LEONARD: BALANCING TRADE AND JOBS
Byline: Kristi Ellis
WASHINGTON — Jim Leonard has studied hundreds of mathematical and statistical models, but he might need a new one to find the right balance between the pull of protectionism and the push for globalization.
Leonard, 62, a textile veteran with a master’s degree in mathematics, is stepping into the position of deputy assistant secretary of textiles, apparel and consumer goods at the Commerce Department as the clock ticks down on the phaseout of quotas on textiles and apparel.
It is a mission his peers said he is well equipped to handle.
“He brings his many years of experience to the job, so there is no learning curve for Mr. Leonard,” said Charles Bremer, director of international trade at the American Textile Manufacturers Institute. “You don’t have to send him on any plant tours.”
Leonard is credited for his understanding of the minutiae of the quota program, as well as for his insight into the broader, conflicting interests of the domestic textile industry and retailers, importers and manufacturers.
“One of the things that helped me make the decision to take this job was for the first time in 20 some years I believed the administration was serious about its commitments [to minimize the impact on the domestic textile industry],” he said.
“Are they going to do everything the [textile] industry wants,” he asked, then answered ‘no’ to the question himself. “But they are going to adhere to the commitments they’ve made.”
The administration is backing its promises by sending high level officials such as his boss, Commerce Secretary Donald Evans, to southern textile states to address executives’ concerns, he said.
A new interagency task force comprised of officials from Commerce, Treasury, Justice, the U.S. Trade Representative and the Committee For the Implementation of Textile Agreements is charged with finding ways through trade policy and Customs enforcement to make the domestic textile industry competitive again.
Leonard, who is chair of CITA and will also participate in the new task force, known as the Textile Working Group, said it will focus on worker assistance and trade remedies and transshipments.
CITA, which is part of Commerce, was created during the Nixon administration and oversees U.S. textile-trade policy. It is an interagency group that supervises the implementation of all textile and apparel trade pacts arranged by the special textile negotiator and it also administers the phaseout of textiles and apparel quotas on WTO countries.
“[The task force] is bigger than CITA,” said Leonard. “It covers a broader range of issues, goes to a higher level and it gets more people involved.”
Leonard’s appointment comes at a time when the Bush administration is looking to demonstrate support for the textile industry and as several Republican House lawmakers are under fire for votes on Bush trade issues. Leonard, who worked for Burlington Industries for 35 years and assisted the company’s lobbying efforts here on trade legislation for 20 years, has a lot to say about the malaise of the beleaguered domestic industry.
Textiles and public service are a family tradition. His great uncle, Luther H. Hodges, spent 29 years in the textile industry as an executive at Marshall Field textile plants, before beginning a career in public service. President John F. Kennedy appointed Hodges Secretary of Commerce in 1962, where he worked to improve relations between business and government. He resigned under Lyndon B. Johnson in 1965.
Leonard fell into his 35-year career, most recently as a consultant, in textiles with Burlington quite by accident. He answered a phone call for his college roommate by a Burlington recruiter and ended up getting the job — his roommate didn’t — in the company’s operations research department on the strength of his undergraduate degree in mathematics from North Carolina State University.
“This group looked at everything you can think of that impacts the textile industry, except finances,” said Leonard. “I could tell you what wages were paid in every state, what imports were and how much cotton and polyester cost.”
Today, most textile companies can’t afford to run 200- to 300-person research departments. In matters of trade, textile mills have also cut back on the number of government advisers who fight for their positions during trade negotiations.
“I can remember when we went on these bilateral [trade negotiations], we would have 15 to 20 advisers and now there are just a few people who do that sort of thing,” he said. “Companies have gone out of business or cut back, and while trade is still important, it’s important in a different context than it was.”
In the span of 20 years, which is the amount of time he advised on trade negotiations around the world, the textile industry has gone through a painful transformation. In the past four years alone, employment has plunged from 611,000 in 1997 to 442,000 in 2001, according to the ATMI.
Leonard’s biggest achievement as an adviser for Burlington, according to many industry insiders, was his two-year fight to protect the domestic wool sector from imports.
“He and he alone fought on behalf of the entire wool textile industry and he was victorious on most occasions, but not all,” said ATMI’s Bremer.
But he was also involved in other monumental trade liberalization moves, including: two rounds of renegotiations of the Multi-Fiber Arrangement, the Uruguay Round of negotiations, which took seven years and established the World Trade Organization, and NAFTA.
Despite the fact that Burlington has, like so many other textile companies, filed for bankruptcy, Leonard still believes in the benefits of trade pacts such as NAFTA.
“You have to work at [reaping the benefits],” he said. “You can’t wait for NAFTA and CBI [Caribbean Basin Initiative] to be signed and wait for the [locals] to come to your door.”
“For commodity kinds of products, which the U.S. textile industry doesn’t do much of anymore, there isn’t much in it for the textile industry,” said Leonard of preferential trade agreements. “For what I call differentiated products, we can get better delivery, quality and a quicker response out of Mexico or the Caribbean.”
Leonard also stressed the importance of niche markets, although he acknowledged textile executives have been talking about it for the past 20 years.
As he settles into his first month on the job, Leonard will also have to focus on the flip side of the issues with importers, retailers and manufacturers. His textile background concerns many proponents of free trade, but most consider him a fair negotiator.
“He understood the realities and negotiating dynamic, and that is that the industry can’t always get what it wants,” said Ron Sorini, the former U.S. chief textile negotiator during the NAFTA talks who listened to Leonard’s arguments.
Sorini, who is now president of trade negotiations and legislative affairs at law firm Sandler & Travis, which has a large importer clientele, said, “You have to pick and decide your priorities and structure the best possible deal, and Jim was always open-minded and willing to do that.”
Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said she hopes some of the attention in the future shifts toward export trade promotion, which is also an area Leonard oversees.
“Mr. Leonard understands the importance of U.S. companies taking a global perspective,” she said.
Hughes said Leonard, as a former adviser, will also be “sensitive” to importers’ concerns about the advisory process, which she said hasn’t worked smoothly.
“He agreed with us there have been times everyone is frustrated they haven’t had the opportunity to present their views to U.S. officials before a decision [proposal] is made,” she said.
The White House even questioned his textile background during his interview for the job.
“When I had my interview with the White House personnel people, one of the questions they asked me was how I could implement the President’s trade policy after having spent 35 years in the protectionist textile industry,” said Leonard. “I have to look at things from both sides now, given the administration’s trade policy, and I know it’s going to be a balancing act.”
As the administration continues negotiations this year on free-trade agreements with Singapore and Chile and delves into a new round of trade negotiations in the World Trade Organization, Leonard will play an increasingly important role.
“The whole point is that the textile industry has to get more proactive,” said Leonard.
He provided a glimpse of just how difficult it will be to strike a balance.
In the case of a U.S.-Singapore Free Trade Agreement, Leonard said he supports a strong “yarn forward” rule of origin, which is opposed by importers and retailers, though he understands that Singapore is not in close proximity to the U.S.
He acknowledged that in some cases under the African Growth & Opportunity Act, some countries are allowed to use third-country fabric.
“But we don’t want to create a situation where the U.S. has no potential input,” he added “The U.S. industry would object to any situation where nothing is in it for them.”
The other outstanding issue is whether the U.S. will seek to negotiate a bilateral textile agreement with Vietnam, something the domestic textile industry strongly supports and importers and retailers strongly oppose. Special Textile Negotiator David Spooner is currently mulling it over and negotiations have not begun, but Leonard said there will “most likely” be some sort of textile agreement with Vietnam.
“I don’t have any idea what form it will take but it will probably occur now that we have an overall trade agreement with them,” he said.
Perhaps the biggest challenge facing Leonard is the quota phaseout on textiles and apparel, which will end on Dec. 31, 2004. Come 2005, the entire textile industry will lose that layer of protection and, at the same time, the role of CITA will change.
Some speculate CITA will be downsized or restructured, though most admit it will still be relevant in terms of export promotion and monitoring Uruguay Round agreements.
“The textile industry is not going to go away,” claimed Leonard. “Companies who are making major changes in the way they operate in preparation for this will continue.”
At the end of the day, Leonard will use his skills of compromise to find the most amenable solutions.
“It’s the real world,” he said. “We are not going to be able to come up with something that makes everyone happy, but I think we can work toward trying to minimize the pain for both sides.”