WASHINGTON — U.S. textile groups said Wednesday that a comprehensive climate change and energy bill the House is slated to take up as early as Friday could lead to substantially higher operating costs, putting domestic producers at a disadvantage against global competitors.
This story first appeared in the June 25, 2009 issue of WWD. Subscribe Today.
The climate change bill is a chief pillar of President Obama’s agenda and he ramped up an intense lobbying effort this week to garner lawmakers’ support.
“This week, the House of Representatives is moving ahead on historic legislation that will transform the way we produce and use energy in America,” Obama said at a news conference Tuesday. “It is legislation that will finally spark a clean energy transformation that will reduce our dependence on foreign oil and confront the carbon pollution that threatens our planet.”
But prominent textile trade groups, including the National Council of Textile Organizations, American Manufacturing Trade Action Coalition and National Textile Association, came out in opposition to the bill, in a letter to Congress on Wednesday.
“As an industry that is heavily reliant on low-cost energy to produce more than $16 billion in exports, this bill would cause an undue financial strain through the increased costs of regulations with respect to the escalating demand (and therefore price) for natural gas, our main energy source, which has a carbon advantage over other main energy sources, as well as our coal-reliant energy utilities,” the textile groups wrote.
The associations are pressing lawmakers to make two changes in the draft of the bill: extend emissions allowances that are reserved for energy-intensive industries, such as steel and cement, to the textile industry, and establish a mandatory “border-adjustment” tariff to be imposed on imported products made in countries that fail to adhere to the same new emissions regulations imposed on U.S. companies.
“One of our remaining competitive areas is the cost of energy in the U.S.,” said Cass Johnson, president of the NCTO. “It is relatively lower than a lot of other countries, but this bill could raise our costs 15 to 20 percent, and that will eliminate that advantage and easily put textile mills out of business.”
Auggie Tantillo, executive director of AMTAC, said, “Some of the biggest violators of the environment are manufacturers in the Third World and if we don’t equalize that in some fashion, we’ll be handing over 10 million more jobs.”
But Stephen Lamar, executive vice president of the American Apparel & Footwear Association, which has not taken a position on the bill, said a border adjustment import tariff could run afoul of World Trade Organization rules, potentially spark a trade war and also penalize “good players trying to mitigate their carbon footprint” while making apparel in foreign countries.