NEW YORK — “We’re the only suckers in the free-trade game.”

Those pithy words, referring to the U.S., came from Wilbur L. Ross, the investor who has agreed to buy Burlington Industries Inc. out of bankruptcy.

The chairman and chief executive officer of New York investment concern W.L. Ross & Co. said he has a crystal-clear idea of why the industries in which he’s chosen to invest, most recently textiles and steel, have fallen on hard times. It’s not because U.S. companies can’t stand toe-to-toe with manufacturers in China, Mexico or elsewhere in the world. Rather, he contended, it’s because the leaders of the U.S. — the “suckers” in this case — are failing to enforce the terms of major trade agreements and grossly underestimating the danger the economy faces as a result of plummeting manufacturing employment.

“The mantra of ‘free trade’ has totally hypnotized the American press and a lot of the politicians,” Ross said last week in an interview at his office on Manhattan’s East Side. “The problem with free trade isn’t the theory. The theory is a right theory. Every country should export whatever it can make most efficiently. It should import what it can’t make efficiently. The unfortunate truth is that everyone uses the slogan ‘free trade,’ but it’s only been the U.S. that’s been practicing it.”

What Ross was complaining about was the widely echoed accusation that through tricks ranging from currency manipulation and transshipment to government subsidization of private industry, other countries are undercutting the rules of commerce, a practice he refers to as “foul trade.”

As phrases like that suggest, Ross has something of a political bent. At a time when the U.S. textile industry is fighting desperately for its survival, the man buying his way in has a strategy for how the industry can pick up some political clout. As reported, Ross has agreed to buy bankrupt Burlington for $620.1 million, in a deal that’s expected to close by October.

Recognizing the desperate situation — with imports from China surging and poised to grow even more sharply in 2005, after the 146 nations of the World Trade Organization drop quotas on textiles and apparel — the organizations that represent the diverse components of the U.S. textile industry have begun to put aside their differences and lobby together. Groups representing mills, yarns spinners, dyers, fiber makers and so forth have agreed to join forces to push the Bush administration to invoke the safeguard provisions of the China-U.S. trade pact that cleared the way for China to join the WTO.But Ross is thinking of a bigger alliance. He looks at the troubles of the steel industry — which he takes quite seriously since he’s chairman of International Steel Group —and the worries of agricultural interests, and thinks it’s time for more industries to join forces.

“We’re waging a trade war on a variety of fronts, but I think there is a reason why our individual industries have been ineffective,” he said. “Take steel — steel is important for Ohio, Indiana, Michigan, Pennsylvania, New York and Maryland, and that’s a number of electoral votes. But it’s a long ways from the control of the Senate or anything else. Look at the map of textiles [which would show primarily Southeastern states]. It’s a different map. Look at the map of agriculture [primarily the Midwest and Great Plains]. It’s a little closer to the textile map, not too close to steel.”

Ross’ idea is for lobbyists for the textile, steel and agriculture sectors to join forces in Washington to support each sector’s trade agendas.

“I don’t believe that there’s any congressman from Ohio who’s going to lose his seat for helping the textile industry,” he said. “I don’t believe there’s any congressman from Georgia who’s going to lose his seat for helping the steel industry.”

Ross has a reason why he thinks it’s necessary for these disparate industries to join forces: It’s literally them against the world.

He said, whether in Washington or the Geneva home of the World Trade Organization, trade officials and lobbyists from scores of countries have one objective in mind: increasing their access to the U.S. market.

“So what you have is six or eight American companies on the one hand fighting the whole rest of the world on the other,” he said. “That’s not an even fight.”

To Ross’ thinking, the stakes are much higher than the future of any of the three industries. He contends that the loss of manufacturing jobs threatens the whole U.S. economy, and he asserts that unless the U.S. does something to stem its growing trade deficit, the nation will be putting itself at risk.“What’s at issue is the U.S. standard of living,” he said. “If we don’t have manufacturing in this country, we’re not going to have much of a standard of living, and if you have a 5 percent trade deficit [as a percentage of GDP], it’s unsustainable. There’s no major economy that’s ever had a 5 percent trade deficit for a long period of time without their economy collapsing.”

According to U.S. Census Bureau data, last year the country recorded a seasonally adjusted $418.04 billion trade deficit — with a $482.87 billion balance of imports in goods greatly outweighing a $64.83 billion balance of exports of services. (The balance figures are created by taking the total value of imported goods and services and subtracting the total value of exported goods and services. If the value of imports exceeds the value of exports, there is a trade deficit.) Through June of this year, the trade deficit was running ahead of last year’s figures by 25.3 percent, with net imports of goods growing while net exports of services declined.

U.S. government data showed the nation’s gross domestic product last year coming to $10.59 trillion. Dividing the total GDP by the value of the trade deficit shows that last year the deficit equalled 3.9 percent of GDP. With a 25 percent growth rate in the deficit drastically outpacing low-single-digit percentage GDP growth, Ross’ estimate of the U.S. trade deficit’s growing to reach 5 percent of the GDP appears mathematically sound.

Ross noted that the sharp downturn in the U.S. manufacturing sector, which began in the late Nineties — though the textile and apparel industries had been in decline for over a decade — coincides with the point when the trade deficit began to grow sharply. Through the mid-Nineties, the trade deficit had averaged $100 billion a year.

To his thinking, the growth of a trade deficit — and the ensuing loss of manufacturing jobs — bodes poorly for economic recovery.

“The real danger is that this is not a cyclical thing, which is what the economists are thinking, that the economy got bad, people lost jobs, [and] if you stimulate the economy, they’ll come back,” Ross explained. “That doesn’t work if the factory has closed. It simply doesn’t work. So what’s really been happening is we’ve been exporting jobs instead of products.”According to the Bureau of Labor Statistics, total manufacturing employment in July stood at 14.6 million, off 15.6 percent from its last peak of 17.3 million in July 2000. For comparison, in June, combined textile and apparel mill manufacturing employment stood at 585,300, off 33.5 percent from the same month in 2000.

U.S. unemployment in July stood at 6.2 percent, according to government statistics. Ross contended that eliminating the trade deficit could wipe out unemployment — though economists often argue that some small degree of unemployment, in the low-single-digit percentages, is unavoidable and somewhat desirable in a market economy.

Ross said that economists have found that each dollar of manufacturing sales has a “multiplier effect” of 2.43, which means that for each $1 worth of manufactured goods created, demand for another $1.43 million in supporting goods and services — from tools to build things to haircuts for factory workers — is created.

Given last year’s $482.87 billion trade deficit of imported goods, that means $1.173 trillion in “downward pressure” on the economy.

“The economy would be 12 percent bigger if we would just trade break-even,” Ross said. “If the economy were about 6 percent bigger, just half of that, we wouldn’t have much unemployment at all.”

Venturing out onto a speculative limb, Ross said he believed that 20 percent of the goods that the U.S. imports are imported illegally — either by being transshipped illegally or by being dumped at prices lower than the real costs of production, for instance.

“We don’t necessarily need new trade barriers; what we need to do is to enforce our treaties,” he said. “To get there, unfortunately, we’re going to have to come to grips with the WTO.”

He noted that the WTO has regularly struck down steps that wealthy nations have taken to limit illegal imports. Most recently, the WTO declared that tariffs the Bush administration imposed on imported steel to prevent dumping were illegal, though the administration has vowed to appeal.

Ross said he believes the structure of the WTO, in which each member nation gets a single vote equal to each other nation, does not tend to promote fair trade.“What it really means is that of the 146 members, 145 have one major objective — to improve their trade balance with the U.S.,” he said. “So we’re the odd man out on every single decision.”

To solve that problem, he argued, the U.S. needs to be willing to fight WTO decisions or act unilaterally. He noted the U.S. has bucked the United Nations at times — most recently in deciding to invade Iraq without U.N. support.

“When we didn’t get the vote we wanted to in the U.N., the President said to the U.N., ‘Go fly a kite, we’re going to do what we’re going to do,’” Ross said. “If the WTO knew that we weren’t going to put up with this anymore, they would have to start to change.”

He added, “The WTO should really be called the Wealth Transfer Operation, out of the U.S., because that’s what it’s done.”

But Ross emphasized that he didn’t want the WTO disbanded. He said, “I don’t think there’s anything wrong with the concept of a WTO. You should have some sort of multinational body to enforce trade rules. I think that’s a valid concept. I just think the way that it’s structured guarantees that it won’t make the right decisions.”

Ross said he’d like to see the Bush administration offer a similar support package to the textile industry to what it has done for steel makers. Bush imposed protective tariffs on dumped steel that phase out over three years. That’s supposed to be enough time for the domestic steel industry to reinvent itself and be ready to compete on a global trading field.

“I don’t know enough about all the details of textiles to know if that exact idea would work, but certainly the textile industry is a very fragmented industry,” he said.

Ross has played a major role in the industry’s reinvention over the past 17 months, assembling a $1.39 billion firm called International Steel Group out of the wreckage of three bankrupt companies. His Richfield, Ohio-based firm last month filed a prospectus in anticipation of a coming initial public offering.In addition to making a political push, Ross acknowledged that the U.S. textile industry will need some structural changes. But he said he thinks the timing is right for that.

“Rationalization of the textile industry is starting to become feasible because you have so many of the big players in bankruptcy,” he said, “and bankruptcy is the one time when you really get a chance to reinvent yourself.”

Ross said he believes some sort of government intervention on the part of the domestic industry is desperately needed.

“If nothing changes between now and 2004 [when, on Dec. 31, the quotas will be dropped], you will have only a tiny fragment of the present industry surviving,” he said. “They are just not ready and I don’t think they can get ready. I think they probably need another year or two, if everybody in the industry really pulls together and really commits to do what steel is doing. They can’t turn around as big an industry as textiles is and as sick an industry as it is in another 12 months. It’s just not realistic.”

Given that quotas have been phasing out for the last eight years under the WTO’s Agreement on Textiles & Clothing and that, during all that time, developing nations have been lobbying aggressively to have the phaseout speeded up, Ross acknowledged that he’s not sure if extending the final phaseout is an achievable political goal. But he said it’s something the U.S. should think about.

“It’s an overall economic problem. This is not a problem peculiar to the textile industry,” he said. “The exportation of jobs isn’t going to stop. Now you’re starting to have call centers and software development and tons of things starting to move offshore. So unless the vision for the future of America is we’re all on welfare and our great-grandchildren are diving for coins tossed into the East River from cruise ships by foreigners, unless that’s the vision of America, we have to do something to try and help industries that have a will to survive and to get there.”

He admitted he hasn’t yet gone fully to work on trying to assemble the textile-steel-agriculture lobby, partly because his purchase of Burlington hasn’t yet closed. But he said that he thinks next year will be a prime opportunity to put this case before the public, given the coming presidential election, the overall concerns about economic recovery and the impending end of quotas.“The key will be if we can get this coalition together because if we can put enough electoral strength together, then everybody will have to listen,” he said.

Ross said he’s looking for allies.

“Roger Milliken, I understand, is thinking very much the same way,” he said. “I haven’t hooked up with him yet, but I would very much like to.”

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