Fabric Softener

by Franklin Foer | March 4, 2002

Ever since he signed on as America's ally in the war on terrorism, Pakistani President Pervez Musharraf has been asking for one simple favor in return: the suspension of U.S. tariffs and quotas on Pakistani textiles. And, last Monday, Musharraf finally got a definitive response to his request: No. On that day Commerce Under Secretary Grant Aldonas told Musharraf's deputies that the Bush administration would neither push Congress to cut tariffs nor raise quotas for vital Pakistani exports like cotton trousers. Instead, the administration's most substantive gesture was to temporarily "swing" quotas, a bureaucratic sleight of hand that would allow Pakistan to borrow unused quotas for American imports such as wool gloves (not a booming business in Karachi). The offer is worth about $140 million--one-tenth of the value of Musharraf's initial request. Not surprisingly, Pakistani negotiators considered it an insult. "The [Pakistanis] said that they had nothing further to discuss. They accused Aldonas of breaking promises," says one source familiar with the proceedings. "It got quite personal and ugly."

The Pakistanis had good reason to be angry. In siding with the United States against the Taliban--as well as the Islamists in his own country--Musharraf has gambled not only his presidency but also his life. In return, he's asked friendly countries for a little free-trade help. And, in most cases, he's gotten it: Turkey raised quotas for Pakistan in October. A few weeks later the European Union lifted all tariffs on Pakistani textiles, despite an outcry from its own textile industry; since the barriers were lifted, exports to the European Union have increased 42 percent, giving the Pakistani economy a much-needed boost.

It was widely assumed that the United States--which owes Musharraf a greater debt and crows more loudly about free trade than, say, the bureaucrats in Brussels--would follow suit. Indeed, just nine days after the terrorist attacks, U.S. Trade Representative Robert Zoellick wrote a Washington Post op-ed entitled "Countering Terror with Trade." But far from countering terror with trade, the United States has reduced its imports from Pakistan in the months since September 11. After the attacks, insurance companies began charging exorbitant premiums for shipments out of Pakistan; American textile buyers refused to venture into a potential war zone; and cold-footed manufacturers like Tommy Hilfiger, American Eagle Outfitters, and Perry Ellis reduced their orders. As a result, textile exports to the United States--about 80 percent of Pakistan's total U.S. exports--dropped by 40 percent. By December an estimated 48,000 workers had lost their textile jobs. That's 48,000 more Pakistanis with nothing to do but take to the streets, cheer on Osama bin Laden, and burn the American flag.

The Bush administration could have helped Pakistan recover. Had it raised Islamabad's textile quota this year, as insurance costs and security risks are diminishing, Pakistan might have been able to undo the post-9/11 economic damage. But the Bushies have done no such thing. The reason: the U.S. textile lobby. Even as the domestic industry for which it agitates slips gradually toward extinction--124 American textile plants closed or made substantial layoffs last year--the textile lobby continues to notch victories in Washington. Thanks to its pressure, Aldonas and his negotiators never went higher than their paltry initial offer. During the past six months alone, the industry has similarly helped squash proposals to grant trade benefits to Turkey, Uzbekistan, and Tajikistan--all key allies in the war on terrorism. In other words, the protectionist lobby of a dying industry has quietly become arguably the most effective domestic opponent of American foreign policy.

In the immediate aftermath of September 11, it looked like the administration would do the right thing. Alan Larson, under secretary of state for economic affairs, called American importers and urged them to stick with Pakistani suppliers through the crisis. Wendy Chamberlin, the U.S. ambassador to Pakistan, visited a factory in Lahore and announced: "The patriotic thing to do if you're American is to buy Pakistani products." By the time Musharraf met with Bush in New York last November, the White House had encouraged Kansas Senator Sam Brownback to introduce legislation that would give the president authority to slash Pakistani tariffs. And, in a series of conference calls, Larson rallied lobbyists from Warnaco, Wal-Mart, and other textile importers to support the legislation. "Importers didn't ask for help. The administration really initiated the whole process," says Julia Hughes, vice president of the United States Association of Importers of Textiles and Apparel.

For a while the cause seemed unstoppable. With the war in Afghanistan underway, Congress wouldn't have dreamed of opposing Bush-backed legislation to help Pakistan. And, while the Brownback bill took care of tariffs, the administration already had the authority to alter (or eliminate) quotas on its own--simply by having Commerce Secretary Don Evans file an announcement in the Federal Register. As North Carolina Representative Howard Coble, chair of the House Textile Caucus, conceded in the trade publication Women's Wear Daily, "It's going to be tough."

But Coble underestimated the power of his patrons. Founded in the 1950s by South Carolina mill owner Roger Milliken--an early and munificent benefactor of Barry Goldwater, Ronald Reagan, and Newt Gingrich--the textile lobby over time developed a prowess to match the oil and pharmaceutical industries. Comparatively, it doesn't have the deepest pockets. But it spends smart. Last fall, for example, the American Textile Manufacturers Institute (atmi) acquired the services of C. Boyden Gray, George H.W. Bush's chief White House lawyer. And, while the industry's overall contributions are not as large as those of other special interests, it shrewdly concentrates them in its home Southern states. In the 1998 cycle, according to the Center for Responsive Politics, it poured more than $275,000 of its $1.4 million in contributions into House and Senate races in the Carolinas alone.

As a result, the industry's friends in Congress fight ferociously on its behalf. Last year Jesse Helms spent months blocking the appointments of four top Bush Treasury officials until he extorted a promise from the administration to work with him to create legislation that makes it harder to import fabric from the Caribbean. At the Office of the U.S. Trade Representative, Helms secured an appointment for his protege Kevin Koonce as special textile negotiator. And, when Koonce stepped down in November, he was replaced by David Spooner--a former adviser to North Carolina Representative Sue Myrick, another stalwart of the textile caucus.

Caucus members and industry lobbyists brought that same ferocity to their fight against imports from Pakistan. In an October letter to the administration, Helms and South Carolina's Fritz Hollings warned: "These Americans [textile workers] must not be made pawns in efforts to build an international coalition." To whomever would listen, the atmi's Charles Bremer accused importers of exploiting September 11 to promote their own bottom lines. "It is scarcely better than grave robbing," he told The Miami Herald.

Balanced against the war on terrorism and the administration's free-trade proclivities, the textile industry's efforts might not have carried the day were it not for a bit of fortuitous timing: The administration was discussing plans to help Pakistan at the exact moment Congress was considering the renewal of Trade Promotion Authority (TPA)-- legislation giving the president license to negotiate treaties that Congress must vote up or down without amending. In normal circumstances, a vote on TPA renewal would have been razor-close, with just enough pro-business Democrats voting aye to make up for the protectionist Republicans who would vote nay. This time, however, House Republican leaders wanted to pass TPA without Democratic support. "They wanted to prove to the high-tech community that the Democratic Party is still controlled by unions," one lobbyist close to the House leadership told me. "They smelled a chance to prove that they're retrograde on economics and not really New Democrats." Or, as a December e-mail from the National Republican Congressional Committee taunted, "Will the New Democrats deliver...?" Rather than welcome Democrats into a pro-trade coalition, the Republicans ignored them. Ways and Means Chairman Bill Thomas gave his Democratic counterpart Charlie Rangel the cold shoulder. Compromises on child labor and the environment--the glue that held together the free-trade coalition during the Clinton years--never received very serious consideration. And so, as the vote neared, such dependable Democratic free-traders as Robert Matsui and Ellen Tauscher announced their opposition.

The problem with the GOP's strategy was that in order to pass TPA--and avoid an embarrassing setback for the administration--the leadership needed the nearly unanimous support of their caucus. And the one dozen or so Republican congressmen from textile districts aren't free-traders. So, with the blessing of the textile lobby, the textile congressmen began to extract as many concessions as possible. North Carolina's Robin Hayes put it bluntly: "We're a definite 'no' until we get some help on textiles." Specifically, they demanded that all textiles imported from the Caribbean be dyed and finished in American factories. And, of course, they insisted that the administration do nothing substantial to help the Pakistani textile industry.

In these efforts they had a valuable ally in Thomas, the powerful Ways and Means chairman whose California district contains some of the most productive cotton fields in the country. Despite his otherwise impeccable libertarian credentials, Thomas has supported some of the more protectionist pieces of legislation of the last 15 years, including the 1986 and 1987 textile protection acts. Negotiating at the November meeting of the World Trade Organization in Qatar, Aldonas reportedly told Pakistani negotiators that he couldn't lower tariffs on textiles for fear of angering Thomas.

The Bush administration's efforts to win over the textile caucus on TPA verged on the obsequious. Zoellick camped out in the offices of undecided congressmen. Bush telephoned caucus members and invited them over to the White House. And even then it wasn't enough. With minutes remaining in the vote, the administration sat on the edge of a 215 to 210 defeat. To pull out the last-second victory, they caved on everything--exactly the kind of legislative hostage-taking TPA is supposed to prevent. Brandishing a letter from House leaders pledging to limit the import of Caribbean fabrics, South Carolina's Jim DeMint switched his vote. Almost immediately, three other congressmen followed. Finally, Hayes--who later claimed the White House had promised him it would not hike Pakistani quotas--voted with his party, passing the legislation and sparing the administration a monumental humiliation. On the floor of the House, Hayes broke down in tears. According to The Hill newspaper, Tom DeLay walked over to put his arm around Hayes and assured him that he hadn't just sealed his defeat in the upcoming midterm elections.

But hayes's reflection is by no means assured. He first won his seat in 1998 by 3,000 votes. And in the last round of redistricting, the North Carolina state legislature has made his political survival even more tenuous, adding 107,000 suburban Charlotte voters to his previously rural district. With Hayes's TPA vote, Democratic challengers sense blood in the water. As one of them, a lawyer named Billy Richardson, put it at a Charlotte forum in January, "Robin Hayes looked people in the eye and said, 'I'm not going to let them take your job.' And with his arm twisted and a tear in his eye, he did just that."

The fate of a single two-term GOP congressman such as Hayes might not mean much under normal circumstances. But, with a mere six-seat majority, Republican control of the House could rest on the survival of Robin Hayes. And the survival of Robin Hayes rests on his ability to hold the White House to its word on textiles--to create the impression that he bargained away his TPA vote for some major industry-saving concessions. To give Hayes the help he needs, DeLay has lobbied the White House to stick to its promises, according to an aide to a member of the Textile Caucus. At the House leadership's urging, last month Evans traveled to Hayes's district to announce the formation of an interagency working group that will devise plans for boosting the industry's competitiveness. And every time the Commerce Department makes noises about Pakistan, House Republicans raise hell. At the mere mention of Pakistan in a recent conference call with Aldonas, aides to textile congressmen exclaimed things like: "I can't believe we're even having this discussion." The campaign has worked to devastating effect, with Pakistan receiving just one-tenth of the assistance Musharraf requested--far from enough to offset its war-related losses.

The atmi's Bremer is unapologetic. "We need to hold firm," he argues. "If we help Pakistan, a dozen more countries will come asking for the same. We won't have any reason not to give it to them." It's a plausible protectionist argument--except for one uncomfortable fact: In three years the World Trade Organization will phase out virtually all textile quotas. The United States agreed to this as part of the 1994 Uruguay Rounds of gatt, and even Bremer agrees it won't be reversed. In other words, the textile lobby has spent millions of dollars and interfered with wartime foreign policy to prolong a protectionist regime that's already slated for imminent extinction. Who are the grave robbers here?

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