The American Textile Industry is a Victim of Failed Trade Policy
The American textile industry is slowly dying, and U.S. free trade policy is killing it.
NBC local affiliate WSLS 10 in Roanoke, Virginia, recently detailed the loss of Dan River Inc., a textile factory going out of business because it can no longer compete against foreign competition.
The company is hardly unique, however. The entire industry has been decimated by American trade policies that allow for an influx of cheap imports.
The textile industry has been a historically vital part of the nation’s economy. Employing over 600,000 Americans in 2005 alone, the industry contributed $23 billion to the nation’s gross domestic product. Competing with nations like China and Vietnam due to America’s trade policy has taken its toll on the industry, though.
From 1997 to 2010, 1,298 textile mills closed, according to the National Council of Textile Organizations. Most of those closings were in North Carolina, South Carolina, Georgia and Virginia, but factories across the country have also closed. And in the five year period between 2004 and 2009, a seasonally adjusted 39.4 percent of the industry’s jobs were lost.
“We like to ask a simple question,” Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, told WSLS. “Is a country made great by what it consumes or what it produces?”
American policymakers apparently decided that the former was more important. In 1994, officials signed the Agreement on Textile and Clothing. The agreement phased out export restrictions over the course of 10 years. It allowed the first wave of cheap imports from undeveloped countries.
Later that year, the U.S. also entered the North American Free Trade Agreement. It allowed for cheap imports from Mexico. It also gave American textile companies incentive to move production south of the border at a lower cost while still having duty-free access to the U.S. market.
“The Washington gurus decided that it was in the best interest of the country to sacrifice textile and garment industries for high-tech industries,” Linwood Wright, a former company official, told WSLS.
Then, in 2001, with the help of U.S. officials, China was ushered into the World Trade Organization. China had been importing textiles into the U.S. for years by that point – often illegally through third parties to avoid tariffs. But after entering the WTO, Chinese textile manufacturers could ship duty-free directly to the U.S.
Given the fact that the Chinese government strictly controls and subsidizes nearly every part of the production chain, American textile manufacturers were hard-pressed to compete.
Chinese textile companies also had the added benefit of selling their wares directly to big box chains like Wal-Mart, which have major influence on market prices.
“You paid more than that dollar you saved. Look at the social costs and economic costs to the country as a whole. It’s not such a good deal,” Tantillo said. “But that’s the argument where Dan River is the perfect example.”
The latest blow could be struck in the form of the Trans-Pacific Partnership. The agreement would provide the Vietnamese textile industry with duty-free access into the U.S. market.
“NCTO is strongly opposed to the inclusion of Vietnam in the TPP agreement because it would mean the loss of tens of thousands of U.S. textile export jobs in this country,” Cass Johnson, President of the NCTO said in a press release.