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 loss.  The textile 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 producers.

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 $13 billion 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 Export Market

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 textile exporters. 

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. textile workers.

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 exporters.   

Textile and Apparel Imports to the United States ($)

Textiles and Apparel Exports to the World ($)

Textile and 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 Trade Initiatives

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 Agreement

Textile Industry & SEIU Urge Renegotiation of Textile Text in KOREA FTA

U.S. Transpacific Partnership (TPP)

Predicts Large U.S. Textile and Apparel Job Losses from Inclusion of Vietnam in TransPacific Partnership Agreement

NCTO Notes Vietnam's Use of "China Model" in Expressing Concerns Over Obama Decision to Move Ahead with Free Trade Negotiations

NCTO 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 rules. 

Unfortunately, over 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 currencies. 

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 efforts click here.