The Answer is TPA, Not Protectionism

By Larry A. Liebenow

April 2002

Being the CEO of a textile company isn't easy these days. Many companies in my industry are suffering, failing or disappearing due to changes in the rules of the game and intense competition—around the world. Not surprisingly, some ask the government to protect us from our international competitors by erecting tariffs and other barriers to imports. This is a shortsighted, band-aid fix that will do nothing to enhance U.S. competitiveness and long-term economic viability. Companies don't need special treatment from the government—we need the same opportunities to compete in the global market place that businesses in other countries enjoy. We need our government to help break down the barriers to U.S. exports. Trade Promotion Authority (TPA) for the president would give our government representatives the tools they need to do that—and put us on a level playing field with our competitors.

Protectionism, though practiced by just about every nation, is flawed policy. It's a 20th century solution to a 21st century challenge. It drives up consumer prices, as well as costs and job losses for other industries, insulates us from the real world, invites retribution from our trading partners, removes incentives to develop cutting-edge products and services, and net, keeps us from being aggressive global players.

Trade, on the other hand, creates wealth in the U.S. Wealth equal to one-third of our Gross Domestic Product (GDP) in fact.

Leaders in every industry—must step back and take a wider view of the world, expand into foreign markets, and look for new business opportunities in places they've never looked before. This is the future of the textile industry, the future of U.S. manufacturing in general – and also the future of our country.

At Quaker Fabric, our success is rooted in the global economy. When I came on board as head of the company thirteen years ago, Quaker was struggling and had no export business. We quickly became convinced that confining Quaker's marketing efforts to the U.S. market would not lead to the kind of revenue and earnings growth we wanted. Nor would it help us build the skills to effectively compete against cheaper imports coming into the U.S. So, we made a commitment back then to build an export business, and we've been building ever since.

Since 1990, Quaker's participation in the global marketplace has created more than 500 new jobs at the company, and last year export sales added $40 million to our top line. We market our products in 42 countries, and 15% of our fabric sales occur outside the U.S. We expect our biggest growth over the next five to ten years to come from the global market—but only if we're allowed to play by the same rules as our international competitors.

Increasingly, we find ourselves at a significant competitive disadvantage in foreign markets because the U.S. is being left out of a growing number of free trade agreements around the world. Countries are dividing up the trade world, while the U.S. sits as a passive observer – on the sidelines. For example, the European Union has free trade agreements with 27 countries. Mexico has trade accords with 32. The U.S. has free trade agreements with just four – with only two of those representing real market opportunities.

Restoring Trade Promotion Authority to the president—a privilege enjoyed by every president from Gerald Ford to Bill Clinton—would help get America, and Quaker Fabric, back in the game.

TPA maximizes trade opportunities for U.S. companies and workers by requiring Congress to expeditiously consider agreements negotiated by the president and his team of negotiators. Without TPA, U.S. negotiators lack credibility with their foreign counterparts, who know that any deal they strike stands a chance of stalling in Congress, or being altered beyond recognition through the amendment process. Lacking this essential credibility, our U.S. negotiating team's ability to obtain concessions is seriously compromised—as is U.S. competitiveness in markets around the world.

Finally, contrary to widespread belief, those hurt most by the president not having TPA are not large or multinational companies based in the U.S. They are small businesses, which account for 97% of all U.S. exporters and make 31% of all products shipped to overseas markets.

It's not enough to pass just any TPA bill. It must be free of language that would trigger trade sanctions to enforce labor, environmental, human rights, religious freedom, health care and other provisions. Each of these issues is extremely important, but I believe there are more appropriate mechanisms that effectively deal with them.

All of us at Quaker Fabric are confident we can compete and succeed in the global market. We aren't asking for special treatment. We just want a fair shake. By passing TPA, Quaker Fabric and millions of companies like it would get an opportunity to compete on a level playing field—nothing less, nothing more. It's time Congress put aside petty partisan politics and gave us at least that chance. That's how we can protect our future.

Larry A. Liebenow is President and CEO of Fall River, Massachusetts-based Quaker Fabric Corporation and is Vice Chairman of the U.S. Chamber of Commerce.