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By Auggie Tantillo
The American Manufacturing Trade Action Coalition (AMTAC) had a productive and busy year in 2003. The organization doubled in size and launched a Web site, www.amtacdc.org.
By the numbers, 2003 was not a good year for the U.S. textile and apparel industry. 93,400 U.S. textile and apparel manufacturing jobs disappeared. World imports to the United States are up almost 12 percent and imports from China are up nearly 75 percent. Pillowtex - one of the most prominent companies in the U.S. textile industry - ceased operations.
The Federal Reserve reported that seasonally adjusted production at U.S. textile firms fell by -1.3 percent in December 2003 and by -7.5 percent for the year. From 1995 to 2003, a time when domestic demand for textile products has shown strong growth, U.S. textile production fell by an unprecedented -24.6 percent. This contrasts remarkably with the 1985 to 1994 time period when U.S. textile production increased by 28.4 percent.
The apparel industry experienced a similar decline in production, according to the Federal Reserve. Seasonally adjusted production at U.S. apparel manufacturing firms dropped by -1.8 percent in December 2003 and plunged by -13.4 percent overall. Apparel output plummeted by an unprecedented -44.1 percent between 1995 and 2003, also a period of strong growth in U.S. consumer demand for apparel products. In contrast, apparel production increased slightly from 1985 to 1994.
The results of the decline in production are grim. Imported goods have captured all growth in U.S. demand for textile and apparel products during the 1995-2003 time frame. Furthermore, imports also have displaced almost 25 percent of previous U.S. production of textiles and 44 percent of previous production of apparel.
Finally, the Federal Reserve observed that U.S. textile mills ended December using only 71.5 percent of their productive capacity, down from 74.8 percent one year ago. Apparel manufacturers were able to use only 64 percent of their capacity, down from 67.2 percent one year ago.
These numbers suggest that, despite a sharp reduction in the productive capacity of textile and apparel firms in recent years and the loss of a very substantial number of jobs, further major reductions in industry capacity and jobs should be expected over the coming months.
For the first time in more than a decade, the U.S. textile industry, from yarn, fiber, and fabric manufacturers to unionized apparel workers, agreed to work together to fight for common legislative goals. These goals included implementing the special textile China safeguard, opposing tariff preference levels (TPLs) and other loopholes in future free trade agreements that would reduce the market share of domestic textile manufacturers, and opposing any reduction of U.S. textile and apparel tariffs.
The impact of the industry's unity in Washington has been enormous. Prior to the industry coming together, it took the U.S. government nearly 18 months U.S. to publish the special textile China safeguard procedures. After the industry came together, it only took two months to file China safeguard petitions.
The China safeguard coalition then garnered the support of more than 170 U.S. senators and representatives and persuaded the Bush Administration to invoke the special textile China safeguard on knit fabric, brassieres and dressing gowns just four months later.
AMTAC now is pushing for the U.S. government to negotiate a comprehensive textile bilateral with China. Total Chinese imports under the MFA are up 340 percent since January 1, 2002. Moreover, China is expected to capture 70 to 75 percent U.S. market share after quotas expire in 2004.
AMTAC believes that if the U.S. government does not act to stem the tide of Chinese imports during the 2004 election year, then there is little reason to hope that they will implement the safeguard in a comprehensive fashion in 2005.
On the trade policy front, the U.S. government continued to sign highly damaging trade deals that cost the U.S. textile industry domestic market share.
In April, the U.S. government signed a textile bilateral agreement with Vietnam, a country that is not a member of the WTO and does not have a market economy. This deal granted Vietnam the largest quota in a single category in the history of the MFA program - 168 million knit shirts.
To add insult to injury, U.S. Customs discovered substantial illegal textile transshipments from Vietnam during the final stages of negotiations. Vietnamese quotas are supposed to be reduced by the amount of the illegal transshipments, but U.S. Customs has thus far failed to report the final results of their investigation. AMTAC is pressing for a speedy resolution of this matter.
In late December, the United States announced a Central American Free Trade Agreement (CAFTA). The CAFTA's job-destroying loopholes include a 100 million square meter TPL for Nicaragua, cumulation for Mexico and Canada and single-step transformation for boxers, brassieres and pajamas.
Moreover, additional damaging provisions could come from the almost certain inclusion of Costa Rica and the Dominican Republic into the deal. Industry analysis predicts that these provisions will force the closure of a minimum of 10 to 15 textile mills and ship 500 to 700 million square meters of textile production offshore.
AMTAC will muster every resource at its disposal to defeat CAFTA. If early indications prove true, the White House will have a difficult time ramming CAFTA through Congress. Other non-textile manufacturing trade associations and significant segments of the agriculture community are expected to join the textile industry in opposition to CAFTA.
The U.S. government also failed in its efforts to obtain an agreement in Cancun to move the Doha Round of WTO talks forward. AMTAC was pleased at the collapse of the talks, because a successful round would likely have led to the reduction or elimination of U.S. textile tariffs.
AMTAC played a key role in stopping efforts by the U.S. Congress in 2003 to grant tax breaks to offshore manufacturing interests at the expense of domestic manufacturers. The European Union successfully petitioned the WTO to declare certain U.S. export tax incentives illegal. The United States now has until early spring to pass a new tax bill before the Europeans levy sanctions.
Instead of giving tax breaks to offshore manufacturers, AMTAC strongly supports modifying the 2003 proposal to redirect all benefits from the new bill to domestic manufacturers.
Finally, AMTAC supported the efforts of House Armed Services Committee Chairman Duncan Hunter (R-CA) to preserve the Berry Amendment and strengthen the military's Buy American programs. AMTAC will work closely with Chairman Hunter and other manufacturing sectors to expand Buy American in the 2004 appropriations process.
If the U.S. textile industry remains united and works hard, significant policy accomplishments can be achieved in Washington, DC, in 2004. If this happens, prospects will brighten considerably for a revived U.S. textile industry in 2005 and the years beyond.
Auggie Tantillo is Washington coordinator for the American Manufacturing Trade Action Coalition (AMTAC).
