Ellinghuysen & The Charlotte Observer
Recent news articles name North Carolina one of three states in which Democratic voters hold "protectionist" sentiments. A majority of N.C. Democratic voters believe free trade has hurt the economy, and now headlines state that Democratic presidential hopefuls Barack Obama and Hillary Clinton are leaning toward protectionist trade policies as a result.
Such headlines are misleading. Labeling their positions on trade as protectionist obscures the true essence of the debate on free trade. It misses an important opportunity to examine what needs to be done in North Carolina in the face of fierce competition in the global economy.
The United States, Mexico and Canada signed the North American Free Trade Agreement (NAFTA) in 1992 with the goal of reducing or removing tariff and non-tariff barriers to trade.
Some argue that the deal has proven positive to the U.S. workforce overall. According to an October 2007 report by the Office of U.S. Trade Representatives, NAFTA increased U.S. manufacturing output by 63 percent, boosted real compensation wages for manufacturing workers by 1.6 percent, and added 25 million jobs to the economy.
Thousands of N.C. jobs lost
However, the figures for North Carolina reveal that laborers in the textile and furniture industries became casualties of the vigorous pursuit of free trade agreements. These two industries account for almost one-quarter of N.C. employment: textiles at 13.5 percent and furniture at 10 percent.The Economic Policy Institute finds that the N.C. manufacturing industry overall experienced a loss of approximately 27,000 jobs between 1993 and 2000. The textile and apparel industry lost close to 11,000 jobs, and lumber and wood products, including furniture, lost 4,673 jobs. A major furniture production area -- Davidson County -- has watched more than 8,000 jobs in wood products disappear, leading to a 9 percent jump in unemployment.
In 2004, the U.S. signed the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA). Opponents view the agreement as another blow to the N.C. textile and furniture industries, adding to the consequences of NAFTA. Proponents view Central America as an additional export market for manufactured goods, especially value-added products.
The most recent challenge to the N.C. textile industry has been China. The phase-out of quotas on global textile and apparel trade has made it possible for imports from China to saturate the U.S. market. China's share of the U.S. textile and apparel market increased from 20.3 percent to 30.4 percent, according to research by Duke University's Center on Globalization, Governance, and Competitiveness. The same study shows that North Carolina's second largest apparel employer, Sara Lee, cut more than 300 jobs in 2004 and many more in 2007.
Candidates decry trade pacts
Free trade's impact on U.S. workers has been one issue in the 2008 presidential race. Both candidates have been highly critical of trade pacts as encouraging companies to send jobs overseas.
However, the candidates' speeches do not reflect a protectionist stance. Protectionism dominated U.S. economic policies until the 1970s. Designed to protect infant industries, protectionist policies included high tariff rates, quotas, import licenses and domestic subsidies.
Neither candidate advocates a return to the pre-free trade era, as portrayed by some in the media. Their positions do not push for an end to future free trade.
Rather, the Democratic candidates propose mechanisms to assist those who have been harmed by free trade. Clinton has proposed a moratorium on new trade deals but has not called for the suspension of existing pacts. Both Clinton and Obama pledged to amend NAFTA to include a stronger labor agreement to benefit U.S. workers.
Placing a simple label on the politicians' stance does nothing for understanding the true nature of what is taking place and discussing ways to ensure that U.S. workers benefit just as much as corporations. As Obama and Clinton have stated, globalization cannot be reversed. There are benefits from free trade. However, mechanisms should be in place to address the consequences of globalization.
Globalization is here to stay. Therefore, it would be advantageous to help workers make the transition into the new global economy through re-education and training programs.
The relationship between the global economy and local communities is worth thinking about as we approach the May 6 primaries and evaluate the true proposals of the presidential candidates.
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