Just before the August congressional recess, the Senate voted 68 to 32 for a bill that would increase the profits of a dozen or so major textile concerns at the expense of every man, woman and child in this country. I am referring to the textile, apparel and footwear bill. If this legislation, which few Americans outside Washington have even heard of, ever becomes law, it will cost them something like $85 billion over the course of the next few years.
I'm familiar with this legislation because the costs of it would be passed on to consumers through people like me, and frankly I resent the prospect of collecting money from Americans to pass on to a few wealthy mill owners. Our company, The Limited, and its affiliates sell clothing through more than 3,000 retail stores.
Few consumers realize it, but the clothing they buy today is already costing them more than $250 more per family each year than it should because of existing protection enjoyed by the domestic textile industry. That amounts to a tax requiring retailers to take money out of the pockets of middle- and lower-middle-class Americans in the form of higher clothing prices so that it can be put into the pockets of those who manage and own domestic textile mills. The textile industry is, in effect, using Congress as a tool to line its own pockets at the expense of everyone else.
This bill is just another example of special-interest legislation to help a healthy industry at the expense of consumers. U.S. output of textile products has grown every year since 1985. U.S. textile mills in 1989 produced at almost 90 percent of capacity compared with about 84 percent for other industries. Unemployment in the five major textile producing states -- North Carolina, South Carolina, Alabama, Georgia and Virginia -- is below the national average at about 5 percent.
Nevertheless, the textile magnates, the unions and southern senators are twisting arms to get Congress to sacrifice the trade and economic interests of everyone else so they can make even more money.
The Multi-Fiber Agreement under which we operate today puts rigid import quotas on hundreds of textile and clothing items on a country-by-country basis. As a result, retailers such as The Limited have to pay U.S. and foreign clothing producers 30 to 50 percent more for the clothing they sell than would otherwise be the case. Foreign and domestic producers pocket this windfall -- they certainly do not pass it on to their employees either here or overseas -- and consumers pay for it.
The $250 per year the average family already gives these interests reduces the living standard of U.S. families earning less than $15,000 by 3 to 5 percent. The bill the Senate voted for would reduce disposable income of poorer families by as much as an additional 1 percent. I believe that if the American people understood what is going on here, they would react to this "Robin Hood in reverse" textile legislation exactly as they would to a 5 percent tax on poor people, because that is what it is.
If we continue to protect the domestic textile industry, the United States will continue to lose apparel manufacturing and retail jobs. The Limited and other U.S. retailers and apparel manufacturers cannot increase employment around the country if the price of apparel gets pushed up so that customers cannot afford to buy. Retailers who cater to lower-income customers will find it especially hard to increase sales and hire more people if this legislation becomes law. And U.S. manufacturers of other products and services would be hurt because customers who have had their pockets picked by the textile interests would have less to spend on other items.
The shortsighted selfishness of industries that have been able to look to Washington for protection against the need to compete has hurt us competitively in many sectors of our economy. We are not being beaten in international markets because American workers are somehow inferior to Japanese or German workers, but because America's industrial managers have figured out ways to make money without even having to worry about being competitive.
The fact that this effort to further increase their own profits could undermine U.S. credibility in the current Uruguay Round of trade negotiations probably doesn't even bother these people. If American farmers are shut out of Europe because the talks collapse or if our aircraft and other high-tech industries lose out because the textile industry's demands make it impossible for our negotiators to come up with an overall international trade agreement, I doubt that the folks behind this legislation will lose one minute's sleep.
The United States has said it wants to open foreign markets. The textile bill is an embarrassing indication that some U.S. industries do not really want to compete at all. And if textile special interests win, U.S. world leadership will suffer.
Textiles are key to trade agreements with Mexico, Brazil, Argentina, Thailand and a long list of other developing countries. These countries will not make the trade concessions President Bush wants on patent and copyright protection, financial and other services, agriculture and manufactured goods, if the United States further restricts their textile exports.
The House is expected to pass a bill similar to the one that cleared the Senate. The president has said he will veto it. Americans who care about fairer income distribution, lower inflation, faster economic growth and opening world markets to U.S. exports should let Congress know that they oppose this clothing tax. Then the country should get on with the job of gradually lowering apparel protection and costs and redistributing income in the right direction.
The writer is chairman of The Limited, Inc., retailer of women's apparel.