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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

Textile Lobbies Split On Central America Pact

By James A. Morrissey, Washington Correspondent

In what could lead to a bitter split among US textile manufacturers, the National Council of Textile Organizations (NCTO) and the National Cotton Council (NCC) have announced their support for the Central American-Dominican Republic Free Trade Agreement. The National Textile Association (NTA) and the American Manufacturing Trade Action Coalition (AMTAC) reiterated their opposition to the pact and expressed disappointment at the NCTO and NCC actions. On the other hand, Kevin Burke, CEO of the American Apparel and Footwear Association, whose members include importers, as well as domestic manufacturers, welcomed the NCTO and NCC endorsements, saying Central America and the Dominican Republic represent one of the best markets for US textile firms.

When the agreement was first announced, NCTO officials said they could not support it in its present form, and NCC said it would only support a good CAFTA. Apparently, assurances from administration trade officials have taken care of their concerns and have won them over.

In announcing NCTO'S support for the agreement, Allen E. Gant Jr., chairman of NCTO, said his organization recognizes strong and important ties between the domestic industry and the CAFTA-DR countries, and said he was pleased with the administration's efforts to clarify its intent with respect to issues that were bothering his membership. He referred to a commitment that US Trade Representative Rob Portman has made to Sen. Elizabeth Dole (R-NC) to pursue a rule of origin change that will protect the interests of US exporters of pocketing and linings to Central America. In addition, the administration has renewed a commitment to negotiate a substantive and aggressive Customs enforcement agreement with Mexico that would address some of NCTO's major concerns. The administration also has made a commitment to ensure that existing US business in Nicaragua is not impacted by tariff preference levels that permit a given amount of inputs from non-participating countries.

None of this satisfied two other major textile organizations. Calling CAFTA-DR a job killer, AMTAC Executive Director Auggie Tantillo said AMTAC cannot and will not support any trade agreement designed to outsource domestic manufacturing jobs. He said one-sided trade agreements are the reason the United States ran a trade deficit of $617 billion in 2004. The major problem, he said, is that the Central American countries have small economies that do not constitute market opportunities for US manufacturers. While the low-wage workers in the CAFTA countries can send billions in exports to the United States, they can afford to buy only miniscule amounts of finished US goods in return.

Karl Spilhaus, president of the NTA, said It is astounding that the yarn spinners and other supplier members on the NCTO board could act with such short- sightedness. He said their action is directly contrary to the interests of their customers the companies that weave, knit or finish fabric. He pointed out the administration has failed to deliver on any of the conditions textile manufacturers sought in connection with CAFTA-DR and, therefore, his organization can't see that anything has happened, that would lead it to reconsider its opposition.

Ever since the industry experienced a major split in connection with the North American Free Trade Agreement, industry leaders have said they hoped they could speak with one voice on trade issues, but that no longer is likely to happen in connection with CAFTA-DR.

May 2005