GREENSBORO — A recent Heritage Foundation report says North Carolina’s congressional delegation “seems to be rejecting” the state’s “long and honorable record of support for open markets,” much to the detriment of the many thousands of constituents who owe their jobs to free trade.
The report, “Trade and Prosperity in the 50 States: The Case of North Carolina,” was authored by Bryan Riley, a senior trade policy analyst at the Heritage Foundation’s Center for International Trade and Economics.
Riley analyzes votes by North Carolina’s delegation on key trade agreements during the past nine years and concludes the delegation “has been relatively hostile to U.S. trade liberalization.”
Riley finds the delegation’s lukewarm attitude toward trade odd, as he says expanding trade will boost the state’s economic vitality. “Yet even as these politicians have been seeking to block markets from competition, some sectors of the state’s economy have been thriving in the global marketplace,” Riley writes. “Every member of Congress who is facing a vote on trade-related legislation should consider the impact of that legislation on every worker and his family in his state, not just on one sector.”
Riley’s analysis dates to the vote on the 1993 North American Free Trade Agreement, which many regard as the start of the decline of North Carolina’s core manufacturing industries, textiles and furniture.
The state’s House members voted 8-4 in favor, while Republican Sens. Jesse Helms and Lauch Faircloth each voted “no.”
More recently, Riley points to 2011 votes on free trade agreements with Colombia, Panama, and South Korea.
Sens. Kay Hagan, a Democrat, and Richard Burr, a Republican, split on those votes, with Hagan casting a “no” vote.
On the trade agreements with Panama and Colombia, the state’s 13 House members were divided, with six members voting for the agreement with Panama and seven members voting for the agreement with Colombia.
The free trade agreement with South Korea was another story, however. While Hagan and Burr again split their votes, only one member of the House — 4th District Rep. David Price — voted in favor.
Of the members voting no on the free trade agreement with South Korea, Riley singled out longtime GOP Rep. Howard Coble, writing that Coble’s vote “may seem like the right one for one group of workers,” i.e., those employed by the textile and furniture industries, but “many more of his constituents will benefit from the increased opportunities that greater openness to trade and investment will create.”
In a statement following the vote, Coble said the Korean trade agreement would be “devastating” to the U.S. textile industry, which at one time was a “powerhouse” in his 6th Congressional District.
“The agreement with South Korea will provide instant, duty-free access for virtually all textile and apparel products, while giving U.S. producers no time to adjust,” Coble said in his statement. “The goals of this Congress should be to prioritize fixing U.S. trade policy, stopping manufacturing job loss, and closing the trade deficit.”
However, Coble went on to say that the agreements with Panama and Colombia did not present a similar threat, because “trade between these great nations is healthy and balanced.”
Hagan’s explanatin of her vote was less specific.
“Our state has suffered more than most from unfair trading practices for years, and I am tired of shipping good North Carolina jobs — in industries like textiles and furniture — overseas to countries that don’t play by the same rules,” Hagan said. “It is time we start protecting jobs here at home.”
In his report, Riley traces North Carolina lawmakers’ support for free trade to the state’s agrarian roots, as it relied on foreign markets to sell cotton and tobacco.
Riley also notes that the state benefited from the migration south of New England textile companies following the Civil War. The trend continued in the years following World War II. Northern textile factories lost nearly 300,000 jobs between 1950 and 1970, while at the same time some 280,000 workers were employed in southern textile mills.
The reason? Lower wages.
“But, just as these industries had once moved from New England to the South, where wages were once lower, the state’s textile and apparel manufacturers also increasingly moved jobs overseas,” Riley writes.
Free trade works both ways, Riley maintains, and as a result, North Carolina’s economy has benefited both from foreign investment by companies such as Daimler Trucks and Electrolux and exporting products such as pork (North Carolina is the second-largest pork-producing state).
Indeed, Riley notes that North Carolina’s agricultural exports increased 79 percent between 2001 and 2010 as worldwide demand not only for pork but poultry and sweet potatoes increased.
On the flip side, restrictive trade policies have an adverse affect on local companies.
Riley notes the adverse affects high tariffs on imported sugar on local companies, notably doughnut manufacturer Krispy Kreme, which pays 56 cents per pound for sugar while the rest of the world pays 31 cents.
While the price of sugar wasn’t cited as a factor in Krispy Kreme’s first-quarter revenue decline, it certainly couldn’t have helped.
Riley’s bottom line is while no one wants to contribute to job losses in this economy, it “would be a mistake for North Carolina’s elected officials in Washington, D.C., to focus their policy decisions based solely on the relatively small sectors of textile, apparel, and furniture manufacturing.”
Sam A. Hieb is a contributor to Carolina Journal.