Effects Of Obama’s Push Questioned By Textile Makers

resident Barack Obama’s goal of doubling U.S. exports in the next five years and creating
two million jobs has been met with considerable skepticism by textiles and other manufacturing
industries. They feel a more productive approach would be an assault on what they say are illegally
subsidized low-cost imports that displace American jobs.

Since the president announced the export-expanding goal during his State of the Union
address, administration trade officials have been making an all-out effort to sell the benefits of
exports. Under a National Export Initiative announced by the president, the Office of the U.S.
Trade Representative, the Small Business Administration, the Export-Import Bank and other federal
agencies have been working on programs to attack overseas trade barriers and facilitate more
two-way trade in other ways. A centerpiece of this effort is Congressional approval of the Panama,
Colombia and South Korea free trade agreements (FTAs), negotiated by the Bush administration, that
have been bogged down in Congress. U.S. textile manufacturers are not particularly concerned about
Panama, as little trade is involved, but they strongly support the Colombia pact, as it has a rule
of origin for apparel imports that presents opportunities for exports of yarn and fabric. On the
other hand, they strongly oppose the Korean agreement because South Korea has a large textile
industry of its own, and they see few opportunities for U.S. exports. They also feel the agreement
could result in a significant increase in imports that under the agreement could enter the United
States duty-free.

Other Actions

The Obama administration is taking preliminary steps to negotiate a Trans-Pacific Partnership
(TPP) that it says will broaden sourcing opportunities for U.S. retailers and increase market
access for U.S. exports. The TPP would include Australia, Brunei, Chile, New Zealand, Peru,
Singapore and Vietnam. U.S. textile manufacturers object to Vietnam’s inclusion, saying that
because of its non-market economy, it will be “another China.”

In a move that could benefit U.S. textile manufacturers, the administration is pursuing ways
to help make financing more readily available to companies interested in exporting. In a recent
meeting with textile executives, Kim Glas, deputy assistant secretary of commerce for textiles and
apparel, said her office is seeking ways to gain access to additional loans and grants to help
bolster exports. This is particularly important where the United States has FTAs with countries
that have financing problems.

Import Issues

While U.S. textile manufacturers welcome these initiatives, they are more concerned about the
high level of imports, which they say can never be offset by increasing exports. In the five-year
period preceding the recession, textile and apparel exports averaged around $18 billion, while
imports rose from more than $83 billion in 2004 to $93 billion in 2008. During that period, textile
and apparel employment fell from 698,000 to 406,000.

Textile industry lobbyists continue to focus on the need for the Obama administration and
Congress to address what they see as currency manipulation by China and other countries, which they
view as an illegal subsidy for their exports. In the pre-recession five years, China’s textile and
apparel exports to the United States rose from $14.5 billion in 2004 to $32.6 billion in 2008. In
addition to the need to address the currency issue, the National Council of Textile Organizations
says other subsidies must be eliminated, and the government needs to help find ways to facilitate
increased access to credit and other financing for exports.

Labor Reform Legislation Sidelined By Congress

One of organized labor’s top priorities, the Employee Free Choice Act (EFCA), has been
sidelined and is unlikely to resurface any time soon in its original form, if at all. With the
election of President Obama and control of both the House of Representatives and the Senate in the
hands of Democrats, organized labor was bullish on the chances for its long-sought legislation that
would bring about major changes in the way union-organizing elections are conducted. The
centerpiece of EFCA is the so-called “card check” that would authorize the National Labor Relations
Board to recognize a union if more than 50 percent of workers signed cards voting for a union. The
legislation also shortens the time for organizing efforts, imposes $20,000 fines on employers found
guilty of violating worker rights during an organizing campaign and provides for federal
arbitration if companies and unions are not able to agree on certification.

In 2007, the House passed a form of free choice legislation only to have it blocked by a
Republican-led filibuster. Following last year’s election, supporters of the legislation felt they
might have the votes to get the legislation passed in the current session, but nothing happened, as
the Obama administration had higher priorities. Hopes for passage of the legislation were further
dimmed by the Democrats’ loss of their 60-member margin to override filibusters, but in the case of
this legislation, support from conservative Democrats is not a sure thing. Business opponents of
the legislation say it would deny workers’ rights to privacy and violate the democratic process of
a secret ballot. On the other hand, the bill’s supporters say it would prevent intimidation of
workers during an organizing effort and stop efforts to thwart elections with delaying tactics.

There were reports late last summer that supporters of the legislation were willing to give
up the card check in order to get other elements of the bill, including the establishment of
timetables, arbitration and stiff penalties for violations of worker rights. That did not exactly
fly with labor leaders, and nothing happened. The fact that President Obama did not even mention
EFCA in his State of the Union address was a matter of additional concern, but Eddie Vale, a
spokesman for the AFL-CIO, says the act is still one of labor’s top priorities, and “we still think
we can get it done.”

March/April 2010