Posted February 1, 2017

 

By Devin Steele (DSteele@eTextileCommunications.com)

 

SPARTANBURG, S.C. – On the eve of the U.S. presidential inauguration, a record 95 paid attendees were on hand for the South Carolina Manufacturers Alliance’s (SCMA’s) eighth annual Textile Summit here.

 

Auggie Tantillo, president & CEO of the National Council of Textile Organizations (NCTO), kicked off the half-day event by diving into the potential promise of an improved business environment under a new administration. (Read related blog here.)

 

“You may like or dislike Donald Trump,” he said in his opening remarks. “There are certainly things on both sides of that equation to argue over. But if you are in the business community, this is an exciting and positive development in terms of how policy apparently is going to evolve over the next four years.”

 

With that tone-setter, he jumped into issues specifically affecting the textile industry as they relate to then-incoming President Trump. The No. 1 issue: The Trans-Pacific Partnership (TPP), which has since become – for the time being anyway – a non-issue after the new Commander In Chief withdrew the U.S. from the ambitious, 12-country trade pact on January 23.

 

For the better part of five years when the TPP was being negotiated – during which time Tantillo and his staff worked tirelessly on to ensure U.S. textile interests were included – an air of inevitability was associated with the deal, Tantillo said. But even as President Obama stood determined to push the agreement through Congress as his signature trade legacy, public opinion began to erode the last couple of years as Trump and, to some degree Democratic candidate Bernie Sanders, continually poor-mouthed the TPP.

 

“Two significant presidential candidates were reversing the whole mindset on TPP by saying ‘wait a minute, why do we want to continue down a path that has led us to $500 billion-to-$700 billion-a-year trade deficits’ and ‘why do we want a trade agreement with a country, namely Vietnam, that does not have an open market and has a state-controlled economy by giving it significant advantages within the trading system?’ " Tantillo said.

 

Despite the fact that the text of the TPP may have been relatively decent compared to other agreements, Trump challenged the entire premise, Tantillo added.

 

Trump’s argument, Tantillo continued, was, “Isn’t it time that we as a country step back from what is really a post-World War II policy environment? Coming out of World War II, we were the strongest military, economic industrial power in the world and therefore we weren't so concerned about every trade agreement and every arrangement that we struck, where we were willing to make concessions in order to get the rest of the world back to a point of stability and growth. And while that made sense in the ’40s, ’50s and early ’60s, the world changed somewhere in the mid-’60s as all of these economies that were in shambles as a result of WWII improved. When they reemerged, our policy, unfortunately, didn't change.

 

“The diplomats in Washington became addicted to the concept of handing out favors and trading away hard, commercial assets in return for geopolitical or diplomatic benefits,” he added. “And we've been living with that policy, in reality, for the last nearly 70 years.”

 

But even with Trump’s executive order unraveling the U.S. from the behemoth agreement, Tantillo cautioned that it isn’t dead, only in “deep hibernation.” Though Trump took a much different posture on trade than we’ve seen in the last several decades, a well-entrenched, well-financed opposition still exists in Washington, Tantillo said. “That loyal lobby in favor of the old playbook is not going away,” he said.

 

“Nothing is ever dead in Washington from a policy perspective,” he explained. “There are just too many people, too many forces, too many entities who have an interest in seeing some of these things go forward and you know who they are: the retailers, the brands, the importing community, multinational corporations who have long since been producing much, much more offshore than they have been domestically, along with the Wall Street crowd that's been financing the trade and investment offshore. They're going to continue to press.”

 

Tantillo also discussed the possibility of the North American Free Trade Agreement (NAFTA) – and the entire free trade structure – being nixed or renegotiated under the new administration. On the campaign trail, Trump blasted the deal and blamed it on all kinds of evils and inefficiencies in our economy, Tantillo said. After calling for the cancellation of NAFTA during the campaign, Trump has moderated his tone since the election, pushing instead to review and possibly renegotiate it.

 

The NCTO and many others have communicated to the Trump team that canceling NAFTA would do more harm than good, Tantillo said.

 

“While it was a legitimate debate 20 or 25 years ago as to what NAFTA's impact was going to be on the economy, it's a reality today,” he said. “Unlike TPP, which has not gone into place, you don't have to disentangle anything with TPP. There's no economic partnership or relationship that has developed as a result of that agreement. With NAFTA, you now have two decades of integration and partnership that have evolved. Disentangling that is not going to come without some level of pain.”

 

The NCTO does agree that NAFTA could use a facelift, he added, particularly in the textile chapter – notably, a number of exceptions that exist related to the “yarn-forward rule,” or the origin requirement. Those exceptions were based on political concessions and not scientific analyses based on economics, he noted.

 

“The single largest exception was something called TPLs (tariff preference levels), which says in essence that you have that yarn-forward rule, but for $100 million square meters of knit apparel, you don't have to use it,” Tantillo said. “You just get a blanket exemption there, for whatever reason.”

 

As such, the council will encourage the Trump Administration to improve NAFTA, not cancel it, he added. And while Trump has not targeted other U.S. free trade agreements for possible annulment or analysis, it can be assumed that once the NAFTA issue is resolved, the changes made to that pact may serve as a template for other potential renegotiations, he noted. “So we have to get NAFTA right first,” he said.

 

The NCTO chief also delved into other issues on Trump’s radar for tackling the trade deficit, including a border tariff assessment to address U.S. value-added tax (VAT) disadvantages; a balance of payment surcharge; and a simplified tax code. He closed by talking about the council’s #WeMakeAmazing rebranding campaign.

 

Other speakers bring diverse presentations

 

Frank Crisp, operations manager at Toray Carbon Fibers America, Inc., Moore, S.C., discussed the Japanese company’s history, products and investment in South Carolina. A year ago, the company broke ground on a 400-acre site for a high-performance carbon fiber production facility. At more than $1 billion, the investment is the state’s second largest in history and will create 500 jobs initially. The plant is expected to open this summer.

 

Dr. Tairan Wang, COO of the newly formed Advanced Functional Fabrics of America (AFFOA), provided an update on the nonprofit research and development consortium comprised of partners from industry, academia and state governments. Last year, AFFOA was selected to lead the Revolutionary Fibers & Textiles Manufacturing Innovation Institute (RFT-MII) at the Massachusetts Institute of Technology (MIT).

 

He explained how AFFOA was leading the way in this “fabric revolution,” where fibers that have the functionality of semiconductor devices are being developed to be used in fabrics that can see, hear, sense, communicate, store and convert energy, regulate temperature, monitor health and change color.

 

Dr. Scott Baier, professor and interim department chairman of the Walker Dept. of Economics at Clemson University, provided an economic update and discussed international trade within that framework. In his presentation, he asked these questions:

 

• Will a proposed 35% tariff imposition by Trump save jobs? “In the short term, yes. In the long run, to me, it is not as obvious,” he said;

• Are job losses to due unfair trade? And what constitutes “bad” trade deals? “I’m willing to admit that we put stupid things in our laws all the time that hurt businesses and consumers,” he said; and

• What are the causes of job losses in manufacturing and what do we do about it? “Some of the causes include trade, domestic and foreign outsourcing, automation and services,” he said.

 

“As trade economists, we’ve been trying to tackle these questions for 20 years,” Baier added.

 

Roy Fluhrer, director of the Fine Arts Center in Greenville, S.C., offered information about the center’s new fiber arts program, which was announced last year. Thought to be the first of its kind in the nation, the program’s curricula include fiber and fabric formation such as spinning, weaving, tapestry and knitting, surface design, wet processes and CAD textile and apparel construction. Twenty-four students were enrolled in the first classes, he said.

 

“The alchemy in those classrooms is astonishing,” he said. “When you see the work those students are doing and the portfolios they are showing to colleges, you’re looking at some pretty astounding students, and we’re very proud of them.”

 

The program is supported by Sage Automotive, Inman Mills, Alice Manufacturing, Springs Creative and Glen Raven and was created in collaboration with N.C. State’s College of Textiles.

 

Fluhrer also invited April Dauscha, fiber arts instructor, and Beth Brotherton, director of communications at Greenville County Schools, to the dais to explain more about the program. After a nationwide search, Dauscha was selected to lead the program after serving at the Chicago High School of the Arts. Brotherton discussed the center’s partnership with the school system.

 

Tim Sinclair, director at CPA firm WebsterRogers, rounded out the program by providing information about his company’s work with manufacturers in the Palmetto State.