WASHINGTON — The political maneuvering around the Central American Free Trade Agreement is driving a wedge into the textile industry.
The National Council of Textile Organizations has broken from the pack of domestic lobby groups and voted to support CAFTA in exchange for commitments from the Bush administration to seek adjustments to some of the accord’s provisions.
The change of heart comes in an industry that has been considered one of the few remaining hurdles against CAFTA’s passage in the House. Other opponents include the sugar industry, faith-based groups and organized labor.
It is difficult to gauge how House Textile Caucus members will weigh NCTO’s endorsement against the remaining industry opposition and whether one association’s support will be enough to swing key votes. Ed McDonald, chief of staff for Rep. Howard Coble (R., N.C.), co-chair of the House Textile Caucus, said the congressman has not changed his position on the agreement.
“If a vote were held today, Congressman Coble would still be listed as a ‘no’ vote,” McDonald said.
McDonald said Coble plans to meet today with Allen Gant, chairman of NCTO and president and chief executive officer of Glen Raven Inc. Coble also plans to schedule a textile panel discussion on the pros and cons of CAFTA for House Textile Caucus members the week of May 23.
“I think it’s positive from the standpoint the administration is looking at concerns the industry has and is addressing them,” said Rep. Sue Myrick (R., N.C.). “Some major employers in my district supported it privately before. I am in the process of finding out where everybody stands.”
NCTO’s announcement drew fire from other textile associations, which called into question how enforceable the commitments are. The domestic textile industry fought against including exceptions for foreign fabrics in CAFTA and many executives take issue with three that were allowed. Some U.S. textile producers fear they will lose a significant portion of that export market as a result of the foreign fabric allowances in CAFTA.
NCTO members claim the trade deal could represent a boon to a region that is a primary export market for U.S. textiles. In 2004, U.S. sales of yarn, fabric and component parts to CAFTA countries reached $5 billion, Gant noted.
“We are pleased with the administration’s recent efforts to clarify its intent with respect to certain provisions of the DR-CAFTA that are problematic for the industry, especially regarding pocketings and linings, cumulation and TPLs,” or Tariff Preference Levels, which make allowances for foreign fabric and yarns, Gant said in a statement.
U.S. Trade Representative Rob Portman said in a statement, “NCTO has taken a bold step in seizing the opportunity that this agreement provides to an industry that needs a boost.”
Karl Spilhaus, president of the National Textile Association, which represents 135 member companies, 80 of which are U.S. fabric makers, said in a statement: “It is astounding that the yarn suppliers and other supplier members on the NCTO board could act with such extreme shortsightedness. Their support for CAFTA is directly contrary to the interests of their customers, the companies who weave, knit or finish fabric in the U.S.”
The American Manufacturing Trade Action Coalition, whose members include Milliken & Co., reaffirmed its opposition to CAFTA.
“Like NAFTA, CAFTA is certain to be a job killer for the U.S. manufacturing [sector], and the U.S. textile industry in particular,” Auggie Tantillo, executive director of AMTAC, said in a statement, adding the textile and apparel manufacturing sector has shrunk from 1.5 million workers to 666,500 since the North American Free Trade Agreement went into effect in 1994.
Tantillo said in a phone interview that he doesn’t believe there will be a “dramatic shift” in House votes as a result of NCTO’s support.
“Obviously, there were some people from textile areas who were looking for a reason to be supportive of CAFTA and this gives them cover to do that,” he said. “However, there is still strong opposition from many sectors of the industry, as well as from outside the industry.”
In explaining its decision, NCTO provided a letter to the press that Gant received from Peter Allgeier, then-acting USTR, on April 4, outlining the process for implementation of “cumulation,” in which other preferential trading partners are allowed to take part in the agreement. Under CAFTA’s cumulation provision, a limited amount of woven apparel and denim fabric made in the CAFTA countries — Costa Rica, Nicaragua, Guatemala, El Salvador, Honduras and the Dominican Republic — from Mexican and Canadian fabric could qualify for duty-free treatment in the U.S. Canada and Mexico are partners with the U.S. in NAFTA.
Gant also cited a “recent commitment” from Nicaragua to allocate TPLs to its “current nonqualifying U.S. trade,” as a means of protecting the $100 million in existing U.S. business and noted a pledge last week from Portman to change a provision in the accord that permits the use of foreign pocketing and lining fabrics. That change alone will guarantee that $100 million in existing U.S. pocketing and lining exports to the region is not lost, Gant said.