While the textile quota bill will pass both houses of Congress by substantial margins, much of the support for it is more embarrassed than enthusistic. In the House, 28 cosponsors of the bill bailed out on the vote for final passage. Many Senate supporters concede that it is bad legislation, forced upon them by intense constituent pressures.
It is, indeed, a very bad bill. The best that can be said for the House version is that it would increase employment in the textile and apparel industries by about 4 percent, but it would do so at a cost to consumers of about $140,000 per job. Both bills would risk retaliation against $33 billion in U.S. exports, including farm commodities, aircraft and chemicals. Like much special-interest legislation, the bill is designed to favor a few people at the expense of everyone else.
Government can hardly be accused of turning a deaf ear to the textile and apparel industries. In fact, they have been the beneficiaries of the most elaborate and longstanding array of import protection enjoyed by any American industry. But the bill before Congress would go much further than any of the international agreements that protect the domestic textile industry.
Why, then, has it progressed as far as it has? Why has it passed the House and won the support, however embarrassed, of a clear majority of the Senate? The answer is that the executive branch, which should be the place to manage specific trade problems, is now closed to industries seeking import relief. When the executive branch is closed for business, Congress is the only place to turn, and the remedy Congress offers is quota legislation.
The president's decision in August to deny import relief to the shoe industry was a clear sign that the executive branch will no longer be a source of help for trade-damaged sectors of the economy. The president sees no distinction between import relief available under the General Agreement on Tariffs and Trade, if the proper legal process is followed, and import relief provided by Congress in violation of international agreements. To him, all forms of import relief, lawful or not, are equally abhorrent. All are branded "protectionist," and all are equally violative of his free-trade philosophy.
In fact, all forms of import relief are not the same. If proper standards are met, relief is expressly provided under Article XIX of GATT. The mechanism is legal, not political. It entails bringing a case before the U.S. International Trade Commission, proving economic injury as defined in the statute, securing a recommendation for relief from the commission, and securing relief in the form of tariffs, quotas or trade adjustment assistance from the president.
The shoe industry followed all the rules in bringing its case under the law. It did not try to throw its weight around in Congress. It did not ask for any special legislation. Instead, the shoe industry brought its complaint before the ITC, made a compelling argument for application of the law and won its case in a unanimous finding by the commission. Then, after expending unknown amounts of resources and energy before the ITC, it learned that all was for naught, that the president would give no relief at all.
The clear message from the White House is that if the shoe industry does not qualify for relief, no industry will qualify. If 78 percent import penetration in shoes is no basis for remedy, then textiles and apparel, with less than 25 percent import penetration, cannot hope to qualify. In effect, the president has blue-penciled Section 201 of the Trade Act out of the statute books.
For many years, the best shield against quota legislation has been a system of trade law that could deflect protectionist pressures toward generic solutions. The shoe industry believed it did not need special legislation. It had confidence that the basic laws were sufficient and that if it made a good case it would gain relief. The shoe industry was wrong. It was played for a sucker. The laborious process before the ITC turned out to be a waste of time.
The textile and apparel boys have the street smarts in dealing with government. Their method is to ignore the GATT, ignore existing law, ignore the ITC. They have used political muscle and have gone to Congress for help. Perhaps they will lose on a presidential veto. Perhaps this legislation, even if vetoed, will improve their position when the Multi-Fiber Agreement is renegotiated next year. Certainly they will end up better than the shoe people, who made the mistake of playing by the rules. So now the textile industry has its quota bill, and the shoe industry has gotten wise and has a quota bill of its own. Steel is not far behind.
What is truly astonishing is that the president has expressed astonishment at all the protectionist legislation.