example, the U.S. textile industry
opposed allowing China into the World Trade Organization in
2004 because China continued to heavily subsidize its textile
and other manufacturing export sectors and manipulate its
currency. As a WTO member, China agreed to stop
subsidizing its industry and not to manipulate its currency to
gain an export advantage, and the United States promised that
it would force China to do so through WTO rules. But
successive Administrations have not been willing to make
unfair trade practices by the Chinese a major issue, and WTO
rules are either underutilized or too weak to compel China to
change its predatory actions.
Regarding more recent initiatives, the U.S.
textile industry has opposed the Korea FTA, the inclusion of
Vietnam as a member of the Trans Pacific Partnership (TPP)
free trade talks, and extending duty free access to apparel
from Bangladesh and Cambodia. Industry opposition
to these agreements is based on inequitable terms of trade
(Korea FTA) or unfair and anti-competitive subsidies, labor
and environmental rules (Vietnam and Bangladesh/Cambodia.)
KORUS -- the U.S. Korean Free Trade
Textile Industry & SEIU Urge Renegotiation of Textile Text in
U.S. Transpacific Partnership (TPP)
Predicts Large U.S. Textile and Apparel Job Losses from
Inclusion of Vietnam in TransPacific Partnership Agreement
Notes Vietnam's Use of "China Model" in Expressing Concerns
Over Obama Decision to Move Ahead with Free Trade Negotiations
Opposes Vietnam Inclusion in Free Trade Talks
Taking Aim at Unfair Trade Players
Trade policy has become increasingly
fractured in the United States with a majority of Americans in
both parties believing that it has encouraged too much
outsourcing and job loss. From the perspective of an
industry that has lost hundreds of thousands of jobs over the
last decade, the responsibility for the job loss falls upon
the failure of the U.S. government in enforcing current trade
the last decade, the government has devoted significantly more
resources to creating new agreements rather than enforcing
existing agreements. As a result, China and other Asian
countries have gained enormous market share in the United
States and has caused significant job and production loss in U.S.
companies. This has justifiably caused, in the textile
industry's eyes, a backlash on a grassroots level against free
trade policy in the United States. Polls
show steadily declining support for U.S. trade policy.
As an industry that is dependent on robust
export markets for its existence, NCTO has supported action
that would punish China and other countries for currency
manipulation and would give U.S. companies the ability to
defend themselves against countries that manipulate their
NCTO also supports the TRADE ACT, a bill by
fair trade representative that sets out new parameters for
free trade agreements and for reform of U.S. trade policy.
The bill covers abusive practices that major exporting
countries use to gain an export advantage, including currency
manipulation, abusive labor practices, direct subsidies to
exporters and environmental degradation.
To learn more about NCTO's public policy