WASHINGTON — On the campaign trail, presumptive Democratic presidential nominee Sen. John Kerry rejects the antitrade, protectionist label slapped on him by his Republican opponent, President Bush.
Likewise, Bush bristles at Kerry’s accusations that the President turns a “blind eye” to foreign countries violating trade agreements at the expense of U.S. workers losing jobs to overseas competition.
Moving beyond campaign finger-pointing and looking at Bush’s three and a half years in the White House and Kerry’s nearly 20-year Senate voting record, distinctions between the candidates on international trade policy aren’t clear-cut. That’s particularly true in the arena of apparel and textile trade policy, and the political high-wire act of balancing the benefits of imports and the interests of U.S. textile producers besieged by foreign competition.
While executives on the import-driven and domestic production sides of the industry have some complaints about Bush’s policies, they also suggested that political concerns are causing Kerry to rethink his positions on international trade. Kerry’s GOP detractors argue the candidate, under pressure from his organized labor backers, is forsaking the pro-trade credentials he burnished in the Senate.
The trade agenda of both candidates, such as how they view imposing quotas on low-cost Chinese apparel and textile imports to protect U.S. manufacturers, is of keen interest to several corners of the fashion industry, particularly retailers who rely on foreign producers for about 90 percent of garments sold in the U.S.
Although the twin industries have lost some 340,000 jobs since Bush took office, the sectors still employ 713,000 workers — a large enough constituency to engender political attention, especially in the context of the larger issue of the economy shedding more than 2.6 million total manufacturing jobs since 2001.
“Economic issues, including trade, will be the issue to decide the election,” said Ron Sorini, an apparel importer lobbyist and consultant who was a U.S. textile negotiator in the administration of the first President Bush.
By election day, Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, expects both candidates to make overtures to help the U.S. textile sector, a constituency heavily clustered in the South, which backed Bush in 2000. But Hughes doesn’t expect either candidate to be concrete in his proposals and thinks both will instead straddle the middle ground.
Hughes doesn’t foresee either candidate wanting to alienate trade-reliant constituencies like retailers by making “commitments to impose quotas on certain products or at any specific date” from China. Under World Trade Organization rules, China’s trade can be restricted if countries can prove that surges of its imports harm domestic producers.
Kerry, whose political contributors from the fashion and retail industries include executives at J. Crew, Revlon, Chanel and Costco Wholesale Corp., and who has Berkshire Hathaway chief executive officer Warren Buffett in his camp, was generally counted on by the business community to support international trade pacts before the Massachusetts senator entered the presidential race. For example, Kerry voted for the North American Free Trade Agreement, the creation of the WTO, China being granted permanent normal trade-relation status with the U.S. and legislation dropping apparel duty for sub-Saharan Africa and the Caribbean Basin.
However, Kerry now qualifies his vision of how he wants to promote global commerce. For example, he has proposed eliminating some tax breaks for U.S. companies with operations abroad, an idea some economists have said would hurt corporations.
Kerry also said that, upon assuming office, he would undertake a 120-day review of trade pacts for instances of noncompliance and enforcement of labor and environmental standards. In addition, he would scrap the recently negotiated free-trade pact with Central America — opposed by domestic textile mills but supported by retailers — citing the absence of enforceable labor and environmental standards, which he would also require in future trade agreements.
Kerry’s “commitment to free trade is somewhat questionable,” Vice President Dick Cheney said last month, according to prepared campaign remarks delivered before 800 Wal-Mart distribution center workers in Bentonville, Ark. Cheney chided the candidate for “trying to re-create himself as an entrepreneurial Democrat,” a characterization rejected by Kerry, who has made small business a cause in his Senate career.
But Bush also has had his lapses in toeing a strict free-trade stance during his administration. The President — who enjoys wider support in the business community than Kerry in terms of political contributions, which include donations from executives at Gap Inc., Limited Brands, Target Stores, Federated Department Stores, Jockey International and St. John Knits — peppers his remarks on international trade with calls for fairness and considers trade a key to U.S. and global economic growth. At the same time, Bush’s ambitious agenda at the WTO to eliminate tariffs on all manufactured goods globally over 15 years, and a list of free-trade pacts completed or being negotiated, is unprecedented for a U.S. president.
However, early in his administration, Bush imposed quotas on foreign steel, at the request of ailing U.S. producers looking for temporary protections in order to regroup. The move was widely criticized by free-trade proponents as a maneuver by the White House to shore up support in battleground states leading up to the 2002 Congressional elections, when the GOP successfully defended its majority control in Congress.
In another move seen as counter to his free-trade principles, Bush signed the 2002 Farm Bill with $190 billion in farm subsidies over 10 years, including those for cotton, which a WTO panel recently declared in a preliminary decision to be against fair-trade principles.
In a trade-limiting move questioned by retailers and other importers, Bush last year agreed to impose temporary safeguard quotas on three categories of Chinese apparel and textile imports with huge market gains, a move requested by U.S. textile mills.
The Bush administration as recently as April reaffirmed its commitment to stand by the long-planned Jan. 1 elimination of quotas on apparel and textiles among WTO members. At the time, Commerce Undersecretary Grant Aldonas said the administration would continue to judge on a case-by-case basis the necessity of individually imposing quotas on Chinese imports, under a safeguard provision.
Retailers and importers were also pleased by the administration’s rejection this month of an organized labor petition to levy tariffs on Chinese imports for alleged worker abuses there.
Mary-Brown Brewer, a spokeswoman for the Commerce Department, insisted the administration has worked with both sides closely and given them equal access.
“We try to get the sides to come together to come to a cohesive position they can all support,” Brewer said, pointing to a big effort on the part of Commerce to convene meetings during the CAFTA negotiations.
Brewer placed more of an emphasis on the administration’s efforts to help the domestic textile industry than she did on importers and retailers. A two-page summary of highlights attempting to illustrate how the administration has helped the textile industry included the imposition of safeguard quotas on China; pressuring Egypt to lower its duties on U.S. textile exports; sponsoring trade missions, international trade shows and export expansion programs; enforcing intellectual property rights and establishing a task force to address piracy concerns.
Bush has “had his ups and downs” on trade policy, acknowledged Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, but “on balance, this administration has done a great deal to further the cause of free trade.” In contrast, Burke considers Kerry on the campaign trail to be sullying his Senate free-trade record.
Burke said a “real test” for Bush’s trade tenets this election year will be whether the President will send CAFTA to Congress and lobby lawmakers for passage. Apparel importers view CAFTA as key to maintaining a sizable slice of garment production in the Western Hemisphere, while using U.S. textile inputs and preserving American mill jobs. However, CAFTA backers are nervous the touchy election year topic of trade’s mixed impact on jobs could forestall an all-out Bush fight for the agreement.
Keeping CAFTA on the back burner is just fine for the apparel union UNITE, whose president, Bruce Raynor, has Kerry’s ear. Chris Chafe, UNITE’s political director, said the candidate and Raynor have talked in person once and on the telephone “pretty regularly” during the last year about balancing U.S. manufacturing and international trade interests. Kerry “clearly gets our issues,” Chafe said, making a contrast to Bush.
However, given Bush’s and Kerry’s mixed records on trade policy, “I question…whether the trade policy in a Kerry or Bush presidency would be substantially that much different,” said Erik Autor, vice president and international trade counsel with the National Retail Federation.
Autor said a factor shaping any president’s stance on trade is the makeup of Congress, where a bloc of Republicans and Democrats have shown concern about imbalances in U.S. trading relationships negatively affecting American companies. “Whoever is the victor,” Autor said, is “either going to have to come up with a [trade] agenda that is nominally bipartisan or face gridlock” on Capitol Hill.
While labor is solidly behind Kerry despite earlier differences on trade when he was in the Senate, the domestic textile industry remains dissatisfied with the candidate, as well as with Bush. Mill executives argue Bush could be doing more to stop the industry’s downturn in the face of growing imports. Among their complaints is the administration’s hesitation to reinstate quotas on more categories of Chinese apparel and textile imports, which they claim are the biggest threat to their industry and could prove fatal in a matter of years.
“We are trying to convey the message we are in the middle of a crisis and it’s time for some very strong and direct action,” said Augustine Tantillo, Washington coordinator for the American Manufacturers Trade Action Coalition. “What we sense being communicated from the Bush administration [to U.S. mills] is, ‘You need to acknowledge countries like China with advantages and you just have to get competitive.’”
Jock Nash, Washington counsel for textile titan Milliken & Co., aired a list of trade grievances with the administration, including a bilateral textile quota agreement with Vietnam, which the industry claimed contained generous quota levels, and CAFTA, which many claim contains too many allowances for foreign yarn and fabric.
Cass Johnson, president of the National Council of Textile Organizations, said, “There is almost a universal anger at the enormous gap between the administration’s commitments and promises and what has been delivered.”
When the administration does take action that could help the industry, such as cracking down on illegal transshipments from Vietnam, textile officials often feel shortchanged. Johnson questioned how U.S. agencies arrived at the penalty figure of 12 million garments, claiming he is concerned the number of transshipments are much higher.
Wilbur Ross, chairman of International Textile Group, who worked closely with U.S. trade officials during the CAFTA negotiations and secured provisions he was seeking, said he is “somewhat disappointed” with the administration.
Ross, who now opposes CAFTA, claiming U.S. negotiators gave the six countries too many allowances for foreign inputs, which could undercut his business, said his biggest disappointment is with the administration’s handling of Chinese apparel and textile imports.
He claimed the administration should pressure the Chinese to impose voluntary quotas, at least temporarily, on textiles and apparel in 2005 to give the U.S. textile industry more time to adjust.
“I can understand the theory that ultimately free trade is the right approach,” said Ross. “I don’t understand the theory of why there shouldn’t be a gradualism or a mechanism to help the industry prepare for it.”
As far as Kerry goes, Ross said the candidate’s trade policy lacks specifics.
“Maybe it’s just because it’s early in the campaign,” Ross said. “What I think would be very helpful, both for us who are interested in trade and the public at large, is if he would be much more specific about his trade policies so one can evaluate them and analyze what the substantive policies, if any, are between him and the present administration.”
Textile executives were buoyed when Kerry complained the Bush administration’s procedures to field Chinese apparel and textile quota requests are overly complicated and have “severely restricted U.S. firms’ ability” to get requests fulfilled, according to a campaign position paper.
Mill officials also support Kerry’s calls for tough enforcement of trade agreements, including labor and environmental standards. However, the NTA and others in the textile industry criticize Kerry for not being more specific about the need to impose more Chinese quotas or to address China depressing the value of its currency, resulting in their exports costing U.S. companies as much as 40 percent less. Kerry has said his administration would “get tough on Day One” to compel China, as well as Japan, to bring their currencies in line, but he hasn’t offered specifics.
Mickey Kantor, President Clinton’s first U.S. Trade Representative and a Kerry trade adviser, said the candidate’s trade policy would be quite similar to that of the Clinton administration’s, largely supported by business.
“John Kerry understands we’re part of an interdependent world,” Kantor said. “He will continue to expand trade.”
However, when the topic is narrowed to how Kerry might handle the China textile-apparel quota issue or whether he would advocate at the WTO a delay in the 2005 overall phaseout of global textile and apparel quotas, Kantor said, “It would depend on the situation…My guess [is] he will be quite resolute in making sure U.S. companies in this area are not harmed.”
Dan Griswold, associate director of the Cato Institute’s Center for Trade Policy Studies, a think tank with a bent toward no government regulations, including tariffs and quotas on imports, said, “The distinctions are becoming finer all the time between Kerry and Bush. The main distinction is how strictly you impose labor and environmental standards on less developed countries. Bush and the Republicans have the attitude you don’t impose [standards] and you encourage development through trade. Clinton tried to have it both ways, [by saying], ‘We care about labor and environmental standards, but not to the point where it becomes counterproductive and it interferes with trade and development.”
However, with organized labor advocating strict enforcement of standards in trade pacts, Griswold said it appears Kerry would not have “much wiggle room” to finesse his campaign promise if elected.
Thea Lee, assistant director of public policy at the AFL-CIO, acknowledged the chance Kerry could backslide after the election on pledges made to labor, but he “at least is keeping an open mind as to where trade agreements have fallen short in the past, what they have delivered in terms of job creation. In contrast, Bush is locked into expanding the status quo.”
— With contributions from Kristi Ellis
On the Issues
- Has pursued an ambitious agenda of free-trade pacts, including the Central American Free Trade Agreement.
- Stands by the World Trade Organization’s plan to drop quotas on textiles and apparel in 2005.
- Has called for WTO members to phase out tariffs on all industrial products over 15 years.
Sen. John Kerry
- Intends to undertake a 120-day review of labor and environmental standards in standing trade pacts.
- Plans to scrap CAFTA.
- Would limit some tax breaks for U.S. firms with operations abroad.