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Carolinas Textile Producers Take Their Case to USTR

U.S. textile producers are making their voices heard when it comes to trade policies that affect domestic manufacturing.

USTR Senior Advisors Beth Baltzan and Jamila Thompson visited textile and apparel manufacturers, farmers, cotton ginners, knitters, dyers and other members of the fabric supply chain in the Carolinas throughout February and March. Milliken’s Spartanburg, S.C. headquarters and Unifi’s Yadkinville, N.C. production facility were the sites of tours and talks with company stakeholders about how trade legislation could help bolster stateside suppliers and material innovation.

Detailing the experience in a blog post last week, the advisors called the region “the heartbeat of America’s supply chain for apparel manufacturing.” Each discussion with stakeholders “centered on inclusive trade policy that supports American workers, farmers, and entrepreneurs.”

U.S. producers told Baltzan and Thompson that China isn’t “held to the same standards” when it comes to environmental impact and fair labor. The advisors “saw first-hand the commitment these companies have to sustainable production,” and the widespread “responsiveness to the changing demands of the marketplace” demonstrated by companies of all sizes across the  textile supply chain. “The playing field needs to be level, and the competition can’t be based on price undercutting grounded in exploitation of people or the planet,” USTR reps wrote following the visits.

“With all the attention that the industry’s received for PPE production, as well as the nearshoring and onshoring stories, having two lieutenants of Ambassador Tai come down to the Carolinas to spend a number of days seeing our industry operations and meeting their workforce is tremendously meaningful,” National Council of Textile Organizations (NCTO) president and CEO Kim Glas told Sourcing Journal.

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Over the past several decades, USTR has “often pursued a trade policy that is all about business and Wall Street,” but the Biden administration has renewed its focus on “worker-centered trade policy,” Glas said. This gives people “on the frontlines of some of the decisions that are coming out of Washington” a voice in the industry’s future.

Innovation and sustainability

The USTR visit helped provide “a keener understanding of the supply chain and understanding of the trends toward transparency and the innovation happening in the industry,” Glas added.

“Nothing can replace a visit to manufacturers in their home state,” David Smith, president of Milliken’s textile division, said. “By visiting us in South Carolina, USTR saw firsthand the legacy and impact of Milliken in the local community.” A tour of the Roger Milliken Center showcased the company’s more than 3,200 textile-related patents, net-zero goals and SBTi target validation. Milliken, which produces textiles and coatings for industrial, automotive and military uses, recently scrubbed PFAS chemicals from its portfolio, making it the first U.S. multi-market textile manufacturer to do so. It replaced “forever chemicals” with harm-free alternatives. Milliken has more than 3,600 workers and 11 textile facilities in South Carolina.

Milliken's innovation gallery.
Milliken’s innovation gallery. Milliken

Baltzan and Thompson’s visit to Unifi’s 1,290,960-square-foot G. Allen Mebane Industrial Complex in North Carolina offered a peek into what Repreve recycled polyester is all about said, Meredith Boyd, the yarn maker’s senior vice president of technology, innovation and sustainability.

Ambassador Katherine Tai wants to see sustainable innovation take root in the U.S. “That really melds perfectly with our own initiatives around the growth of our Repreve products, both for our polyester and nylon offerings,” Boyd added. Unifi sees “a real opportunity” for Repreve’s growth and is shopping it as an alternative to virgin materials. It’s currently on track to see Repreve drive 50 percent of its overall sales originate by 2025. Boyd noted that the tour also profiled Unifi’s new eAFK EvoCooler polyester texturing machinery, which cuts carbon impact by 20 percent.

Unifi's G. Allen Mebane Industrial Complex in North Carolina.
Unifi’s G. Allen Mebane Industrial Complex in North Carolina. Unifi

Calling innovation a “core element of these companies’ comparative advantage,” Thompson and Baltzan noted that “many of the goods” they saw were “made using patented technologies or trade secrets” as well as “state-of-the-art” equipment.

Unifi reiterated how domestic producers stepped up to address the pandemic PPE shortage. “It was really the U.S. manufacturers in the textile industry in particular who really rose to this challenge,” Boyd said. “So we re-emphasized how important Unifi and the overall textile industry are, not only for consumers on a day to day basis, but also for the safety and security from a healthcare standpoint, first responders and military.”

Impacts of trade legislation

Talk also turned to the trade laws and actions affecting U.S. textile companies.

“As USTR considers trade agreements, economic frameworks, and Section 301 tariff effectiveness, they must hear from domestic producers,” said Milliken’s Smith, who believes the “global, diversified company” is “uniquely positioned to provide a perspective on USTR efforts.” Federal actions “impact us across all of our business platforms and global locations,” he added.

Smith said Milliken advocates for legislation and trade agreements “which strengthen our national defense and promote fair trade.” During the USTR visit, the company underscored the importance of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) and the U.S.-Mexico-Canada Agreement (USMCA) in supporting domestic industry and promoting nearshoring. “We are deeply appreciative of the Administration’s steadfast support of the textile rules of origin, specifically the yarn-forward rule,” he added.

Spools of yarn at Unifi's North Carolina factory.
Spools of yarn at Unifi’s North Carolina factory. Unifi

Boyd said Unifi also emphasized the “criticality of certain free trade agreements” during the talks, highlighting the “essential” CAFTA-DR deal and yarn forward rule. Without the protection, yarns are “more likely to be imported, and that would put U.S. manufacturers at a big disadvantage,” she said. Preserving the rule will “increase demand for American yarns, which might otherwise be sourced from countries like the People’s Republic of China,” the USTR leaders wrote.

Milliken and Unifi both want congressional leaders to close the Section 321 de minimis loophole allowing $800-or-less shipments into the U.S. free of duties since 2015. It’s an area of “deep concern” for Unifi, too, “due to the lack of oversight and the potential abuse of these exploding e-commerce imports,” Boyd said. “We support efforts to significantly reduce the Section 321 limit to ensure imports from our free trade partners are not compromised and our U.S. customers are able to compete on a level playing field.”

One of Milliken's South Carolina operations.
One of Milliken’s South Carolina operations. Milliken

U.S. textile producers tend to have a nuanced views the Section 301 punitive tariffs that apparel and footwear importers roundly decry. “Our industry has strongly supported the Biden Administration’s approach on China,” NCTO’s Glas said, noting the organization’s pro-tariff stance.

But stateside manufacturers are also pushing for “an expedited and fair exclusion process for items and inputs that are limited in availability, or that we don’t make here,” including textile machinery. “I’ve got manufacturers who want to invest significantly in their U.S. operations with more energy efficient equipment, but a 25-percent tariff on a $10 million piece of equipment is pretty expensive,” she said. “A lot of our companies are competing globally, and margins are very, very tight.”

“We vocalized to the senior advisor that we would like to see a very thoughtful, purposeful review process be put in place because there are certain pieces of hardware and chemicals that are used in this industry, for which there’s not an alternative to sourcing from China,” Boyd added.

Apparel and sportswear maker American Giant, which produces in both North Carolina and South Carolina, voiced support for tough-on-China legislation during its USTR meeting. “We have spent too much time over the last 40 years figuring out how to make things cheaper, and not thinking at all about how shipping manufacturing overseas ends up hurting urban and rural communities that depended on those jobs to keep their communities vital and thriving,” founder and CEO Bayard Winthrop wrote in a blog post.

Winthrop, who advocates for “fair trade, not ‘free trade’” with China, said the Asian nation’s manufacturers should face the same “strong worker protections, high environmental standards and minority rights” as American businesses. “Today we grant China unfettered access to the American market, the most valuable and coveted in the world, essentially for free,” he added. “They do not return the favor.”

“Many with whom we met noted that given a fair-trading system they would be able to compete anywhere,” Baltzan and Thompson wrote in their blog post last week, and Tai reiterated the rhetoric when she testified at the House Ways and Means Committee hearing on President Biden’s 2023 trade policy agenda. “American workers can compete anywhere if the competition is fair,” she said. “That is why we have been laser-focused on using trade to defend workers’ rights, both at home and abroad.”

Tai was expected to carry on with Section 301 tariffs, which represent “a significant piece of leverage” in the U.S.-China trade relationship, she has said. “We are mindful of the effects that trade actions can have on American workers and businesses,” she said. “At the same time, we are taking a deliberate and strategic look at how our economic interests can be served.”

While the administration keeps “the door open to conversations with the PRC, including on its Phase One Agreement commitments,” the U.S. must “vigorously defend our values and economic interests from the negative impacts” of China’s unfair economic policies and practices,” Tai said. “That means making groundbreaking investments here at home so that we can compete—and collaborate—from a position of strength.”

In a statement to NCTO shared at its annual meeting on Thursday, Tai said, “I know the challenges that unfair trade practices have posed to the textile industry.” The Biden administration will review comments from the textile sector when it considers what to do with tariffs and legislation.

CAFTA-DR is key to a healthy U.S. production sector, Tai added. “Not only will these investments and sourcing commitments help increase economic opportunities in those countries, they will also promote greater nearshoring and support American jobs that provide the yarns and fabrics that go into Central American Apparel production,” she said Thursday.

“Make no mistake, we know how important the yarn forward Rules of Origin are for the success of our trade partnership with the region,” she added. “Those rules provide the certainty that companies need to invest in and expand operations, which also creates good paying jobs both in the United States and in Central America.”