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2003

HEARING ON CHINA’S IMPACT ON

THE U.S. MANUFACTURING BASE

HEARING

BEFORE THE

U.S.-CHINA ECONOMIC AND SECURITY 

REVIEW COMMISSION

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JANUARY 30, 2004

Printed for the use of the 

U.S.-China Economic and Security Review Commission 

Available via the World Wide Web: http://www.uscc.gov

(

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

ROGER W. ROBINSON, Jr., Chairman 

C. RICHARD D’AMATO, Vice Chairman 

CAROLYN BARTHOLOMEW, Commissioner 

GEORGE BECKER, Commissioner 

STEPHEN D. BRYEN, Commissioner 

JUNE TEUFEL DREYER, Commissioner 

ROBERT F. ELLSWORTH, Commissioner 

PATRICK A. MULLOY, Commissioner 

WILLIAM A. REINSCH, Commissioner 

MICHAEL R. WESSEL, Commissioner 

LARRY M. WORTZEL, Commissioner

DAVID J. OHRENSTEIN, Executive Director 

ROBERT A. BEAN, Senior Advisor and Director Public and Governmental Affairs 

KATHLEEN J. MICHELS, Associate Director

The Commission was created in October 2000 by the Floyd D. Spence National Defense Authorization Act for 2001 sec. 1238, Public Law 106–

398, 114 STAT. 1654A–334 (2000) (codified at 22 U.S.C. sec. 7002 (2001)), 

as amended, and the ‘‘Consolidated Appropriations Resolution of 2003,’’ 

Public Law 108–7, dated February 20, 2003. Public Law 108–7 changed 

the Commission’s title to U.S.-China Economic and Security Review Commission. 

The Commission’s full charter is available via the World Wide Web: http:// 

www.uscc.gov. 

The Commission’s Statutory Mandate begins on page 151. 

(II) 

iii

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

MARCH 4, 2004

The Honorable TED STEVENS, 

President Pro Tempore of the U.S. Senate, Washington, D.C. 20510

The Honorable J. DENNIS HASTERT, 

Speaker of the House of Representatives, Washington, D.C. 20515

DEAR SENATOR STEVENS AND SPEAKER HASTERT:

On behalf of the U.S.-China Economic and Security Review Commission, we are 

pleased to transmit the record of our field investigation in Columbia, South Carolina 

on January 30, 2004. This field investigation titled, ‘‘China’s Impact on the U.S. 

Manufacturing Base,’’ gave the Commission the opportunity to examine the real, onthe-ground impacts of fast increasing Chinese imports and off-shore transfers by 

U.S. firms on the U.S. manufacturing base. 

This investigation revealed the extent of the difficulties faced by America’s manufacturers, workers and communities in the face of manufacturing competition from 

China and the urgent need for action to deal with them. The location was vital to 

the message. According to U.S. Department of Labor statistics, between November 

2002 and November 2003, Columbia, South Carolina lost 12,000 jobs, which represents a 4 percent decrease, the largest percentage of jobs lost that year for any 

metropolitan area in the United States. The State of South Carolina lost 2.6 percent 

of its jobs over that same time period, the largest percent decrease of any State. 

In the manufacturing sector, South Carolina has lost 63,000 jobs, a nearly 20 percent decline over the past three years. 

Representing bipartisan Congressional concerns about this matter, Senators Ernest F. Hollings (D–SC) and Lindsey O. Graham (R–SC) took part in the proceedings and expressed to the Commission their views regarding what they believed 

to be China’s unfair trade policies, particularly its artificially undervalued currency, 

as well as export subsidies, dumping, and other WTO-inconsistent practices. Panelists representing South Carolina’s manufacturing industries—including textile, apparel, steel and plastics—gave vivid descriptions of the bottom line challenges they 

face from such Chinese competition. 

Unfair Chinese Trade Policies 

China’s continued rapid growth in manufacturing, U.S. companies’ willingness to 

move production abroad in order to cut costs, often referred to as offshore 

outsourcing, and China’s policies aimed at encouraging growth and investment in 

its manufacturing base were discussed in depth at this investigation. In assessing 

causes of the worsening U.S. trade deficit and loss of U.S. manufacturing jobs, participants pointed to China’s lack of labor and environmental standards, rampant infringement of intellectual property rights, state subsidization of its state-owned industries through preferential tax treatment, access to capital, and other benefits, 

and its record of lagging compliance with many important commitments under its 

WTO accession agreement. These factors have undermined the competitiveness of 

U.S. manufacturing firms in South Carolina and elsewhere in our country. 

Overall, many of the hearing participants were exceedingly critical of the U.S.’ 

trade strategy and policies. Many claimed that policies aimed at promoting free 

trade were in fact encouraging the transfer of manufacturing and research and development to China to the detriment of the U.S. economy. 

Industry Specific Considerations 

Steel: Over the last three years South Carolina’s steel and metals industry has 

experienced a dramatic decline. Between November 2000 and November 2003, South 

Carolina’s primary metals and fabricated metals industries lost a combined 7,300 

jobs, representing contractions of 20 percent and 18.6 percent, respectively. According to the U.S. Department of Commerce, between 2000 and 2002, South Carolina’s 

exports of primary metal manufactures fell from just over $126 million to approximately $76 million. 

Panelists representing U.S. steel firms described the effect of competition from 

China on their industry. They noted that China’s steel industry—which benefits 

from extensive capital subsidies from China’s state-owned banks—has grown 10 percent in the last 12 months resulting in soaring demand for scrap steel and other 

inputs. One particularly ominous concern expressed by hearing panelists is that a 

slow down in the Chinese economy could reduce its domestic demand for steel and 

iv

lead to dumping of subsidized Chinese steel in U.S. markets, resulting in further 

price pressures on U.S. steel producers.

Textiles and Apparel: The U.S. textile and apparel industries have suffered dramatically since China entered the WTO in 2001. Over 50 American textile plants 

closed in 2003, resulting in the loss of 49,000 jobs. One out of every four U.S. textile 

jobs that existed in January 2001 no longer exists. South Carolina’s textile industry 

has suffered significant losses. In 2003, 4,000 textile workers in South Carolina lost 

their jobs. This was second only to North Carolina—whose textile industry lost 

13,600 jobs. 

Textile manufacturers and union representatives expressed deep-seated concern 

that the expiration of the Multifiber Arrangement on January 1, 2005 would allow 

China to capture a vast percentage of the U.S. market and decimate the remaining 

U.S. textile industry, which still employs 630,000 people. Participants also alerted 

the Commission that new trade agreements, such as the Central American Free 

Trade Agreement (CAFTA), provide an opportunity for the transshipment of Chinese textiles through third country ports, which would undermine the China specific 

textile safeguards imposed by the U.S. against a range of Chinese goods in December. 

To guard against surges of Chinese textile imports from subsidized state-owned 

factories, the U.S. negotiated a special textile safeguard as part of China’s WTO accession agreement that allows the U.S. and other WTO members to impose restrictions on Chinese textile imports when they pose ‘‘a significant cause of material injury, or threat of material injury to the domestic industry.’’ Although China entered 

the WTO in January 2002, the U.S. Government did not publish procedures to implement this safeguard until May 2003, and first used this provision in November 

2003 when the Bush Administration announced the imposition of textile safeguards 

on select categories of knit fabric, dressing gowns, robes and bras imported from 

China. These year-long restraints became official on December 23, 2003. The Commission believes the U.S. Government has not been aggressive enough in using this 

textile safeguard. 

Based on the record of this hearing and the Commission’s other work on these 

issues to date, we present the following preliminary recommendations to the Congress for consideration. The Commission will continue to develop these recommendations and provide additional guidance in our annual Report to the Congress. 

Preliminary Recommendations: 

• The United States Trade Representative and the Department of Commerce 

should immediately undertake a comprehensive investigation of China’s system 

of government subsidies for manufacturing, including tax incentives, preferential access to credit and capital from state-owned financial institutions, subsidized utilities, and investment conditions requiring technology transfers. 

USTR and Commerce should provide the results of this investigation in a report 

that lays out specific steps the U.S. Government can take to address these practices through U.S. trade laws, WTO rights and by utilizing special safeguards 

China agreed to as part of its WTO accession commitments. 

• The U.S. tax code should be restructured to eliminate incentives for U.S. businesses, particularly manufacturing, but also services and high technology companies, to shift production, services, research and technology abroad. Tax incentives which reward relocation abroad should be removed from the tax code as 

soon as possible. 

• USTR should press for provisions during the Doha Round that allow for increased penalties on firms that have been found in violation of anti-dumping 

laws on multiple occasions. 

• The Administration should undertake a comprehensive review and reformation 

of the government’s trade enforcement infrastructure in light of the limited efforts that have been directed at enforcing our trade laws. Such review should 

include consideration of a proposal by Senator Hollings (D–SC) at our hearing 

to establish an Assistant Attorney General for International Trade Enforcement 

in the Department of Justice to enhance our capacity to enforce our trade laws. 

Moreover, the U.S. Government needs to place a renewed emphasis on enforcement of international labor standards and appropriate environmental standards. 

• If we experience new surges of imports that threaten the U.S. steel industry, 

the United States should claim a national security exemption under Article XXI 

of the WTO for the steel industry because of its importance to our military manufacturing sector and our national security. 

• The United States should work with other interested WTO members to convene 

an emergency session of the WTO governing body to extend the Multifiber Arrangement at least through 2008 to provide additional time for impacted industries. 

v

• The U.S. Government should more fully and effectively make use of the Section 

421 China-specific safeguard and the China textile safeguard available to WTO 

members. These were important provisions negotiated into China’s WTO accession agreement and intended to provide relief for domestic industries hit with 

surges of imports from China. 

• The leadership and appropriate Committees of Congress should convene a summit of leaders of the textile industry, its workers and their representatives, impacted communities and others to help define the crisis in the domestic textile 

and apparel industry as it related to trade with China and to define a plan of 

action to help address predatory trade practices and ensure that domestic capabilities exist to meet our Nation’s economic and national security needs in this 

important area. As part of that effort, the Summit should:

• Review recently completed free trade agreements and those under negotiation 

so as to avoid loopholes such as that present in the Central American Free 

Trade Agreement (CAFTA) that grant the Chinese textile industry the opportunity to circumvent American safeguard and tariff provisions. 

• Examine Customs Service efforts to monitor and inspect shipments of textile 

and apparel imports to ensure that the law is being appropriately enforced 

and determine what increases in resources are necessary to protect the rights 

and interests of the industry and its workers. 

Community Impacts 

The Commission heard powerful testimony on the extent to which trade-related 

economic dislocations have impacted many South Carolina manufacturing communities. The Commission was told that the significant loss of jobs in South Carolina 

due to import competition and off-shoring had resulted in externalities such as the 

erosion of the local tax base in many communities and the accompanying decline 

of law enforcement, infrastructure, and health services and had a debilitating impact on families and quality of life. 

Preliminary Recommendations: 

• U.S. trade policies have contributed to current high levels of unemployment. 

The Administration should authorize another unemployment insurance extension in an attempt to provide unemployed workers with a greater amount of 

time with which to locate employment. 

• A new type of education program should be enacted for long-term and effective 

adjustment to the employment impacts of outsourcing and relocation abroad. 

Further, a series of Federal and local training programs in coordination with 

private U.S. firms aimed at tailoring education to meet future needs should be 

developed. 

• The Congress should fund information sessions and a public awareness campaign to inform laid off workers about existing and newly established programs 

such as Trade Adjustment Assistance (TAA). Petitions for TAA eligibility should 

be processed expeditiously.

Thank you for your consideration of our recommendations. In addition to the 

above findings we commend you to also review the record of our September 25, 2003 

hearing on China’s investment, industrial, and exchange rate policies, our February 

5, 2004 hearing on China’s WTO compliance and a February 12–13, 2004 field investigation in San Diego on U.S.-China high-technology trade. We hope you will find 

all of these proceedings helpful as the Congress continues its assessment of the implications of China’s growing role in global trade and manufacturing. 

Sincerely,

Roger W. Robinson, Jr. 

Chairman 

C. Richard D’Amato 

Vice Chairman

Note:

Commissioners Bryen, Reinsch, and Wortzel dissented in whole or in part from the 

Commission’s majority in submitting these preliminary recommendations.


Insert names.eps
(VII)

CONTENTS 

Page 

FRIDAY, JANUARY 30, 2004

HEARING ON CHINA’S IMPACT ON

THE U.S. MANUFACTURING BASE 

Opening remarks of Chairman Roger W. Robinson, Jr. ....................................... 1

Opening statement ........................................................................................... 9

Prepared statement .......................................................................................... 11

Opening remarks of Commissioner George Becker, Hearing Co-Chair .............. 7

Opening statement ........................................................................................... 12

Prepared statement .......................................................................................... 14

Opening remarks of Vice Chairman C. Richard D’Amato .................................... 8

CONGRESSIONAL PERSPECTIVES

Statement of Lindsey O. Graham, a U.S. Senator from the State of South 

Carolina ................................................................................................................ 2

Statement of Ernest F. Hollings, a U.S. Senator from the State of South 

Carolina ................................................................................................................ 15

Discussion, Questions and Answers ....................................................................... 22

PANEL I: TEXTILES/APPAREL

Statement of Norman Chapman, President, Inman Mills, Inman, South Carolina ........................................................................................................................ 29

Prepared statement .......................................................................................... 31

Statement of Sarah Friedman, Executive Director, Southeastern Apparel 

Manufacturers and Suppliers Association (SEAMS) ......................................... 34

Statement of Larry Crolley, President, Craig Industries ..................................... 35

Statement of Harris Raynor, Southern Regional Director and International 

Vice President, Union of Needletrades, Industrial and Textile Employees 

(UNITE) ................................................................................................................ 37

Statement of Smyth McKissick, Chief Executive Officer, Alice Manufacturing 

Company, Inc., Easley, South Carolina, and representing American Textile 

Manufacturers Institute (ATMI) ......................................................................... 39

Prepared statement .......................................................................................... 41

Panel I Discussion, Questions and Answers .......................................................... 59

PANEL II: STEEL

Statement of Bob Johns, Marketing Director, Nucor Corporation ...................... 71

Statement of Timothy J. Dillon, Senior Vice President, Commercial Georgetown Steel Company, LLC ................................................................................... 74

Prepared statement .......................................................................................... 76

Statement of Larry Murray, Staff Representative, United Steelworkers of 

America (USWA) .................................................................................................. 78

Panel II Discussion, Questions and Answers ........................................................ 80

PANEL III: TRENDS IN TRADE AND SOUTH CAROLINA MANUFACTURING

Statement of Donna DeWitt, President, South Carolina AFL–CIO .................... 92

Statement of Jon T. McClure, President and Chief Executive Officer, ISO 

Poly Films, Inc. .................................................................................................... 94

Prepared statement .......................................................................................... 96

Page

VIII

Statement of J. Richard Dillard, Jr., Director of Public Affairs, Milliken 

& Company, Immediate Past Chairman, Spartanburg Area Chamber of 

Commerce, and Board Member, South Carolina Chamber of Commerce ....... 101

Prepared statement .......................................................................................... 103

Panel III Discussion, Questions and Answers ....................................................... 107

PANEL IV: COMMUNITY IMPACT

Statement of Larry Martin, a State Senator from the State of South Carolina 115

Statement of Jack Hutchison, Economic Development Coordinator, Georgetown County Economic Development Commission ............................................ 118

Statement of Evans Tindal, Director of Operations, Cheraw Yarns Mill ........... 119

Panel IV Discussion, Questions and Answers ....................................................... 121

Open Microphone for Public Comment .................................................................. 129

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Testimony of U.S. Representative John M. Spratt, Jr. (D–SC) ........................... 138

South Carolina Fair Trade ...................................................................................... 140

First Congress, Session I, Chapter 2, 1789—First U.S. Tariff Act ...................... 142

Letter dated February 12, 2004, from Urs Buehlmann and Al Schuler, to 

Chairman Robinson and the Members of the U.S.-China Economic and 

Security Review Commission .............................................................................. 146

ADDITIONAL MATERIAL SUPPLIED FOR THE WEB

WORLD WIDE WEB: http://www.uscc.gov 

Article from Wood & Wood Products, January 2003, ‘‘How Can the U.S. 

Wood Products Industry Compete?’’ by Urs Buehlmann, Matt Bumgardner, 

Al Schuler & Rich Christianson 

Article from Wood & Wood Products, May 2003, ‘‘U.S. Competitiveness Study: 

How Furniture and Cabinet Manufacturers Compare’’ by Urs Buehlmann, 

Matthew Bumgardner, Al Schuler & Rich Christianson 

Article from the U.S. Department of Agriculture, Forest Service, ‘‘Identifying 

Future Competitive Business Strategies for the U.S. Residential Wood Furniture Industry: Benchmarking and Paradigm Shifts’’ by Albert Schuler 

and Urs Buehlmann 

(1)

HEARING ON CHINA’S IMPACT ON 

THE U.S. MANUFACTURING BASE 

FRIDAY, JANUARY 30, 2004

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION, 

Washington, D.C. 

The Commission met in Room 101, Blatt Building at the South 

Carolina State House Capitol Complex, Pendleton and Assembly 

Streets, Columbia, South Carolina at 9:30 a.m., Chairman Roger 

W. Robinson, Jr. and Commissioner George Becker (Hearing CoChairs), presiding. 

OPENING REMARKS OF CHAIRMAN ROGER W. ROBINSON, JR. 

Chairman ROBINSON. I’d like to call for order, if I may, on the 

first field investigation of the U.S. China Economic and Security 

Review Commission, a practice that we hope to repeat on a number 

of occasions in the future. It’s designed to get firsthand, on-theground information, in this case, on China’s impact on the U.S. 

manufacturing base. And, regrettably, that’s no more apparent or 

problematic than concerning the State of South Carolina. We’re delighted to be here in Columbia. We thank all of those who have 

been so generous with their time and hospitality in making this 

happen, not to mention the great support we’ve received from the 

offices of Senator Graham and Senator Hollings. We are honored 

to have Senator Graham with us today to kick off this field investigation. We likewise think that it might be best to hold the opening statements of the Chair, Vice Chair and other Co-Chairman for 

today’s hearing, Commission Becker, in order to permit Senator 

Graham to move right ahead and open for us. Senator Graham was 

elected to the South Carolina House of Representatives in 1992, 

and in 1994 became the first Republican to represent South Carolina’s Third Congressional District in the U.S. House of Representatives since I believe it was 1877. He has served the Nation in the 

United States Air Force and the South Carolina Air Guard, was a 

veteran of Operation Desert Shield and Desert Storm, and continues to serve as a Lieutenant Colonel in the U.S. Air Force Reserves. After spending four terms in the House, Senator Graham 

was elected to the U.S. Senate in 2002. He is a Member of the Senate Arms Services Committee; the Senate Committee on Health, 

Education, Labor and Pensions; and the Senate Judiciary Committee and Senate Veterans Affairs Committee. We’re honored to 

have him here today to appear before the Commission. We had the 

good fortune of hearing from him at an important hearing that we 

convened on September 25th where he provided a forceful presentation on a number of the issues that we’re going to be addressing 

2

here. And, if you’ll indulge me, Senator, I can’t resist sharing with 

our audience just a couple of comments you made——

Senator GRAHAM. Take your time. 

Chairman ROBINSON. —in what we all would regard as plain talk 

and powerful points, one after the other. It was really an extraordinary presentation that I commend to all of your attention. But 

one of the points that Senator Graham made at that time was that 

it is hard to have free trade if you do not have free speech. ‘‘Somebody in our government has got to come to grips with the idea that 

we are dealing with a country that cheats and is a communist dictatorship and what do you expect. They are cheating and they are 

taking the money to build up their military. It’s a lose, lose.’’ There 

were many other dimensions to that particular address but it gives 

you a sense of how forcefully the State of South Carolina is represented and how powerful a proponent you have in Washington. 

So, with that, Senator Graham, we welcome your remarks. 

CONGRESSIONAL PERSPECTIVES PANEL 

STATEMENT OF LINDSEY O. GRAHAM

A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA 

Senator GRAHAM. Well, thank you, Mr. Chairman. Welcome to 

South Carolina. Our economy has improved over the last couple of 

days because of Presidential politics and this Commission. I don’t 

know how you got both here, but we’re glad to have you and I 

think this is a good idea for the Commission to get out of Washington and talk to people who are affected by China. And I do appreciate that compliment. There’s a lot of talk about which party 

is best for the country and who’s going to win the Democratic Presidential primary. And I’m glad they had one here and our Democratic party chairman has done a good job and it’s been beneficial 

to the State to showcase South Carolina through this debate. But 

there were some things said last night that I would like to associate myself with. I’m obviously on the other side of the aisle and 

I’m a big fan of President Bush. But when it comes to trade, I don’t 

think people really ask too much if you’re a Republican or a Democrat when you get the layoff notice. You lose your job, you lose your 

job. And what Senator Lieberman said last night about China I 

thought was dead on. It’s funny, during the Clinton years, it was 

a real effort to have a global economy to allow China to come in 

and be part of the Family of Nations. I was always leery of China. 

I voted one time, I think, for most favored nation status to see how 

it would play and ever since then I’ve voted continually to not open 

our doors to China until they change. I’ve never lived an extended 

period of time in a communist dictatorship. And we tend to forget 

that. Cheap labor is part of capitalism. Those of us in South Carolina who have benefited from the textile industry, my family included immensely, have to realize that these jobs came from the 

North. People came to South Carolina years ago to operate the textile plants because labor was cheaper and there were no unions. 

And it was a very good business climate. That’s part of the capitalist dynamic. Where do I locate my business? What’s the most favorable climate? And if one State can provide a better climate than 

the next, then that’s just the way it is. What I’m talking about and 

what this Commission is exploring is not that at all. They level 

3

against me and anyone else who wants to talk about China as 

being a protectionist; that I’m supporting the old economy and not 

realizing about the new economy; and I’m trying to defend the 

buggy-whip manufacturer when cars are right around the corner. 

This Commission has done an invaluable job. You’ve taken the 

rhetoric of both sides and you’ve analyzed it and you’ve come up 

with some findings. And if you look at this issue very close for a 

short period of time, you see trends. We’re losing jobs to India and 

other places because of outsourcing. Cheap labor, very qualified, 

educated people competing against services here. I don’t know how 

to stop that other than making our economy a better place to do 

business by reforming the way we litigate, regulate and tax. What’s 

going on with China is totally, completely different. The reason our 

textile industry has been under siege, it’s not because they haven’t 

invested in modern technology. If you walk through a textile plant 

in South Carolina today versus when I was born in 1955 living in 

a textile town, there is a world of difference. The reason our textile 

industry, in particular, has been devastated is not because of 

NAFTA; it’s because the Chinese government has decided to steal 

the market share. They have tried to benefit from NAFTA even 

though they’re not a partner. Trans-shipment is a huge problem. 

And you know that. Billions of dollars of goods made in China are 

working their way through NAFTA and other trade agreements 

that the Chinese are not a part of because they cheat. I said before, 

it’s hard to deal with somebody that has a totally different value 

system. Democracies seldom go to war and we’re able somehow to 

resolve our trade disputes in court. Go to China and try to go to 

court. If you’re in China and your intellectual property has been 

stolen, good luck trying to get it worked out. If you sell semiconductors in China, and they put a value-added tax just on Western 

made semiconductors, good luck going to Congress and trying to 

get a fair shake. The Chinese system of government and the Chinese trade policies are something that we really don’t understand 

and have not come to grips with in terms of how it impacts our 

trade. The money. I’ve been told that if we try to float the Chinese 

currency that we will cause great instability in China with their 

banking system. I am not an expert on that issue, but I do know 

this. That in 1994, when the Chinese began to peg their currency 

to our dollar, the deficit with China trade wise was 29.4 billion. In 

2003, the trade deficit with China is about 125 billion. I know this, 

that everybody that I represent from the textile industry, from any 

manufacturing entity, is telling me that having the Chinese currency valued the way it is is killing them. And they’re hoarding 

dollars. The President talked about marriage and a lot of other 

issues that are important. I’m here to let the Commission know 

that I’ve read your report, and we may have bills talking about 

marriage, but the thing I like most about being a United States 

Senator is you can put legislation on anything you want to. We 

may have a bill talking about marriage but we’re also going to have 

on that same bill talking about the value of the Chinese currency. 

I have promised the people that I represent that talk has been in 

abundance and action has been limited. I have behind me some big 

constituencies in this State—the textile people and the steel people. 

Usually, you use this opportunity to try to make them feel good 

4

about their representative. I’m here to tell them that I don’t feel 

like I’ve done a good enough job for them, any one of them. I don’t 

see any short-term solutions. But we’ve got to fight back where we 

can. And your report about the manipulating of the Chinese currency is dead on. And if it has a ripple effect in the Chinese economy, so be it. It’s time for them to change their economy. The numbers speak louder than I could ever speak. I’ve got statistics here 

that are just astonishing, and I’ll read some of them before I end. 

But what I would like to see my country do, Republican and Democrat, is to ask that the Chinese government stop cheating; to try 

to persuade the Chinese government, through international organizations like the WTO and other avenues, to stop stealing market 

share; be a better member of the Family of Nations. And there’s 

a lot of resistance to any idea about change. One of the reasons is 

that it costs some money. The plants that have closed throughout 

this country and have gone to China are not making products in 

China to sell to the Chinese. They’re making the same widget that 

they made in America for a fraction of the cost, selling it back to 

the American economy and consumers’ benefit in the short term. 

The Chairman mentioned about where the money goes in China. 

0.1 percent of the people in China have benefited from this trade 

regime. It is not going to the average Chinese. It is going into their 

military disproportionately. The Chinese have launched a man in 

space. That same rocket could be used for different purposes. What 

I considered to be at one time a regional problem now is a national 

security problem. The Chinese have doubled their share of the steel 

industry in ten years. If you produce steel in China, the least of 

your worry is paying the power bill because the Chinese government pays the power bill for you. The American government 

doesn’t pay the power bill for Nucor and Georgetown Steel. It’s the 

number one cost of producing steel. There will be an effort this 

year, I hope, to shake things up. This Administration has listened; 

they have taken some action, but I don’t believe they quite understand it yet. That we’re dealing with a Chinese communist dictatorship that is an economic and military threat to our way of life. If 

we had had these same policies with the former Soviet Union in 

terms of trade and allowed the Soviet Union to enrich itself in the 

same manner that we’re allowing the Chinese government to enrich itself by stealing market share, it is my belief that the former 

Soviet Union would still be in business. The reason it collapsed is 

that we took a firm view of their human rights record. We stood 

up to them at every turn. President Reagan went in front of the 

Wall, the Berlin Wall, and said tear it down. Right now, the wall 

that exists in China, our approach is can we sell you more bricks. 

I’m very disturbed about the long-term consequences of the China 

that is not met forcibly. They have taken the field and they have 

shown a willingness to do almost anything to enrich their economy. 

And their economy is a command-controlled dictatorship. People in 

China would only dream of being able to criticize their government 

the way I’m criticizing mine. If you had said what I’m saying today 

about the Chinese way of doing business, you would be in jail. 

When you talk about international wage standards and environmental standards, I’m listening. I don’t want to over-regulate the 

world, but I do want a level playing field. My State, in South CaroVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
5

lina, manufacturing has declined 6.6 percent. Nationally, it’s declined 4.2 percent. Why? It’s not that we’re making buggy whips. 

We’re making products that people want but we can’t make them 

and stay in business because of China, and other places like China, 

but mainly China. There have been two States in the whole fifty 

State union that’s had a plus up in manufacturing—Hawaii and 

Nevada. Productivity is part of it, but that’s not what’s happening. 

We’re not that much smarter, that much more efficient. It’s just 

slowly but surely our economy is bleeding. I don’t care if the Dow 

gets to 20,000. It doesn’t matter because we’re having a jobless recovery. Why are we having a jobless recovery? Because if you want 

to create a new job, then you’ve got to pick the way we tax, the 

way we regulate, the way we litigate, makes it a hard choice to 

pick our country. The way the Chinese tax, the way they regulate, 

the way they litigate, makes it an easy decision to go over there 

in the short term. Here’s what happens if you choose to partner 

with these folks, the government. The Chinese people, I’m sure, are 

wonderful people. I’m just not a big fan of dictatorships communist 

in nature. The number one complaint I’m getting back now is companies who decide to go into business with Chinese entities find 

themselves when they get to be profitable, the laws change. And 

next week there’s a plant across the street making the same product with their own technology totally owed by the Chinese. So, if 

you go there to make some quick bucks, understand the consequences of what may happen to you. We’ve lost 41,000 jobs in 

South Carolina in 2003. I’m here to tell you, it’s not because we’re 

lazy; it’s not because we’re dumb. It’s going on all over the country. 

We’re not a lazy people; we’re not a dumb people. Chinese access 

to the U.S. textile and apparel market doubled, more than doubled 

in 2002. 117 percent. In 2003, an additional 114 percent. It is not 

a two-way street. Our steel industry is having the same type of effects. More than 200,000 U.S. textile workers have lost their jobs. 

Here’s what I say to the multi-national corporations who pooh-pooh 

the textile industry or any other industry like it: What do you tell 

a 45 or a 50 year old person who’s gotten a notice that their job 

is over? Where do they go? We’re having 250 million dollars for job 

retraining. What do we train people in that they can stay in business here? Eight percent of the lawyer jobs, God knows we’ve probably got too many lawyers, but eight percent of the lawyer jobs in 

this country in the research area are going to be lost to India. The 

number one deal in medicine now is to have somebody overseas 

read the diagnostic testing because they can do it so much cheaper. 

What area of the economy is not vulnerable to this? What do you 

train people to do if you don’t regulate China? If they choose to 

play in your business, no matter how high tech it may be, if they 

choose to, they will eventually get you. Not because they’re better 

business people; it’s because they have absolutely no value system 

that we all play by. This Commission is extremely important only 

if we do something. We’ve wasted your time, the taxpayer money, 

put on a political show, if all we do with your report is say isn’t 

that a shame. And every time I speak this way, people ask me well, 

what should we do. You’re talking about concepts just in general. 

Start with the money. Why shouldn’t the Administration and the 

Congress heed your call to actively get the Chinese to float their 

6

currency to get its true value. Let’s start with the money. Let’s 

start with the dumping in textiles. Let’s go to the Chinese government and say that if you keep dumping and trans-shipping, we’re 

going to have permanent quotas. Let’s fight back. If you continually 

steal intellectual property, you’re going to find yourself before every 

world trade organization that exists. Let’s fight back. We fought 

back against the former Soviet Union and communism at every 

turn. We spent trillions of dollars during the Cold War to make 

sure that communism did not spread. It was one of the best investments we’ve ever made. We’re AWOL as a country when it comes 

to standing up to this communist dictatorship that’s playing unfairly, that oppresses its people, is bleeding our economy dry. 

That’s not protectionism. To me, that’s just patriotism. Thank you 

for coming to South Carolina. The trade deficit with China will 

only get worse until we act. The numbers speak for themselves. 

You know them better than I do. I’m here today to say that numbers tell a lot. But I grew up in South Carolina like John Edwards. 

He said he grew up forty miles from the Greenville debate. He was 

born in Seneca, South Carolina. Guess where I was born? Seneca, 

South Carolina. Same hospital. Two years apart. He looks younger 

but he’s not. I was born in the right wing and he was born in the 

left wing. John and I disagree on a lot but when he talks about seeing mills close and people thrown out of work, he’s right. He’s dead 

right. I know President Bush is a compassionate man. I know he 

believes in trade. I honestly and completely do. We need to make 

sure that every country can contribute in a way that’s helpful to 

their people and everybody has a niche to play in the world market. There is no room in the world market for a communist dictatorship that cheats. God Bless You. Thanks for coming. 

Chairman ROBINSON. Thank you, very much, Senator Graham. 

Senator GRAHAM. Thank you. 

Chairman ROBINSON. Do you have perhaps a moment or two 

for——

Senator GRAHAM. I’ve got all the time you need. 

Chairman ROBINSON. I know our Co-Chairman would like to pose 

a question to you for today’s hearing. Commissioner Becker. But I 

would only say on behalf of the Commission that, again, we’re very 

pleased you would take the time to be with us. And I can also assure you, and after having you read our final report, I think you’re 

probably persuaded, that this is not another academic exercise or 

rehash that this Commission is engaged in. 

Senator GRAHAM. I’m completely floored by the details. You guys 

all have——

Chairman ROBINSON. Well, we’re prepared to deal with the facts, 

as they exist. We are prepared to let the proverbial chips fall where 

they may. There’s been extraordinary bipartisanship on this Commission. It’s tough minded; it’s security minded by mandate. We’re 

not just here to be a cheerleader and look at what’s right about the 

relationship, although there are a number of positive indicators as 

well. We’re more mandated to look at the vulnerabilities of our 

country, what’s unfair, what’s wrong with this picture. And we’re 

going to state those facts as forthrightly and powerfully and persuasively as we know how. And that’s our pledge in turn to you 

7

and to South Carolinians. And with that, I would like to turn it 

over to my Co-Chairman, George Becker. 

OPENING REMARKS OF COMMISSIONER GEORGE BECKER

HEARING CO-CHAIR 

Co-Chair BECKER. Thank you very much. I certainly appreciate 

your remarks, Senator. You’ve got a good hold on the problem. I 

want to echo a bit of what Chairman Robinson said about the mandate of this Commission. Certainly, we’re not here just to document 

the loss of jobs and the loss of plants and the suffering of workers 

who have been displaced. We want solutions. And one I wanted to 

talk to you about is, as a Senator, you’re in a position I think to 

do something about. I was glancing ahead at some of the ATMI testimony and their comments. One of the things that they were 

pleading for is that Congress reject CAFTA. You were talking 

about transnational shipments and you mentioned Mexico and 

other low wage countries. And if it’s not China, it’s going to be 

somebody else that’s involved in this. We’re fighting this battle on 

many, many fronts. And they’re asking Congress to reject CAFTA. 

I don’t know whether that extends to FTAA. But what they’re concerned about is the trade agreements that are being initiated 

through USTR and which Congress has in effect given the Administration a blank check on. I was wondering how you feel about 

that, and what you feel can be done from that end. USTR goes 

their own way. And there was a resolution from Congress before 

the last round of bargaining in Doha that they hold the line and 

not give away anything concerning our safeguards or anti-dumping 

permissions. And yet they’re on the table for bargaining. And when 

USTR puts it on the table for bargaining, I’m afraid it’s gone. And 

I would like your comments on that. 

Senator GRAHAM. Okay. Well, let’s look at it less emotionally; 

kind of walk ourselves around the world and find out where we’re 

at trade-wise. There are a lot of non-tariff trade barriers that exist 

that somehow we have to deal with. I think the European demands 

about genetically altered food and other aspects of the European 

Unions policy about some of our agricultural products are non-tariff 

trade barriers. I think they’re using science in a way to try to deny 

market access. Having said that, our farm subsidies do not withstand scrutiny. So there’s some practices within our own country 

that need to be changed because the subsidies that we have right 

now in our farm system are necessary because a lot of times you’re 

competing with governments; not just a competitor. But I would 

like to see the subsidies in our country changed and try to get 

other people to do likewise. The Europeans are even worse than us 

in terms of agriculture. I just got back from Central America and 

South America, and the economies are really in bad shape. And the 

number one question I asked is what kind of influence do you have 

from Chinese business. The Chinese are coming there in droves. 

The African—I can’t remember the acronym—but the trade agreement we have with Africa, the number one beneficiary of that trade 

agreement is people who own or build warehouses where Chinese 

companies are locating to get goods from China to send through 

that trade agreement. I would like to help Central American countries. The Singapore-Chilean trade agreement that came before the 

8

Congress, Zoellick put on the table changing the professional immigration standards. In other words, he was trying to change the law 

through a trade agreement to allow certain professional people to 

come in and get citizenship and visas. The problem I have with 

him is he puts everything on the table. I wouldn’t let him buy my 

car. I don’t think he’s a very good negotiator. I think that we’re 

taking our foreign policy and trying to implement it through trade 

agreements. CAFTA and any other trade agreement that comes 

through the Congress is going to be met with resistance until you 

can prove to me that China will not take advantage of it cheating. 

I’m not going to extend any more vehicles in the trade area until 

we deal with the current problem of trans-shipment in an honest 

and serious way. I don’t want to be an isolationist; I don’t want to 

be a protectionist. I don’t think I have to be. We’re selling soybeans 

to China. So, if you’re in the soybean business, you’re doing great. 

There’s no reason that you can’t do well in the soybean business 

and have the textile industry put out of business or the steel industry put out of business or the semiconductor people not being able 

to do business in China. It’s got to be a two-way street. So, sir, to 

answer your question, the Administration will aggressively pursue 

regional and bilateral trade agreements. I’m going to take your report and I’m going to highlight what China is doing in terms of our 

economy and I’m going to follow the paper trail. And any time 

someone brings up a trade agreement, whether it be regional or 

with a particular country, I’m going to ask questions about the role 

that China could play in terms of how they would benefit from that 

agreement. When you go to Central and South America, you know 

they need help. They need to have access to our economy. How we 

do that without bleeding further from Chinese intervention, I don’t 

know. So I will be a no. It breaks my heart to be that way because 

having gone there, you want to help wherever you can. But I think 

my number one job not only is to reach out and try to make the 

world a better place, but to make sure people that live in my State, 

my country, can have a job. So, I don’t like Zoellick’s approach to 

trade, putting everything on the table. You take our dumping provisions out, you’ve emasculated us. 

Chairman ROBINSON. You’ve been very kind with your time and 

I’d like to just turn it to our Vice Chairman, Dick D’Amato, for 

comment. 

OPENING REMARKS OF VICE CHAIRMAN C. RICHARD D’AMATO 

Vice Chairman D’AMATO. Thank you, Mr. Chairman. And, again, 

thank you, Senator, for coming and we appreciate the hospitality 

of South Carolina. I listened very carefully to your statement. I 

think your statement was a very important statement. This is a 

Congressional Commission. All the Commissioners are appointed 

by the leaders of the Congress. We have only one client and that’s 

the Congress. And we will continue to provide our best judgment 

on action items that can be taken up by the Congress. I’d just like 

to point out one thing. A number of us traveled last month to Geneva to visit with the WTO. And both the National Association of 

Manufacturers and the Chamber of Commerce of the United States 

had a list as long as your arm of violations of the agreements that 

the Chinese reached in acceding to the WTO. We had extensive 

9

conversations with representatives of many of the countries represented in the WTO, including for example Japan and the European Community, and we concluded there’s going to be only one 

country that is going to be willing to take the Chinese to dispute 

settlement panels and complain about their behavior, and that is 

the United States. And we haven’t done it so far. We’re going to 

have a hearing on the WTO on February 5th. So, as to the question 

that you raised regarding unfairness on the part of the Chinese in 

terms of their performance in the WTO, the United States is going 

to have to bring them to the dispute settlement panels to try and 

develop fair treatment by China toward the U.S. in the context of 

their WTO obligations. 

Senator GRAHAM. The value of your Commission, I think, is that 

it does kind of put it all into one neat package so that we can kind 

of look at it system-wide. I know you’re just focusing on China, but 

when, you know, Representative Kucinich says that we shouldn’t 

be in the WTO and we shouldn’t have passed NAFTA, I don’t know 

how I would have voted. But the idea of the world coming together 

so that we can open up each other’s market was a good idea. And 

the WTO could be very helpful to us only if they respond in a clear 

way. And I think the case that you all are making against China 

needs to be echoed by our Government into some international 

body. Let’s give the WTO a chance. But really we have no one to 

blame, in my opinion—you all please tell me if I’m wrong—but ourselves. We’re sort of asleep at the switch here. And your Commission has performed a valuable service to us but I don’t want to 

leave here . . . it means nothing if we don’t do something about it. 

And representative, you know, of the USTR . . . what has changing 

the immigration laws, why should that be in a trade agreement? 

Should we let the Executive Branch change immigration laws 

through a trade agreement and Congress say nothing? That’s why 

I’m so worried about the fast track. It kind of deals us out. And 

should we as a body allow any dumping provisions to be excluded 

or not to be used or enforced on the individual trade agreements? 

The only way we can answer that now is to kill the whole agreement. What I hope your Commission will do for us as a body, the 

Congress, is to give us some ammunition to kind of stand up and 

expect better. I’ll end with the last comment that I made before. 

If you can figure out how to integrate a Chinese communist dictatorship with over a billion people who go where they’re told to go; 

who work in the industry they’re told to work; who get paid what 

they’re told they’re worth; who have no way to answer back, if you 

can figure out how to integrate that into a world economy, please 

let me know. Thank you all very much. 

Chairman ROBINSON. Thank you, Senator. 

Senator GRAHAM. God Bless You. 

OPENING STATEMENT OF CHAIRMAN ROGER W. ROBINSON, JR. 

Chairman ROBINSON. Well, we’re expecting to be joined fairly 

shortly, I believe, by Senator Hollings. In the intervening time, 

however, I thought that it might be a good moment to go forward 

with our opening remarks so that we can, in effect, officially kick 

off this first field investigation. And, in that regard, I want to again 

10

express all of our pleasure for being greeted so warmly in Columbia. 

I’d like to note at the outset of today’s event that we’re being 

broadcast and web cast by South Carolina’s Educational Television. 

ETV is South Carolina’s statewide public broadcasting network. 

And we are very appreciative of their efforts to help expand the 

viewership of this important event. The web cast will be available 

on the Commission’s website as well at www.uscc.gov. 

Our Commission, the U.S. China Economic and Security Review 

Commission, was established by the U.S. Congress to investigate 

the national security implications of our trade and economic relationship with China. The Members of the Commission were appointed by the Republican and Democratic leaders of both the U.S. 

Senate and House of Representatives. In setting out our mandate, 

the Congress directed us to take a broad view of national security 

to include an assessment of how our economic relationship with 

China is impacting U.S. economic and broader security interests. It 

is this part of our mandate that’s brought us to South Carolina. 

As I mentioned earlier, today is the Commission’s first field investigation outside of Washington. I think all of us believe this 

method of firsthand investigation will become a permanent and significant part of our Commission’s work and we’re very glad to be 

kicking it off here today. 

The goal of today’s investigation is to hear practical firsthand 

perspectives on how U.S. China trade is impacting the industrial 

base of South Carolina. U.S. manufacturers, labor unions, economists and others have increasingly identified China’s manufacturing competition as the critical factor in the erosion of U.S. manufacturing capacity, an issue that raises clear concerns of an economic and national security nature. 

We’re honored to be joined today by both of the distinguished 

Senators from South Carolina, Senator Graham, who we’ve just 

heard from; Senator Hollings who will be along. And we will also 

hopefully be joined by the distinguished Representative from the 

Columbia area, Congressman Clyburn. Their participation with us 

demonstrates the bipartisan concern in the Congress over the 

issues we’ll be discussing today. We thank all of them for their 

help, their offices and their staff, in helping put together today’s 

event and commend them for their strong leadership on manufacturing-based issues more broadly. If I might, I would like to again 

quote from the testimony of Senator Graham when he appeared before the Commission on September 25th where he made clear his 

deep concern over the devastating losses being sustained by South 

Carolina’s manufacturers and his conviction that the imbalanced 

U.S.-China trade picture, in general, was a major contributing factor. He told the Commission at that time, ‘‘Let me tell you what’s 

going on at home. We’ve lost 250 textile plants. I know a lot of people say well, this is a high intensive labor-type production and 

you’re just not going to make it in the 21st century. Well, if we do 

not make it, so be it. I just do not want to not make it because 

other people cheat. China cheats.’’

Today’s event builds on the Commission’s September hearing 

which was entitled ‘‘China’s Industrial, Investment and Exchange 

Rate Policies: Impact on the United States,’’ where we examined 

11

China’s currency policies, its foreign investment incentives and its 

strategies for industrial development, all of which factor into China’s rapid manufacturing development. Following this hearing, we 

forwarded to Congress several key findings on these issues, including our conclusion that China has been deliberately manipulating 

its currency to maintain a favorable exchange rate against the U.S. 

dollar. A point forcefully made by Senator Graham. Specific to today’s discussion, we concluded that, ‘‘The inappropriate exchange 

rate between the Chinese yuan and the dollar is negatively impacting the competitiveness of U.S. manufactured goods and is contributing to a migration of world manufacturing capacity to China and 

erosion of the U.S. manufacturing base.’’

The September hearing was effective also in unearthing some of 

the larger issues and concerns of U.S. workers and manufacturers. 

Today’s field investigation is an effort to examine real, on-theground impacts of increased Chinese imports and offshore transfers 

by U.S. firms, particularly on workers and working communities. 

Today, we’ll be exploring these and other important questions with 

representatives of industry, workers, communities and concerned 

members of the public. 

Again, we’re also honored to be joined by Senator Hollings and 

hopefully Congressman Clyburn in the near term. I look forward 

to hearing their perspectives as well as those of all of the distinguished panelists that we’ve assembled today. 

At this time, I’d like to turn over the proceedings to the Co-Chair 

for today’s event, my colleague, Commissioner George Becker, for 

his opening remarks. Thank you. 

[The statement follows:]

Prepared Statement of Chairman Roger W. Robinson, Jr. 

Good morning, it is a pleasure to be here in Columbia. 

I want to note at the outset that today’s event is being broadcast and webcast 

by South Carolina Educational Television (ETV). ETV is South Carolina’s statewide 

public broadcasting network, and we are very appreciative of their efforts to help 

expand the viewership of this important event. The webcast will be available on the 

Commission’s website at www.uscc.gov. 

Our Commission—the U.S.-China Economic and Security Review Commission—

was established by the U.S. Congress to investigate the national security implications of our trade and economic relationship with China. The Members of the Commission were appointed by the Republican and Democratic leaders of both the U.S. 

Senate and House of Representatives. In setting out our mandate, the Congress directed us to take a broad view of national security to include an assessment of how 

our economic relationship with China is impacting U.S. economic security. It is this 

part of our mandate that has brought us to South Carolina. 

Today our Commission will hold its first field investigation outside of Washington, 

DC. I believe this method of first-hand investigation will become a permanent and 

significant part of our Commission’s work, and we are very glad to be kicking off 

this new process in South Carolina. 

The goal of today’s investigation is to hear practical first-hand perspectives on 

how U.S.-China trade is impacting the industrial base of South Carolina. U.S. manufacturers, labor unions, economists and others have increasingly identified China’s 

manufacturing competition as a critical factor in the erosion of U.S. manufacturing 

capacity, an issue the raises clear issues of economic and national security. 

We are honored to be joined today by both of the distinguished U.S. Senators from 

South Carolina, Senator Hollings and Senator Graham, and by one of the distinguished Representatives for the Columbia area, Congressman Clyburn. Their participation demonstrates the bipartisan concern in the Congress over the issues we 

are discussing. We thank all of them for the help their offices provided in putting 

together today’s event and commend them for their strong leadership on manufacturing base issues. We had the honor of having Senator Graham address the ComVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00019 Fmt 6633 Sfmt 6621 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
12

mission at our hearing in September where he made clear his deep concern over 

the devastating losses being sustained by South Carolina manufacturers and his 

conviction that imbalanced U.S.-China trade was a contributing factor. He told the 

Commission: ‘‘Let me tell you what is going on at home. We have lost 250 textile 

plants. I know a lost of people say, well, that is high-intensive labor type production 

and you are just not going to make it in the 21st century. Well, if we do not make 

it, so be it. I just do not want to not make it because other people cheat. China 

cheats.’’

Today’s event builds on the Commission’s September 25 hearing on ‘‘China’s Industrial, Investment and Exchange Rate Policies: Impact on the U.S.’’ where we examined China’s currency policies, its foreign investment incentives, and its strategies for industrial development, all of which factor into China’s rapid manufacturing 

development. Following this hearing, we forwarded to Congress several key findings 

on these issues, including our conclusion that China has been deliberately manipulating its currency to maintain a favorable exchange rate against the U.S. dollar. 

Specific to today’s discussion, we concluded that: ‘‘the inappropriate exchange rate 

between the Chinese yuan and the dollar is negatively impacting the competitiveness of U.S. manufactured goods and is contributing to a migration of world manufacturing capacity to China and an erosion of the U.S. manufacturing base.’’

The September hearing was effective in unearthing some of the larger issues and 

concerns of U.S. workers and manufacturers. Today’s field investigation is an effort 

to examine the real, ‘‘on-the-ground’’ impacts of increased Chinese imports and offshore transfers by U.S. firms, particularly on workers and working communities. 

Today we will be exploring these and other important questions with representatives of industry, workers, communities and concerned members of the public. 

Again, we are honored to be joined by Senator Hollings, Senator Graham, and 

Congressman Clyburn. I look forward to hearing their perspectives, as well as those 

of all the distinguished panelists we have assembled today. 

Now I would like to turn over the proceedings to my Co-Chair for today’s event, 

my colleague Commissioner George Becker, for his opening remarks.

OPENING STATEMENT OF COMMISSIONER GEORGE BECKER

HEARING CO-CHAIR 

Co-Chair BECKER. Thank you, Mr. Chairman. I would like to join 

the Chairman in thanking Senators Hollings and Graham and Congressman Clyburn for their assistance in helping put this important event together. Senator Hollings and Congressman Clyburn 

are going to join us a little bit later. 

The Commission is convening today in Columbia, South Carolina, 

holding the first field investigation of its tenure outside of Washington, D.C. This is an important new procedure for the Commission and one that I hope will be repeated frequently in the future 

as it gives Commissioners the opportunity to see and hear firsthand how U.S.-China trade relations are impacting particular regions of the country. 

Unfortunately, our first field investigation brings us to a region 

of the country whose economy is under siege. As we have come to 

learn, South Carolina has suffered the largest percentage job loss 

of any other State in the past year. Columbia, South Carolina is 

among the hardest hit metropolitan area in the country with regard to job losses. It comes as no surprise that the bulk of these 

losses are in the manufacturing sector. In fact, South Carolina has 

lost some 65,000 manufacturing jobs over the past three years, a 

staggering 19 percent decline in this sector. 

Among the hardest hit industry sectors have been textiles, apparel and steel. At the same time we have seen imports of Chinesemade goods in these areas escalate dramatically during a similar 

timeframe. It’s essential that the policymakers in Washington 

closely assess the extent to which these devastating declines in 

13

South Carolina manufacturing bases are attributable to U.S. trade 

policy with China and take appropriate actions in response. 

The Commission’s mandate from Congress directs us to assess 

both the security and economic impacts of our economic and trade 

relationship with China. As a part of this examination, we have 

been asked by the Congress to look specifically at how the shift in 

U.S. manufacturing capacity to China as well as the relocations of 

high-tech and R&D, research and development, facilities is impacting the U.S. economy. In Congress’ words, ‘‘The Commission is to 

assess the effect of these transfers on the U.S. economy, economic 

security, employment and the standard of living of the American 

people.’’ Today’s event will greatly assist us in this important endeavor. 

Today, we will hear from a spectrum of individuals representing 

both industry and labor perspectives. We will begin with panels focusing on the textile, apparel and steel industries. We will then 

have a panel looking at broader trends with regards to trade with 

China and the South Carolina manufacturing base. 

Our event will conclude with perhaps the two most important 

sessions of the day. We will have a panel focusing on how traderelated economic dislocations are impacting communities in South 

Carolina, providing what I expect will be a vivid picture of how the 

pain of these dislocations are felt more broadly than just by the 

companies and workers directly affected. Following this panel, we 

will move into an open microphone session, inviting interested 

members of the public to make their views known to the Commission. These concluding sessions will help bring home for the Commissioners a very real, human impact of the policy issues we are 

grappling with today. 

Through these panels, the Commission will be able to gain important perspectives on how U.S.-China relations are impacting important segments of the South Carolina manufacturing base and 

how these trends may be indicative of the broader trends for the 

U.S. manufacturing base and economy. 

We are honored to be here in Columbia today and look forward 

to the day ahead. 

That concludes my opening statements. And we’re shifting some 

of this around a little bit. We’re ready to go directly to the first 

panel with the understanding that when Senator Hollings and Representative Clyburn show up we will probably suspend the proceedings for just a little bit and hear from these gentlemen and 

then we can get about the business of the day. 

Okay. First panel. And let me tell everybody just broadly here a 

little bit of the rules of the game. We will allow seven minutes for 

presentations from each of the panelists. And then, in turn, we will 

have questions from the Commission. If this permits time at the 

end, we may go back to some further questions. So those who have 

real short statements, I guess you can expand yours a little bit. 

Those who have real long statements, try to adjust your statement 

as you’re going along so that we stay within the framework of the 

seven minutes. With that, let’s call the first panel to the forefront. 

[The statement follows:]

14

Prepared Statement of Commissioner George Becker

Hearing Co-Chair 

I would like to join Commission Chairman Robinson in welcoming Senators Hollings and Graham and Congressman Clyburn and thanking them for their assistance in putting this important event together. Senator Hollings has been a true 

champion and advocate for industrial workers throughout his long and distinguished career and I am particularly honored he could be with us today. I’d also 

like to extend my appreciation to South Carolina Educational Television for their 

assistance in broadcasting this event. 

The Commission is convening today in Columbia, South Carolina, holding the first 

field investigation of its tenure outside of Washington, DC. This is an important 

new procedure for the Commission and one that I hope will be repeated frequently 

in the future as it gives Commissioners the opportunity to see and hear first-hand 

how U.S.-China trade relations are impacting particular regions of the country. 

Unfortunately, our first field investigation brings us to a region of the country 

whose economy is under siege. As we have come to learn, South Carolina has suffered the largest percentage job loss of any other State over the past year. Columbia, South Carolina is among the hardest hit metropolitan areas in the country with 

regard to job losses. It comes as no surprise that the bulk of these losses are in the 

manufacturing sector. In fact, South Carolina has lost some 65,000 manufacturing 

jobs over the past three years, a staggering 19 percent decline in this sector. 

Among the hardest hit industry sectors have been textiles, apparel, and steel. At 

the same time, we have seen imports of Chinese-made goods in these areas escalate 

dramatically during a similar timeframe. It is essential that policymakers in Washington closely assess the extent to which the devastating declines in the South Carolina manufacturing base are attributable in U.S. trade policy with China and take 

appropriate actions in response. 

The Commission’s mandate from the Congress directs us to assess both the security and economic impacts of our economic and trade relationship with China. As 

part of this examination, we have been asked by the Congress to look specifically 

at how the shift of U.S. manufacturing capacity to China, as well as relocations of 

high-tech and R&D facilities, is impacting the U.S. economy. In Congress’ words, the 

Commission is to assess ‘‘the effect of these transfers on United States economic security, employment, and the standard of living of the American people.’’ Today’s 

event will greatly assist us in this important endeavor. 

Today we will hear from a spectrum of individuals representing both industry and 

labor perspectives. We will begin with panels focusing on the textile, apparel, and 

steel industries. We will then have a panel looking at broader trends with regard 

to trade with China and the South Carolina manufacturing base. 

Our event will conclude with perhaps the two most important sessions of the day. 

We will have a panel focusing on how trade-related economic dislocations are impacting communities in South Carolina, providing what I expect will be a vivid picture of how the pain of these dislocations are felt more broadly then just by the companies and workers directly affected. Following this panel we will move into an open 

microphone session, inviting interested members of the public to make their views 

known to the Commission. These concluding sessions will help bring home for Commissioners the very real human impact of the policy issues we are grappling with 

today. 

Through these panels, the Commission will be able to gain important perspectives 

on how U.S.-China trade relations are impacting important segments of the South 

Carolina manufacturing base and how these trends may be indicative of broader 

trends for the U.S. manufacturing base and economy. 

We are honored to be here in Columbia today, and look forward to the day ahead.

Vice Chairman D’AMATO. Senator Hollings has just arrived. 

Co-Chair BECKER. Senator Hollings has just arrived so already 

you’re put on hold. 

Chairman ROBINSON. Senator Hollings, we’re honored to have 

you with us today. You couldn’t have timed your arrival better. We 

just finished our opening remarks. We’ve had a very stimulating 

and forceful presentation from your colleague, Senator Graham, 

who engaged in plain talk, as he always does, on behalf of the state 

and our national interests. And I’d like to turn the proceedings 

15

over, if I might, to our Vice Chairman, Dick D’Amato, who is going 

to say some good words about you, sir. 

Vice Chairman D’AMATO. Senator Hollings, welcome. Thank you 

for your hospitality and the hospitality of South Carolina in hosting 

this visit of the Commission. It’s a great privilege to be here. Senator Hollings is truly one of the giants of the Senate. In his seventh 

term as a United States Senator, he is one of the most respected 

and one of the most productive legislators in the modern history of 

the U.S. Congress. I don’t think I’m exaggerating. In that respect, 

having come from being the youngest Governor in the history of 

South Carolina, he has been a consistent leader in many, many 

areas, the Chairman and now Ranking Member of the Commerce 

Committee, third Ranking Member of the Appropriations Committee, has a list of major legislative accomplishments as long as 

your arm. Author of the landmark Telecommunications Act in the 

late 1990’s; author of the first major American Land Use Act, the 

Coastal Zone Management Act thirty years ago; as a long-serving 

Member of the Budget Committee, author of the major budget balancing Act known as Graham-Rudman-Hollings, and author of 

many trade proposals, one of which is on the front page of the business section of your newspaper here today, a new idea from the 

Senator to create a senior position in the Justice Department for 

trade enforcement, to be introduced in Washington shortly. He’s 

been a leader in combating unfair trade practices by our trading 

partners. And, in fact, was one of the major co-sponsors of the legislation that created this Commission three years ago on the floor 

of the United States Senate. Incidentally, for the first time, this 

Commission is being broadcast by an educational television network. And we understand this was one of your initiatives as Governor, creating the educational television system in South Carolina. 

We look forward eagerly to your testimony, Senator, and thank you 

again for your hospitality. 

STATEMENT OF ERNEST F. HOLLINGS

A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA 

Senator HOLLINGS. Well, thank you very, very much for your hospitality. It couldn’t be a better time, in all candor, because the 

country is in real trouble. I’m glad that, and I’m glad always to join 

my colleague, Senator Lindsey Graham. He knows the subject and 

we work together on it, not only for the good of the State but the 

good of the country. And it’s very, very important, your Commission, because while you are the Commission on the economic security, the national economic security, the China Commission, in all 

fairness, it represents a problem that we have with ourselves and 

all countries. To get right to the point, our national security is like 

a three-legged stool. And you’ve got the one leg which are the values of our Nation and it’s unquestionable. Everyone knows our 

stand for freedom, individual rights, our willingness to sacrifice, as 

we’re doing now in Afghanistan, Iraq and around the world. And 

the second leg of military is also unquestioned, the one remaining 

superpower. But the third or economic leg is fractured. And everyone in this room has got to understand how it occurred because it 

has resulted in that fracture and the enemy within, which I’ll describe. Our problem is yes, with China, but more with ourselves. 

16

1First U.S. Tariff Act begins on page 142. 

And it’s resulted in a bunch of sloganeering and symbols and free 

and ‘‘I want to level the playing field’’ and fair trade and all of that 

nonsense. Trade, the word is something for something. Come on. 

We all believe in a free and open market. But when it comes to 

trade, trade is trade. And all countries treat it that way and we 

treated it that way. In the earliest day . . . and let me tell you how 

to build a country. You go to the greatest generation, not mine, the 

greatest generation, with Washington and Madison and Jefferson, 

and more than anybody else, Alexander Hamilton. In the earliest 

days, the Brits, right after we had won our freedom, corresponded 

to the colony and said you trade with us what you produce best and 

we’ll trade back with you what we produce best. David Ricardo, 

The Doctrine of Comparative Advantage. And Hamilton wrote a 

booklet. There’s one original copy that I know of at the Library of 

Congress. I’ve got a copy in my file. And it’s The Report on Manufacturers. And I’d read it to the Commission because you folks 

would really be interested in it. But, in a line, Hamilton told the 

Brits bug off. He said we are not going to remain your colony, shipping you our rice, our cotton, our indigo, our lumber, our iron ore 

and bringing in the manufactured goods; we are going to build up 

our own manufacturing capacity. And, as a result, mark it down in 

the annals of this particular Commission; the first bill is like that 

seal of South Carolina behind you. The first bill was for the seal 

of the United States. The second bill to pass the Congress of the 

United States on July the 4th, 1789, was protectionism.1 A tariff 

bill of 50 percent on some sixty articles. Go look it up and see. We 

started not only the first democracy—we’re the oldest democracy in 

the world—but we started a trade war. All these children running 

around, ‘‘Oh, oh, we’re going to start a. . . .’’ Come on. I say we’re 

unilaterally disarming. We’ve been in it. We started it. I want to 

tell you how successful it was because—I wish I had the time, but 

I will refer to Theodore Rex. There was a law against manufacturing. England said the colony couldn’t have it. Now, old Hamilton, he had a hard time putting it over, but he did. And even Lincoln, of course, followed with steel. They went and they were going 

to build the transcontinental railroad, Mr. Commissioner. He said, 

‘‘Huh-uh, we’re not getting the steel from England. We’re going to 

build our own steel plants. And when we get through, we’ll not only 

have a railroad, we’ll have a steel capacity.’’ Abraham Lincoln did 

that. Mark it down. But, listen to this. I’m referring just to page 

20. I want to read a paragraph. Theodore Rex, Teddy Roosevelt, 

right at the turn of the century, after a hundred years in 1900, 

‘‘The first year of the new century,’’ that’s how this thing starts off. 

‘‘The first year of the new century found the United States worth 

25 billion dollars more than her nearest rival, Great Britain, with 

a gross national product more than twice that of Germany and 

Russia. The United States was already so rich in goods and services that she was more self-sustaining than any industrial power 

in history. Indeed, it consumed only a fraction of what it produced. 

The rest went overseas at prices other exporters found hard to 

match. As our Andrew Carnegie said, ‘The nation that makes the 

cheapest steel, has other nations at its feet.’ More than half of the 

17

world’s cotton, corn, copper and oil flows from the American cornucopia. And at least one-third of all steel, iron, silver and gold.’’ Let 

me read on. This is a historian, not a politician. By Teddy Roosevelt. ‘‘Even if the United States were not so blessed with raw materials, the excellence of her manufactured products guaranteed her 

dominance of world markets. Current advertisements in British 

magazines gave the impression that the typical Englishman woke 

to the ring of an Ingersoll alarm, shaved with a Gillette razor, 

combed his hair with Vaseline tonic, buttoned his Arrow shirt, hurried downstairs for Quaker Oats, California figs, and Maxwell 

House coffee, commuted in a Westinghouse tram, body by Fisher, 

rose to his office in an Otis elevator, and worked all day with his 

Walden pen under the efficient glare of Edison light bulbs. ‘It only 

remains,’ one Fleet Street flag suggested, and I quote, ‘for us to 

take American coal to Newcastle.’ Behind the joke lay the real concern the United States, real concern, the United States was already 

shipping beer to Germany, pottery to Bohemia and oranges to Valencia.’’ Now, we had the real super power because that’s economic 

power. They don’t talk about missiles and that you can’t even use, 

nuclear to end the word. We’re talking about real power, economic 

power and that economic leg. And, after that, now let me tell you, 

having built it up, how we tore it down. And it was intentional. At 

the end of World War II we had the only manufacturer, the only 

industrial power in the free world. And so in order to prosper, we 

had to spread prosperity, and we did. The Marshall Plan. And it 

worked. We sent over the money, we sent over the equipment, the 

machinery, we sent over the expertise. And capitalism defeated 

communism. It took a long time but it was good. It worked. My 

trouble is, because I testified before the old International Tariff 

Commission in 1960. That was 44 years ago. And Tom Dewey for 

the Japanese ran me around the hearing room. And we were worried in South Carolina and in the United States, up in New England particularly, if we didn’t watch out, ten percent of the consumption of textiles in the United States was going to be imported. 

Now look around this room. Seventy percent of the clothing you’re 

looking at is imported. Eighty percent of the shoes on the floor are 

imported. Eight-six percent to be exact. I can go down the list from 

cameras to equipment to semiconductors, to hand tools, to computers to, oh heavens above. I know they’ve got architects over 

there doing . . . that light, somebody said the lights were out in the 

Columbia area, you had a power failure. Well, you know where you 

had to call? SCANA. You call SCANA and a Bangalore, India representative operator answers the phone. Yes. The lights in this 

room are administered in Bangalore, India. And if you’re on food 

stamps, thank gosh we hadn’t gotten that bad yet; but, if you’re on 

food stamps, the food stamp program of South Carolina is administered in India. And just night before last I turned on Lou Dobbs. 

They’ve got not only the architects, they’ve got all of the medical 

personnel reading the mammograms and the CAT scans, they’ve 

got the lawyers. All the legal research work for billable hours. We 

sit around and we’re lawyers in this big office and instead of paying a legal attache ́, aide $80 an hour, all we’ve got to do is pay 

them in India $10 an hour and let them send it back here on the 

Internet. I’ll tell you right now, the only thing that we’re not going 

18

to import, I guess, is politicians because we’re already too cheap. 

I picked up my morning paper from Charleston, South Carolina 

last week and found out that the county attorney was making two 

hundred and ninety some thousand dollars, twice what I’m making 

as a United States Senator. I’m getting out. I’m running for county 

attorney. So, I understand . . . I heard my good friend talk about 

Benedict Arnold. Suppose you started D’Amato Manufacturing. 

Well, before you open the front door, by law, under Congress, by 

law, Republican and Democrat, we agree on one thing—before you 

open that front door you’ve got to have a minimum wage; you’ve 

got to have Medicare, Medicaid; you’ve got to have Social Security; 

you’ve got to have clean air; you’ve got to have clean water; we’ve 

got to send OSHA after you and make you get a safe working place 

and safe machinery; you’ve got to have plant closing notice; you’ve 

got to have parental leave. I can go right on down the list. That’s 

the high standard of living. But you can go to China for 58 cents 

an hour and none of that. I called Walter Alessandrini. Walter is 

a wonderful friend. I brought him in here over eighteen years ago 

over in Lexington County, right across the river, with Pirelli. They 

make all the fiberglass and a lot of the communications stuff. And 

he got really expert at it. He organized Avanex out on the West 

Coast. Walter’s still got a home in Columbia. He loves South Carolina. And I saw about four years ago that his stock was way up and 

I called Walter and I said, Walter, I got you the water and sewer 

lines over there in Lexington now. I helped you out when you 

brought Pirelli in. You’ve got to help me. You’re making a lot of 

money on your expansion. I want the next one back in South Carolina somewhere. He said I don’t make anything in America. I said 

you don’t? Oh, no. No. He said I got my research team and sales, 

but he said, I make everything in China. He said you go over there, 

I don’t have to put anything in the plant; they’ve got the plant. I 

don’t have to worry about labor; they’ve got the labor. I don’t have 

to worry about a long-term investment; I can go from year-to-year 

and if it succeeds, I just get another plant, another, another opening and everything else of that kind. Or, if it fails, I don’t have to 

renew the contract. I don’t worry about any of that. If D’Amato 

Manufacturing got a 30 million dollar tax cut from Washington, 

that’s all we talk about is tax cuts, would you put your expansion 

in Columbia, South Carolina or in China? You’ve got to go to China 

because your competition has gone. You continue to work your own 

people, you would go bankrupt. That’s what this Commission has 

got to understand. And it’s going out in a tremendous hemorrhage. 

And in order to change this thing, we got to understand the culture 

and everything else like that and the real enemy. Because when I 

first got to Washington almost 38 years ago, it was a Japanese representative come in there or some big slick Washington lawyer at 

the business round table. It’s the National Association of Manufacturers. It’s the conference vote in the front room. It’s the United 

States Chamber of Commerce. They’re not interested in main street 

Columbia, South Carolina; they’re interested in main street China. 

Come on. And so you’ve got the opposition here of . . . and it’s the 

darndest thing in the world. The big banks started, in 1973, Chase 

Manhattan and Citicorp in New York began to make the majority 

of their profits outside of the United States. They organized the 

19

Trilateral Commission with David Rockefeller. And they organized 

the Foreign Policy Association. And you’ve got all of those think 

tanks and all of those college people and you’ve got the newspapers. And the newspapers don’t make money on what you pay 

for the 50 cents to get the paper. They make it from retail advertising. And I’ve been in the debates and, as you know, and we put 

a thousand, or I don’t know how many dozens, a hundred thousand 

dozens of a shirt, a woman’s blouse or whatever else, and they 

bring it in from China and then, if it sells good, and at the Christmas season they need another ten thousand dozen from New Jersey, they look right there and make a way bigger profit on the one 

from China than the one from New Jersey. So I’ve got the whole 

retail trade crowd and I’ve got the newspaper crowd against me. 

And they’re all shouting free trade, free trade; level the field, level 

the field; free markets; free trade. Oh, baloney. They told me 

NAFTA was going to create 200,000 jobs and we’ve lost 2 million. 

Come on. It’s been an outflow. We had in Spartanburg where we 

got BMW, three years ago we had 3.2 percent unemployment; now 

we’ve got 7 percent unemployment. So this problem is real and 

you’ve got to change the culture. And when I talk about protectionism, come on. The fundamental reason that you sent me to 

Washington is to protect you. We’ve got the Army to protect us 

from the enemy without; we’ve got the FBI to protect us from the 

enemy within; we’ve got Social Security to protect us from old age; 

we’ve got Medicare to protect us from ill health. We’ve got clean 

air, clean water. We all believe in that. Protect. But when you talk 

about protecting my standard of living that I require, D’Amato 

Manufacturing, oh, no, no. We better wake up. We better wake up. 

It’s going out fast. We’re in real trouble. When I say we’re in real 

trouble, I got something here that’s a measure. It’s not only the 

Chamber of Commerce. You’re looking at a fellow that’s gotten 

every Chamber of Commerce award that you can get. In the ’92 

race, Thompson from Greenville was the national president of the 

National Chamber of Commerce. I was the man of the year. He had 

me up there and everything else like that. Now, I’m the skunk of 

the year. They’ve switched. And they’ve got a fellow over there that 

doesn’t know anything about trade, but listen to this. I didn’t know 

about this until December. The Administration says that they’re 

trying their best. Jobs. You’ve got the President with jobs, jobs, jobs 

behind him. Let me tell you what’s already out in front. This is 

from the December 10th New York Times and I’m going to read 

just three or four lines here about a conference in New York. ‘‘After 

the opening speeches, the 50 or so American executives gathered 

at the Hotel Pennsylvania in Manhattan. They were invited to divide up. Those interested in investing in China, putting an operation there and hiring Chinese workers were to go across the hall 

to the Penntop North Conference Room. Those who wanted help in 

exporting to China were to stay seated in Penntop South. More 

than half went across the hall. Given the explosion of business in 

China, the interest in setting up shop there is not surprising. What 

was surprising was the presence of the United States Commerce 

Department at the conference. While the Bush Administration complains about China unfairly tilting trade dealings to its advantage, 

the branch of government most responsible for promoting American 

20

business is participating and financing conferences and workshops 

that encourage American companies to put operations and jobs in 

China.’’ The enemy within. The enemy we made. It’s us. You all are 

paying, we’re paying taxes to send the jobs out there as fast as we 

can. And it’s gotten so bad that we spend in South Carolina here 

recently, and I commend the State Legislature and those up in the 

Piedmont and in Clemson for putting in an automotive park, a research park. But read this here. This is great. Tuesday, January 

the 27th. ‘‘Bosch Decision Deals New Blow to Sumter.’’ The Bosch 

plant that makes automobile parts that we brought in over there 

is moving to Mexico over the next eighteen months costing Sumter 

County 400 manufacturing jobs. They say they can’t make it. So, 

we put a big investment up there to get an automobile park to get 

the automobile parts people there and everything and, then the 

ones we got we can’t keep. If you think that’s bad, let me read you 

finally, because you folks are really into something important. In 

China, I’ve watched it. I’ve just come back from lunch, dinner actually with my friend Howard Baker—we got into the United States 

Senate together—in Tokyo. And Nancy Kassebaum, the former 

Senator from Kansas, he married her. And her daughter’s down 

there helping with the College of Charleston. Her son, John Kassebaum, was down in Charleston in my backyard. So I keep up with 

them good. And they said you’re going to be amazed getting back 

over there into Shanghai. And, true enough, when I was coming in 

from the airport, I’m on the Commerce Committee, and here’s my 

Commerce Department using my tax money to get rid of the jobs 

and I’m trying to create them. And riding in from the airport to the 

city of Shanghai, the Maglev train just whizzed by me. I can’t even 

get money for Amtrak. But they already got the Maglev in China. 

They’re building in China as fast as they can. They have not developed a consumer society. And we are operating now on spending. 

We infuse the economy, listen to this closely. There was a 562 billion fiscal deficit last year and a 500 billion current account or 

trade deficit. So, five and five is ten. We goose the economy; we infuse the economy a trillion dollars. You’ve got to have some kind 

of recovery. But there are not any jobs. Yeah, they’re making profits on Wall Street. But when you put in a trillion dollars, come on. 

That’s the only thing keeping us going right now. It’s a crime. I’m 

home free. I’m 82 years, but I can tell you right now, the kids are 

going to have to pick up our bills. We’re going to run into a wall 

here right soon. It might happen before the election. I don’t know. 

But your work is the most important work going. The fears . . . I’m 

reading from the New York Times, Tuesday, January 27th, ‘‘Cisco 

Chief Calls Productivity a New Engine of Wealth.’’ But they had 

a big conference up there and here’s reading just a couple of paragraphs. ‘‘The fears are intensified by the rise of China, one of the 

prime destinations for jobs moving out of the United States and 

Europe. Norman Saks issued a study here predicting the Chinese 

economy would overtake that of Germany within a decade and surpass the American economy by 2041. Zoom in. An economic advisor 

to the President of China was met with silence at a dinner last 

week when he asked Americans at the conference how their country planned to finance its economy when both blue collar manufacturing and white collar service jobs were going elsewhere.’’ The 

21

Chinese are worried about the United States. If our interest rates 

go up, what I call the debt tax, not death. There are politicians 

talking about death. I’m talking about debt, D–E–B–T, the debt 

tax. You can’t get out of the way. It’s going to come and hit us. And 

if the consumption goes down in the United States, then they go 

down on the momentum in China. So their whole success in getting 

1,300,000,000 into a capitalistic society and it’s moving in the right 

direction and we like it. But I can tell you, when the Chinese worry 

about us . . . and, by the way, they’re financing my debt. 170 billion. 

When you add up that with Hong Kong and the Peoples Republic, 

they’re buying our bonds, 170 billion worth. And the Japanese have 

got over 400 and some billion. So, they’re hoping that we’ll sober 

up and start paying the bills and get competitive in trade. Because 

if we fail, China fails. But they’re not worried about it in Washington. They’re worried about it in Beijing. Can you imagine that? 

That’s how bad off we are. Okay. What’s the solution? The first 

thing is to quit financing and paying for the jobs to go overseas. 

If D’Amato Manufacturing puts a plant and you succeed in China 

and you make a profit, as long as you don’t repatriate the dollar, 

the profit, you can build another plant. You don’t have to pay any 

income tax. But if you put a plant in Columbia, South Carolina and 

you make a profit, you’ve got to pay the tax on it. So we favor the 

industry going and producing over there. So, I’ve got a bill in, and 

you’ve read about it in the morning papers, if you move, your tax 

goes up; if you stay and produce in the United States, a 35 percent 

corporate tax goes down to 32 percent. That’s S. 584. We want to 

have an incentive to produce in the United States and a disincentive to leave. That’s my job. Because you can’t depend on the 

Chamber of Commerce; you can’t depend on the leadership there 

in Washington. The only thing is the Congress. You can’t depend 

on the colleges. The function of creating jobs is mine, Congress. 

And global competition, I’m the last clear hope. And you’ve got to 

have it. We’ve got to stop these other programs like the Secretary 

of Commerce, the International Trade Commission. I know my 

commissioner from the steel industry understands this because, 

goodness gracious me, if you’re in international trade administration, they buck you over to the International Trade Commission. 

And they find out, since there is a dumping violation, what the injury is and they only find out there ain’t no injury. I mean, time 

and again. I was there when Zenith, Zenith came in with Washington lawyers and everything else like that and they went through 

and won at the Administration, they won at the Commission, they 

went to the Supreme Court and they won and they were right on 

the Cabinet table, this was during President Reagan’s day. And 

under the national security provision, the President has got the 

last chance to reverse that decision. And the Cabinet Members all 

had voted to sustain the finding in behalf of Zenith and, my gracious, in walked President Reagan and he said I just got off the 

phone with Nakasone and we’re going to have to reverse that decision. So they say to heck with it. Why pay a bunch of Washington 

lawyers 500 dollars, 1,000 dollars an hour over a three year period, 

spend 10 million dollars and get nowhere. Nobody, nobody is enforcing the trade laws of the United States of America. I want me 

an Assistant Attorney General that enforces the trade laws of the 

22

United States. We’ve got them over there to enforce the tax division; we’ve got them over there for the antitrust division. I want 

me an Assistant Attorney General to start enforcing the trade. 

They don’t want to enforce them. They want to treat trade as aid. 

We’ve got to have the manufacturing extension partnerships. What 

they call . . . and some of them are hauling Senators around and 

help us to step up and computerize and arrange a stock room and 

everything else. All these small businesses, they can’t afford a consultant; they can’t pay for bonds and everything else like that. The 

Manufacturers Extension Partnership Act is working all over the 

country. The advanced technology programs. You’ve got to look at 

the stock market and their practices. The chairman of the board, 

he’s got to produce in three years. If he hasn’t got his stock up, so 

he doesn’t play around with any kind of new technology unless it’s 

a sure shot. And so what we do is get new technology we have invented by the National Academy of Engineering then on a competitive basis before the Department of Commerce. They get a grant 

and help. They have to put up 50 percent; we put up 50 percent. 

The majority of it is for small business advanced technology program. They’re not funding it. Customs agents. My office is in the 

Custom House down in Charleston, South Carolina. And I talked 

to the agent, I said man, come on, they’ve got 5 billion in transshipment of textiles through Matsui, through Hong Kong, through 

all of these funny countries. And they said wait a minute, Senator. 

They used to tell me, ‘‘Do you want me to get drugs or do you want 

me to get textiles?’’ I said oh, excuse me, no, you get the drugs first 

but let’s try to enforce it. Now they tell me, ‘‘Wait a minute, Senator, do you want me to get security, homeland security, port security, you want me to get drugs or do you want me to get textiles?’’ 

So, we need at least a thousand more customs agents. They’re totally understaffed there. The critical materials that the Secretary 

of Commerce, rather than financing seminars, how to get rid of the 

jobs, the Secretary of Commerce and the laws as to critical materials, there are over 500 necessary for our national defense. We 

have to wait up almost five months before we went in on Desert 

Storm in order to get the flat panel displays for the look down to 

attack Iraq and Kuwait. We don’t have the materials to go to war. 

I don’t know how to wake this country up except with your Commission. If you all blister us in Washington, give us the hell. I can 

tell you that right now. Because I could go on and on, but you can 

see the impossibility of the task. You’ve got to change the culture 

and the thought and everything else. And why they’re leaving and 

how they’re going to continue to leave and, in a line, we’ve got to 

get a competitive trade policy. I’m glad I answered your questions. 

I apologize, but I get wound up on this one. 

Discussion, Questions and Answers 

Chairman ROBINSON. That was extraordinary, Senator, and I’m 

sure your comments have been taken to heart and certainly will be 

a valued part of our work. If you have a moment, I’d just invite 

any of our Commissioners that might have a question. 

Commissioner REINSCH. I do. 

Chairman ROBINSON. Commissioner Reinsch. 

23

Commissioner REINSCH. Thank you. Senator, glad to see you. I 

want to begin with a tribute. For a very long period of time you 

have really led the country in identifying problems and forcing us 

to pay attention to things that people would rather ignore. You’ve 

done us a great service in doing that, the country’s going to miss 

you when you retire. I’m sorry that you’re leaving but you’re certainly going out in style. 

Senator HOLLINGS. I thank you a lot. I’m going out and make a 

living. 

Commissioner REINSCH. You’re entitled. You said something very 

important and I do have a question. You’re only the second witness 

today, and I suspect you may be the only one today who really has 

approached the problem from the full context and perceived it not 

only as a trade problem but a budget problem, a debt problem, a 

deficit problem, a cultural problem. There’s a whole range of 

things. And I hope one of the things that my colleagues and I are 

going to be able to do is to sort out pieces of that and end up blaming China for the things that are China’s fault but assigning other 

blame where it belongs. Not everything that has happened in the 

last ten years is China’s fault. There are some other mistakes, and 

you are kind to enumerate several of them. I certainly agree with 

your comments about debt because our children, 20 to 25, are going 

to pay; they’re going to pay for a long time for our mistakes. We 

haven’t figured it out yet. Just one question that I can’t resist asking you. Your comments about Alexander Hamilton and manufacturing I thought were interesting and something that I learned a 

long time ago and forgotten so I’m thankful for you bringing it back 

to mind. I can’t help but think though in a way what you’re telling 

us is that Hamilton had the right approach. It seems to me that 

one could argue the Chinese are doing exactly the same thing, so 

they’re smart too, right? 

Senator HOLLINGS. Definitely, all the countries are. In Europe 

they’re doing it, that’s why we ended up with about——

Commissioner REINSCH. So they’re doing what we——

Senator HOLLINGS. —a deficit with a balance of trade with Europe that we used to have, five years ago it used to be positive; it’s 

now negative. It’s going to 130 billion with China. 

Commissioner REINSCH. It’s hard to blame them for being smart 

like us. 

Senator HOLLINGS. That’s right. You’ve got to understand the opposition and we’ve got to start with ourselves, clean up our act. 

Commissioner REINSCH. I agree. Let me ask one more thing. The 

situation isn’t very good anywhere. It seems to be worse here in 

South Carolina than elsewhere, and there’s a lot of evidence that 

we’ve assembled and Senator Graham has pointed out, and I’m 

sure our subsequent witnesses are going to point out as well. South 

Carolina seems to be worse. Why? Is that because of the makeup 

of industry here as opposed to elsewhere in the country? 

Senator HOLLINGS. Well, it’s been the, let’s say not the most 

skilled like computerization or software and that kind of thing, it’s 

the semi-skilled textile industry and you can make a t-shirt anywhere. And incidentally, you ought to understand that part of the 

problem. I’ll never forget I brought in Oneida down in Andrews, 

South Carolina. All they made were t-shirts and they had to close 

24

the plant, they went broke and moved and at the time when they 

left Andrews, South Carolina, there were 487 employees, the age 

average was 47 years of age in that plant. And let’s cry on Washington’s retrain, retrain, retrain, skills, retrain. I got training and 

skills coming out of my ears here in this State of South Carolina. 

Tomorrow morning we got 487 skilled computer operators. Are you 

going to hire the 47-year-old computer operator or the 21-year-old 

computer operator? You see, those at 47 years of age, they’re deadlined, you’re not going to take on the retirement costs, the health 

costs of a 47 year old. 

Commissioner REINSCH. So what do we do about that? 

Senator HOLLINGS. That’s your whole problem. It’s just not retraining but they’re not dealing with . . . we’re not dealing with the 

problem in the Congress. We’re just given symbols and slogans and 

nonsense. They don’t understand and we keep on trying on both 

sides, it’s Republican and Democrat. Just the other day we had a 

State, Justice, Commerce Appropriations bill, Congressman Frank 

Wolf on the House side put in there two million dollars to enforce 

our trade laws with China and we got a letter from the White 

House threatening to veto, said take that two million out, we don’t 

need to enforce our trade laws with China. Can you imagine that? 

They’ve got no idea. We’re in the hands of the Philistine. I can tell 

you they’ve got no idea of a competitive trade policy. The whole 

movement is otherwise to get rid of the jobs, make the profit and 

we’re losing the middle class of America, the strength of our democracy. 

Commissioner REINSCH. I agree. 

Chairman ROBINSON. We’d like to turn it to Commissioner Becker, then Vice Chairman D’Amato, Commissioner Mulloy and then 

Commissioner Dreyer. 

Co-Chair BECKER. Senator, I appreciate very much your remarks. 

I’m following close and I’m making notes on this. I hope I can retrieve some of this information you were talking about with Alexander Hamilton and Lincoln. And it jarred me, I knew some of it, 

particularly with Lincoln, it resonated well. In the last question 

that you were answering you made reference to a plant that was 

shut down——

Senator HOLLINGS. Yes, sir. 

Co-Chair BECKER. —and the people trained. I think you said it 

shut down and it moved. 

Senator HOLLINGS. Right. 

Co-Chair BECKER. Where did the plant move to? 

Senator HOLLINGS. Mexico. 

Co-Chair BECKER. Thank you. 

Senator HOLLINGS. Incidentally, on steel, Bob McNamara and 

now my other friends that used to be at the Kennedy Center and 

the World Bank and they run around the world and tell these third 

world emerging countries that they cannot became a nation-state 

until they have the steel for the weapons of war, until they make 

the steels for the tools of agriculture so they give two percent steel 

plants. Willie Caulk, I dedicated one of his steel plants in Kiel, 

Germany right across from Strasburg. He built the Georgetown 

Steel Plant and several others all over the United States and Saudi 

Arabia and he built them in China before he crashed into the Alps 

25

ten years ago. But now, as a result, I’ve got us a competitive steel 

company Nucor which is 25 miles from my office in the Custom 

House. But I’m looking outside the Custom House in Charleston 

and they’re dumping Brazilian steel for all the manufacturing construction all over the Southeast. It’s Brazilian. Because we’ve got 

steel plants all over everywhere and you can’t compete with a two 

percent steel plant. 

Chairman ROBINSON. Vice Chairman D’Amato. 

Vice Chairman D’AMATO. Senator Hollings, thank you for your 

testimony. It’s really a panorama of the problem that you’ve 

weighed in on. The Commission intends to consider as many action 

items as we can in terms of recommendations. And I think that the 

idea of providing tax and other incentives to staying in the U.S., 

and disincentives against leaving is a good concept that ought to 

be filled in many, many ways. That’s one central concept. The second thing, in terms of your legislative proposal in terms of fair 

trade, it’s clear and true that there is not a fair playing field out 

there. We just went to visit the WTO in Geneva; we visited with 

all our trading partners there. There’s nobody but the United 

States that is even willing to bring a complaint against the Chinese. Everyone is afraid of Chinese retaliation against them in 

terms of access to the Chinese market. And yet the NAM and the 

Chamber both have long lists of unfair trade practices by the Chinese clearly violating their promises made when we let them in the 

WTO. The Chinese are on a roll and you can’t blame them for 

being on a roll, but on the other hand, you’ve got to call them to 

account when they engage in consistently unfair practices. And I 

think if we’re going to use that tool, the WTO, to our advantage, 

you better get on the stick and start bringing complaints before the 

appropriate WTO bodies. By the way, while you’re in your last year 

of office we certainly look forward to working with you and your 

staff in developing a lot of these items. 

Senator HOLLINGS. Thank you a lot. Incidentally, all of our enforcement now is going right in the face of the WTO and I’m trying 

to get the best, both the Congressional Research Service and my 

trade lawyer friends and everything else, how can we enforce our 

laws and not be in violation of the World Trade Organization. And 

I’m almost so mad I’ve got to retain some credibility so they’ll listen. But I didn’t want to come to your Commission saying get out 

of the WTO. But we studied it and, look here, we’ve got to look out 

for the economic security of the United States of America and if 

we’ve got an international entity that is not unelected and meets 

in caucus in secret and they come out and make findings and there 

are not any appeals and they repeal the laws of the United States 

of America, we’ve got a real problem, we might have to withdraw. 

Co-Chair BECKER. Thank you. 

Chairman ROBINSON. Commissioner Mulloy. 

Commissioner MULLOY. Senator Hollings, it’s a privilege that 

you’re before us today. As you know, I worked on the Senate Banking Committee staff with Senator Sarbanes for many years. Senator Sarbanes came in here and testified at one of our first hearings and he showed us about the PNTR vote. When that vote, 

which was to get China permanent MFN, permanent access to our 

market, we used to only do it on an annual basis when we had a 

26

little leverage and that was to get them into the WTO. The exporters would all come in and the industry would all come in and say 

State by State how many exports our guys were going to get and 

it would help our workers because we were going to get all kinds 

of export opportunities. The day after the House vote Senator Sarbanes brought us an article from the Wall Street Journal and the 

Wall Street Journal said the whole game was not exporting goods 

from the United States, these folks all wanted to export manufacturing and investment from the United States to China and they 

needed to lock our market open because if we could lock our market, then it would make sense for them to put all that investment 

into China. And in our first report we looked at that from the Chinese perspective. It revealed that a key part of their reason to get 

into the WTO was to get investment because they wanted the technology and they wanted the money and they wanted to move up 

the technological food chain, all as part of the WTO accession. So 

the other thing, we did a hearing just recently with exchange rates. 

Senator Schumer came in and talked about that with us. He and 

Paul Greg Roberts who was in the Reagan Administration as an 

Assistant Secretary Treasurer, both came in and said, if we let 

them in, why do they do it? If they can have an undervalued currency, it gives an incentive for people to move factories to China 

because they can get cheap labor and sell at a good price back here 

in this market so they have clearly from what we could see, they 

have a national strategy. And I’m not anti-Chinese, I think they, 

God bless them, they can have a national strategy. But it seems 

to me what we ought to be doing is thinking what is our national 

strategy. In my view, your testimony today is really kind of like a 

wake-up call and it’s very important in my view to get these ideas 

out in the political debate in this year because I think the American people sense that something big is happening and we’re not 

equipped to deal with it. 

Senator HOLLINGS. You’re right on target. There isn’t any question that the China Commission has got to make a change with respect to China being treated as a third world or emerging country. 

Look here, I’ve been briefed and everything else. It’s not just the 

Maglev train. Their nuclear is just as advanced as ours. They’re already up into space. They aren’t advanced but they got instead of 

five they’ve got ten years to comply and everything else. And then 

there’s a third world emerging entity. They get all the consideration of the WTO and that’s why it’s tough even if you got them 

to the rates. Then you go to the WTO and say well, you know, 

they’re still third world. Of course, what they’re doing is getting the 

business. Everybody’s in there just falling over each other, Germany, Great Britain, United States and France, United States, 

we’re all just fighting for the business and then don’t disrupt the 

fight. The Japanese, incidentally, have moved totally, they’re advanced technology. Before General Motors could sell that Buick, 

they had to put in their most advanced technological research in 

downtown Shanghai so all automobile research now is in Shanghai 

if you want to see how to build a car. And now, once the Japanese 

two years ago started to join them, they are smarter than we are, 

they’ve got plus balance of trade and they send over all the materials still, they make it all. It’s assembled only in China and come 

27

back. But we send the whole manufacturing over. We’re not competing. We don’t even get to make the parts. But Japan does and 

by the way, all these here fellows running up and down, ‘‘If they’re 

going near Taiwan that means war,’’ that’s bunk. Who do you think 

in the Congress is going to vote to go to war about Taiwan? Taiwan’s got 130 billion invested in the mainland. That bologna is 

over. There’s one China, that’s our policy. We’re not going to kill 

Americans on that kind of thing. We’ve got a whole culture of sort 

to change around to get us competitive and the theme is to rebuild 

our country. It’s a good country, it’s strong, it’s the best and we are 

the most productive but as they keep on congratulating us on productivity we’re going broke. 

Chairman ROBINSON. Commissioner Dreyer. 

Commissioner DREYER. I think your ideas are really excellent 

and as I think you’ll agree, not one of them is going to be easy to 

implement. One of them in particular struck me, since I am an educator, of particular importance. That is changing the culture of 

this country. And there are some things that don’t involve China 

that we can do better here to compete with China, and one of them 

is the culture of the country. You know, you joked about running 

for county commissioner because you would make more money than 

you do as a senator. Take a look sometime at what football coaches 

make. We have a culture in this country that emphasizes sports. 

I have nothing against sports—it promotes diversity, it promotes 

being able to get along with your fellow humans. None of that is 

wrong or misplaced but it comes at the expense of training people, 

in doing homework, learning math and physics. One of the reasons 

these jobs are being exported to India, to China and elsewhere is 

that there are people there who are computer experts. My son 

worked for Qwest. They have been importing their labor from Bangalore into the United States because they can’t find enough 

trained Americans to take the jobs and that’s something we’ve really got to change. 

Senator HOLLINGS. I love you and I agree with you a hundred 

percent except for the fact that they can find enough to do the job, 

they just don’t want to pay them. I voted against H1B visas. Silicon 

Valley is 42 percent part time, they don’t want to pay the health 

costs; they don’t want to pay the pension costs and everything else 

they got. You got to realize you’re on target. The greatest man that 

ever lived was a teacher and since I married one the greatest 

woman that ever lived was a teacher. And when we had this here 

‘‘leave no child behind,’’ it was a gimmick. There are four and a 

half billion bucks in there to close the schools. Give them a test, 

close them and then we can validate giving vouchers, privatizing 

your public education system. Look, instead of the four and a half 

billion that went there to give all the tests that we were already 

giving in South Carolina, we were giving all of those tests, it’s 

nothing new, give them to the teacher. I had a little young lady 

come in from Florence, South Carolina in November of last year, 

two months ago, and she was one of the 20 winners of Time-Warner AOL, Time-Warner, whatever it is, contests, national contests, 

and she was one of the 20 winners. And I said, ‘‘Let me ask you, 

I don’t want to be personal, but at your range, what do you’’ . . . 

she’s making $32,000 a year. Now, come on. How can she save 

28

enough money and send her kid to college and so forth like that? 

She ought to be making $64,000 a year. Double the pay of the 

teacher, not order reading and writing and monitoring and tutors. 

If you pay the good teachers, they’ll come. When I go to the graduations and they say, ‘‘Senator, I wanted to be a teacher but I just 

couldn’t save enough money and make it, and so I had to take the 

business course or I had to take the international relations course, 

I had to do this, I had to.’’ They’re just not coming into education 

because it’s a non-entity; it’s a bitter end. 

Commissioner DREYER. Just one second. I’m very much afraid 

that you misconstrued what I was saying. I wasn’t advocating paying teachers better, I was advocating working the students harder. 

Senator HOLLINGS. Yes, well, of course. 

Commissioner DREYER. I don’t disagree. 

Senator HOLLINGS. The students will work harder if they’ve got 

a good teacher. Man, I can tell you the best one I ever had was 

Coleman Parish over at the Law School. That fellow worked me to 

death. I slipped through torts. He was a good fellow and all that, 

we told stories to each other. But the good teacher makes you work 

harder. 

Commissioner DREYER. Exactly. 

Chairman ROBINSON. Well, Senator, you’ve been awfully generous with your time and I just want to assure you as you depart 

here that this Commission, and I mentioned this earlier when Senator Graham was here, has been extraordinarily bipartisan in nature. It is not in the business of soft-soaping or papering over these 

debilitating unfair trade practices, I’ll tell you right now. We’re 

going to let the chips fall where they may and we’re going to try 

to be the wake-up call that you know this country needs and you 

expect us to be. This is not some popularity contest but rather a 

truth squad, even if the truth is going to hurt. And when you see 

our report at the end of the year, there are going to be lots of elements of it that hit like a brick through a plate glass window, I 

believe that. That’s because we’re going to tell this story the way 

it desperately needs to be told. So we are very grateful for your 

past support of the Commission and your appearance today and we 

greatly look forward to working with you down the road. 

Senator HOLLINGS. I thank you and the Commission. You all 

have been very generous in indulging me. I appreciate it very much.

PANEL I: TEXTILES/APPAREL

Chairman ROBINSON. Thank you, sir. I’m going to turn the proceedings over now. If we could have our first panel. Co-Chairman 

Becker will be presiding over the proceedings for the balance of the 

morning. We also want to extend our apologies and gratitude to our 

first panelists for rolling with the punches so to speak and allowing 

for this important opportunity to hear from your State Senators. 

We certainly will provide whatever time is required to hear from 

you as well and we’ll try to make sure you’re not in any way shortchanged because we enormously value your participation today. 

And with that I’ll turn it over to our Co-Chairman. 

Co-Chair BECKER. Well, we’ll go ahead and proceed. Again, I 

want to emphasize that we’re going to keep time as strictly as we 

can. We want to catch up if we can on our scheduling a bit, so obviVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
29

ously we’re going to go past what would have been our lunch break. 

Norman Chapman is the President and Chief Operating Officer of 

Inman Mills. The Chapman family founded Inman Mills in 1902. 

Mr. Chapman is also a member of the Spartanburg Chamber of 

Commerce Executive Committee and has a B.S. in Economics from 

Clemson University. Larry Crowley is the President of Craig Industries, which is a textile mill. And Harris Raynor is the Southern 

Regional Director and International Vice President of the Union of 

Needle Trades, Industrial and Textiles Employees, commonly 

known as UNITE. Sarah Friedman has been the Executive Director 

of the Southeastern Apparel Manufacturers and Suppliers Association, commonly known as SEAMS, since January of 1999. And 

Smyth McKissick has been the President of Alice Manufacturing 

Company’s four plants in Easley since 1988. He succeeded his father, Ellison McKissick, Jr. and is the fourth generation of his family to head the textile manufacturing company. We look for an interesting presentation from all of you. We’ll start the clock when 

you start your presentation and let me go first then with Norman 

Chapman.

STATEMENT OF NORMAN CHAPMAN

PRESIDENT, INMAN MILLS, INMAN, SOUTH CAROLINA

Mr. CHAPMAN. Thank you very much and thank you for what 

you’re doing. I could have sat and listened to Senator Graham and 

Senator Hollings all day, they were tremendous. On behalf of 

Inman Mills and our 500 associates I’m pleased to have this opportunity to address this China Commission hearing on the effects of 

Chinese imports on South Carolina textile manufacturing. 

Inman is a textile manufacturer and has been in business for 

over 100 years. We have a wide variety of products from home furnishings, industrial and apparel markets. Our record year for both 

sales and profits was 1998. In 2001 we closed two plants and have 

been fighting the wave of imported fabrics and products ever since. 

The current U.S. trade policy is one that favors import maximization, especially from China. The United States will run a trade 

deficit of approximately 550 billion in 2003. The U.S. trade deficit 

with China alone will exceed 130 billion dollars. The effects of this 

policy have been devastating to the U.S. manufacturing sector. 

More than two and a half million manufacturing jobs have disappeared since January 2001, including 323,000 jobs in the textile 

sector. 

U.S. trade policy must be reformed immediately to slow the unprecedented surge of job-destroying imports and to stabilize the 

U.S. marketplace, thereby preserving the nearly 15 million domestic jobs supplied by U.S. manufacturers, including the 271,000 jobs 

in South Carolina. 

The surge of low-price Chinese imports has had a dramatic adverse impact on South Carolina textile companies and their communities. South Carolina has lost 56,800 manufacturing jobs since 

January 2001. 21,600 of those job losses were in the textile and apparel sector. Over 800 of these were Inman Mills. 

The news only gets worse. South Carolina’s precipitous drop in 

manufacturing employee has cast a pall over the state’s economy. 

South Carolina has suffered job losses for three years running and 

the state has a projected 350 million dollar shortfall. 

30

Clearly South Carolina’s economic conditions are not good. The 

U.S. Government needs to take several decisive steps to help South 

Carolina and its textile manufacturing industry. 

The United States must acknowledge that its trade policy with 

China is flawed. The current so-called free trade regime is running 

up an unsustainable trade deficit and unacceptable job losses. 

The United States needs to more fully and effectively use the 

special textile China safeguard. 

For years the textile industry has operated under an arrangement negotiated by U.S. government known as MFA. MFA was 

adopted in response to the threat of the ability of two or three lowwage countries to capture almost all of the United States textile 

and apparel market. MFA doled out the U.S. textile and apparel 

quotas to nearly all low-wage countries in the world. The result 

was a success. Apparel industries took root in dozens of poor countries, textile and apparel products are the leading exports in many 

of these countries, and the industry employs tens of millions in the 

third world. Last but not least, market share for U.S. manufacturers has been preserved. 

Despite the success of MFA, the WTO Uruguay Round phased 

out all textile quotas after a ten year phase-out period ending January 1, 2005. At the time the quota phase-out was negotiated, 

China was not a member of the WTO and the addition of countries 

with non-market economies was not contemplated. 

Despite its failure to convert to a market economy, China was 

admitted to the WTO on January 1, 2002. Moreover, China was not 

given a ten-year quota phase-out like the rest of the world but was 

allowed to join the phase-out in progress. This meant China received significant quota-free access to U.S. markets immediately 

upon its admittance to WTO. 

In return for immediate quota-free access, China gave the United 

States the right to use a safeguard to place quantitative limits on 

imports of Chinese textile and apparel products if these imports 

were disrupting the U.S. market. 

While the trade-off sounds great in theory, the reality has been 

a disaster for the U.S. textile industry. The U.S. Government has 

failed to implement the safeguard in a timely and effective manner. 

Although the safeguard was first agreed to six years ago and although China joined the WTO on January 1, 2002, the United 

States government did not publish procedures to implement the 

safeguard until late May 2003. The U.S. domestic textile industry 

had asked the special textile safeguard mechanism be invoked 

against surges in several specific textile categories in 2002 but the 

answer was wait until the procedures are published. 

The U.S. textile industry filed its first safeguard provisions in 

July 2003. Three safeguard provisions were approved in November 

2003. Nevertheless, the inexcusable delay on the part of the government has already resulted in enormous damage to the U.S. textile industry and its workers. China’s exports to the United States 

grew by 340 percent between January 2002 and November of 2003. 

Meanwhile the U.S. textile and apparel industries continue to lose 

tens of thousands of jobs. 

China will wreak havoc on the economies of dozens of both leastdeveloped and first-world countries if allowed to export unchecked. 

31

Business Week reports that an estimated 30 million textile and apparel workers worldwide, including 630,000 in the United States, 

will lose their jobs to China’s textile and apparel exporting machine. 

In light of the impending worldwide calamity alluded to above, 

the United States should attempt to convene an emergency session 

of the WTO governing body to extend all current textile quotas 

through January 1, 2008. This would give WTO time to study 

whether phasing out textile quotas is the best interest of the 

world’s least developed countries. 

And can talk about this later, that the United States must stop 

negotiating free trade agreements like CAFTA. CAFTA has loopholes in it that allow Chinese to come in through Central America 

duty-free to this country. 

Last, the United States should enhance and extend Federal buy 

American purchase requirements. The current Defense Department 

buy American requirements should be revised to eliminate waiver 

authority for inappropriate and arbitrary reasons. Buy American 

provisions should be extended to other national security agencies 

such as the Department of Homeland Security. The measures 

would help the health of the U.S. textile industry. 

If the United States loses its textile industry, we’ll be losing a 

critical military research and development capability. 

Lastly, clearly it’s time for action. U.S. textile and apparel manufacturers do not need any more promises, commitments or hollow 

announcements. What the industry needs are results and results 

will only occur when the U.S. Government actually implements the 

policy tools mentioned in this testimony to keep Chinese exports 

from totally undermining U.S. manufactures of textiles and apparel. With the elimination of textile quotas looming on the immediate horizon it is imperative that the United States confront the 

Chinese threat to U.S. textile and apparel manufacturing forcefully 

and effectively. Thank you for your time. 

[The statement follows:]

Prepared Statement of Norman Chapman

President, Inman Mills, Inman, South Carolina

Effects of Chinese Imports on South Carolina Textile Manufacturing

On behalf of Inman Mills and our 500 associates, I am pleased to have this opportunity to address this China Commission hearing on the effects of Chinese imports 

on South Carolina textile manufacturing. 

Inman is a textile manufacturer and has been in business for over 100 years. We 

weave a wide variety of products for the home furnishing, industrial, and apparel 

markets. Our record year for both sales and profits was 1998. In 2001 we closed 

2 plants and have been fighting a wave of imported fabrics and finished products 

ever since. 

The Fruits of Flawed U.S. Trade Policy

The current U.S. trade policy is one that favors import maximization, especially 

from China. The United States will run a trade deficit of approximately $550 billion 

in 2003. That’s just over $1 million per minute! The U.S. trade deficit with China 

alone will exceed $130 billion. The effects of this policy have been devastating to 

the U.S. manufacturing sector. 

More than 2.5 million manufacturing jobs have disappeared since January 2001, 

including 323,000 jobs in the textile sector. 

U.S. trade policy must be reformed immediately to slow the unprecedented surge 

of job-destroying imports and to stabilize the U.S. marketplace and thereby preserve 

32

the nearly 15 million domestic jobs supplied by U.S. manufacturers, including the 

270,900 jobs in South Carolina. 

The surge of low-priced Chinese imports has had a dramatic, adverse impact on 

South Carolina textile companies and their communities. South Carolina has lost 

56,800 manufacturing jobs since January 2001. 21,600 of those job losses were in 

the textile and apparel sector. Over 800 of these were at Inman Mills. 

The news only gets worse. South Carolina’s precipitous drop in manufacturing 

employment has cast a pall over the State’s entire economy. South Carolina has suffered net job loss for three years running and the State has a projected $350 million 

shortfall in its FY 2005 budget. 

Clearly South Carolina’s economic conditions are not good. The U.S. Government 

needs to take several decisive steps to help South Carolina and its textile manufacturing industry. 

A Six-Point Action Plan to Help Domestic Textile Manufacturers

First, the United States must acknowledge that its trade policy with China is 

flawed. The current so-called free trade regime is running up unsustainable trade 

deficits and unacceptable job losses. 

Second, the United States needs to more fully and effectively use the special textile China safeguard. 

For years the textile industry has operated under an arrangement negotiated by 

the U.S. Government known as the Multi Fiber Arrangement (MFA). The MFA was 

adopted in response to the threat of the ability of two or three low-wage countries 

to capture almost all of the U.S. textile and apparel market. The MFA doled out 

U.S. textile and apparel quotas to nearly all low-wage countries in the world. The 

result was an unqualified success. Apparel industries took root in dozens of poor 

countries. Textile and apparel products are the leading exports in many of these 

countries and the industry employs tens of millions in the Third World. And last 

but not least, market share for U.S. manufacturers was preserved. 

Despite the success of the MFA, the WTO Uruguay Road phased out all textile 

quotas after a ten-year phase-out period ending January 1, 2005. At the time the 

quota phase-out was negotiated, China was not a member of the WTO and the addition of countries with non-market to the WTO was not contemplated. 

Despite its failure to convert to a market economy, China was admitted to the 

WTO on January 1, 2002. Moreover, China was not given a ten-year quota phaseout like the rest of the world but was allowed to join the phase-out in progress. This 

meant China received significant quota-free access to the U.S. market immediately 

upon its admittance into the WTO. 

In return for immediate quota-free access, the China gave the United States the 

right to use a ‘‘safeguard’’ to place quantitative limits on imports of Chinese textile 

and apparel products if those imports were disrupting the U.S. market. 

While the trade off sounds great in theory, the reality has been an unmitigated 

disaster for the U.S. textile industry. The U.S. Government has failed to implement 

the safeguard in a timely and effective manner. 

The textile safeguard was designed to protect U.S. textile manufacturers and 

workers from a rapid and disruptive increase of low-cost Chinese textile imports and 

was first negotiated as part of the Chinese/U.S. textile agreement in 1997. The 

China safeguard was reaffirmed as part of China’s World Trade Organization (WTO) 

accession agreement in 2001. 

Although this safeguard was first agreed to six years ago and although China 

joined the WTO on January 1, 2002, the U.S. Government did not publish procedures to implement the safeguard until late May 2003. The U.S. domestic textile 

industry had asked that the special textile safeguard mechanism be invoked against 

surges in several specific textile categories in early 2002, but the answer was always 

wait until the procedures were published. 

The U.S. textile industry filed its first safeguard provisions in July 2003. To the 

credit of the U.S. Government, three safeguard petitions were approved in November 2003. Nevertheless, the inexcusable delay on the part of the U.S. Government 

has already resulted in enormous damage to the U.S. textile industry and its workers. China’s exports to the United States grew by 340 percent between January 

2002 and November 2003. Meanwhile, the U.S. textile and apparel industries continued to lose tens of thousands of jobs. 

Comprehensive implementation of the special textile China safeguard will take on 

even greater importance in 2004. Quotas on all categories especially sensitive to 

U.S. textile manufacturers expire on January 1, 2005. If the special textile China 

safeguard is not implemented in a comprehensive fashion, China is expected to capture 70 to 75 of the entire U.S. textile and apparel market within two to three 

years! China is also expected to capture 45 percent of the world market. 

33

China will wreak havoc on the economies of dozens of both least developed and 

First World countries if allowed to export unchecked. BusinessWeek reports that an 

estimated 30 million textile and apparel workers worldwide, including 630,000 in 

the United States, will lose their jobs to China’s textile and apparel exporting machine. 

Third, in light of the impending world-wide calamity alluded to above, the United 

States should attempt to convene an emergency session of the WTO governing body 

to extend all current textile quotas through January 1, 2008. This would give the 

WTO time to study whether phasing out textile quotas is in the best interest of the 

world’s least developed countries. 

Fourth, the United States must stop negotiating free trade agreements like the 

Central American Free Trade Agreement that grant the Chinese textile industry 

enormous loopholes to exploit at the expense of the U.S. textile industry. 

For example, the U.S. Government included loopholes in CAFTA that will likely 

lead to the loss of 500 to 700 million square meters of U.S. textile production. One 

loophole is ‘‘single transformation,’’ an exception to the rule of origin that allows for 

Chinese-made components to be used in the assembly of an unlimited amount of 

brassieres, boxers and pajamas in CAFTA countries and then be exported to the 

U.S. duty free. This loophole will almost certainly most all domestic manufacturing 

of the textile components for these sensitive products. 

As you recall, the U.S. Government approved a special textile safeguard petition 

on brassieres because Chinese imports were disrupting the market. Yet with the 

stroke of a pen only a month later, the United States included a loophole in CAFTA 

that consigns nearly the entire brassiere-component manufacturing market to 

China. 

Another loophole is tariff preference levels (TPLs). TPLs are an exception to the 

rule of origin allowing for a specific amount of trade to receive duty free treatment 

without having to use U.S. or regional yarns and fabrics. Under a TPL scheme, Chinese yarns and fabrics are shipped to Central America, cut and sewn into garments 

and then exported to the U.S. duty free. CAFTA includes a TPL for Nicaragua of 

100 million square meters of production. 

TPL’s take away U.S jobs because U.S. industry they give incentives for Central 

American apparel manufacturers to send vital yarn and fabric orders to China and 

other Far Eastern suppliers at the expense of their American counterparts. China, 

which was not even a party to CAFTA and gave nothing up, receives all the benefits 

from the loophole. Finally, TPLs are unnecessary because ‘‘short supply’’ provisions 

in the agreement allow CAFTA countries to use Asian yarns and fabrics if those 

components are no longer produced in the U.S. 

It should be noted that other third-party countries may also exploit the loopholes 

discussed above. That being said, China will reap the lion’s share of the benefits. 

Fifth, the United States should enhance and extend Federal buy-American purchase requirements. Current Defense Department buy-American requirements 

should be revised to eliminate waiver authority for inappropriate and arbitrary reasons. Moreover, buy-American provisions should be extended to other national security agencies such as the Department of Homeland Security. The measures would 

help ensure the health of the U.S. textile industry. 

The U.S. textile industry manufactures such essential products as camouflage uniforms, Kevlar body armor, polar jackets, waterproof and insect-repellant fabrics, etc. 

In addition, U.S. researchers at the Massachusetts Institute of Technology are developing military apparel with nanotechnology that would be lightweight, bulletproof and waterproof. This technology could save innumerable lives in a time of war. 

The importance of the textile industry research and development capability cannot 

be understated. If the United States loses its textile industry, it will be losing a critical military research and development capability too. 

Sixth, Congress should pass a Foreign Sales Corporations/Extraterritorial Taxation Initiative (FSC–ETI) reform bill that focuses tax relief much more on domestic 

manufacturing, rather than continuing to provide large tax incentives for 

outsourcing corporations. 

In 2001, the current FSC/ETI law giving tax credits to U.S. corporations for their 

offshore activities was deemed illegal by the WTO. The European Union has threatened to impose tariffs on U.S. imports unless the FSC tax breaks are removed. Legislation advocated by the House Ways and Means Committee would divide tax benefits between domestic manufacturers and outsourcing companies and overseas investors. Congress should instead direct much more of this benefit to domestic manufacturers. Moreover, benefits of the legislation should be extended to Subchapter S corporations as in the Senate bill. This tax relief would help U.S. manufacturers compete with heavily subsidized Chinese manufacturers. 

34

Conclusion

Clearly it is time for action. U.S. textile and apparel manufacturers do not need 

any more promises, commitments or hollow announcements. What the industry 

needs are results. And results only will occur when the U.S. Government actually 

implements the policy tools mentioned in this testimony to keep Chinese exports 

from totally undermining U.S. manufacturers of textiles and apparel. With the 

elimination of textile quotas looming on the immediate horizon, it is imperative that 

the United States confront the Chinese threat to U.S. textile and apparel manufacturing forcefully and effectively. 

Hopefully, such action will come in time to save the nearly one million textile and 

apparel jobs that are still left in this country.

Co-Chair BECKER. Thank you. We will wait until the entire panel 

has presented their testimony before we’ll get into questions. Sarah 

Friedman. 

STATEMENT OF SARAH FRIEDMAN

EXECUTIVE DIRECTOR, SOUTHEASTERN APPAREL MANUFACTURERS 

AND SUPPLIERS ASSOCIATION (SEAMS) 

Ms. FRIEDMAN. Good morning. Thank you for the opportunity to 

speak with you this morning. I come to you today representing 

SEAMS. That is an association to the sewing products industry. 

The association was formed 37 years ago in South Carolina by 

manufacturers and suppliers to the apparel industry mostly at that 

time. It was formed to work together to strengthen our industry 

and to try to help manufacturing companies and contracting companies keep their businesses competitive. In the early 1990’s our 

association had approximately 450 companies that were members; 

we now have 182 companies. Today I want to talk to you about our 

South Carolina companies that are members. In 2001 we had over 

100 companies in South Carolina that were members of our association. Today we have 51. We’ve lost 50 companies in the last 

three years. The reason they closed the doors is not because they’re 

not competitive. It wasn’t because they did not have the latest 

equipment and that they did not have skilled workers in their facilities. The doors were closed because of the unfair trade that’s 

going on and that they could not compete. Why could they not compete? Not just because of the wages in other countries, but because 

of the greediness with the retailer, and what they wanted. As we 

go into the stores and look at products that are made here, or if 

they’re made in China, and I did this yesterday, the prices are the 

same. A lot of it is not being passed on to the consumer even 

though we’re told that it is. A lot of these contracts that they lost 

were maybe pennies per piece for the products that they were willing to make in their facilities. And what it’s done in closing these 

plants is that so many people, and I’m not sure if you’ve ever been 

into an apparel plant or textile products plant. A lot of the workers 

are minorities, they’re women and they have a high skill level and 

they want to do these jobs, they’re prepared to do them, they’ve 

been doing them for years. A lot of them are in their 40’s and 50’s 

and I’ve spoken to some of them that have lost their jobs, and I’m 

asking what are you doing. Well, of course the first thing they do 

is they sign up for unemployment while they seek work. Some of 

them have been retrained. But after being retrained, there are still 

not the jobs out there for them because they’re in their 50’s. And 

if you’ve got somebody that’s in their 50’s and someone that’s in 

their 20’s, even though we’re not supposed to, guess who’s going to 

35

get the job. That’s what’s going to happen. So these women, a lot 

of them are faced with if they do other work, they work for less 

money than they were making, they’re away from their families 

more and they lose benefits that they had to protect their families. 

So it’s devastating to talk to these people or go into their facilities 

and know that there’s not a lack of the way they’re managed or the 

equipment that they had or their skill level. And then in changing 

hats, also I am part owner of an apparel company in Aiken, South 

Carolina, a plant that was built in 1962. And many people will tell 

you that you need to diversify. If you diversify, you can keep your 

facilities going. You have to think out of the box; you have to be 

willing to do different things. Aiken Industries did that, and in the 

early 1990’s had 165 employees; today they have 42. As I sit here 

with you today, those employees are laid-off because of lack of 

work. They diversified, tried different things. Eight months ago I 

went to work for a company that assured me only that they would 

give them work. They went out and bought modern equipment, put 

it into the facility. The last week in November they came to them 

and said we will not give you any more work, the reason being that 

this work was going to be made in China. Not because of anything 

they’d done wrong, not because of the delivery or quality but because they wanted it coming out of China. So what I ask you today 

is do we want to keep manufacturing in the United States? If we 

do, what can we do about it? We need help from our government 

and in order to do that there’s many ways. Senator Hollings mentioned the Berry Amendment and so did Senator Lindsay Graham. 

We need to strengthen the Berry Amendment, also maybe look at 

procurement laws in each State as far as the products that are 

made and where they’re made and be given an opportunity. We 

need your help, please. 

Co-Chair BECKER. Thank you very much. Mr. Crolley. 

STATEMENT OF LARRY CROLLEY, PRESIDENT, CRAIG INDUSTRIES 

Mr. CROLLEY. Commissioners, thank you for the opportunity to 

come before you. My name is Larry Crolley. I’m President of Craig 

Industries. Craig Industries was a company formed in 1979 to 

manufacture apparel and then was later changed to a company 

that does what is known in our industry as cut make and trim apparel. As I prepared to come before you, I spent several days writing out what I was going to say and as I was preparing to leave 

this morning, I just threw it all in the trash. I felt like I should 

come talk to you from my heart. I guess my company represents 

small business America. We’re a small company. Wasn’t always 

that way. In 1990 we had 500 employees. Today we have less than 

100. I was brought up to believe in American pie, Chevrolet and 

motherhood. I have a strong sense of loyalty to my employees. I 

have a strong sense of loyalty to the politicians that we elect and 

I’m proud to be an American. But it’s awful hard to compete when 

you are constantly being told, ‘‘Larry, you’ve done a good job for us 

for 20 years. We’re just going to have to buy in China or India or 

Pakistan.’’ And you know I was around when we fought the Japanese on this same area, and I said, ‘‘Well, we’ll whip all those countries too.’’ So we’re fighting the fight. How long will we last? I don’t 

know. My faith is in this country, my faith is in the politicians that 

36

I have . . . as best as I have the ability to study and try to understand and elect, I hope they’ll represent what’s best for me and the 

employees that work with me. Then what happens is we’ve become 

such a selfish society. If you don’t perform and if you don’t make 

money, you cannot exist. And you say, ‘‘Well, Larry, that’s about 

as fundamental economics as there are.’’ Well, that’s true, it is. You 

cannot continue to spend out more than you take in. But the problem that we have is that as small companies, we can’t compete 

with multi-national companies, we can’t go open a plant in China, 

we can’t go open a plant anywhere that we . . . if somebody wants 

us to open. We as small business have to deal with what’s put before us. We’ve been told, us small businessmen, that we’re the 

backbone that will get the economy going again, we’re the ones, the 

entrepreneurs, the creative ones, that we’ll get things going. Well, 

I’m here to tell you it’s getting harder and harder. I mentioned a 

while ago about money. You know, bankers aren’t blind to what 

we’re talking about, they read the papers and they’re smarter than 

most of us. I would like for one of you one day to go with me to 

a banker and say, ‘‘You know, I can get a little more efficient if I 

can buy this piece of equipment. Would you be interested in financing it for me for ten years?’’ ‘‘Larry, I’ve known you all your life 

but you know, we just don’t look in favor at all on the apparel and 

textile businesses. Why don’t you just go ahead and do something 

else? Just quit, try to do something else.’’ But I come to you and 

I will conclude by saying these things, I’ve been in this business 

40 years. For 25 of those years I’ve been in business for myself. 

When I started in business in 1979 I hired 13 people. Those 13 people and I started making what then was known as sundresses. 

Twenty-five years later, six of those women are still working with 

me and the others are dead. You know, they depend on me to find 

work. They depend on me for a paycheck. They depend on me to 

help them make their house payment, their car payments, send 

their kids to college and give them a better life than what they 

had. It’s very hard to walk away from that. It’s very hard to say, 

you know, I fought the fight; I’ve done all I can do. I’m just going 

to throw up my hands and walk away. You know, to the success 

we have, we owe it to a lot of people and I owe my success to my 

employees, I owe my success in life to my family. You just can’t 

walk away from it, you just keep fighting and you keep scratching 

and you keep clawing and you keep praying. And we depend on 

people like you to get laws passed to help us. One of the things 

that Craig Industries has done is we went to, we attended some 

seminars, we went and talked to some professors at Francis Marion 

University which is in Florence, South Carolina. We talked with 

some professors here at South Carolina. I have a . . . I was blessed 

to be able to get a college education. I understand supply and demand and economics, or I thought I did. And so we aggressively 

went after Japanese business because made in the USA has some 

value over there and we were successful at that. The first two 

years we shipped them over three million shirts a year going out 

of the Port of Charleston. This year we may ship 600,000. Guess 

who our biggest competitor in Japan is? China. China can sell in 

Japan the same shirt we make for 60 percent of what we’re paid, 

of what we charge. Something’s wrong with that picture. I don’t 

37

know the answers, Mr. Chairman. I guess you all have been 

charged to find that answer. And I can conclude with a little emotional thing that happened to me. There’s a plant 15 miles from my 

plant. This happened on January 7th. ‘‘Timmonsville Plant Closing 

to Leave 100 People Without Jobs.’’ ‘‘Oxford Drapery officials claim 

that they cannot compete with cheap labor,’’ and the article goes 

on to say that the goods are going to be made in China. But we 

need to think about what this worker says. ‘‘Unemployment in the 

seven counties of the region is more than 13 percent. Only two of 

these counties had jobless rates in single digits in November. For 

some of the workers at Oxford one of the biggest blows will be the 

loss of benefits. ‘The one thing that’s hard is insurance,’ said Nettie 

Chappel, a 16 year employee of Oxford. I’m on a lot of medication. 

Without insurance that’s really going to be hard.’’ What are we 

going to do about Ms. Chappel? What are we going to do about us 

baby boomers? Thank you, gentlemen. 

Co-Chair BECKER. Thank you, Mr. Crolley. We will now hear 

from Harris Raynor from UNITE. 

STATEMENT OF HARRIS RAYNOR, SOUTHERN REGIONAL DIRECTOR

AND INTERNATIONAL VICE PRESIDENT, UNION OF NEEDLETRADES

INDUSTRIAL AND TEXTILE EMPLOYEES (UNITE) 

Mr. RAYNOR. Thank you. I’m going to try to be brief. I shouldn’t 

lie from the beginning. I’m going to try put some of this in context. 

I’ve spent about half my adult life trying to get to the table with 

some of the people who are sitting on either side of me and their 

companies. It was a different table that I envisioned we’d be meeting at but the seriousness of this problem I think is sort of embodied in the fact that here we are, the union and companies that 

have been opposed to having unions all of their lives, in one room 

in one place together on one issue because our very lives are at 

stake right now and the lives of the people that we represent, and, 

as some of these company owners so eloquently have expressed 

how much they care for. I was a little late getting back to the table 

because I was voting on a bankruptcy creditor’s committee call for 

Cone Mills, the largest denim company at one time in the United 

States. And Cone Mills, as part of its bankruptcy, is trying to auction itself off to the highest bidder. We have one bidder that Mr. 

Becker knows, a gentleman named Wilbur Ross, and the creditors 

went out trying to see if there’s any other bidder who could see 

some value to this company. There’s not a person, there’s not a 

company, there’s not a financial organization that has put in a bid 

for Cone Mills. 

I had the pride and the honor to represent 7,000 workers at 

Pillowtex Corporation, better known as the old Fieldcrest and Cannon, the two best known brands in the home furnishings industry, 

a company that made profit when it sold Fieldcrest and Royal Velvet towels. In that bankruptcy we could not find a bidder for that 

company despite the fact that it had from 24 to 34 percent profit 

margins on its high-end products. Why not? Because everybody we 

approached said, ‘‘2005 is coming and you want me to put my 

money in the textile industry?’’ No way in Hades. This is not a 

change we’re talking about here; this is a massive dislocation of entire industries at light speed. It’s not some gradual thing that’s 

happening or that’s been happening over the years. This trade and 

38

the threat that China brings is enormous, and it’s like something 

that we’ve never seen. I hope that the President doesn’t dare make 

his speech about all those jobs that he’s creating in Kannapolis, 

North Carolina because the only jobs he’ll create will be for tons 

of the Secret Service people we’re going to have to keep those workers off his back. Nobody’s finding jobs that were affected by the 

Pillowtex bankruptcy. 

Now, there’s a lot of statistics that have been thrown around 

here and I’m not an economist, but you have them and you’ve 

heard them. Senator Hollings said something and I think we have 

to examine some of the things that he said. Let me first say this 

is the most modern, the most efficient, the safest and by far the 

best textile industry in the world and we can’t compete. Why not? 

Senator Hollings made a whole list of things that you have to do 

if you want to run a company. You’ve got to pay into a retirement 

system for your workers, through Social Security if not through 

your own pension plan; you have to pay minimum wage; you have 

to obey an Occupational Safety and Health Act that has almost 

eliminated brown lung disease in this country. You have to take 

care of your people and have workers’ comp insurance. You have 

to pay overtime after a certain number of hours. You can’t go out 

and get 12 year olds to come and work in your factory for nothing. 

You can’t tell them to take the work home and finish it and that’s 

their overtime. You have to pay taxes to support school systems 

and hospitals. You have to pay into a medical system for your people. And it goes on and on and on. How do those things happen? 

You go by a textile mill in this country and out in front or on the 

side or in back of every one of them is a water treatment plant to 

make sure that our natural resources are safeguarded. We don’t 

pollute the air. What happens to us when we cross the borders? I 

go in Wal-Mart and I find everything made in China, but I didn’t 

realize the air we breathe said, ‘‘Made in the U.S.A.,’’ or made in 

China. But when you go to China and you do business, none of 

those things matter at all. You are dealing with a state-run economy that says to its businesses, your job is to support the state. 

It says to its labor union, your job is to support the state, not the 

workers who might be your members, who might want better 

wages or better benefits, your job is to support the state. And you 

know what happens to people in China, I don’t have to tell you, 

when they go against the party and they go against that government. 

Now we are not here begging for a handout. The people I represent are too proud to want charity. What we want is to be able 

to help those people and help ourselves at the same time. China’s 

not the only one; this is the problem of trade in general. These 

countries are desperate to have access to U.S. capital, to U.S. markets and to U.S. technology and we give it away with no price. We 

don’t say, ‘‘If you want to trade with us, you will obey international 

labor laws, you will pay a minimum wage, you will not employ children, instead you will educate children.’’ We don’t use trade to do 

anything to uplift the rest of the world; we don’t make any insistence that there be a deal here. We have the power to do that. Instead we hide behind the veil of free trade, which says this should 

be a race to the bottom. My union was founded on ending sweatshops in this country and there were a number of employers who 

39

wanted to join us in that effort. China is the world’s sweatshop and 

we either have a responsibility to our workers and to the workers 

of the rest of this world to try to end that sweatshop by not prostituting our country and its resources on the bier of free trading. If 

we continue to do that, we won’t need to have any more of these 

hearings. We can’t compete in that way but we can have a plan, 

a sensible trade policy that recognizes that we have a global marketplace we’re trying to deal with national institutions. The two 

don’t match up and we have got to use the rest of the world and 

our ability to negotiate trade agreements and to participate, as 

long as our President will let us participate and not keep telling 

everybody he doesn’t give a damn about the rest of the world, participate in decisions with all the countries of the world to try to 

raise living standards through trade for all people. Thank you. 

Co-Chair BECKER. Thank you, Mr. Raynor. We’ll now hear from 

Smyth McKissick. 

STATEMENT OF SMYTH MCKISSICK, CHIEF EXECUTIVE OFFICER

ALICE MANUFACTURING COMPANY, INC., EASLEY, SOUTH CAROLINA

AND REPRESENTING AMERICAN TEXTILE MANUFACTURERS

INSTITUTE (ATMI) 

Mr. MCKISSICK. Thank you, Commissioners. I very much appreciate your being here. Our company, Alice Manufacturing, was established in 1910. We have 750 associates in Easley, South Carolina and four generations of my family have guided this proud company through good times and bad, including numerous recessions, 

World War II and the Great Depression. 

Over the years our company, Alice Manufacturing, has consistently invested in new equipment in order to remain highly productive and competitive in the global trading environment that we now 

face. We are typical of the entire U.S. textile industry that has 

taken steps to make sure that our industry, the U.S. textile industry, is the most modern and productive textile industry in the world. 

But make no mistake about it, the threat we face today from unrelenting and massive surges of unfairly traded imported textile 

products, particularly from China, make the Great Depression pale 

by comparison. The crisis we face today will determine whether 

Alice Manufacturing, along with much of what remains of the 

American textile industry, even survives. 

Alice Manufacturing views the Chinese trade practices as the 

major threat to world stability in textile and apparel trade. We are 

threatened today because of unfair and illegal trade practices, 

which the Chinese government has instituted to help their textile 

industry and to ensure continued employment for their textile and 

apparel workers. 

I’m talking about currency manipulation to drive down the prices 

below the levels that anyone can compete with. I’m talking about 

direct government subsidization of inefficient, money-losing Chinese textile manufacturers, which enable their exports to undercut 

our products. I’m talking about no-cost loans from Chinese government-owned banks to build textile plants to produce goods for export. 

Let me give you some facts and figures. In 2002 after China had 

just joined the World Trade Organization, as Norman mentioned 

earlier, China was allowed to benefit from the elimination of a 

number of quotas on textile and apparel products. 

40

As a result, in 18 months’ time, the Chinese share of total U.S. 

imports in these categories went from nine percent to 53 percent. 

And that trend has continued to the point that we estimate China’s 

share of imports in these categories will be between 65 and 75 percent by June of this year. 

China is doing this because it dropped its prices on average of 

55 percent. 

No one can compete with a 55 percent price cut. Not the Philippines, not Bangladesh, not even Mexico with zero duties, and 

many American textile companies have been wiped out. 

Here are some more facts. Over the past 12 months China’s exports into this country have increased by 85 percent. That’s the 

biggest increase by any country in history. Over the same period 

of time, the U.S. textile industry has closed 53 plants and has seen 

the elimination of 49,000 jobs and that’s only a fraction of what is 

to come if our government does not do something fast. 

In 11 months, as you folks know, all remaining quotas on Chinese textile and apparel import will be removed. A recent study by 

the American Textile Manufacturers Institute shows that if China 

merely repeats its pattern of behavior from 2002, the entire U.S. 

textile and apparel industry will be virtually wiped out. 

This study projects that over the course of two or three years 

630,000 hard working American textile and apparel jobs will be 

eliminated if this occurs. This industry, one of the largest manufacturing employers in the United States, will be destroyed and all 

these good jobs will be gone forever. 

And the damage won’t be limited just to our country. The World 

Bank estimates that because China will get the same quota-free access to all other countries, it will take over as much as one-half of 

the world’s trade in apparel. That’s over 200 billion dollars a year 

in trade. In fact, according to Business Week, increased Chinese 

production will displace upwards of 30 million textile and apparel 

jobs in other countries around the world, many of them in developing, or least-developed countries. This will be one of the biggest 

short-term shifts of wealth in history. It will be devastating to dozens of countries and in Africa, Central America, the Caribbean and 

Asia, countries whose economies depend upon apparel exports to 

the United States and Europe. 

And there is no apparent U.S. Government response or concern 

to the enormously destabilizing effect that a China takeover of this 

manufacturing sector will cause. 

Now truth be told, and we’ve heard this before, none of this is 

entirely China’s fault. China is doing what is in its own best interest. China is acting aggressively on behalf of its own national interest and its people. China is sticking up for its own textile industries. 

So we have to ask ourselves when is our government going to 

stick up for us? Not talking, not promising but actually doing something. When will our government insist, not ask but insist that 

China cease manipulating its currency? Why isn’t the U.S. taking 

legal action today to force China to stop currency manipulation and 

when will our government insist that China stop subsidizing its 

textile manufacturers? When will the U.S. challenge China in the 

WTO regarding its illegal export tax rebate scheme? 

41

I also understand that our government has a rule on the books 

that makes it impossible for our company to ask for a trade action 

against Chinese subsidies because China is a non-market economy. 

That’s ridiculous. How can our government allow things like this 

to happen? 

The U.S. market, our market, is what China is after. We have 

all the leverage but we apparently are doing nothing while our jobs 

and our wealth disappear. As a final point I want to address the 

serious implications this situation has for our national security. 

The Defense Supply Center in Philadelphia estimates that it procures 8,000 different textile items annually for use by the armed 

forces and this figure actually rises to over 30,000 line items when 

individual sizes are added into the item mix. We supply the American war fighter with everything from uniforms to high-tech protective clothing. We supply defense contractors with industrial fabrics 

that are vital to the operation of key pieces of military equipment. 

We are, in the words of one former Secretary of Defense, second 

only to steel in importance to the Armed Forces of the United States. 

But if this industry, this key supplier to the U.S. Department of 

Defense is allowed to wither away because of unfairly traded imports from China and other countries, where will our Armed Forces 

go for these 30,000 line items? Do we really want to have to depend 

on communist China or any other nation for these critical military 

items? 

In conclusion, our workers see the future and they know that 

their jobs could be gone if the U.S. government doesn’t start taking 

their side. They see China taking away job after job after job because it has not played fairly and they see our government looking 

the other way. Our government is letting us down, it is letting our 

families down, and it is letting our communities down. I hope you 

members of the Commission send a message to the folks in Washington that it is time to implement trade policies that are first and 

foremost designed to benefit the U.S. economy and the workingmen 

and women of the United States. Thank you very much. 

[The statement follows:]

Prepared Statement of Smyth McKissick, Chief Executive Officer

Alice Manufacturing Company, Inc., Easley, South Carolina, and

Representing American Textile Manufacturers Institute (ATMI)

China’s Impact on the U.S. Textile Manufacturing Base

Mr. Chairman, Members of the Commission, my name is Smyth McKissick. I am 

the CEO of Alice Manufacturing, a relatively small, privately held textile company 

with four plants located here in South Carolina. We currently produce a variety of 

woven fabrics and home furnishings ultimately used for home furnishings, apparel, 

industrial goods, and pocketing and linings, among other things. These products are 

ultimately used by our customers for home furnishings, apparel, industrial goods, 

and pocketing and linings, among other things. 

Alice Manufacturing was established in 1910. Four generations of McKissicks 

have guided this proud company through good times and bad, including numerous 

recessions, World War II and the Great Depression. Both my grandfather and father 

served as President of the American Textile Manufacturers Institute, and I have 

served for a number of years on the Board of Directors of that association. 

Over the years, Alice Manufacturing has consistently made prudent and necessary 

investments in new equipment in order to remain highly productive and competitive 

in the global trading environment we now face. We have described our modernization program as ‘‘aggressive’’ because to be passive in our business means you get 

left behind. We are typical of the entire U.S. textile industry, which has taken steps 

to make sure it is the most modern, productive textile industry in the world. 

42

But make no mistake about it—the threat we face today from unrelenting and 

massive surges of unfairly traded imported textile products, particularly from 

China, makes the Great Depression pale by comparison. The crisis we face today 

will determine whether Alice Manufacturing, along with much of what remains of 

the American textile industry, even survives. 

Alice Manufacturing views Chinese trade practices as the major threat to world 

stability in textile and apparel trade. It’s not simply a question of their low wages—

in fact, if wages were the only factor, China’s 40 cents/hour wages would put it at 

a competitive disadvantage vis-a-vis Bangladesh, which only pays its textile workers 

25 cents per hour. Nor is it the fact that China does not face the same labor law, 

tax, environmental or safety and health requirements that we face. While we wish 

that China and our other competitors had to abide by these same requirements, we 

know that is not going to happen anytime soon. 

Instead, we are threatened today because of the unfair and illegal trade practices 

which the Chinese government has instituted to help their textile industry and ensure continued employment for their textile and apparel workers.

• I am talking about currency manipulation to drive down prices below the level 

that anyone can compete with. 

• I’m talking about direct government subsidization of inefficient, money-losing 

Chinese textile manufacturers, which enables their exports to undercut our 

products. 

• I’m talking about no-cost loans from Chinese government-owned banks to build 

textile plants to produce goods for export.

Let me give you some facts and figures. In 2002, because China had just joined 

the WTO, China was allowed to benefit from the elimination of a number of quotas 

on textile and apparel products. Other WTO member countries got to do the same. 

It was a case of China versus the rest of the world, including U.S. textile companies. 

What happened? In 18 months time, the Chinese share of total U.S. imports in 

these categories went from 9 percent to 53 percent. And this trend has continued 

to the point that we estimate China’s share of imports in these categories will be 

between 65 and 75 percent by June of this year. 

How did China do this? China did this because it dropped its prices by an average 

of 55%! 

No one else could compete with a 55 percent price cut. Not the Philippines, not 

Bangladesh, not even Mexico, with zero duties. And many American textile companies have been wiped out. 

Here are some more facts. Over just the last twelve months, China has increased 

its exports of textiles to the United States by 85%, the biggest increase by any country in history. Over the same period of time, the U.S. textile industry has closed 

53 plants, and 49,000 U.S. textile workers have lost their jobs. And that is only a 

fraction of what is to come if this government does not do something fast. 

In eleven months, all remaining quotas on Chinese textile and apparel exports 

will be removed. A recent study by the American Textile Manufacturers Institute 

(ATMI) showed that, if China merely repeats its pattern of behavior from 2002, the 

entire U.S. textile industry will virtually be wiped out. 

This study projects that, very quickly, over the course of two or three years, 

630,000 hard-working American textile and apparel jobs will be eliminated if this 

occurs. This industry, one of the largest manufacturing employers in the United 

States, will be destroyed, and all those good jobs will be gone forever. 

And the damage won’t be limited to the U.S. The World Bank estimates that, because China will get the same quota-free access to all other countries, it will take 

over as much as one-half of the world’s trade in apparel. That is over $200 billion 

in trade. In fact, according to Business Week, increased Chinese production will displace upwards of 30 million textile and apparel jobs in other countries around the 

world, many of them in developing and least developed countries. This will be one 

of the biggest short-term shifts of wealth in history. And it will be devastating to 

dozens of countries in Africa, Central America, the Caribbean and Asia, countries 

whose economies depend on apparel exports to the United States and Europe. 

Yet there is no apparent U.S. Government response to or concern over the enormously destabilizing effect that a China takeover of this sector will cause. The only 

thing we have heard out of the government thus far is a comment from Ambassador 

Zoellick, suggesting that the African countries should try making shoes instead. 

China already has an 82% share of the import market for shoes, which doesn’t leave 

much room for anyone else to break in. China also has more than an eighty percent 

share of the market for small appliances, lighting, bicycles and toys. Just what on 

earth are these other countries supposed to try and make? 

43

Now, truth be told, none of this is entirely China’s fault. China is doing what is 

in its own best interests. China is acting aggressively on behalf of its own national 

interests and its people. China is sticking up for it’s own textile industry. 

So we have to ask:

• When will our government begin sticking up for us? Not talking, not promising, 

but actually doing something? 

• When will our government insist—not ask, but insist—that China immediately 

cease manipulating its currency? 

• Why isn’t the U.S. taking legal action today to force China to stop its currency 

manipulation? 

• And when will our government insist that China stop subsidizing its textile 

manufacturers? 

• When will the U.S. challenge China in the WTO regarding its illegal export tax 

rebate scheme?

I also understand that the U.S. Government has a rule on the books that makes 

it impossible for my company to ask for a trade action against Chinese subsidies 

because China is a non-market economy. That’s ridiculous. How can OUR government allow things like that to happen? 

The U.S. market is what China is after. We have all the leverage, but the U.S. 

is doing nothing while our jobs and our wealth just drains away. 

This Commission was authorized as part of the Floyd Spence Defense Authorization Act, a law named after the late Congressman from South Carolina who understood the link between our Nation’s military security and the need for a strong defense industrial base in textiles. In light of this fact, I want to address the serious 

implications this situation has for our national security. 

The Defense Supply Center—Philadelphia estimates that over 8,000 different textile items are purchased annually for use by the Armed Forces, and this figure actually rises to over 30,000 line items when individual sizes are factored into the item 

mix. We supply the American warfighter with everything from uniforms to high tech 

protective clothing. We supply defense contractors with industrial fabrics that are 

vital to the operation of key pieces of military equipment. 

We supply such combat essential items as combat and flight uniforms, helmets, 

flak jackets, gear for extreme weather operations, chemical defense suits, parachutes, aircraft fuel cells, sandbags, tents and shelters, sheets, blankets and hospital supplies, as well as airplane panels (made of Nomex and Kevlar), ammunition, 

bags/pouches, fabric for bullet-proof vests and helmets, chemical protective suits, 

communication lines (optical fiberglass), extreme weather protective fabrics, interfacing and lining in apparel and shoes, parachutes and parachute harnesses, personal flotation devices, pontoon bridges, rafts, ropes and cables, ship composites, 

stealth fighter plane graphite fibers and wet suits, to name just a few of the thousands of items. 

We are, in the words of one former Secretary of Defense, second only to steel in 

importance to the Armed Forces of the United States. 

But if this industry, this key supplier to the U.S. Department of Defense, is allowed to wither away because of unfairly traded imports from China and other 

countries, where will our Armed Forces go for these 30,000 line items? Will our soldiers have to wait on China to agree to meet our military’s specifications not just 

for quantity but for quality? Will our soldiers then have to wait for China to produce 

the items needed? Will they then have to wait for them to be shipped on the proverbial slow boat from China? And what if our military receives the items it needs but 

they do not meet the rigid specifications we have established—do we send them 

back and start over again? 

Finally, and most importantly, what do we do when China does not agree with 

a particular U.S. foreign policy or defense policy, and decides to cut off the pipeline? 

We saw what happened when OPEC did that to us in 1973–74 with respect to oil. 

Do we want to be faced with an embargo on potentially thousands of different textile items? Do we want our military’s supply needs to be held hostage to the whims 

of the government of China, whose principles of government differ so greatly from 

our own? 

In conclusion, our workers see the future and they know that their jobs will be 

gone if the U.S. Government doesn’t start taking their side. They see China taking 

away job after job and job because it is not playing fairly, and they see our government looking the other way. This understandably makes them very angry. This government is letting them down, it is letting their families down and it is letting their 

communities down. I hope you send the message to the folks in Washington that 

this is a dangerous game to play and the day may come, sooner than they expect, 

when they will be held accountable. 

44

BusinessWeek

DECEMBER 15, 2003

ASIAN COVER STORY

Where Free Trade Hurts

Thirty million jobs could disappear with the end of apparel quotas 

By Cambodia’s modest standards, Tuch Phearom is a success story. For the past 

four years she has been sewing sweaters, a job that now earns her as much as $80 

per month, including overtime. The money has helped her family build a new wooden house that sits on stilts, leaving room for the chickens, pigs, and cattle to sleep 

and forage below. And her wages have allowed her father to expand the plot of land 

he farms to 4.5 hectares. 

The winds of global commerce, though, may soon blow right through Tuch’s humble prosperity. The U.S. and Europe next year are set to remove a 30-year-old regime of strict import quotas on clothing and textiles, which could put Tuch and the 

1,300 other workers at the Thai-Pore Garment Manufacturing Co. Ltd. out on the 

street. The reason: Once the quotas are lifted, a handful of countries—most notably 

China—are expected to quickly dominate the clothing industry worldwide, using 

their low wages, modern factories, and good infrastructure to put outfits like ThaiPore out of business. ‘‘I’m worried my family will have nothing,’’ says the 24-yearold Tuch. Adds her boss, managing director Roger Tan: ‘‘China is a major, major 

threat.’’

It’s not just a threat to Cambodia. From the Dominican Republic to Bangladesh, 

some 30 million workers in dozens of developing countries could see their jobs suddenly evaporate. Under a 1974 global pact called the Multi-Fiber Arrangement 

(MFA), 47 nations each gets a share of the European and U.S. markets for clothing 

and textiles. Cambodia, for instance, this year can export to the U.S. 1,721,232 cotton pillowcases, 72 silk dresses, 1,136,229 knit shirts, and 37,896 playsuits—in all, 

$1.4 billion worth of clothing and textiles. The original idea of the quotas was to 

afford some protection to the declining textile industries of the developed countries. 

The reality was different: With quotas effectively guaranteeing market access, manufacturers sprang up in such unlikely places as Jamaica and Sri Lanka, which before the quotas had no significant textile industry. 

‘‘Trade Not Aid’’

Talk about unintended consequences. Clothing exporters such as Ghana, the Dominican Republic, and Turkey had long protested that quotas were holding back 

their development. Not so many years ago, each expected to ramp up production 

dramatically if the quota system were dismantled. The World Bank, meanwhile, estimated that the quota system, by limiting market access, deprived poorer nations 

of twice what they received in foreign aid. So ‘‘trade not aid’’ became the prescription for Asia, Africa, and South America. In 1995, the U.S. and Europe agreed to 

begin phasing out their quotas on clothing and textiles as part of the deal that created the World Trade Organization. Of the 140 categories of clothing covered by the 

MFA, quotas on about 50 less contentious categories have already been eliminated. 

By Jan. 1, 2005, the rest are scheduled to disappear, though most products will still 

face import duties of 16% in the U.S. and 18% in the European Union. Developing 

nations hailed the agreement. 

That was before China was invited to the party. In December 2001, after 13 years 

of negotiations, China joined the WTO. Now, as a member of the global trading club, 

China will be able to compete on an equal footing to sew blazers, blouses, and bedspreads for the fashion-conscious consumers of Europe and America. The grand 

prize: $500 billion in global garment trade. 

As in so many other areas, China’s weight is likely to be felt far beyond its borders. Apparel industry workers in China earn an average of $73 per month, compared with $75 in Indonesia, $102 in the Dominican Republic, and $300 in Honduras. Moreover, with the help of trading companies in Taiwan and Hong Kong, 

China can quickly deliver its goods to stores thousands of miles from its shores. Last 

year, China’s exports amounted to 17% of the global clothing market. Once all 

quotas are lifted, its share is expected to quickly jump to 45%, the World Bank estimates. China now sells the U.S. $6.5 billion of its $60 billion in apparel and textile 

imports. The number may hit $40 billion by 2010, the World Bank says. China is 

‘‘the 800-pound gorilla,’’ says Ronald J. Sorini, a former U.S. trade negotiator for 

textiles. 

45

Making China the Scapegoat 

Suddenly, the much-maligned quota system looks like a lifeline. Rather than helping developing nations, the phaseout of quotas creates a Darwinian survival of the 

fittest—or, as critics of globalization would have it, a race to the bottom, where 

wages and benefits are certain to be sacrificed in a frantic effort to retain market 

share. When quotas on baby clothes and soft luggage ended last year, China’s exports of baby clothes to the U.S. leaped 826%, and its soft luggage shipments rose 

fivefold. In Thailand, the Philippines, Indonesia, and Mexico, production of those 

products dropped by half. In the Dominican Republic, luggage exports plummeted 

by 70%, to $8.2 million. 

That kind of competition benefits consumers around the developed world. Prices 

have already fallen by 30% on dozens of items that went off quota last year, according to industry estimates. And buyers from companies such as the Gap and Nike 

have been flooding China in search of new suppliers in anticipation of the end of 

the quota regime. M. Maniwanen, CEO of Indonesia’s Busana Apparel Group, got 

a taste of what life may soon be like when he met in November with officials of 

Phillips-Van Heusen Corp. (PVH). The Van Heusen team kicked off the discussion 

by insisting that Busana’s prices of $12 to $15 for a dozen dress shirts were too 

steep. ‘‘They’re taking advantage’’ of the quota phaseout, says a dispirited 

Maniwanen. Van Heusen could not be reached for comment. 

Still, China is sure to take plenty of heat for the shift. Last year’s surge in U.S. 

imports of three off-quota items from China—bras, bathrobes, and woven fabric—

has already created a mini-crisis in Beijing’s relations with Washington. On Nov. 

30, the U.S. announced it would impose emergency ‘‘safeguard’’ quotas on the three 

categories to give domestic manufacturers some breathing room. China pleads that 

it needs the clothing industry to absorb legions of workers from rural areas and 

those laid off from inefficient state-owned industries. Modernized textile and garment factories could go a long way toward meeting the goal. ‘‘China is still a developing country, so for a long time we will need labor-intensive industry,’’ says Cao 

Xinyu, vice-chairman of the China Chamber of Commerce for Import & Export of 

Textiles. 

One of the primary victims of the end of quotas is likely to be the U.S. apparel 

and textile industry. In the past 12 months, nearly 50,000 U.S. textile and garment 

jobs were lost, leaving just 780,000 workers in the two sectors. Some expect the U.S. 

industry to nearly disappear, much as production of toys, bicycles, and consumerelectronics moved offshore with the quiet acquiescence of Washington policymakers 

years ago. The union representing U.S. textile workers, UNITE, puts the potential 

job loss from the quota phaseout at 500,000. Even the Bush Administration acknowledges the outcome could be grim. ‘‘The industry has been used as a bargaining 

chip . . . traded off for benefits elsewhere in the U.S. economy,’’ Grant Aldonas, Under Secretary of Commerce for International Trade, said at a Greater Mt. 

Airy (N.C.) Chamber of Commerce lunch last year. 

Washington is also worried about the destabilizing impact of the end of apparel 

quotas in the developing world. Last spring, U.S. Trade Representative Robert 

B. Zoellick ordered a report on the effects of a quota phaseout on poorer nations. 

His main concern: America’s closest neighbors in the Caribbean, Central America, 

and the Andean nations. Their inefficient industries survive today only because they 

have guaranteed quotas and can export to the U.S. duty-free as long as they use 

American-made fabric. But after the study was completed in October, Zoellick refused to release its contents. According to sources familiar with its conclusions, it 

warns of a devastating effect on many developing economies. Dominican officials say 

they’ve been told they will lose more than a third of the country’s 119,000 garment 

workers, while exports will decline by 35%. 

The likely losers, meanwhile, are scrambling for ways to fight back. Central 

American nations, for instance, are desperately trying to negotiate a free-trade deal 

with the U.S. by Jan. 1. Such a pact would eliminate tariffs on their apparel exports, even when they don’t use cloth or yarn made in the U.S. ‘‘For us, [a freetrade pact with the U.S.] is a question of life or death,’’ says Jesu ́ s Canahuati, president of the Honduran Maquiladora Assn., an industry group representing clothing 

manufacturers. ‘‘It’s the only instrument that will permit us to survive.’’ Such a 

deal, though, may be a hard sell in Washington during an election year. 

The situation could be even worse for Vietnam. Clothing is Vietnam’s largest export, and its biggest growth industry, employing 2 million workers. As a non-WTO 

member, Vietnam will continue under quotas even after next year’s phaseout—

which won’t be an advantage once the country faces full-blown competition with 

China. While Vietnam’s minimum wage of $28 to $48 a month is competitive with 

China’s labor rates, its plants are only 60% as efficient as those north of the border, 

according to U.S. buyers. ‘‘We have to bear the huge pressure from competition, esVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00053 Fmt 6602 Sfmt 6621 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
46

pecially manufacturers in China, India, Indonesia, and Pakistan,’’ worries Le Quoc 

An, chairman of the Vietnam Textile Garment Assn. 

‘‘No More Handouts’’

Cambodia is banking on its adherence to international labor standards to carry 

it through. With the clothing industry producing 93% of its export earnings, it’s 

highly vulnerable. Since 1999, Cambodia’s garment quotas in the U.S. have been determined by its willingness to improve working conditions at its factories. While the 

requirements have forced many smaller manufacturers to shut down, larger companies quickly realized that they could get additional quota allowances by treating 

their workers better, so overall textile employment has increased to 220,000 this 

year from 96,500 in 1999. Exports have grown by 153% over the same period. 

Now some are wondering whether those gains will be lost as factory owners will 

no longer have the incentive of bigger quotas to provide better conditions for workers. The hope is that factories will realize they can use their labor records as a selling point. Cambodia ‘‘has started to realize it might give it an edge over other countries as a way of attracting buyers,’’ says Lejo Sibbel, an official of the International 

Labour Organization in Phnom Penh. Adds Chea Vichea, president of the Free 

Trade Union of Workers of the Kingdom of Cambodia, whose 40,000 members account for about 20% of garment workers: ‘‘Cambodia has a good reputation with 

buyers and consumers.’’

Indonesia, meanwhile, will have a hard time competing on price. Like many other 

countries, its textile industry is inefficient and has trouble supplying garment makers. The country’s 1.2 million workers make as much as $90 a month—plus benefits—stitching clothing for export. But they use mostly Chinese fabrics, so when 

quotas are lifted Indonesian manufacturers will likely lose out to Chinese companies. Last year, at least 10,000 jobs were lost as eight factories closed and Indonesia’s clothing exports plunged 13.2%, to $3.8 billion. So far this year, 30 more Indonesian garment operations have shut down, according to industry figures. 

That has companies such as Busana searching for another way out. Busana’s 

plan: Quit the garment business, close half of its factories, pay workers $5 million 

in severance pay, and start over as a garment buyer providing a bridge between 

manufacturers in Asia and retailers in the U.S. ‘‘Indonesian garment factories that 

are running are not making money. They’re only surviving,’’ says J. Baskaran, chief 

financial officer of Busana. 

China won’t be the only winner. India and Pakistan are also likely to benefit from 

the lifting of quotas. ‘‘There will be no more handouts, and everyone will have to 

survive by sheer economic competitive advantage,’’ says Abid Farooq, an official of 

the All Pakistan Textile Mills Assn. Wages in Pakistan are comparable to China’s, 

factories are being upgraded, and both countries grow plenty of cotton and make 

high-quality synthetic fibers. Pakistan’s textile and clothing industry is the country’s largest, employing more than a third of all industrial workers. Its $7 billion 

in sales abroad this year will account for two-thirds of the country’s export earnings. 

Under Political Pressure 

With so much at stake, Pakistan is gearing up for the shift. Imports of textile machinery—some of it used equipment from shuttered American plants—rose from 

$160 million in 1999 to $550 million this year. Over the past four years, the industry has invested $3 billion to upgrade factories and expand capacity. The goal: to 

double exports to $14 billion by 2005. Aziz Memon says he welcomes the challenge. 

His Karachi-based Kings Apparel Industries Ltd., which employs 2,000 and already 

ships knit-cotton clothing to Europe and the U.S., has added $8 million of imported 

machinery to expand capacity by 45%. ‘‘We’re going to fight against China’’ and 

other rivals, Memon says. 

India is in an even stronger position. With its sophisticated, growing middle class, 

it has already created a sizable domestic market. India claims the world’s third-largest cotton production, behind China and the U.S. And Indian exporters have established close ties to major U.S. retailers such as J.C. Penney (JCP) and Target 

(TGT). Optimists in the industry are already getting a jump start on 2005. Welspun 

India Ltd., the world’s fifth-largest towel maker, is doubling capacity at its plant 

outside Bombay, where a stream of U.S. buyers are placing orders in anticipation 

of the quota phaseout on towels. ‘‘We see ourselves as one of the dominant players,’’ 

says Rajesh R. Mandawewala, executive director of Welspun. 

China, meanwhile, is preparing for its new bounty. Shanghai Three Gun Group 

Co. Ltd. spent $36 million on a factory in Shanghai’s Pudong district that began 

producing knit fabric last year. By October the company had exported $65 million 

worth of textiles—up from only $1 million in 2002. ‘‘The phasing out of the quota 

system should be a new point of growth for us,’’ says a Three Gun official. All over 

47

China’s textile belt, producers ‘‘are adjusting our industrial structure, improving our 

research and development capabilities, and actively following new trends in fashion,’’ says China Textile International Exchange Center Vice-President Zhao Hong. 

Will the Bush Administration yield to pressure from political leaders at home and 

allies abroad to save their apparel factories? ‘‘Politically, it’s not going to be possible 

to do nothing,’’ says Fernando Silva, managing director of Kurt Salmon Associates, a worldwide consultant on strategic planning for consumer product companies. ‘‘If nothing is done, we will have a very rapid shift to China and a rash of 

bankruptcies in the U.S., Mexico, the Caribbean, Central America, and Africa.’’

U.S. officials concede the pressure is intense. ‘‘I have people in my office all the 

time saying, ‘You gotta do something,’ ’’ says James C. Leonard III, the U.S. Commerce deputy assistant secretary for textiles, apparel, and consumer goods. ‘‘What 

am I going to do? Everybody agreed to do away with quotas.’’ Still, many are skeptical that the U.S. will let China own the global apparel industry. ‘‘There’s a bigger 

risk that when the quotas come off, rich nations will impose anti-dumping penalties 

and other sanctions against China, particularly if we start seeing widespread unemployment in Central America and the Caribbean,’’ says Nancy Birdsall, president of 

the Center for Global Development, a Washington think tank. 

But China has so many advantages that its rise seems inevitable. ‘‘Take anything—garments or textiles—and people will say, ‘Sorry, China is cheaper than anywhere else,’ ’’ says G.K. Ram, general manager of a Kahatex Group factory in 

Bandung, Indonesia, that churns out apparel for Wal-Mart Stores Inc. (WMT) and 

Kmart (KMRT). Perhaps sooner than most realize, Tuch Phearom and millions like 

her will be struggling to find new jobs.

By Paul Magnusson in Washington, Frederik Balfour in Phnom Penh, and Michael 

Shari in Jakarta, with Manjeet Kripalani in Bombay, Dexter Roberts in Beijing, Geri 

Smith in Mexico City, and Naween Mangi in Karachi.


Insert Smyth1.eps
48


Insert Smyth2.eps
49

1 Available at http://www.atmi.org/Textiletrade/china.pdf

UPDATE: The China Threat to World Textile and Apparel Trade

• September 12, 2003: includes updated trade figures covering the 

first half of 2003

American Textile Manufacturers Institute 

1130 Connecticut Ave., NW, Ste. 1200

Washington, DC 20036

202–862–0500 / f: 202–862–0570 / www.atmi.org 

Summary

This updates ATMI’s July 2, 2003 study, The China Threat to World Textile and 

Apparel Trade, incorporating new trade data covering the first six months of 2003. 

The most recent trade figures, which were compiled from U.S. Department of 

Commerce, confirms the conclusions of the original ATMI study.1 As that study predicted, during the first six months of 2003, China has continued to move aggressively to take control of the 29 apparel categories removed from quota control on 

January 1, 2002. 

In June 2003, the Chinese share of market topped 50 percent for the first time. 

Imports from China during the first six months of the year increased by 175%. 

Meanwhile, the rest of the world fell still farther behind, with market share held 

by other suppliers falling from 91 percent in 2001 to 69 percent in 2002.

This trend has continued and even accelerated in the first six months of 2003, 

as market share held by other suppliers fell to 47 percent as of June 2003. This 

share is projected to drop to 35 percent by year-end and to 25 percent by the end 

of 2004. 

Chinese share of market remains on target to meet the July 2003 ATMI projections of 65 percent by the end of 2003 and 75 percent by the end of 2004. The Chinese surge has been fueled by continuing declines in Chinese prices: during the first 

six months of the year, Chinese prices have fallen by 17% and opened up an even 

more significant price gap of $0.44/square meter (compared to just $0.04 in 2002) 

between China and other world suppliers. 

The implications of China’s ability to increasingly dominate world textile and apparel trade remain stark. If China follows the same pattern when the remaining 

quotas are lifted in 2005, U.S. textile and apparel sector job losses are estimated 

to total approximately 630,000 workers in the two and one-half year period from 

June 2004 through December 2006. 

During that period of time, it is projected that 1,300 textile plants in the United 

States will close—the equivalent of 100 Pillowtex’s being put out of business. 

The textile and apparel industry, described by President Bush as a cornerstone of 

U.S. manufacturing and a vital supplier to the U.S. military, will virtually cease to 

exist.


Insert Smyth3.eps
50

Projected Export Losses to China 

Country/Region Loss ($ mil.) 

CBI ¥$6,279

Mexico ¥$5,423

EU ¥$2,477

Canada ¥$1,861

Honduras ¥$1,763

Korea, South ¥$1,620

Indonesia ¥$1,390

Turkey ¥$1,316

Dominican Republic ¥$1,287

Guatemala ¥$1,265

Philippines ¥$1,236

Italy ¥$1,218

Thailand ¥$1,161

Bangladesh ¥$1,051

El Salvador ¥$1,015

SUB-SAHARAN AFRICA ¥$926

ANDEAN ¥$731

The impact on other exporting countries will be even greater. $42 billion in trade 

from Mexico, the Caribbean region, Africa, East Asia, Turkey, Sri Lanka and Bangladesh, among others, will shift to China. As a result, millions of jobs will be lost 

in one of the most rapid and devastating transfers of wealth in modern history. 

Mexico and the nations of Central America and the Caribbean alone are 

projected to lose one million textile and apparel jobs.

What could head off this coming catastrophe? The United States, as well as other 

countries, retains the right to re-impose quotas on imports from China if they cause 

disruption in the United States. By using the China WTO textile safeguard, the 

United States Government can push back the day of reckoning for some products 

until the safeguard expires on January 1, 2008. 

For those products that are made in the United States or their components are 

made in the United States, the U.S. textile industry will closely monitor Chinese 

imports of such items and ask for the safeguard to be used where warranted. And 

ATMI and other industry groups will strongly urge other countries and groups who 

will be affected to demand its use as well. 

The safeguard, however, is not a comprehensive answer. It must be reapplied 

product-by-product on a yearly basis, and even though China agreed that it could 

be used, there is no mechanism which says that the U.S. Government must use the 

safeguard. And, as already noted, the safeguard itself expires in 2008.

Recent China Increases and U.S. Job Losses 

2002 YTD 6/03

Increase from China: 

• Square meters (billion) 2.75 1.7

• Percentage 124% 90%

U.S. tex/apparel job losses 69,300 69,900

U.S. textile plant closures 42 27

51

Unless action is taken on other fronts, as this analysis shows, even if the safeguard is used in a comprehensive manner, it merely postpones an eventual day of 

reckoning that will have catastrophic consequences for millions of textile and apparel workers around the world. 

During the last three months, increasing attention has been focused in the United 

States on anti-competitive programs that China employs to gain an artificial price 

advantage over other suppliers for manufactured goods. China’s currency regime 

has recently been cited by President Bush as harmful to U.S. workers and manufacturers, and several bills have recently been introduced in the United States Congress to impose punitive tariffs on imports of Chinese goods if China persists on 

undervaluing the yuan. 

U.S. textile manufacturers have also made note of numerous other artificial advantages China employs, including subsidization of state-owned textile and apparel 

facilities, preferential tax and financing schemes for export operations and the use 

of export tax rebates, among others. 

All told, China’s anti-competitive practices make Chinese goods virtually unbeatable in not only world textile and apparel trade, but, increasingly, in other manufacturing sectors as well. These practices have fueled the biggest increase in manufacturing exports to the United States in history and the Chinese government has remained resistant to removing any of these anti-fair trade props out from under its 

export machine.

Impact on U.S. industry if Chinese trade follows same 

pattern when quotas are removed in 2005. . . .

• Equivalent to 100 Pillowtex’s closing 

• 630,000 textile and apparel jobs will be lost 

• 1,300 textile plants will close 

Given such a response, the major exporting countries, particularly those in developing countries, would be justified in insisting that existing quota restraints remain 

in place on goods produced by foreign manufacturers that have used unfair trade 

advantages to rapidly gain market share. While more than 70 countries around the 

world are major exporters of textile and apparel products to the United States, few 

countries to date have been willing to confront China on this issue. If they do not 

do so soon, they may discover that not only the development and investment that 

they had counted on is not only missing but that their existing export markets have 

collapsed in the face of the Chinese onslaught. 

UPDATED FIGURES FROM JUNE 2003

Here are the relevant statistical updates from the previous report. See appendices 

for detailed figures by product category. 

(1) China market share hits 53% in June 

On a volume basis, Chinese average market share for the 29 apparel categories removed from quota control on January 1, 2002 rose from 31 percent in 2002 to 53 

percent for June 2003, an increase of 71 percent. Market share for the rest of the 

world fell from 69 percent in 2002 to 47 percent for June 2003. Prior to quotas being 

removed, Chinese market share was 9 percent while the rest of the world accounted 

for 91% (2001). 

The Chinese increase tracks ATMI’s original prediction made in July for China 

to achieve a 65 percent share by the end of this year and to achieve a final market 

share of 75 to 80 percent by the end of 2004. 

On a dollar basis, Chinese market share showed a similar track. Chinese market 

share reached 49 percent in June 2003 compared to 31 percent in 2002. As a result, 

the market share for the rest of the world fell from 69 percent in 2002 to 51 percent 

in June 2003. By way of background, prior to quotas being removed on January 1, 

2002, Chinese market share was 15 percent while the rest of the world accounted 

for 85 percent. 

(2) Imports from China increased by $871 million in first six months of 2003

Imports from China during the first six months of 2003 in the de-controlled categories increased by $871 million, or 126%, rising from $691 million to $1.56 billion. 

In fact, since quotas on 29 Chinese textile and apparel categories were lifted in 

2002, imports from China have increased by a total of $1.9 billion. 

52

In volume terms, imports from China during the first six months of 2003 increased by 321 million square meters, or 175%, rising from 183 million square meters to 504 million square meters. 

(3) Imports from other countries drop by $158 million 

Imports from other countries fell by $158 million, dropping from $2.05 billion to 

$1.83 billion, a decrease of 8 percent. Since quotas on Chinese imports were lifted, 

imports from the rest of the world have fallen by a total of $972 million. 

In volume terms, imports from the rest of the world fell by 30 million square meters, declining from 572 million square meters to 542 million square meters. Since 

quotas were lifted in 2002, imports from the rest of the world have now fallen by 

a total of 205 millions square meters. 

(4) Chinese prices fall another 17 percent, while the spread between world 

prices and Chinese prices widens significantly 

Chinese prices continued to decline during the first six months of 2003, falling an 

average of 17%, from an average of $3.37/square meter in 2002 to $2.79/square 

meter in June 2003. Since quotas were lifted in 2002, Chinese prices have declined 

by an average of 55 percent, dropping from $6.23/square meter to $2.79/square 

meter. 

The spread between the average world price and the average Chinese price widened during the first six months of 2003. Chinese goods undercut world prices by 

an average of 13 percent in June 2003, with Chinese goods averaging $2.79/square 

meter while the rest of the world averaged $3.23/square meter. The $0.44 difference 

in prices in June was significantly larger than the $0.04/square meter gap at the 

end of 2002, when Chinese prices averaged $3.37/square meter and world prices 

averaged $3.41/square meters.

Appendices follow.

Sources: Unless otherwise noted, the U.S. Department of Commerce, Office of Textiles 

and Apparel (www.otexa.ita.doc.gov).

Questions or more information? Please contact Cass Johnson at 202–862–0545/ 

cjohnson@atmi.org.

53

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—DOLLARS 

Category 

CHINA 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Dollars 

TOTAL 888,220,034 1,867,759,720 690,704,419 1,561,251,991 277,379,925 126% $870,547,572

239 $120,698,220 $479,794,059 $142,029,023 $369,161,518 $86,946,327 160% $227,132,495330 $12,994,798 $13,050,777 $5,659,638 $5,274,222 $592,051 ¥7% ¥$385,416349 $54,884,438 $70,899,568 $35,433,738 $51,001,975 $9,696,874 44% $15,568,237350 $19,005,853 $66,059,933 $21,962,311 $46,576,140 $7,753,549 112% $24,613,829431 $13,856,396 $11,306,646 $1,254,926 $1,362,927 $900,184 9% $108,001432 $1,986,071 $928,463 $53,171 $294,161 $85,042 453% $240,990459 $67,704,716 $66,541,163 $5,436,114 $12,905,771 $5,658,040 137% $7,469,657630 $2,087,403 $1,121,709 $653,443 $397,373 $30,548 ¥39% ¥$256,070631 $28,220,505 $41,635,030 $6,338,821 $17,455,948 $4,166,406 175% $11,117,127632 $4,210,725 $24,289,216 $4,516,597 $25,027,358 $6,819,859 454% $20,510,761649 $65,285,388 $218,912,769 $77,994,716 $164,406,899 $32,842,520 111% $86,412,183650 $14,670,588 $56,022,092 $7,756,099 $14,519,298 $3,913,240 87% $6,763,199653 $92,608,048 $88,182,671 $8,177,073 $8,375,892 $5,544,004 2% $198,819654 $72,216,558 $85,915,916 $8,651,944 $12,213,040 $8,816,544 41% $3,561,096831 $1,706,808 $2,403,138 $895,129 $1,594,786 $194,099 78% $699,657833 $840,598 $1,352,948 $272,886 $5,513,622 $325,418 1920% $5,240,736834 $5,082,269 $3,198,064 $331,307 $6,015,012 $1,068,964 1716% $5,683,705835 $26,434,742 $38,138,237 $24,464,444 $39,147,058 $7,341,147 60% $14,682,614836 $31,803,902 $36,510,061 $29,243,244 $48,486,743 $2,660,049 66% $19,243,499838 $68,161,071 $192,550,434 $66,437,282 $114,967,341 $29,988,413 73% $48,530,059839 $4,066,497 $7,423,991 $1,846,267 $4,564,871 $510,108 147% $2,718,604840 $59,578,011 $144,892,988 $97,104,774 $224,471,645 $9,131,845 131% $127,366,871842 $21,855,977 $30,349,562 $22,874,600 $56,584,489 $3,654,279 147% $33,709,889843 105060 983491 319715 1505614 71432 371% $1,185,899844 $1,639,161 $2,913,099 $1,541,772 $7,596,706 $531,654 393% $6,054,934847 $89,890,775 $160,699,755 $108,979,402 $300,745,436 $44,565,976 176% $191,766,034851 $91,912 $723,479 $459,819 $459,027 $2,880 0% ¥$792858 $2,452 $1,213,653 $485,214 $503,089 $114,428 4% $17,875859 $6,531,092 $19,746,808 $9,530,950 $20,124,030 $3,454,045 111% $10,593,080

ALL TEXTILE AND APPAREL IMPORTS FROM CHINA:

Total $6,536,315,121 $8,744,040,790 $3,527,649,762 $5,252,498,552 $997,267,508 49% $1,724,848,790

Apparel $4,602,352,784 $5,593,697,500 $2,140,838,169 $3,191,241,334 $589,115,210 49% $1,050,403,165Textiles $1,933,962,337 $3,150,343,290 $1,386,811,593 $2,061,257,218 $408,152,298 49% $674,445,625

54

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—DOLLARS 

Category 

REST OF WORLD 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Dollars 

TOTAL $5,040,204,354 $4,226,307,019 $2,051,876,941 $1,893,446,618 $282,783,206 ¥8% ¥$158,430,323

239 $1,772,480,894 $1,348,528,906 $637,654,787 $560,915,646 $100,033,000 ¥12% ¥$76,739,141330 $13,612,123 $5,733,525 $3,247,495 $1,494,764 $334,392 ¥54% ¥$1,752,731349 $106,245,292 $112,999,420 $52,148,706 $66,666,000 $12,523,910 28% $14,517,294350 $299,692,712 $262,142,307 $105,086,887 $103,880,109 $16,569,104 ¥1% ¥$1,206,778431 $5,191,042 $4,162,877 $861,781 $429,470 $200,791 ¥50% ¥$432,311432 $14,925,891 $17,744,450 $3,262,447 $3,037,368 $886,684 ¥7% ¥$225,079459 $110,456,631 $97,185,904 $21,751,891 $27,294,893 $8,798,456 25% $5,543,002630 $3,661,592 $2,199,175 $1,129,339 $695,518 $75,345 ¥38% ¥$433,821631 $95,402,431 $74,979,695 $21,942,787 $20,590,976 $4,867,643 ¥6% ¥$1,351,811632 $370,723,729 $340,702,122 $145,086,532 $136,793,268 $24,566,150 ¥6% ¥$8,293,264649 $1,158,378,898 $1,198,588,175 $571,944,440 $525,573,038 $85,325,468 ¥8% ¥$46,371,402650 $170,721,775 $128,492,371 $35,817,869 $29,669,976 $6,398,486 ¥17% ¥$6,147,893653 $27,985,697 $24,752,705 $1,630,975 $4,518,360 $1,931,859 177% $2,887,385654 $33,016,049 $32,483,556 $2,034,058 $5,273,097 $2,865,739 159% $3,239,039831 $1,433,578 $930,023 $470,609 $582,967 $67,858 24% $112,358833 $16,688,630 $14,634,486 $9,674,281 $12,733,937 $407,949 32% $3,059,656834 $5,150,993 $2,218,432 $1,264,371 $1,332,894 $91,916 5% $68,523835 $64,578,306 $36,480,849 $28,523,518 $29,618,528 $1,105,501 4% $1,095,010836 $77,726,139 $43,545,685 $37,720,668 $29,072,421 $750,979 ¥23% ¥$8,648,247838 $109,958,350 $35,454,872 $21,353,822 $12,027,759 $1,301,336 ¥44% ¥$9,326,063839 $11,070,468 $8,230,783 $5,114,381 $3,231,009 $185,878 ¥37% ¥$1,883,372840 $264,653,461 $191,283,957 $160,114,326 $135,571,849 $3,756,951 ¥15% ¥$24,542,477842 $35,852,166 $22,731,369 $19,014,608 $25,041,746 $748,437 32% $6,027,138843 $1,295,983 $1,328,470 $923,177 $1,850,788 $84,054 100% $927,611844 $4,441,636 $2,524,282 $1,591,689 $1,735,486 $75,607 9% $143,797847 $214,621,328 $175,827,245 $141,324,097 $130,630,355 $6,062,208 ¥8% ¥$10,693,742851 $1,948,618 $996,916 $494,963 $180,690 $6,401 ¥63% ¥$314,273858 $9,777,212 $9,948,374 $5,854,774 $3,786,110 $373,711 ¥35% ¥$2,068,664859 $38,512,730 $29,476,088 $14,837,663 $19,217,596 $2,387,393 30% $4,379,933

ALL TEXTILE AND APPAREL IMPORTS FROM REST OF THE WORLD:

Total $63,703,449,450 $63,439,089,780 $28,724,626,779 $31,394,507,118 $5,526,964,188 9% $2,669,880,339

Apparel $51,858,030,181 $51,369,252,711 $22,825,768,460 $25,533,091,129 $4,543,571,276 12% $2,707,322,669Textiles $11,845,419,269 $12,069,837,069 $5,898,858,319 $5,861,415,989 $983,392,912 ¥1% ¥$37,442,330

55

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—SQUARE METERS 

Category 

CHINA 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Square Meters 

TOTAL 142,477,614 553,521,047 183,398,673 504,803,474 99,587,954 175% 321,404,801

239 20,373,715 188,618,529 50,326,693 160,069,297 40,783,856 218% 109,742,604330 5,556,711 8,223,951 3,542,792 4,191,760 392,591 18% 648,967349 8,403,652 11,180,168 5,263,836 9,235,648 1,669,416 75% 3,971,812350 9,367,868 58,421,555 21,021,098 53,913,964 8,929,812 156% 32,892,866431 1,430,532 1,096,947 166,865 183,361 137,084 10% 16,495432 87,835 115,363 1,849 70,072 20,677 3689% 68,223459 7,069,431 7,712,676 556,621 1,438,319 539,804 158% 881,699630 1,206,545 859,795 543,697 346,284 5,635 ¥36% ¥197,413631 4,196,990 15,107,939 2,829,321 7,872,166 1,757,017 178% 5,042,845632 2,213,253 20,658,259 4,867,770 29,951,148 7,306,864 515% 25,083,378649 4,336,780 31,139,948 10,340,600 22,806,428 4,651,440 121% 12,465,828650 5,080,817 34,101,215 5,230,428 11,716,022 3,617,762 124% 6,485,594653 11,655,101 14,919,732 1,242,690 1,617,809 871,953 30% 375,119654 9,760,257 14,091,525 1,385,451 2,008,418 1,414,880 45% 622,967831 1,920,702 3,033,368 1,221,753 2,070,704 284,281 69% 848,952833 140,289 546,067 25,604 2,283,741 148,288 8820% 2,258,138834 1,460,558 1,379,379 105,087 2,953,545 531,231 2711% 2,848,458835 4,051,163 9,412,946 4,930,602 12,445,013 2,539,200 152% 7,514,411836 7,242,387 12,721,021 9,860,974 18,292,132 1,225,307 86% 8,431,158838 9,385,635 33,363,217 11,058,126 20,020,396 5,516,035 81% 8,962,270839 647,149 2,052,905 426,132 1,445,718 140,774 239% 1,019,586840 7,865,416 28,089,083 17,431,493 45,446,495 1,914,972 161% 28,015,002842 2,498,089 5,258,433 3,373,658 10,680,111 971,122 217% 7,306,453843 38,352 254,435 83,844 280,748 13,363 235% 196,904844 313,862 775,466 515,816 2,029,137 135,074 293% 1,513,321847 13,889,929 32,441,785 19,331,394 65,183,268 11,091,858 237% 45,851,874851 17,444 296,322 154,643 365,748 52,200 137% 211,106858 106 278,243 93,212 91,997 26,044 ¥1% ¥1,214859 2,267,050 17,370,775 7,466,625 15,794,025 2,899,413 112% 8,327,400

ALL TEXTILE AND APPAREL IMPORTS FROM CHINA:

Total 2,210,674,207 4,963,116,352 1,893,508,829 3,596,627,661 716,216,631 90% 1,703,118,832

Apparel 975,979,534 1,564,963,032 586,769,468 981,485,043 188,456,640 67% 394,715,575Textiles 1,234,694,673 3,398,153,319 1,306,739,361 2,615,142,618 527,759,990 100% 1,308,403,257

56

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—SQUARE METERS 

Category 

REST OF WORLD 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Square Meters 

TOTAL 1,412,519,761 1,238,205,318 572,486,488 542,809,308 87,479,693 ¥5% ¥29,677,180

239 606,750,562 500,822,513 228,472,291 201,667,492 38,430,473 ¥12% ¥26,804,799330 7,215,961 2,592,866 1,612,181 486,658 162,728 ¥70% ¥1,125,523349 15,909,460 16,676,860 7,583,860 10,258,336 1,912,900 35% 2,674,476350 166,798,383 176,228,106 75,455,633 92,784,930 14,628,968 23% 17,329,297431 818,269 335,794 75,892 41,735 9,689 ¥45% ¥34,157432 1,929,935 1,914,230 470,727 260,321 80,689 ¥45% ¥210,406459 9,713,332 6,649,015 1,431,844 1,864,386 621,841 30% 432,541630 801,185 677,922 387,031 290,941 26,433 ¥25% ¥96,090631 52,452,955 38,208,828 13,862,281 11,231,552 2,411,565 ¥19% ¥2,630,729632 147,366,831 147,289,946 65,000,041 62,584,548 10,729,038 ¥4% ¥2,415,493649 118,960,424 119,567,252 57,874,552 51,488,184 7,845,896 ¥11% ¥6,386,368650 101,865,163 94,971,375 30,548,588 26,046,620 4,466,695 ¥15% ¥4,501,968653 2,693,346 3,685,566 178,952 808,577 457,091 352% 629,625654 4,428,903 5,096,202 194,822 475,617 268,479 144% 280,796831 486,066 539,275 335,440 232,647 44,625 ¥31% ¥102,793833 603,273 535,401 346,208 489,709 14,090 41% 143,501834 1,552,983 672,198 226,251 163,530 59,616 ¥28% ¥62,721835 12,098,598 7,190,628 4,955,649 4,797,605 353,522 ¥3% ¥158,045836 27,109,188 16,536,945 14,649,601 10,203,286 237,330 ¥30% ¥4,446,314838 17,940,265 6,085,778 3,486,284 1,916,249 305,499 ¥45% ¥1,570,035839 2,265,770 1,856,119 1,051,155 728,979 49,392 ¥31% ¥322,176840 48,683,957 37,415,465 29,843,952 26,137,754 1,058,062 ¥12% ¥3,706,198842 4,969,835 3,219,190 2,540,346 4,245,457 236,865 67% 1,705,111843 27,215 37,389 27,313 67,233 2,324 146% 39,920844 557,796 218,730 169,354 315,231 6,847 86% 145,877847 39,026,706 34,354,200 23,600,378 25,527,827 1,983,980 8% 1,927,449851 1,222,785 495,465 199,013 41,717 2,001 ¥79% ¥157,296858 569,877 534,448 337,425 208,151 20,321 ¥38% ¥129,274859 17,700,738 13,797,613 7,569,425 7,444,038 1,052,738 ¥2% ¥125,388

ALL TEXTILE AND APPAREL IMPORTS FROM REST OF THE WORLD:

Total 30,601,072,694 33,325,037,739 15,802,668,662 16,604,901,419 2,810,386,655 5% 802,232,757

Apparel 15,127,492,086 15,690,694,401 7,107,601,168 7,992,497,524 1,378,557,990 12% 884,896,357Textiles 15,473,580,608 17,634,343,338 8,695,067,494 8,612,403,895 1,431,828,665 ¥1% ¥82,663,600

57

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—AVERAGE PRICES 

Category 

CHINA 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Price 

TOTAL $6.23 $3.37 $3.77 $3.09 $2.79 ¥18% ¥$0.67

239 $5.92 $2.54 $2.82 $2.31 $2.13 ¥18% ¥$0.52330 $2.34 $1.59 $1.60 $1.26 $1.51 ¥21% ¥$0.34349 $6.53 $6.34 $6.73 $5.52 $5.81 ¥18% ¥$1.21350 $2.03 $1.13 $1.04 $0.86 $0.87 ¥17% ¥$0.18431 $9.69 $10.31 $7.52 $7.43 $6.57 ¥1% ¥$0.09432 $22.61 $8.05 $28.75 $4.20 $4.11 ¥85% ¥$24.56459 $9.58 $8.63 $9.77 $8.97 $10.48 ¥8% ¥$0.79630 $1.73 $1.30 $1.20 $1.15 $5.42 ¥5% ¥$0.05631 $6.72 $2.76 $2.24 $2.22 $2.37 ¥1% ¥$0.02632 $1.90 $1.18 $0.93 $0.84 $0.93 ¥10% ¥$0.09649 $15.05 $7.03 $7.54 $7.21 $7.06 ¥4% ¥$0.33650 $2.89 $1.64 $1.48 $1.24 $1.08 ¥16% ¥$0.24653 $7.95 $5.91 $6.58 $5.18 $6.36 ¥21% ¥$1.40654 $7.40 $6.10 $6.24 $6.08 $6.23 ¥3% ¥$0.16831 $0.89 $0.79 $0.73 $0.77 $0.68 5% $0.04833 $5.99 $2.48 $10.66 $2.41 $2.19 ¥77% ¥$8.24834 $3.48 $2.32 $3.15 $2.04 $2.01 ¥35% ¥$1.12835 $6.53 $4.05 $4.96 $3.15 $2.89 ¥37% ¥$1.82836 $4.39 $2.87 $2.97 $2.65 $2.17 ¥11% ¥$0.31838 $7.26 $5.77 $6.01 $5.74 $5.44 ¥4% ¥$0.27839 $6.28 $3.62 $4.33 $3.16 $3.62 ¥27% ¥$1.18840 $7.57 $5.16 $5.57 $4.94 $4.77 ¥11% ¥$0.63842 $8.75 $5.77 $6.78 $5.30 $3.76 ¥22% ¥$1.48843 $2.74 $3.87 $3.81 $5.36 $5.35 41% $1.55844 $5.22 $3.76 $2.99 $3.74 $3.94 25% $0.75847 $6.47 $4.95 $5.64 $4.61 $4.02 ¥18% ¥$1.02851 $5.27 $2.44 $2.97 $1.26 $0.06 ¥58% ¥$1.72858 $23.22 $4.36 $5.21 $5.47 $4.39 5% $0.26859 $2.88 $1.14 $1.28 $1.27 $1.19 0% $0.00

ALL TEXTILE AND APPAREL IMPORTS FROM CHINA:

Total $2.96 $1.76 $1.86 $1.46 $1.39 ¥22% ¥$0.40

Apparel $4.72 $3.57 $3.65 $3.25 $3.13 ¥11% ¥$0.40Textiles $1.57 $0.93 $1.06 $0.79 $0.77 ¥26% ¥$0.27

58

IMPORTS OF 29 DE-CONTROLLED QUOTA CATEGORIES—AVERAGE PRICES 

Category 

REST OF WORLD 

2001 2002 YTD June 02 YTD June 03 Jun/2003

CHANGE YTD 6/02–6/03

Percent Price 

TOTAL $3.57 $3.41 $3.58 $3.49 $3.23 ¥3% ¥$0.10

239 $2.92 $2.69 $2.79 $2.78 $2.60 0% ¥$0.01330 $1.89 $2.21 $2.01 $3.07 $2.05 52% $1.06349 $6.68 $6.78 $6.88 $6.50 $6.55 ¥5% ¥$0.38350 $1.80 $1.49 $1.39 $1.12 $1.13 ¥20% ¥$0.27431 $6.34 $12.40 $11.36 $10.29 $20.72 ¥9% ¥$1.06432 $7.73 $9.27 $6.93 $11.67 $10.99 68% $4.74459 $11.37 $14.62 $15.19 $14.64 $14.15 ¥4% ¥$0.55630 $4.57 $3.24 $2.92 $2.39 $2.85 ¥18% ¥$0.53631 $1.82 $1.96 $1.58 $1.83 $2.02 16% $0.25632 $2.52 $2.31 $2.23 $2.19 $2.29 ¥2% ¥$0.05649 $9.74 $10.02 $9.88 $10.21 $10.88 3% $0.33650 $1.68 $1.35 $1.17 $1.14 $1.43 ¥3% ¥$0.03653 $10.39 $6.72 $9.11 $5.59 $4.23 ¥39% ¥$3.53654 $7.45 $6.37 $10.44 $11.09 $10.67 6% $0.65831 $2.95 $1.72 $1.40 $2.51 $1.52 79% $1.10833 $27.66 $27.33 $27.94 $26.00 $28.95 ¥7% ¥$1.94834 $3.32 $3.30 $5.59 $8.15 $1.54 46% $2.56835 $5.34 $5.07 $5.76 $6.17 $3.13 7% $0.42836 $2.87 $2.63 $2.57 $2.85 $3.16 11% $0.27838 $6.13 $5.83 $6.13 $6.28 $4.26 2% $0.15839 $4.89 $4.43 $4.87 $4.43 $3.76 ¥9% ¥$0.43840 $5.44 $5.11 $5.37 $5.19 $3.55 ¥3% ¥$0.18842 $7.21 $7.06 $7.49 $5.90 $3.16 ¥21% ¥$1.59843 $47.62 $35.53 $33.80 $27.53 $36.17 ¥19% ¥$6.27844 $7.96 $11.54 $9.40 $5.51 $11.04 ¥41% ¥$3.89847 $5.50 $5.12 $5.99 $5.12 $3.06 ¥15% ¥$0.87851 $1.59 $2.01 $2.49 $4.33 $3.20 74% $1.84858 $17.16 $18.61 $17.35 $18.19 $18.39 5% $0.84859 $2.18 $2.14 $1.96 $2.58 $2.27 32% $0.62

ALL TEXTILE AND APPAREL IMPORTS FROM REST OF THE WORLD:

Total $2.08 $1.90 $1.82 $1.89 $1.97 4% $0.07

Apparel $3.43 $3.27 $3.21 $3.19 $3.30 ¥1% ¥$0.02Textiles $0.77 $0.68 $0.68 $0.68 $0.69 0% $0.00

59

Co-Chair BECKER. Thank you, Mr. McKissick, and I want to compliment the panelists for keeping their testimony within the time 

frames, roughly. We did that and I appreciate that very much. 

Turn now for questions from the Commission and I’ll start with our 

Chairman, Mr. Robinson. 

Panel I: Discussion, Questions and Answers 

Chairman ROBINSON. This has been a real eye opener to be with 

you. We obviously have briefing books, we can read the statistics, 

and we were also briefed by our staff prior to coming to Columbia. 

It is quite another thing to hear these very moving and debilitating 

tragic stories one after another. I’m still reeling from what I’ve 

heard to be honest with you and what I have is more of a comment 

than a question. That is, that there’s dramatic work to do. The idea 

of incremental steps and working within the existing system is 

clearly not going to be remotely sufficient for the textile and apparel crisis, not only for South Carolina, but also for the United 

States. It’s nothing short of that. You’ve been extremely persuasive 

and the numbers don’t lie, not to mention your own experience, 

your day-to-day lives and what you’re seeing. I know that the Vice 

Chairman and I are not only deeply impressed by the scale of this 

crisis but also moved personally because these are human beings 

and you’ve made that very poignant and very clear. And I can only 

tell you that as I’ve said to our Senators when they were present, 

that we are going to take to heart what we have heard here. Some 

of the testimony I can tell you will be remembered for a long time. 

I’m delighted that it’s being broadcast and obviously we have transcripts and we will put out these proceedings so that your words 

will be shared with a broader audience in Washington. But I think 

what’s really important is what we do in our findings, in our recommendations to the leadership of the Congress to whom we report, not to mention the general public and you know we have both 

the classified but particularly unclassified version that’s due every 

year and this year will probably be in the May timeframe that we 

release our report. So I would only tell you that the remedies that 

we’ll be seeking won’t be the some kind of re-hash. They won’t be 

the same kind of incrementalism that can’t hope to address the 

scale of this challenge or the radical adjustments that need to be 

made to preserve one of America’s most valued industrial sectors. 

We are going to be committed to taking these stories on board and 

taking clear and decisive action, we are not shrinking from that, 

we are not afraid of that and that’s important that you know that 

we’re going to play this straight and forcefully. So that’s just a 

comment for you as I again reflect on your comments and try to 

formulate perhaps a question or two later on. But I think that you 

should know the profound impact you’ve had on my fellow Commissioners and me. Thank you. 

Co-Chair BECKER. Thank you, Chairman. 

Vice Chairman D’Amato. 

Vice Chairman D’AMATO. Thank you, Mr. Chairman. First of all, 

I wanted to reiterate what the Chairman said. I think we’re all 

moved by your sense of loyalty to your people and to the country. 

That’s the way it should be, except that we are faced with substantial confusion on the part of many of our political leaders and our 

60

business leaders about what is the right thing to do for the country. I don’t understand exactly why we have reached this state of 

confusion, frankly. But there certainly are alarm bells ringing 

when you have to plead with politicians to do what’s right for the 

country. That shouldn’t have to be, you shouldn’t have to remind 

politicians that they should be doing what’s right for the country. 

Any country that doesn’t care about its people is doomed. I don’t 

think this Commission is ready to join the funeral procession. What 

we are interested in, though, is what kind of action items we can 

recommend to move this situation out of the red zone back into the 

blue zone. Certainly the 2005 deadline has got to be changed in 

some way that’s basic. The second thing is the kind of procurement 

policies that you mentioned, for example with the military. I don’t 

want to see American soldiers walking around with shirts that are 

made in Bangladesh, that doesn’t make any sense to me. Berets or 

whatever it is can be made in this country. Our economy in some 

ways is under attack but we are probably more responsible than 

anybody else in allowing that to occur. So what we will be interested in in your testimony and further down the road in consultation with you is the action items that we can recommend, specific 

things that will move this thing off dead center back into a positive 

area before it’s too late. So thank you. Yes, Mr. Chapman? 

Mr. CHAPMAN. Can I comment on that for a second? 

Vice Chairman D’AMATO. Yes. 

Mr. CHAPMAN. Part of the confusion that we have is you take, 

for example, the safeguards that were implemented on braziers and 

a couple other items. The recently negotiated CAFTA agreement 

puts single transformation in, which allowed for all the components 

that go into these products to come in unlimited through Central 

America and be transformed, and they come in duty-free to the 

United States. So with less than a month after we got the safeguards implemented, they put in a trade agreement or are attempting to pass a trade agreement that makes it all worthless. We’re 

confused. 

Vice Chairman D’AMATO. Well, that’s the kind of information 

that we would like to have so that we can call that out and make 

it clear what we’ve got is subterfuge of the original safeguard 

agreement. If that’s what’s going on, we want to know about that 

so we can head off so that and we can do something about it. 

Co-Chair BECKER. I want to make just a comment and ask a 

question. Is this all the trade agreements, is this CAFTA, this is 

NAFTA, is this FTAA, is this generally across the board, the same 

loopholes exist in all of them? 

Mr. CHAPMAN. We had a meeting yesterday to map out what we 

want our politicians to answer going forward and there are loopholes in numerous trade agreements. The one I was referring to 

was specific to CAFTA. 

Vice Chairman D’AMATO. Mr. McKissick, did you have——

Mr. MCKISSICK. You asked for some specific suggestions and our 

industry has a platform that we shared with you in our submitted 

documents that speak to the quotas and speak to the Berry Amendment and speak to a couple of other issues that are critically important to us. In my opinion, though, another piece of the equation 

should be that our leaders ought to cease and desist with all free 

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trade agreements from now on and take the time to analyze the 

impact of all the past trade agreements on the U.S. economy, and 

on the jobs front. Let’s take a look at what we’ve already done because it seems as soon as we sign a trade agreement we can’t start 

negotiating another agreement fast enough. We’ve written so many 

trade agreements. We ought to put the brakes on and do a thorough analysis of all past trade agreements. And if our leaders are 

going to put the integrity of the U.S. economy secondary to the 

world economy, I wish our leaders would at least have the courage 

to stand up and say so. If the world economy is more important 

than the U.S. economy, let’s at least have the guts to say so. But 

I believe the U.S. economy ought to be first and foremost, the beneficiary of any trade agreement our government negotiates. I think 

if we’re going to have trade agreements, the two parties to the 

agreement should be the only ones that benefit. For example, in 

the recent CAFTA agreement, the only beneficiaries should be the 

signatory nations—the CAFTA countries and the United States—

not third nations. I think it would be critically important to do an 

analysis of what we’ve already done and the impact on the U.S. 

economy, particularly the jobs equation. I, for one, believe that 

there are things that are more important than just ‘‘everyday low 

prices’’ at your local retailer. I think the country’s standard of living is also important. 

Co-Chair BECKER. Thank you very much. Commissioner Dreyer. 

Commissioner DREYER. I again echo the Chairman’s words about 

being very brave. If any of you can think of any specific suggestions 

that the Commission can make such as the one Mr. Chapman 

made to repeal the provision that was put in afterwards that allowed goods to come in duty-free through the CAFTA loophole, this 

is something. We are soliciting concrete suggestions that we can 

put in our report, something that can be implemented. We would 

greatly appreciate that. 

Mr. RAYNOR. If I can just comment on something. Every time we 

negotiate one of these sort of piecemeal trade agreements somebody 

then thinks of the loopholes that have to go around the agreements. And there’s a number of policies that people at this table 

could suggest and a number of very specific suggestions and we 

would suggest like we thought we had on CAFTA and we’ll be back 

here a year from now saying ‘‘well, wait a minute, this group is 

doing this, this group is doing that.’’ I think you’ve got to do that 

because I think these kinds of things move along some kind of a 

continuum. But I come back to the main point that I was trying 

to make, we don’t have a coherent trade policy that says our goal 

is to get from here to there. And if we don’t have that, then all we 

have is this patchwork of small policies that basically are about 

politics. Whoever says ouch the largest and whoever’s district happens to be closest for the vote and whoever happens to be running 

for office we get a thrown-together policy to deal with that and 

those policies don’t work. And part of the reason they don’t work 

is because they are just that, thrown together. And part of it is because people in Washington don’t consult the people actually doing 

the work and making the trade when they come up with policies. 

And I think both of those things have to change if we want to get 

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velopmental. We recognize that there’s a global economy. Let’s deal 

with it; let’s not hide from it. 

Co-Chair BECKER. Thank you. Commissioner Bartholomew. 

Commissioner BARTHOLOMEW. Thank you very much and thank 

you to our witnesses, both for your testimony and for your leadership on behalf of your companies and also the people who work for 

you. It’s heartbreaking and heartwarming at the same time. I’m 

pleased that Mr. Raynor noted for the record how unusual the situation is that he’s at the same table with all of these people because 

I had been thinking that exact same thing remembering back to 

boycotts and all of those things a number of years ago. And as 

somebody who worked on a Congressional staff, I was honored to 

work for Congresswoman Nancy Pelosi for 15 years, I can really attest to the work that UNITE, the Ladies Garment Workers Union 

before then, had done on this issue going back certainly to 1990. 

This was not a problem that people couldn’t foresee and it was 

really one of the blessings of my Congressional career that I got to 

work with Emmy Dubrough who is just an extraordinary woman 

who was the face of garment workers in Washington for so long 

and actually continues to be in her own way. It’s really wonderful 

which is, of course, no reflection on Mr. Raynor’s brother who is 

doing a wonderful job also. A couple of points that have really 

struck me listening to you all and thinking about the situation and 

one of which is how difficult it has become for people who want to 

buy American in American stores. There are a lot of people who I 

think would like to buy garments made in the United States but 

it’s become extremely difficult to even find them, and I think that 

that’s something that people really need to think about even if we 

take on another buy American type campaign or something like 

that, how we do it. I remember reading in one of the industry publications, this is probably five or six years ago now, that there was 

this hope for a little while that quality control issues like there are 

problems in China and seasonal turnaround time would help the 

American industry and it doesn’t sound, listening to you all, as 

though it has and I wonder if you have any reflections on that. 

You’ve certainly told us about the modernization of plants here and 

how skilled the work force is but I wonder what happened to those 

trends. 

Mr. MCKISSICK. Well, I don’t think there’s any question that if 

you’re going to compete in the future and go forward and you’re a 

U.S. based manufacturer, you must leverage the close proximity we 

have in the U.S. market with outstanding service and our operations have to be lean and efficient. I believe that we have got to 

provide advantages to our customer base in terms of being able to 

have much lower inventories and take advantage of the changing 

fashion. You know, rapid response to fashion changes is the U.S. 

textile industry’s greatest friend, and that will be what carries us 

forward. But the fact that we have outstanding service here is not 

enough to save a company when we go toe-to-toe with China because, as shown by our own data, Chinese companies are losing 

money. Now if a state-owned, communist owned textile company in 

China that’s paying people 40 cents an hour still loses money and 

half of their industry is owned by the state—and my understanding 

is almost half of those companies lose money—if they can’t cut it, 

63

it’s going to be tough for a U.S.-based company that competes headto-head within the product category to be successful. 

Mr. RAYNOR. Let me comment just for a second. A number of 

years ago our union and Levi Strauss formed a partnership. As 

part of that process Levi’s went and surveyed all of its customers 

and said the salvation of our American manufacturing is going to 

be just-in-time delivery, quick response, carrying the inventory for 

the retailer, getting the right size jeans in the right place, and we 

went out to all of our plants and redid those plants, made them 

much more flexible, had people be able to sew different styles using 

team manufacturing they changed all of their distribution centers, 

investing millions of dollars into making them from warehouses 

into throughput centers. This year the last Levi Strauss plant 

closed. The company decided that despite all of that it’s cheaper to 

buy it in China, put it in a warehouse here and then bring it to 

the stores and they decided their salvation is the mass merchants. 

So we have that brand which was never sold in Target, Wal-Mart 

and K-Mart before is now sold there. And I think that the drive 

for price which somebody mentioned earlier coming from the retailers, my belief is that soon Wal-Mart will merge with Toys-R-Us 

and we’ll just call it Chinese-R-Us. 

Mr. CROLLEY. One of the things that you mentioned from where 

I sit about fashion and style, I really think . . . I don’t know the answer but I do think there’s a totally new definition of fashion and 

style the way when we were younger we bought a . . . the last fashion item that I can recall that we had was in the middle 90’s when 

we made tons and tons of what was called stirrup pants. There are 

not any more fashion items. These companies go and buy so far in 

advance offshore that that aspect of our business I think is history. 

What we do have is the opportunity with some companies to do 

what’s called blending where we blend. If they sell a style and the 

color chartreuse takes off, then we will come in and try to make 

the chartreuse color of that style. But in mainstream I don’t think 

there is the fashion items that you envision exist today. I think it’s 

just another change we went through so quickly we didn’t even realize the change. 

Ms. FRIEDMAN. You mentioned about the quality aspect. I speak 

to companies every week and I ask that same question, why? Because I know of companies that of course went to Mexico and then 

into Honduras and now they’re into China. And because of what 

they can get in China and everything that’s given to them that 

they cannot get from us, our government here, if they have poor 

quality that comes in from China, they will set up a shop and they 

will do the re-work and then send it out to the stores and my understanding and I’ve been told is that they still make more money 

doing it that way than having it manufactured here in the United 

States. 

Commissioner BARTHOLOMEW. And are they doing the re-work in 

the United States? 

Ms. FRIEDMAN. Yes, they are. Yes, if they can find someone to 

do it. That is a problem. But there are some companies that have 

their own plant that that’s all these plants do is they do repairs 

and re-works that come in from China to pass it on to the consumer. 

64

Mr. CHAPMAN. Sometimes perception is greater than reality. We 

had a large program this year where we were actually competitive. 

When the garment was delivered to the shelf we were competitive 

but the retailer in this case that was buying the garment said that 

if you’re not giving it to me from China you’re not giving me your 

best price. We lost a very large program where we were actually 

competitive on the garment and that’s a fact. 

Commissioner BARTHOLOMEW. That’s just amazing to hear. 

Commissioner DREYER. And you couldn’t convince him? 

Mr. CHAPMAN. No. 

Commissioner BARTHOLOMEW. And this was an American-based 

company? 

Mr. CHAPMAN. My customer was American-based, yes. 

Commissioner BARTHOLOMEW. That’s just amazing. Somebody 

had mentioned the Lou Dobbs programs that have been going on 

and I’ve found those of particular interest. Part of me is tempted 

to go back ten years and see if Mr. Dobbs himself was on the free 

trade will solve all of the woes of the world bandwagon and whether he’s changed or whether he was saying the same thing. But it 

really has struck me that while people in the textile industry, 

again, I’ve said for at least ten years have recognized that these 

problems were taking place, I think they’ve happened faster than 

anybody was really expecting them to. But now that people see . . . 

we at the time, of course you know this better than I, had been 

told, well, our textile industry is gone and our service economy is 

the wave of the future for the United States, that and our intellectual property. And now that we’re seeing service jobs being shipped 

overseas and our intellectual property being stolen, people I think 

are paying a little bit more attention. I just say that I hope that 

it’s not too late for our textile industry. We’ll do what we can. 

Ms. FRIEDMAN. One other comment I’d like to make. We mentioned the manufacturers and I think that Senator Hollings mentioned this when he was speaking. They’re being driven to . . . their 

competitors are in China so he mentioned I think Levi Strauss. 

They’re being driven to go over there. If they do not, then they will 

lose. They have no choice to do this so, it’s——

Commissioner DREYER. Ms. Friedman, could you give me an example of re-work. I think I know what it is but it would help me 

if you could give me some examples. 

Ms. FRIEDMAN. The blouse you have on, if it were to come in and 

I know this has happened in the last few months, I know a company that actually brought in some garments from China and the 

blouse was supposed to have top stitching on the collar, a stitch 

that outlines collar. 

Commissioner DREYER. Right. 

Ms. FRIEDMAN. When it came in, part of them had the stitch; 

part of them did not and also it had . . . the ones that had stitches 

made, form stitches, they were loose so you could not pass them on 

until you had the re-works done. 

Commissioner DREYER. So that’s a repair or something similar——

Ms. FRIEDMAN. Yes. 

Commissioner DREYER. —that wasn’t done right? 

Ms. FRIEDMAN. Repair, re-work, yes. 

65

Commissioner DREYER. Thank you. 

Co-Chair BECKER. Commissioner Reinsch. 

Commissioner REINSCH. My perspective on these things is sometimes a little bit different than my colleagues. My heart goes out 

to all of you. I think you’re dealing with the most difficult economic 

problem that America has. You’ve got people, real people, who’ve 

spent their lives, and in many cases, generations of lives working 

in your industry. And as those jobs go away they find themselves 

without a lot of other choices, without any choices. And the ones 

that are 45, 40, 47 could be in the worse situation of all for reasons 

that you all very eloquently stated. I think that’s a much more difficult problem than other sectors have, and one that, I was pleased 

to see, Senator Hollings in particular had suggestions for how to 

deal with. Because at one level one can talk about trade solutions 

and we’ll get to that minute, but I’d also venture to say that we 

can do everything you want tomorrow and a lot of those jobs are 

not going to come back. They’re gone. But the people are still here. 

I’m glad to see that Senator Hollings and you all are concerned 

about the people because that’s the most important consideration 

that we all have—which is what we’re going to do about those people? How are we going to help them become more agile in an economy that is going to demand increased agility whether we like it 

or not. I approach this from—a lot of us are old Capitol Hill people. 

I worked for John Heinz for 14 years and then I worked for Jay 

Rockefeller, and I learned when I was working for John Heinz that 

actually textiles and apparels was the largest manufacturing employer in Pennsylvania, not steel workers. I don’t know if that’s 

still true because so many are gone. They were mostly more apparel than textiles. But I spent a lot of time working on this. And 

Mr. Raynor said we don’t really have a policy, it’s sort of a patchwork of addressing whoever screams the loudest. And it struck me 

that in a bizarre way that the reality may actually be reversed. We 

do have a policy, but nobody wants to talk about it because the policy really is to let this sector go because it can’t be saved. We could 

have had this hearing ten years ago or probably did. I’m sure Senator Hollings had one ten years ago. We talked about Japan and 

Korea or Pakistan or whoever. These are not new developments. 

Let me just ask a question. What are the tariffs on imports of your 

items? What is the average tariff? 

Mr. MCKISSICK. It would roughly be in the teens. 

Commissioner REINSCH. So you’ve got tariffs that are four or five 

times the average in manufacturing tariffs, more than that coming 

in. You’ve got quotas at least for ten more months. You’ve got safeguard mechanisms. You’ve got trade law that I share your concerns 

about, particularly on the safeguard enforcement issue. There’s this 

whole network of things going on here, which I think are the result 

of squeaky wheels, well placed squeaky wheels. But despite all that 

network which frankly is more than any other sector of this economy has in terms of protection, you still have these problems. And 

so that leads me to think that this isn’t good news, but certainly 

leads me to think that rather than Mr. Raynor’s comment that 

we’re sort of fumbling around responding to politicians; in fact successive Administrations have sort of made an implicit decision that 

this one sector is going to go and what we’re really talking about, 

66

and I do this with apologies because Carolyn and I, we’re trying to 

declare a cliche ́-free zone up here—without any success as you notice—but it just strikes me we’re just rearranging the deck chairs 

on the Titanic in this case. And I know that’s bad news, but I don’t 

see a lot of other solutions. It’s going to be very hard to extend the 

MFA because that takes consensus. That’s not something the 

United States can do unilaterally. Ironically, as Pat and I were 

talking a minute ago, the biggest losers here are the Bangladeshis, 

the Pakistanis, Mauritians, the Maldives, they’re all going to be 

eaten alive by the Chinese when the quotas go away. And there’s 

some sign they have started to figure that out, which means you 

might get some support for extending the MFA from some unexpected sources, i.e. the very people who tried to get rid of it when 

it was . . . we all agreed to get rid of it ten years ago. But I think 

that’s a long shot. I’m not sure what the answer is. We’re stuck 

still with the very human problem of how to we deal with these 

people. So I just sort reflect gloomy thoughts and ask you to comment, if anybody wants to. 

Mr. MCKISSICK. Mr. Chairman, I’d like to. First and foremost, 

I’m sure you all understand this problem goes so far beyond textiles. Our country’s lost three million manufacturing jobs in the 

last few years. Only 335,000 have come out of our industry. Yes, 

our industry’s been decimated. But overall our country 17 million 

manufacturing jobs and now we have 14 million. Our industry’s detractors will say, ‘‘It’s just textiles, we’ll trade that sector away.’’ 

I live in Greenville, South Carolina. There are all kinds of manufacturers there from gas turbines to the finest automobiles on the 

planet to Michelin tires. All across the board all manufacturers are 

losing jobs in our area and in this country. So we may be further 

along in the trajectory, but we’re all going in the same direction. 

And one thing interesting I find about the U.S. textile industry, 

many people like to describe us as an old smokestack industry, a 

buggy-whip industry, and we shouldn’t be here anyway. But up 

until just prior to the Asian currency crisis, ours was a growth industry. It was a high-tech growth industry with growing profitability, growing sales, all of that. Then overnight came the Asian 

currency crisis, and then the demise began in the industry. So my 

two points would be, first, it goes way beyond textiles. Second, this 

is a new phenomenon that wasn’t here ten years ago, 15 years, 20 

years ago. It really began with the Asian currency crisis in the mid 

to late 1990s. 

Commissioner REINSCH. Let me ask Mr. Raynor. While you were 

growing productivity, which is a point, I certainly take and I agree 

with you and I alluded to the right things that we’re doing, were 

you growing jobs during that period? It seems to me the union 

story has been a 30-year decline in jobs. 

Mr. RAYNOR. Were we growing jobs? I think not. But I think 

that’s part . . . that’s part of improving people’s lives. There were 

jobs at some of these places that don’t need to be done. They can 

be done better by equipment than people, that’s not a bad thing. 

And allowing us to improve productivity also allowed us to improve 

earnings. You’re talking about industry that on the textile side was 

paying people $14 and $15 an hour. This industry is a lot of different industries. It’s very interconnected. You want to see techVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00074 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
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nology? Let me take you into a synthetics fibers mill, which is an 

extrusion process, which is as technically vibrant as any in the 

world. 

But what you’ve got to look at is trade policy. Take up a whole 

other industry. You walk around in the South and throw a rock up 

in the air five years ago and you either hit a textile mill or you 

hit a furniture plant. Now you would think that furniture which 

apparently has to be made out of pine if it’s in the Carolinas or 

maple if it’s in New England or some other wood would still be 

here because you need the forests in order to have your raw materials. What has happened to the furniture industry in this country 

in the last five years? The advantage that we have of owning those 

raw materials is gone because of this cost. And I come back to it 

again and again and again. Free trade ain’t free. And unregulated 

trade, unplanned trade is going to destroy entire industries. 

The textile manufacturers need sewing plants to be their customers and many of our textile mills are of such a size that they 

need a certain size sewing industry in order to be able to produce 

to survive. Some of them are smaller, but some of them are larger 

as well. We gave away light manufacturing without thinking about 

what would happen to the heavier higher tech manufacturing that 

supplied it. Now I’ve got plants that sew who say to me I can’t find 

the raw materials to make my product anymore. I know a curtain 

manufacturer a hundred miles from here who says to me, ‘‘I may 

have to leave this country because I can’t find raw materials to sew 

because we’re the only ones left and we don’t provide enough business to somebody to keep them going in business.’’ Planning and 

putting industries together and, again, looking at this is an interconnected world economy is the only reality. 

Co-Chair BECKER. We still have two more Commissioners. 

Commissioner REINSCH. My time’s up. Thank you. 

Co-Chair BECKER. Commissioner Mulloy. 

Commissioner MULLOY. First, we want to thank you and the 

Chairman for bringing us out of Washington and hearing what’s 

going on. Too often when we’re in Washington, and you suspect 

this big problem and this really confirms what you think, what you 

instinctively feel is going on. But people who think like I do and 

I think like you about these issues, we’re immediately called protectionists and that’s like a bad word and you’re shut off in the corner. This Commission, the wisdom of the founders was that industrial manufacturing, these are ultimately the national security base 

of the United States. We could talk about Iraq. We could spend billions. But if we don’t have an industrial base, manufacturing, good 

jobs for our people and ultimately what’s going on here, we’re losing our tax base. When the tax base goes, then your ability to even 

educate your people is gone. So these are important issues. I want 

to thank Mr. Crolley. I grew up in small town in Pennsylvania. My 

granddad was a coal miner, so when you talk about how important 

paychecks are for people and how important jobs are for dignity 

that really struck me because I know it and I’ve seen it in the people that I grew up with. Then when, Mr. Raynor, when you talked 

about this is going on in a much more rapid state, pace than we’ve 

ever thought would happen. We’re globalizing this economy. We’re 

bringing in China, 1.2 billion people. We’re bringing in India, anVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00075 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
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other billion people. And the technology (inaudible) must be 

outsourcing of these jobs that are held by Americans and that you 

talked about, all the things that we pay our people to preserve a 

good lifestyle. And so the companies (inaudible) and it’s going on. 

Now it seems to me, and I’ll tell you what, I’ve watched this culture in Washington for a long time. I’ve been in State, I’ve been 

in Justice. I’ve worked on Capitol Hill. I’ve been an appointee of 

the Commerce Department working in trade. This culture cannot 

be changed except by political action. Politicians have to change 

this culture. And to me, it seems to me it has to be almost like a 

Presidential election issue. These are the issues that have to be 

talked about in a Presidential election. That’s the only way they’re 

going to get it. And the bureaucracy will take its clues from the political leadership that wins such an election and says this is an important issue. I don’t know how all to deal with it. But once we decide it’s a problem and we don’t want it happening, then we can 

develop a national strategy to deal with it. And I’m telling you, you 

guys have to do it at your level. You have to make these politicians 

do it. Because the bureaucracy isn’t going to do it because it’s too 

acculturated into a game that’s been going on here for 30 years. 

And they don’t understand, in my view, how fast it’s going out. It’s 

a whole new ball game and we’re not . . . and we don’t have the 

strategy or the thought on how to deal with it. Finally, when you, 

Mr. McKissick, you talked about the textiles, and when Bill was 

saying, that it’s not just textiles. To me textiles are the canary in 

the mineshaft or something. That industry’s going, but we have to 

say there are a lot of others that are going to happen very quickly 

after it. This is a rapidly changing game when you have a $500 billion current account deficit. That means we’re importing $500 billion more than we’re exporting. And what do we do? We borrow the 

money to finance that from abroad. This is a game that can’t go 

on. And when it can’t go on, well some people say, well, let the 

market force correct it. Well, it will correct it with a much lower 

standard of living for the average American. So it seems to me this 

has to be a national strategy and I’m urging you to really get your 

. . . the multinational corporations, the CEOs, they get their big 

compensation package and they move on. So that’s what they’re 

working for. And the Wall Street guys who are moving their investment around, they don’t care either. It has to be done with the 

business community that creates the jobs and the employment opportunities. And I think it has to be done by you guys saying we 

have to have an alternative forum. You can’t rely on the great associations in Washington who are tied up in the old culture. And I’ve 

given you what I’ve seen now. I’ve been in this game watching this 

for 35 years. Thank you very much for all your testimony. 

Co-Chair BECKER. I want to thank all of the Commissioners. I’m 

the only one left that hasn’t asked any questions. I’m going to try 

to do a couple of wrap-up things. Mr. Chapman, you made reference to a loophole paper and I’m paraphrasing on that. 

Mr. CHAPMAN. Loophole what? 

Co-Chair BECKER. Loophole paper or a document or something, 

you made some reference to loopholes in various trade laws. 

Mr. CHAPMAN. Correct. 

Co-Chair BECKER. Do you have that documented somehow? 

69

Mr. CHAPMAN. I can get it. 

Co-Chair BECKER. Can you furnish that to the Commission? 

Mr. CHAPMAN. Yes. 

Co-Chair BECKER. I’d appreciate that. Second, I’d like to throw 

out for your consideration what to do immediately. We’ve got a crisis that we’re going to be facing in December 2004. I don’t even 

know if there’s enough time left to do something about it. I’m assuming that the quota that’s going to expire, that this government 

cannot unilaterally extend that, can we? 

Mr. CHAPMAN. I don’t know. 

Co-Chair BECKER. You ought to know something about it——

Mr. RAYNOR. I just heard a speech where somebody said, ‘‘I don’t 

have to ask anybody’s permission.’’ I think we can do a lot of 

things. 

Co-Chair BECKER. Okay. You think that we can unilaterally extend that? This is——

Mr. RAYNOR. I don’t know all the legalities of it. What I’m saying 

is this country seems to have the power to do a lot of things when 

it has the will to do it, and the idea of doing this politically is that 

idea, it has to have the will to do it. 

Co-Chair BECKER. But you have to have the will——

Mr. RAYNOR. A lot more people than just us have to rise up and 

say, ‘‘We will not support you if you don’t have that will.’’

Co-Chair BECKER. We’re going to do as much as we can, obviously, about bringing this forward and pressure to do something on 

that. But most everybody at that table belongs to some trade association. You run one yourself, Ms. Friedman. And you have the 

ATMI association that does something. Most of the business community supported all these trade agreements, right? Most of the 

business community supported NAFTA. Most of the business community supported PNTR with China. There has to be a lot of pressure from business to do this. When these trade agreements come 

up, they’re fought, they’re supported by business generally in the 

United States. And there has to be a lot of pressure mounted from 

the business community to do something about it. We want to do 

something about it, we want to work at this, but we need some assistance on this. We need these same business groups that you belong to to take strong positions against this. Now, you have talked, 

several of you have talked about transnational shipments; that 

even if something is done with China, that you expect the exports 

to go from China through other countries, whether it be through 

Central America, whether it goes through Mexico, right? 

Mr. CHAPMAN. Correct. 

Co-Chair BECKER. Or if we pass the FTAA with 34 countries, the 

whole Western Hemisphere will come in in a Caribbean Basin. Am 

I reading this wrong? This is the problem. And so what we’re looking—one of the Commissioners mentioned how difficult it is to 

change something, and I don’t think anybody’s looking at just 

changing the furniture in a room and just having a different way 

to get in and out. We need a change in policy in the United States 

and that has to be driven by the business community. I’m just stating this out the way that I see it. The reason we have these trade 

agreements is because of the business community in conjunction 

with the government, the government’s responding to the pressure 

70

from the business community to do that. I had a question here. 

We’ve been told that there’s between 200 and 400 plants that have 

shut down, textile plants. How many of these went overseas and 

are exporting back into the United States? Is this where the exports are coming from, from American companies that are over in 

China and Mexico and places like that? 

Mr. CROLLEY. No. No, I don’t think so. They’re just eliminated. 

Mr. RAYNOR. These are generally not multinational businesses. 

The people you’re talking to here generally own their own businesses and are here. Maybe one of you could describe what some 

of these reverse auctions are you’re dealing with in the home furnishings industries. These days Wal-Mart will get a bunch of companies; let’s say they want to buy towels. They’ll call up a bunch 

of towel companies and say we’re having a bid on this level, this 

size, this towel and you will get on the Internet, and the major 

companies, West Point Stevens, Springs, used to be Pillowtex, and 

a whole bunch of people in Pakistan and in China and in other 

places will bid. And whoever has the lowest bid gets the towels. No 

worry about service. No worry about delivery. No worry about what 

colors you can provide. You’ve got the bid. 

If you don’t perform, they take the bid away from you and give 

it to somebody else next time. But that’s all it is. And sometimes 

you don’t even know in many cases who you’re bidding against. It 

all comes in over a computer screen. And that’s how this stuff is 

handled these days. By and large in this industry, I think the majority of it is just coming in from other countries or is being 

outsourced and sometimes directly by the large retailers. 

Mr. MCKISSICK. I would add to that, the absolute vast majority 

fits that description. It’s got to be in the high 90s as far as percentage of imported textiles that come from non-U.S. ownership, nonU.S. companies. I don’t know of instances where folks have shut 

plants down, shut down their spilling and weaving operations and 

moved them. I’m sure there are some. But, the vast majority of 

these imports come from companies with non-U.S. ownership, companies that did not pack up and leave the U.S. in search of cheaper 

wages. 

Co-Chair BECKER. Very good. Thank you. I want to say again 

how much I appreciate the presentation from the committee. You 

made a profound effect on this Commission. I want you to know 

that. And I want you to feel free to submit any additional information that you might have that would help us in this, or any suggestions that you have as we go forward. We’re going to take a break 

now for lunch. I want to invite the panelists to join us. 

Thank you very much. 

[Lunch break from 12:45 p.m. until 1:20 p.m.] 

PANEL II: STEEL 

Chairman ROBINSON. Okay. I’d like to begin our afternoon session with our second panel of the day. We’ll examine South Carolina’s steel industry. We’ll hear testimony from a number of executives. We’ll be first hearing from Mr. Bob Johns who is marketing 

director for Nucor Corporation, followed by Tim Dillon who is a VP 

for Sales for Georgetown Steel, and Larry Murray, finally, of 

United Steelworkers Association. As China’s demand for steel has 

71

grown, Nucor has been facing steep price increases for its raw material. Georgetown Steel is currently in bankruptcy and in search 

of a buyer that can revitalize its aging facilities. And Mr. Murray 

will be sharing the views of the steelworkers themselves. And we 

thank you very much for being with us today. We’ve had an extraordinarily powerful set of testimonies this morning that put into 

sharp relief the nature of the challenges that are being faced in the 

textiles and apparel industry and very moving human stories, I 

might add. This wasn’t just involving cold statistics and debilitating trend lines. This really put not just a human face to it but 

made very plain the multidimensional costs involved in all that 

you’re facing as well as an industrial sector for the State, and obviously, this can be projected to include our country as a whole. We 

feel especially privileged to have a chance to be here with you and 

to hear your stories firsthand because that’s the extra value-added 

that we need, not to mention your good recommendations as to how 

we can help in a material way. We report to Congressional leadership directly. Our report will probably be out in May of this year 

will have some very stark findings and we hope the kind of robust 

recommendations for legislation and otherwise that can make a 

real difference. We’re not just a listening post here or some academic body. This is an activist, let the chips fall where they may 

operation. And I just want to assure you that we are looking to 

take action on your behalf and on behalf of others in your industry. 

So with that, if I might, I’d like to begin with Mr. Johns. We have 

some rules of the road to share. We have generally a seven-minute 

opportunity for your opening remarks each. We’ll be restricting 

Commissioners to about five minutes in terms of their question period, and Mr. Swanson behind me will be reminding you the old 

fashioned way, with a little sign because we’re not in Washington 

with our fancy lights where we have the one minute drill for wrap 

up. So again, it’s with our great appreciation that you could be 

with us today and I’m happy to start in any order, but it strikes 

me that perhaps Mr. Johns, you might go first. 

STATEMENT OF BOB JOHNS

MARKETING DIRECTOR, NUCOR CORPORATION 

Mr. JOHNS. Okay. Before you start the timer, first of all, Nucor 

appreciates being here and we’re very happy to testify in this hearing. Carrying over from the lunchtime conversation that I overheard, if I could prompt the Commissioners with a couple of notions for questions at the end I certainly would like to address, 

would be the currency issue I want to talk a lot about, but the realignment has to start before you will ever change capital flow and 

that is a critical mass in this thing. The velocity of capital flow I 

think has caught everybody by surprise and I think that needs to 

be addressed. Also, if the Commissioners would be so kind as to 

consider the motivation to cheat on the rules acceding to the World 

Trade Organization and others. And then the general practice and 

the pattern that’s created by rules violations via currency intervention and the model that it establishes for others and I can give you 

some anecdotal information I’ve got. I’ll get into the testimony at 

this point. As stated, I am Bob Johns with Nucor Corporation. Like 

many other companies, Nucor has found South Carolina to be an 

72

excellent place to invest. Companies outside the United States have 

reached the same conclusion. I don’t think it’s any accident that 

South Carolina leads the country in foreign investment per capita. 

Precisely because South Carolina is so integrated into the world 

economy, it’s essential to think that we think about what’s going 

on in a world economy could affect South Carolina will affect the 

rest of the country. China’s economic policies are having an immediate and very direct effect on companies operating in South Carolina, including Nucor. At first blush, many of these effects appear 

to be positive. Many of you have seen or may have seen an article 

in this month’s issue of Fortune Magazine talking about the boom 

times in U.S. steel industry. The article provides the explanation 

in a word—China. As you all know, the Chinese economy is growing at a sizzling rate. China’s demand for steel last year approached 250 million tons. But behind that growth there are some 

economic policies that have the effect of transferring much of the 

cost of China’s growth onto workers and companies in the United 

States. As importantly, these policies are not sustainable, or should 

not be sustainable. If continued, they will ultimately have a destructive impact on China, on the United States and the entire 

world economy. China’s growth represents a classic export driven 

development strategy and serves as a model to others. Chinese production of all sorts of manufactured goods has exploded and much 

of this production is exported. Some of this production is by companies that are foreign to China, including U.S. companies that have 

moved to China to take advantage of lower labor costs. With those 

lower labor costs go lax environmental regulation, subsidies, export 

incentives and other inducements to locate there. Other manufacturers or state-owned companies have been able to make massive 

investments in new equipment via local, provincial and central government support. In all too many cases the ultimate result is the 

same. Hundreds of American manufacturing companies have been 

driven out of business and thousands of Americans have lost their 

jobs. China’s economic development is not in itself a bad thing. To 

the contrary, it is absolutely essential that China develop a free 

market economy that can provide its billion plus people with jobs. 

A major problem is the policy instruments the Chinese government 

is using to push that development. Currency intervention, direction 

of credit. China does not allow its currency called, what I’m going 

to call RMB, to be freely traded or exchanged. Instead, it is pegged 

to the dollar. Whenever you have a fixed exchange rate, it’s difficult to determine what the free market rate for the currency 

would be, whether it is undervalued or overvalued. Fortunately, 

the Economist magazine has developed a reliably, widely accepted 

method for assessing exchange rates, its Big Mac Index. According 

to the most recent index, the RMB is undervalued to the tune of 

about 56 percent versus the dollar, making it the most undervalued 

major currency in the world. At the same time, the initial devaluation in 1994 was 60 percent, so we haven’t had any change in a 

decade in spite of the fundamentals. The Chinese government has 

deliberately kept its currency undervalued. There are two immediate consequences for the U.S. The first is obviously it makes Chinese goods cheaper than they would be otherwise. An office desk 

made in China that sells for $300 would cost over $450 if the curVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00080 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
73

rency were fully convertible. The consequences for the U.S. furniture manufacturer competing with the Chinese are obvious. If the 

currency were subject to valuation by the market rather than being 

fixed, Chinese goods would be much less competitive in the United 

States. Our own government adds some odd twists to this. The 

Treasury Department claims that China isn’t manipulating its currency through the convenience of a very narrow definition of the 

word manipulation. Whether intervention or manipulation, I don’t 

care what you call it, it’s clear that they’re setting the exchange 

rate at such a low level it’s costing the United States tens of billions of dollars a year in lost sales, lost profits, lost wages, lost tax 

revenues, higher government expenditures for laid off workers, and 

it goes on and on. And a minor byproducts of this and not so minor 

byproduct of this is a laid off worker is certainly less a consumer 

and is a tax drain, not a taxpayer. The domino effect moves 

through the economy. I firmly believe that the artificial exchange 

rate for the Chinese currency is one of the main reasons why the 

current economic recovery has generated so few new jobs in manufacturing. Even in an improved economy, U.S. manufacturers simply can’t compete against Chinese exporters, on top of lower labor 

and regulatory costs, plus have a wholly artificial 50 percent plus 

currency advantage. An undervalued Chinese currency doesn’t just 

hurt American companies that compete directly with Chinese exports. It also hurts our suppliers and our customers. Nucor sells 

steel to furniture manufacturers as well as to companies in dozens 

of other industries that are losing ground to Chinese imports. As 

our customers reduce production they cut back on steel purchases 

from us. If they move out of the country, i.e., move to China, typically they’re gone forever. Nucor happens to be the most efficient 

steel producer in the world, but quite frankly, there’s no point in 

making steel here if we don’t have any manufacturing customers 

that need to buy it. And we certainly aren’t going to export that 

steel into a market protected by an enormously undervalued currency. An undervalued RMB has a second negative effect, one that 

affects exporting companies even more directly. Just as a cheap 

currency makes Chinese imports into U.S. less expensive, it makes 

all U.S. exports to China more expensive. The second economic policy China uses to artificially boost investment is the direction of 

credit through state-owned banks. The government of China still 

exerts tremendous control over the allocation of credit. Tens of billions of dollars of loans have flowed from the state-owned banks 

into state-owned companies allowing them to fund enormous investments and this way the Chinese government created much of 

the manufacturing capacity that has enabled Chinese manufacturers to swamp the U.S. with low priced imports. The Chinese steel 

industry has been one of the major recipients of state-directed 

loans. Just in brief on this, they have added more capacity in the 

last three years than the entire United States industry has the 

ability to produce. That capacity will eventually find a home the 

first time the Chinese economy has a downturn, and we strongly 

suspect it will start here. In 2001, China joined the WTO and they 

are a member also of the International Monetary Fund. They have 

a certain obligation to abide by WTO principles and rules when 

they join. They have not. They’ve gained an enormous advantage 

74

by being accepted in the international community and they’re abusing it. We can’t dictate what Chinese policies are going to be internally but we can make it clear to China that this currency manipulation must cease. We can certainly help them technically resolve 

some of their banking issues, but the bottom line is that until or 

unless this issue is addressed firmly by the United States Government, this is not something businesses can do. We are in an accelerated spiral. I think the flushing sound in this hemisphere is 

clockwise when a business goes down the toilet. 

Co-Chair BECKER. Well, I’ll try to restrain myself in making comments now, but it is a dark day when to run a steel operation like 

you’re running you have to become a financial and currency specialist to that extent. We certainly will take this up in the questions and answers. If we might move to Mr. Dillon second. 

STATEMENT OF TIMOTHY J. DILLON, SENIOR VICE PRESIDENT

COMMERCIAL GEORGETOWN STEEL COMPANY, LLC 

Mr. DILLON. Hello, my name is Tim Dillon and I represent 

Georgetown Steel Company, LLC. I’d like to thank you for allowing 

me the opportunity to participate in the investigation of China’s 

impact on the American manufacturing base. 

First, let me tell you about our company. The Georgetown steel 

mill was established in 1969 in Georgetown, South Carolina, and 

operates in the wire rod sector of the steel industry. U.S. shipments of wire rod are about six million tons per year and accounts 

for five percent of the U.S. steel market. We sell primarily to domestic wire drawers and process wire rod into products for diverse 

end use applications including the automotive, construction, industrial, and consumer industries. 

In the automotive industry, our wire rod is used in many applications including tire cord and tire bead for steel-belted radial tires, 

hose wires, springs, shock absorbers, brake pads, fasteners. We 

supply the construction industry with products for end uses such 

as pre-stress concrete strand, galvanized guy strand for use in constructing office buildings, parking garages, and cable stay bridges 

such as the Cooper River bridge now under construction in 

Charleston. Other construction uses include metal building cross 

members, cable TV and telephone support wires and highway barrier strand among many other applications. Our consumer end uses 

include upholstery and bedspring wire, steel wool, coat hangers and 

fishhooks. General industrial uses for our products include screws 

and bolts, ball bearings, cutting wire, bailing wire and wire rope. 

Our steel mill is the only one in the United States with a direct 

iron reduction plant, which produces a high quality raw material. 

This is known as DRI. Other U.S. mini-mills rely solely on buying 

scrap or scrap substitutes for their raw material feed which is 

mostly lower quality and now much higher cost. We also operate 

an 80-ton electric furnace, a continuous caster, and a wire rod rolling mill. The entire operation is located on approximately 65 acres 

and operates in a 500,000 square foot manufacturing facility located on a deepwater seaport on the Sampit River. 

The mill’s capacity is about 900,000 tons per year and up until 

a few months ago we employed more than 600 workers and we 

were shipping near capacity levels. Today we are in bankruptcy, 

75

the mill has ceased operations and most of our work force is without jobs. 

The Georgetown facility has been a profitable company during 

each of the last ten years leading up to 2003. Though escalating 

wire rod imports have made business conditions difficult in previous years, the combination of dumped and subsidized imports depressing the price for our products and the rising scrap cost, natural gas costs and electricity, all of this was overwhelming this 

past year and did not allow us to continue operations after October 

21, 2003. 

As I mentioned, wire rod imports have been a problem for our 

industry for several years. Wire rod was not part of the highly publicized and now terminated section 201 steel tariff program. Wire 

rod producers have spent several millions of dollars pursuing remedies for trade extorting practices. Finally in April of 2002 after 

several months of litigation and affirmative rulings by the International Trade Commission and the U.S. Commerce Department, 

anti-dumping and countervailing duty orders were implemented 

calling for some of these unfairly traded imports to pay a duty 

upon entry into the U.S. Seven countries were found to be guilty 

and are either paying or not shipping to the U.S. Also anti-dumping and countervailing duty suits against four other countries are 

now on appeal. 

These unfair trade cases leveled the playing field with countries 

investigated and found guilty; however, China was not included in 

these cases that began in early 2001 and they since have emerged 

as a new dominant importer of wire rod into the United States. 

After shipping less than 25,000 tons to the U.S. for all of 2001, China’s 2002 imports increased to 414,000 tons or more than a 1,500 

percent jump from the previous year. Last year in 2003 China’s 

wire rod imports were about 252,000 tons and although less than 

the extraordinary 2002 year, their recently established share of the 

overall U.S. imports remained about the same. We estimate China’s wire rod production capacity is about seven to eight times larger than that here in the U.S. Our concern is when inventories need 

to be balanced in China or normal business adjustments occur, 

shipments from China surge into the U.S. 

Our customers have similar stories on how China’s affecting 

their business. The garment hanger industry, for example, has also 

seen an explosion of Chinese imports. Imported hangers from 

China account for 95 percent of all imported hangers today as their 

sales to the U.S. have grown more than 800 percent during the last 

five years. The underselling margins of these imports average 30 

percent and many times exceed 50 percent. The ITC actually ruled 

five to nothing that significant injury had occurred to this industry 

in a recent Section 421 investigation. But the President decided 

against any relief. Last year one of our largest U.S. hanger manufacturers and one of our customers went out of business. 

Our pre-stress concrete strand customers are also feeling the effect of imports from China, which was less than 100 tons total in 

2001 and 2002. Latest import figures tell us more than 17,000 PC 

strand tons from China have hit the U.S. through the first 11 

months of 2003. Strandtech-Martin is a five-year old business located in Summerville, South Carolina, and is one of our largest 

76

customers in this market. I’m sure they can tell you the negative 

effect of these surging Chinese imports have had on their business. 

Strand Tech and this entire industry are extremely concerned imports from China will only continue to grow. 

Drawn wire imports from China have also grown including galvanized coated wire,’’ which is more conducive for ocean transportation to the U.S. Leggett and Platt recently closed their wire galvanizing in Andrews, South Carolina, at least in part due to these 

increased imports. Other finished steel products from China such 

as nuts and bolts, brake pads, wire shelving and wire rope are also 

gaining an increasing share of our customer’s markets. These markets are even being further eroded when you consider products 

ranging from steel handled pails to sophisticated automotive assemblies that are now coming from China and no longer requiring 

U.S. parts. 

All of this is occurring as the Chinese economy is growing at a 

rate in excess of eight percent. As part of that amazing growth, 

China is consuming more; however, the consumption seems to be 

mainly raw materials which from our industry’s perspective is primarily scrap and they’re consuming this at a historically high rate 

and that rate is growing. Much of the scrap China is consuming is 

being exported from the U.S. resulting in some shortages of raw 

material here and costs that have more than doubled for U.S. steel 

makers in the past year. So in addition to depressing our prices, 

China also seems to be driving up our costs. 

Obviously manufacturers in the U.S. today face the reality of 

survival; that is, competing in a global economy is not simply a 

choice. We hope that competition, however, will be fair. At Georgetown Steel we’re not operating today partly because our costs were 

too high and partly because our prices could not be adjusted to 

cover these costs. I am optimistic today a buyer will emerge for the 

mill in Georgetown who will see what we believe is an opportunity 

to restart the lowest cost, high quality wire rod mill in the U.S. On 

a level playing field, we believe our mill will be able to compete 

against any one in the world, including Chinese imports traded 

fairly. Again, thank you for this opportunity to speak with you. 

[The statement follows:]

Prepared Statement of Timothy J. Dillon

Senior Vice President, Commercial Georgetown Steel Company, LLC

China’s Impact on Georgetown Steel and the Steel Wire Rod Industry

Hello. My name is Tim Dillon and I represent Georgetown Steel Company LLC. 

I would like to thank you for allowing me the opportunity to participate in your investigation of China’s impact on the American manufacturing base. 

First, let me tell you about our company. The Georgetown steel mill was established in 1969 in Georgetown, South Carolina and operates in the wire rod sector 

of the steel industry. U.S. shipments of wire rod are about 6 million tons per year 

and accounts for 5% of the total U.S. steel market. We sell primarily to domestic 

wire drawers that process wire rod into products for diverse end use applications, 

including the automotive, construction, industrial and consumer industries. 

In the automotive industry, our wire rod is used in many applications, including 

tire cord and tire bead for steel belted radial tires; hose wire, springs, shock absorbers, brake pads and fasteners. We supply the construction industry with product for 

end uses such as pre-stressed concrete strand and galvanized guy strand, for use 

in constructing office buildings, parking garages, and cable-stay bridges such as the 

Cooper River bridge now under construction in Charleston; metal building cross 

members, cable TV and telephone support wires, and highway barrier strand among 

77

many other applications. Our consumer end uses include upholstery springs, steel 

wool, coat hangers, and fish hooks. General industrial uses for our product include 

screws and bolts, ball bearings, cutting wire, bailing wire and wire rope. 

Our steel mill is the only one in the United States with a (DRI) direct iron reduction plant which produces a high quality raw material. Other U.S. mini mills rely 

solely on buying scrap or scrap substitutes for their raw material feed, which are 

mostly lower quality and now much higher cost. We also operate an 80 ton electric 

furnace and caster, and a wire rod rolling mill. The entire operation is located on 

approximately 65 acres and operates in a 500,000 square foot manufacturing facility 

located on a deep-water seaport on the Sampit River. 

The mill’s capacity is about 900,000 tons per year and up until a few months ago, 

we employed more than 600 workers, and we were shipping near capacity levels. 

Today, we are in bankruptcy, the mill has ceased operations, and most of our workforce is without jobs. 

The Georgetown steel facility has been a profitable company on an EBITDA basis 

during each of the last 10 years, leading up to 2003. Though escalating wire rod 

imports have made business conditions difficult in previous years, the combination 

of dumped and subsidized imports depressing the price for our products, and the 

rising costs for scrap, natural gas, and electricity were overwhelming this past year 

and did not allow us to continue operations after October 21, 2003. 

As I mentioned, wire rod imports have been a problem for our industry for several 

years. Though wire rod was not part of the highly publicized and now terminated 

section 201 steel tariff program, wire rod producers have spent several millions of 

dollars pursuing remedies for trade distorting practices. Finally in April 2002, after 

several months of litigation, and affirmative rulings by the International Trade 

Commission and the U.S. Commerce Department, anti-dumping (ADD) and countervailing duty (CVD) orders were implemented calling for some of these unfairly traded imports to pay a duty upon entry into the U.S. Seven countries were found to 

be guilty and are either paying or not shipping to the U.S. Also, ADD/CVD suits 

continue against four other countries on appeal. 

These unfair trade cases leveled the playing field with the countries investigated 

and found guilty. However, China was not included in these cases which began in 

early 2001, and they since have emerged as a new dominant importer of wire rod 

into the United States. After shipping less than 25,000 tons to the U.S. for all of 

2001, China’s 2002 imports increased to 414,000 tons, or more than a 1,500% jump 

from the previous year. Last year in 2003, China wire rod imports were about 

252,000 tons and although less than their extraordinary 2002 year, their recently 

established share of overall U.S. imports remained about the same. We estimate 

China’s wire rod production capacity is about 7 to 8 times larger than that in the 

U.S. Our concern is when inventories need to be balanced in China or normal business adjustments occur, shipments from China surge into the United States. 

Our customers have similar stories on how China is affecting their business. The 

garment hanger industry for example has also seen an explosion of Chinese imports. 

Imported hangers from China account for 95% of all imported hangers today as 

their sales to the U.S. have grown more than 800% during the last 5 years. The 

‘‘under selling’’ margins for these imports average 30% and many times exceeded 

50%. The ITC actually ruled 5–0 that significant injury had occurred to this industry in a recent section 421 investigation, but the President decided against any relief. Last year one the largest U.S. hanger manufacturers, and one of our customers, 

went out of business. 

Our pre-stressed concrete strand customers are also feeling the effect of imports 

from China, which was less than 100 tons total in 2001 and 2002. Latest import 

figures tell us more than 17,000 PC strand tons from China have hit the U.S. 

through the first 11 months of 2003. Strandtech-Martin is a 5-year-old business located in Summerville, SC and is one of our largest customers in this market. I am 

sure they can tell you the negative effect these surging Chinese imports have had 

on their business. Strandtech and this entire industry is extremely concerned imports from China will only continue to grow. 

Drawn wire imports from China have also grown, particularly galvanized-coated 

wire which is more conducive for ocean transportation to the U.S. Leggett and Platt 

recently closed their wire galvanizing in Andrews, at least in part due to these increasing imports. Other finished steel products from China such as nuts and bolts, 

break pads, wire shelving, and wire rope are also gaining an increasing share of our 

customers’ markets. These markets are being even further eroded when you consider products ranging from steel handled pails to sophisticated automotive assemblies that are now coming from China, and no longer requiring parts made in the 

U.S. 

78

All of this is occurring as the Chinese economy is growing at a rate in excess of 

8%. As part of that amazing growth, China is also consuming more. However, that 

consumption seems to be mainly raw materials, which for our industry is primarily 

scrap, and at a historically high rate, and that rate is growing. Much of the scrap 

China is consuming is being exported from the U.S. resulting in some shortages of 

raw materials here and costs that have more than doubled for U.S. steel makers 

in the past year. So in addition to depressing our prices, China also seems to be 

driving up our costs. 

Obviously, manufacturers in the U.S. today face the reality of survival. That is, 

competing in a global economy is not simply a choice. We hope that competition will 

be fair. At Georgetown Steel, we are not operating today partly because our costs 

were too high and partly because our prices could not be adjusted to cover these 

costs. I am optimistic today a buyer will emerge for the mill in Georgetown who will 

see what we believe is an opportunity to restart the lowest cost, high quality wire 

rod mill in the U.S. On a level playing field, we believe our mill will be able to compete against anyone in the world, including Chinese companies, . . . fairly trading.

Chairman ROBINSON. Thank you very much, Mr. Dillon. Well 

done. If I may turn to Mr. Murray. 

STATEMENT OF LARRY MURRAY, STAFF REPRESENTATIVE

UNITED STEELWORKERS OF AMERICA (USWA) 

Mr. MURRAY. Good afternoon. Thank you for having me and by 

me following Mr. Dillon, you may hear some repetitive statements, 

but I’ll try my best to be very brief. My name is Larry Murray. I’m 

United Steelworkers of America staff representative assigned to 

service our members of Local Union 7898 at Georgetown Steel in 

Georgetown, South Carolina. I sincerely appreciate the opportunity 

to speak to you about our members there at Georgetown. Georgetown Steel Company has a proud history of production of high 

quality wire rod products produced by some 600 plus worker residents of Georgetown, South Carolina area. The mill was built and 

began production in 1969. Since that time the mill has provided 

high quality products to customers across the U.S. and more importantly has provided family and community supported jobs in the 

Georgetown area. On October 20, 2003, Georgetown Steel filed for 

bankruptcy protection and subsequently closed the mill. This tragedy to our members and their community was not caused by excessive costs, low productivity, lack of quality or any of the newest excuses often offered in the event of plant closings. Employees of 

Georgetown Steel worked hard, played by the rules and dedicated 

themselves to their families, their coworkers, their company and 

their community. This tragedy was caused by unfair trade and 

dumping of steel products into the United States and should never 

be blamed upon the dedicated employees of Georgetown Steel. The 

women and men of Georgetown Steel had risen to the challenge of 

the American dream. They worked hard, raised their children and 

supported their churches and community. For that investment 

their dreams were sacrificed to free trade. Over the years employees of Georgetown Steel have made concessions, sacrifices and accommodations to adapt to keep their mill alive. After surviving the 

near collapse of the entire U.S. steel industry in the 1980s and surviving depressions throughout the 1990s, it became evident that 

they could no longer give enough to level the playing field and have 

their mill survive. The sacrifices of the individuals involved in this 

and other plant closings deserve more than to simply be classified 

as a negative step in the global economy. The workers of Georgetown Steel are real people with real families, real dreams and real 

79

needs. They have spouses and children that depend upon them for 

their survival. They have dreams of their children being able to be 

educated and prosper beyond what they have been able to accomplish. They have mortgages, grocery bills, health care costs and 

utility bills. A force they could not see or touch has crushed their 

dreams and aspirations and without the assistance of their fellow 

citizens and the government they cannot defend against it. Dedicated workers have been forced to join the ranks of the unemployed 

in Georgetown County, already at double-digit rates. Dreams of college education and a more prosperous life for their children are 

being swallowed up with more immediate needs. Proud and once 

prosperous workers have had to accept charity they were once 

proud to offer to others. Former workers, retirees, and other families are left with no health care coverage and are having to do 

without necessary treatment and prescription drugs vital to their 

continued health. What little savings workers were able to put 

away is being sacrificed to attempt to pay mortgages and bills they 

can no longer afford. In a few short months many will face bankruptcy, foreclosure and eviction. The devastation suffered in the 

Georgetown Steel closure goes beyond the personal tragedy suffered by the individual workers and their families. The payroll generated through the Georgetown Steel operation supported hundreds 

of additional workers who provided contracted services to the mill, 

drove trucks, and provided other support for the mill operation. 

Nearly two million dollars in local taxes is lost that supported local 

schools and community services. Approximately 70 percent of 

Georgetown Steel employees attended religious services and contributed to local churches. Many of these are now in a position of 

needing support from these same churches. This reversal will put 

a tremendous financial strain on these institutions. The local economy has and will continue to suffer tremendously. The approximately $30 million payroll of Georgetown Steel pumped money into 

the community, supporting doctors, dentists, hairdressers, barbers, 

lawyers, accountants and a multitude of other self-employed. Employees shopped locally, fueling income for restaurants, grocery 

stores, clothing stores, and car dealerships. The loss of health care 

coverage for workers at Georgetown Steel will put significant additional pressure on the local hospital to remain viable as more and 

more residents have little or no health care coverage. The Chinese 

steel industry experiencing unprecedented growth adding hundreds 

of millions of tons of steel capacity with much of the equipment 

being acquired from United States mill closures. The Chinese economy is currently growing at 9.1 percent per year. What will happen 

to the global steel market if the Chinese growth rates fall by any 

significant amount? After having made this enormous investment 

in steel capacity, the Chinese will want to continue producing steel 

and return to the export market to maintain steel production. The 

Chinese steel is dumped into the global market; it will dwarf the 

surge of imports that the United States experienced in 1998 as a 

result of the Asian crisis. While the loss of one mill and one plant 

may not seem like a significant event to some, as one looks deeper 

into the impact on the workers, their families, and their community, the true impact is intense. Workers at Georgetown Steel and 

a multitude of other facilities in all industries closed across the 

80

United States deserve better. They deserve the ability to compete 

on a level playing field and have the willingness to work hard and 

play by the rules not to be undermined by unfair trade and dumping of products while exporting American jobs. Thank you for listening and giving me the opportunity and privilege to speak with 

you. 

Panel II: Discussion, Questions and Answers 

Chairman ROBINSON. Well, the privilege has been ours. And I 

dare say, just as a personal observation, that the Chinese will not 

be able to maintain those robust growth rates and so I’m afraid 

that you will see the very phenomenon that you’re most concerned 

about in terms of even a further penetration of international markets, but we’ll get into that shortly. As you may know, we’re running a little behind because of the morning session. I’m prepared 

to forego my five minutes reluctantly, but I would like to ask my 

fellow Commissioners if they could observe theirs rather strictly so 

that we might be able to conclude this panel at about 2:35 or so, 

as a courtesy to our third panelists as well. But this should give 

us a full opportunity to hear from all of our Commissioners. I think 

that as established by our Co-Chairman for today’s hearing, George 

Becker, who had a rather simple formula, we just go down the line. 

And so I’ll, in keeping with that, begin with him if I might and 

we’ll just proceed right down the dais. 

Co-Chair BECKER. Thank you, Mr. Chairman. It’s deja vu. I sit 

here and I look at the steel industry and staff representatives together testifying. In my other life I would be on that side of the 

table. Let me just make a few comments about each company. I 

know Nucor and I’ve never been inside one of the mills but I’ve 

been in front of the gates a few times in my life. Nucor is really 

a well-managed company. I’ve always said that if Nucor can’t make 

it in the United States, there’s no steel company going to make it. 

It’s well managed. It’s diversified. And they run a real, a very, very 

tight ship. The rollback of the 201 had to be devastating to Nucor, 

as well as the rest of the steel industry in the United States. That 

was a hard fought trade concession for us to be able to give the 

United States. I was listening about on the scrap and reading some 

of the comments in here of what’s happening with scrap. I’ve been 

through this before with the mini mill operations and where they 

could drive the prices up and really damn near put you out of business by just paying premiums. We’ve seen that in other industries. 

The leather industry where Japan and then China would bid ten 

cents over premium. Whatever was bid out there they would pay 

a premium over that to be able to take the product out. And I was 

just wondering if there was any thought about or plans from the 

company, if there’s anything that can be done to restrict the sale 

of scrap to China and whether that’s a viable option in some way. 

Mr. JOHNS. I don’t think the panel has the time to go through 

the nuances of what I’ll call the iron unit business because we use 

quite a bit of scrap substitute in our manufacturing, things like pig 

iron, PRI, HBI, in fact Georgetown has a scrap substitute plan. The 

scrap situation is rather interesting and rather intricate and it involves foreign government manipulation in commodities markets. 

And the most specific example I can give you is when Russia put 

81

a 30 percent tax on scrap exports, they and the Ukraine, it upset 

the entire balance of the global scrap market. The Chinese increased their intake by about nine million tons. Russia curbed their 

exports by about ten million tons and guess where the other scrap 

came from. It came from around the globe, but certainly a fair 

amount’s coming from the United States which puts pressure on its 

market. The good news for the steel companies is that it’s a global 

issue whether it’s scrap iron or coke, pig iron or whatever. The Chinese have put enormous pressure on all commodities markets and 

when you look at the increase in those costs and the ability to 

transport it, that’s where you come into shortages. Relative to 

shortage, we don’t really have a scrap shortage in the United 

States because if you’re willing to pay enough for it, then you can 

recoup it in price then you can buy the scrap to take care of your 

customers. But at the end of the day there’s a limit to what you’re 

going to pay for scrap. It’s something that we’re addressing on . . . 

you talked earlier about involvement and we are with the termination of the Russian suspension agreement, we are very actively 

working in D.C. to address this whole manipulation of global scrap. 

Part of the Russian thing is China happens to be a very large target, but the principles that they exhibit in terms of how they’re 

going about their export growth and the growth of their economy 

is something that should be alarming. India does it, Russia’s already done it. In 1998 they devalued the ruble by 485 percent. 

That’s the next step. You know, the model is moving on and I think 

that China’s a great spot to start, if the government has the nerve 

to deal with China. 

Co-Chair BECKER. Short comment on the Georgetown Steel. It’s 

heartbreaking for that place to shut down. It’s the major industry 

in Georgetown and it’s by far the best paid as I understand it of 

any job that you can get around there. It’s been devastating to the 

community in many, many respects. If a buyer isn’t found for the 

mill, it’s going to change the face of Georgetown itself before it’s all 

over. You mentioned the ITC ruling on the 421 on the coat hangers. All that required after the ITC determination, all it required 

at that point was for the President to sign it, as I understand it; 

is that correct? 

Mr. DILLON. That’s my understanding as well 

Co-Chair BECKER. And it’s my understanding that every 421, 

which is a safeguard provision of some kind, that’s went forward 

from the ITC sought relief. And the ITC has agreed and this went 

to the President, and each one of them he’s refused. The President 

has refused to give relief in any case on those, is that not correct? 

So this is an Administration decision, not a legal—not being able 

to make your case or anything. It’s the President. 

Mr. DILLON. Mr. Becker, I’m not certain how many cases have 

been brought before this Administration or the previous one but 

I’m not aware of one that has gotten relief from the President. 

PANELIST. I can comment on that. They were not available in the 

previous Administration. But there’s a provisional law they call a 

China specific safeguard, and it came when China entered the 

WTO, and that has happened in the last three years. So there have 

been a number of recommendations, probably four I think, to grant 

82

that relief by the ITC, but the Administration has chosen not to 

grant it in any case so far. 

Co-Chair BECKER. That was designed to be able to circumvent a 

lot of other long procedural, expensive challenges to China’s imports and to allow the President, upon a determination of the ITC, 

just simply decide on a safeguard. I might mention that when talking about the capacity in China, China is buying steel mills in the 

United States that are shut down. There have been at least three, 

maybe four that I’ve been aware of rather recently where China 

has bought mills that are supposedly inefficient in the United 

States to operate. They dismantle these old mills and take them to 

China and put them into production there and help them build capacity. There’s a tremendous amount of capacity being built in 

China. So, I think you’re absolutely right that this is going to come 

back to bite us at some point in time if there’s any kind of a downturn in the industry. I just wanted to make those few comments 

and let you know I appreciate the fact that you came in and certainly the dire circumstances that Georgetown finds itself in, I 

hope something is going to be worked out to help them. 

Chairman ROBINSON. Well, thank you very much, Co-Chairman 

Becker. I’d like to turn to Vice Chairman D’Amato. 

Vice Chairman D’AMATO. Thank you, Mr. Chairman. Thank you 

all for your testimony. I’ve always been an advocate of taking steel 

completely out of the WTO game and declaring it a national security—that’s been my position consistently. You may know that Senator Byrd and other Senators have taken that position officially as 

well. In terms of ending the safeguards early, I’m curious. What 

kinds of benefits would there have been to maintain the safeguards 

in place until their end? What were the down sides? What are the 

down sides of having terminated them early? And do you have any 

recommendations as to what other new actions we can recommend 

in terms of U.S. trade laws to help bolster the industry? You can 

take it each one. 

Mr. DILLON. Well, I should really pass this onto Bob as wire rod 

product, the product that we make at Georgetown, was not covered 

by the 201 safeguard program. So I’m going to pass the question. 

Mr. JOHNS. I think the industry dodged a huge bullet with the 

timing of the discontinuation of the 201. Certainly if China had not 

taken off at the time it did, I think it would have been a disaster. 

But like I said, I think we lucked out on the safeguard itself. Relative to the . . . however, one of the giveaways in terminating the 

safeguard was what you started to get to and that is the WTO plus 

agreement on steel to eliminate subsidy and facilitate the elimination of subsidized capacity, particularly where it’s totally inefficient. And I’d like to give Mr. Becker a statistic when I’m done 

with this comment, kind of backs up what he said. With the termination of the 201, in our view, this is just Nucor’s view, this is not 

necessarily shared by everybody on the face of the earth, but the 

impetus for the OECD discussions to be meaningful beyond that 

went to zero. And immediately everybody turned their hand out, 

palm extended up, saying that China wants DME status. Well, 

nonsense. When you had growth and I’m sure when their growth 

has exceeded the entire U.S. capacity, they’re not a factor. Brazil 

doesn’t have an advanced steel industry. Who’s kidding who here? 

83

It’s ridiculous. And then the Europeans want to be subsidized for 

something that we will never have a subsidy here for and that’s an 

EPA type issue. They signed on to Kyoto. Now they want some undefined hundreds of millions that could exceed a billion dollars to 

subsidize signing on to Kyoto. Something that the United States 

didn’t do. Normal business expenses, R&D, they want that, an allowable subsidy. And then they want those allowable subsidies to 

be excused from coverage under U.S. anti-dumping and countervailing duty orders. So this all happens after the 201. So the President had three legs on the 201 stool. One was give the industry a 

chance to get back on its feet, which it did and it’s restructured in 

massive proportions. The second leg was to engage in the international discussions for this elimination and that leg is, on this 

stool, is gone. So while we’ve had a recovery and restructuring, 

we’ve had nothing happen on the backside. And that’s a terrible 

loss because I don’t think it’s going to happen. The industry just 

fired off a letter that says the entire NAFTA region feels the same 

way. Canadian mills and the Mexican mills feel exactly the same. 

It is amazing. We’ve just had some people in China and I’ve got 

a couple friends that are on the ground in China working there in 

China, in Shanghai. You can’t walk through the steel district and 

see the other side of the street. It’s that polluted. We import a ton 

of steel, import a ton of pollution. The irony of this whole thing is 

that the infrastructure for supply is so fragile the U.S. coking coal 

goes to China to be turned into coke there. And now they’re not 

going to export the coke back to the United States, which will inhibit production here while enhancing their own, regulation has basically forced closure of coke ovens in the United Sates. If you look 

at the condition of the industry at the time, it was time to reinvest 

in that particular end of the business, it didn’t make any sense. To 

give you an idea of efficiency, our people just came back from touring a brand new Chinese mill; roughly the same size and product 

mix as our Berkeley County, South Carolina facility, which is a relatively new facility as well. It takes 15,600 people to produce 3.1 

million tons of steel at this mill in China. Last year it took all of 

750 Nucor employees to produce 3.2 million tons of steel in a like 

facility. This isn’t an issue about productivity and labor costs. Our 

labor costs are about a third of what it costs in ocean freight to 

bring steel here. This is about subsidy. It’s about when the banks 

don’t collect on the loans. I’m sorry, but Wachovia collects on our 

loans. We don’t have a choice in the matter. So it gets to a myriad 

of other things like that. 

Vice Chairman D’AMATO. Let me ask you some follow-up, Mr. 

Chairman. Two things that let me ask you whether you think they 

would be useful. There’s a debate growing now as to having exported U.S. Manufacturing Capacity Board, we ought to start talking about manufacturing American labor standards and environmental standards. Would it be useful, have you considered what 

would the impact be of our trying to include in our mix the cost 

of Chinese putting an equal environmental standards into their 

plants that we have in our plants? 

Mr. JOHNS. I think yes, we can do that and the——

Vice Chairman D’AMATO. Can you quantify that? 

84

Mr. JOHNS. Yeah, I think we can through the American Steel Institute and we will do that because it varies depending on whether 

you’re an EAF operator or an integrated. But if you look at the cost 

of regulation, I think there was a great study put out by the NAM 

that took the non-currency issue to task. And steel runs pretty 

much along the same lines. The cost of regulation and tax differences is it exceeds a 20 percent differential in cost. It’s just the 

cost of production. 

Vice Chairman D’AMATO. Twenty percent? 

Mr. JOHNS. Twenty percent. I think 22.4 percent was the precise 

number the NAM had. We don’t disagree with that number but 

when we get the currency that’s undervalued 56 percent, it kind of 

pales by comparison. What you get when you put them together, 

you get a doggone good picture on how efficient a lot of American 

industry really is. You’ve been soliciting suggestions. We have been 

working. We’re trying to get some minor enhancements to the trade 

law, duty as a cost in an AD/CVD case. We also would like to see, 

Blanch Lincoln and Marion Berry have a piece of legislation in 

both houses now that covers the repeat dumper situation so we can 

expedite the procedure. It reminds the Department of Commerce 

that they can self-initiate, which they never do. Part of the tradeoff, if you will, for the expiration of the 201 was a commitment to 

self-initiate. We can’t even get good numbers from Customs first 

shot out of the box and the licensing system has bad information. 

How are you going to self-initiate if we can’t count? 

Vice Chairman D’AMATO. Real quickly, the second question I had 

was do you in the industry have you considered the question of 

whether it would be useful to attempt to put pressure on the Administration to bring a WTO case on the question of subsidization 

of steel by Chinese because of the loan issue and all that? 

Mr. JOHNS. In a typical AD case, you have to be injured and that 

process takes you about a year of injury to even start to file the 

case. So would it come up in a case, a normal AD case, yes. If we 

had a surge and we felt it was dumped and we prosecuted a case, 

about a year later you might get a determination that that happened. I think the biggest pressure that’s been put on the Administration is going to come out of what’s called the Fair Currency Alliance, which is kind of a subset of the Sound Dollar Coalition. About 

35, 40 trade associations retained an attorney in D.C., Collier 

Shannon, I’m sure you’re familiar with them, to prepare a 301 petition on currency intervention by the Chinese. Chinese aren’t the 

only one. They just happen to set the standard and of course the 

rest of Asia will follow. 

Chairman ROBINSON. Commissioner Dreyer. 

Commissioner DREYER. You have all been extremely eloquent in 

talking about your problems and I assume that you have been 

equally eloquent in complaining to people in Washington to your 

representatives and yet nothing has been done really to help the 

problems that you folks have outlined. And I wonder where you see 

the major obstacle. Is it that people in Congress are nodding but 

not doing anything? Is it that the U.S. Trade Representative, as 

Senator Hollings indicated earlier, doesn’t seem to be doing what 

he’s hired to do very well? Or do we have an Administration that 

thinks that China is some important to its foreign policy that it’s 

85

willing to sacrifice American workers and American factories to it 

or none of the above? 

Mr. MURRAY. I’d like to take that one first. All of the above. It’s 

simply that their priorities are way out of whack and we or I can 

say the steelworkers, we’ve spent enormous amounts of time going 

to different locations and we do it almost weekly trying to make 

a change, and I think we’ve got to get it out to the working people. 

Sometimes even those that are hurt the most tend not to believe 

that there’s anything that can be done. They think it’s all being 

shouted out to a deaf ear. So yes, we’ve got to do the groundwork, 

the footwork to get out there and tell our people that they have to 

get involved. I don’t think there’s any one simple solution. I know 

it’s not going to be easy, it’s not going to be easy, but it can be done 

and it’s sad that we even have to be here as somebody said earlier. 

But we’re here and we’ve just got to give it our best shot. But I 

don’t think there’s any one thing that can tell us why this horrendous situation is upon us. 

Commissioner DREYER. And would Mr. Johns and Mr. Dillon 

agree with that? It looks like you do. 

Mr. DILLON. I’d also just add some comments based on personal 

experience. We’ve had a situation in wire rod where imports have 

been a problem for a long time and the problem is that the remedies that are available to our industry or other industries for 

trade distorting practices such as what we’re seeing from China 

right now is that, by the time you get around to providing care for 

the patient, the patient’s dead. It’s a long process. As Bob mentioned, if you file an anti-dumping suit or a countervailing duty 

suit, you have to prove injury, you have to prove a number of 

things. 

Commissioner DREYER. So part of it is the time and expense of 

litigation, is that correct? 

Mr. DILLON. Exactly. The processes available either through AD 

or CVD cases or Section 201 proceedings. We won a 201 case that 

was initiated in 1999 on wire rod for three years. We were provided 

relief in the form of a tariff rate quota system and this was from 

the previous Administration, and the relief provided for imports to 

continue to surge into the United States at lower prices. So it was 

practically no relief at all. And after we spent a lot of dollars pursuing that case in addition to seeing our problem exacerbated, we 

were then ineligible for the big steel 201. 

Commissioner DREYER. There was a similar case in our briefing 

material by Goss. It’s not the one you’re talking about, because this 

one involved newsprint and dumping and by the time they won, 

which they did, the company was out of business. 

Mr. DILLON. The other comment I’ll make is that currently today 

there’s a provision for ‘‘CDO’’ funds to be refunded to effected parties. And of course there’s a lot of conversation about those funds 

no longer being available and using those funds for something else 

rather than the industries that have been harmed by the . . . the 

reason those funds were colleted. So I would say looking forward 

a continuation of the Byrd Amendment would be helpful to our industry. 

Commissioner DREYER. Mr. Johns. 

86

Mr. JOHNS. Exactly. There are several remarks I’d like to make; 

I just wish we had a lot of time to do it. I agree with Larry. There’s 

some of all of the above. The frustration that you run into in Washington is that: (A) it’s above somebody’s grade level; (B) it’s another 

department. We’ve got a business issue here. The Commerce Department says the dollar belongs to Treasury; Treasury said well, 

it’s a narrow definition, nobody’s manipulated it. What do we do? 

Well, doggone it; right now we’ve got a business issue that transcends two departments of government. And they need to get their 

heads together to get the problem resolved. This is above my grade 

level and out of my department doesn’t fly. As regards to the trade 

case themselves, let me just draw a little example. Typically, in an 

AD case is more than $50 per ton, but let’s just call it 50 and let’s 

use a company the size of Tim’s, call it a million ton steel company. 

You got hit with 50 million dollars worth of price suppression in 

a year, a million bucks to pursue a trade case isn’t the issue. It’s 

the time you spend losing that 50 million dollars of revenue that 

puts you on the deathwatch. That’s what happens here. And not 

only do you have to prove injury, you have to prove material injury. 

Beauty is in the eye of the beholder and you’ve got political appointments to the ITC and it depends on the philosophy of those 

political appointments. So you could have a slam dunk case and 

flat out lose it. Our system is broken and badly. 

Co-Chair BECKER. If I could just make a comment on that. 

What’s happened in past cases, after you spend the 50 million dollars and you win the case after fighting it a year, a year and a half 

and then they change the mix. 

Mr. JOHNS. That’s the repeat dumper rule, that’s——

Co-Chair BECKER. They change the mix and start sending something else over and you’re right back where you started. 

Mr. JOHNS. On country switching? 

Co-Chair BECKER. Right. 

Mr. JOHNS. Very easy to do. 

Chairman ROBINSON. I turn to Commissioner Bartholomew. 

Commissioner BARTHOLOMEW. Thank you very much. First, I 

think we have an esteemed guest in our audience. Former Congressman Jim Jontz from Indiana, who was talking about these 

issues ten years ago maybe in Congress. So welcome. I was pleased 

to see you walk in. It’s always disappointing to know that we’re 

further down a bad path rather than having resolved some of these 

issues. But thank you for coming. Also, I wanted to just commend 

the Co-Chairs of this hearing for putting it together. It has in a lot 

of ways brought us much closer to the reality of what these problems are. It’s one thing to sit in Washington and know about them. 

It’s another to talk to people who are struggling with how to keep 

businesses afloat and talk to people who are dealing in their communities with very real ramifications of people losing their jobs. So 

thank you all for coming. And again, I wish that it were an easier 

situation that we were all facing, but at least we have a better 

sense of the reality of it. Commissioner Becker mentioned how the 

Chinese are buying steel mills in the United States and I would 

just note that a couple of years ago there was a mill in Northern 

California that was being sold and the workers there faced the further indignity of the fact the Chinese insisted on bringing in ChiVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00094 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
87

nese workers to dismantle the mill so that the workers didn’t even 

get paid for taking apart what it was that they had been doing, 

and the communities didn’t get the tax base that those salaries 

would have provided. So it’s sort of a package deal; that you sell 

your mill and you sell your jobs and you don’t even get the income 

out of taking it apart. One of the things of course that our U.S. 

steel industry has been known for is the quality of its product and 

I want to take the questioning just a slightly different way. Cost 

of course is not just price. And as we face a situation where we it 

looks like we’re going to end up importing Chinese steel, I wondered if you had any comments on the quality of what it was that 

we might be facing because steel of course if the backbone of everything that we build. A couple of years ago Congressman John Dingle had done an important study on fasteners, screws and bolts, I 

think they were, and there were some real quality concerns about 

what was coming out of China. I wonder if you have any sense of 

the quality of the products being made there? 

Mr. JOHNS. I can address a lot of the long and flat rolled products. Interestingly enough, Nucor is not substantially in the rod 

business. Georgetown is, but there are a couple of Chinese steel 

companies that make decent quality products. Can they make surface quality in the shape of a coated sheet you’d be happy with on 

the roof of your car or the hood? No, not yet. You can buy technology globally. It’s a matter of applying it. People like Baosteel are 

making rapid moves to improve the quality. But then there are a 

lot of products, for lack of a better term, call them sink in water, 

commodity type grades that they can make. It’s not an issue and 

quite a lot of that is used. I think one of the textile people hit on 

it. You can’t live on the fashion designer type of stuff. If you’ve got 

a steel mill, you’ve got to have a base load of some volume because 

you’ve got a billion dollar investment in a large steel plant. Something like our Berkeley, South Carolina plant. So we’ve got to run 

several million tons and we aren’t going to run several million tons 

of automotive roofs. That just doesn’t happen in the real world. So 

the best way to kill a steel company is attack its base volume and 

push it in the niche business and you will eventually kill it. 

Mr. DILLON. Today the imports coming into the United States 

from China are really a wide variety of qualities. As Bob mentioned, a big part of our business and I tried to give you a flavor 

of some of the products that our steel ends up into, they’re perfectly 

capable of making those quality levels taking that volume away 

from our mill and making it very difficult to operate. Even the 

niche businesses in the United States can be unit based businesses 

and volume is very important to the survival. So I don’t see product 

coming in from China to be, let’s say going into steel belted radial 

tires today, but I do see wire capable of making wire rope. And 

these are critical safety applications in some cases. So there would 

be some concerns there, but there’s also a concern for the volumes 

that they make. 

Commissioner BARTHOLOMEW. And since I don’t really know 

much about your industry, when you have to shut a plant down, 

how long can it stay shut down before it becomes no longer viable 

to bring it back up and be productive again? 

88

Mr. DILLON. Well, I think that probably varies from plant to 

plant. We closed our plant with the intent of restarting it. I’ve 

known mills to be down for two years and restarted. It really depends on what you’re doing at that particular facility. 

Mr. JOHNS. On the EAF side, electric components producers, 

you’re going to get furnace damage and certain utility damage 

when you’re down. On the so called integrated side which are the 

traditional steel producers making product from iron ore, if you 

shut down a blast furnace, you’re going to sustain millions and millions of dollars worth of shut down damage on these type of facilities. The infrastructure breaks down pretty quickly. 

Commissioner BARTHOLOMEW. And the point of that question of 

course was if the remedies in the trade process that have taken so 

long, we really need to figure out ways to speed things up so that 

you’re not forced into a situation where if you finally get some sort 

of relief you’re no longer viable as a company. So thank you. 

Chairman ROBINSON. Thank you, Commissioner Bartholomew 

and we certainly already chatting about what the Commission can 

do to have an emergency relief mechanism, in changing the game, 

changing the timetable of this because this is ridiculous where the 

patients are dying as they wait for remedy or for a restart. We’re 

going to take a hard look at that. That’s just right off the cuff. We’ll 

certainly have a chance to do this. Before I turn to Commissioner 

Mulloy, there was just a very quick intervention by our Vice Chairman on the point that was made concerning the niche industries. 

Vice Chairman D’AMATO. Yes, actually, I wanted to ask. I think 

this is a question that I might as Georgetown. One of the industries I know I understand is in jeopardy is wire rope. And I understand the Chinese are making wire rope. Is that correct? 

Mr. DILLON. Yes. 

Vice Chairman D’AMATO. How many wire rope manufacturers 

are there left in the United States? 

Mr. DILLON. There are three primary wire rope manufacturers. 

There’s Williamsport Wire Rope, which is struggling to stay out of 

bankruptcy and they’re about to change ownership right now. 

There’s Wire Rope Corporation of America in Missouri and they 

have just gone through bankruptcy; and then there’s Bridon, which 

is owned by a U.K. company. 

Vice Chairman D’AMATO. And I understand that the Chinese are 

making wire rope and they’re subsidizing their wire rope and 

they’re beginning to export that to the United States? 

Mr. DILLON. That’s my understanding. 

Vice Chairman D’AMATO. Do we use wire rope for catapults on 

aircraft carriers? 

Mr. DILLON. Yes. 

Co-Chair BECKER. There has to be a little bit of follow-up on 

that. When you say primary wire rope, the cable that you would 

use to string the Golden Gate Bridge, does that come under primary? 

Mr. DILLON. I’m not sure. 

Co-Chair BECKER. I’ve had testimony given me on a different 

hearing that we cannot make the wire rope to string the bridges 

like the Brooklyn Bridge or the Golden Gate Bridge—that’s gone 

89

from the United States. I just wanted to make that point. When 

you said primary wire rope. 

Chairman ROBINSON. If I might turn to Commissioner Mulloy. 

Commissioner MULLOY. Again, Mr. Chairman, thank you for 

scheduling this hearing outside of Washington, enormously important. Mr. Dillon, you mentioned the Byrd Amendment. I think it 

would be very important to describe what that is. It is an amendment offered by Senator Byrd enacted into law by the U.S. Congress, so it would be helpful if you told the audience, television 

viewers, what that was and why it was needed by the steel industry. 

Mr. DILLON. The Byrd Amendment, as I understand it, is an 

amendment that allows for the duties that are collected as a result 

of trade cases resulting from unfair trade practices. The monies are 

then refunded to the affected parties in that particular industry. In 

the wire rod industry, I mentioned we have trade cases that we 

have won with dumping and countervailing duty margins of over 

three hundred percent; Brazil was over a hundred percent. $83 million of wire rod duties have been collected since April of 2002 

through the end of September 2003. We might see $36,000 out of 

that collection from what has been disbursed so far, and we’re 

probably two years away or at least a year away from seeing any 

disbursement over and above the $36,000. If there was a way that 

we could have accessed a portion of what ultimately would be due 

to us if the Byrd Amendment continues, and, again, there’s no assurances that that’ll happen by the time these funds are due to be 

paid out, we might have been able to avert bankruptcy. 

Commissioner MULLOY. Well, let me understand and I think it’s 

important I do and then I’ll go to currency. The Byrd Amendment 

was enacted by the Congress, put into law with the theory that an 

injury that . . . a company that’s been injured by unfair trade practices, and we’ve heard testimony today how long it takes to get that 

kind of ruling, how expensive it is, you have to hire lawyers, and 

you finally get the relief, meanwhile you couldn’t get the capital 

that you really needed because people don’t want to invest if you’re 

losing money, but there’s a relief. The Byrd Amendment provided 

that the money could go to the industry so that the industry could 

recompensate itself for the injury it suffered. This is taken to the 

WTO. The WTO is stacked with people who have free trade ideology. They immediately declare what our Congress did, what the 

President signed into law illegal under the WTO. So, now the pressure is back on the United States that we have to repeal the Byrd 

Amendment, not because we want to, but because the WTO is 

stacked with this . . . and I’ll describe one other thing. There’s a 

seven member appellate body in the WTO who are the ultimate decisionmakers in the WTO on dispute settlements. The U.S. has one 

of those seven. My understanding is the U.S. representative on 

that appellate body, his term expired and we wanted to replace 

him. The Administration, instead of sending one name over, sent 

two names over. The WTO interviewed them both and instead of 

picking Bob Lighthizer, who was formerly a Deputy U.S. Trade 

Representative, one of the top trade lawyers in Washington, they 

picked someone who teaches international trade law and has a free 

trade ideology to put on the WTO panel. I just want people to unVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00097 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
90

derstand what is going on here. So even though the United States 

wants that law in effect, it’s been ruled WTO illegal. Currency, let’s 

come back to that one more point. Part of the deal after World War 

II when we set up this international trading system was that tariffs, we would have a multi-lateral forum to deal with tariffs and 

that we would engage in mutual tariff reductions. But during the 

30’s it was also realized currency manipulation was a key problem 

in the international trade. After World War II, the IMF . . . we fixed 

currency so people couldn’t manipulate the currencies and they 

were supervised by the IMF. That system fell apart in the 1970’s 

and since that time trade flows no longer drive currency values. 

Capital flows are driving currency values. So capital sloshes around 

the world and what is a one-day competitive industry because of 

capital movements, your exchange rate changes, and therefore you 

are no longer competitive in the market. I’ve worked on the Senate 

Banking Committee. We enacted into law the provision that you’re 

talking about requiring the Treasury to identify countries that manipulate their currency to gain trade advantages and there are 

countries that do that. In the beginning, Treasury did identify 

Korea, Taiwan, and I think early on they even said China. But 

then for various reasons, that people lost interest in staying on top 

of that Treasury Department to do that. And now it’s become a big 

issue because China pegs its currency to the dollar. Even though 

the dollar has declined against other currencies, it has not declined 

against the Chinese currency, and they gain, as you pointed out, 

tremendous trade advantage. But part of the deal that the American worker when we signed into these deals, what they had, you 

don’t have this going on. That was part of the deal after World War 

II to create this international trading system and a key part of it 

has fallen off the board and we’re not dealing with that problem. 

Would you . . . I’d just like your comment. Do you agree with what 

I——

Mr. JOHNS. Yes, we are flat out not dealing with the problem. 

You’ve got the Japanese who are part of the problem. They intervene in currency markets to the tune of I think it was $187 billion 

last year. You have something in just the four countries, a group 

of Taiwan, Korea, Japan, and China, about 1.3 trillion in dollar reserves in those countries. That’s about, according to my new professors, who happen to be Robert Blecker at American University, and 

Peter Morici at the University of Maryland, these guys estimate 

that this is like three times any normal currency reserve based on 

the trade patterns with the United States. The intervention is so 

obvious it’s painful. And then on top of that, you end up with a 

periodic default devaluation events that are common in South 

America, then Russia did the same thing. So everybody has figured 

out that this currency game is a wonderful thing to do to if you 

want to export your way out of a problem, and nobody does anything about it. That’s the damnable thing about it. We don’t do 

anything about it. 

Commissioner MULLOY. Well, thank you. Those are two important points. It plays out the point, you need a national strategy. 

You cannot . . . you can deal with all these things piecemeal, but 

you’ve got to put together a whole strategy on what you need to 

do on the two parts of it. 

91

Chairman ROBINSON. I think that’s a very good point, Commissioner Mulloy. Thank you. We’re just about to wrap up. I would 

like to just turn for one last quick question to our Co-Chair for 

today, Commissioner Becker. 

Co-Chair BECKER. Yes, and this is to Mr. Johns. The WTO has 

been instructed by Congress several times to keep their hands off 

the trade laws in the United States and a safeguard position provisions, not to bargain these, not to put them on the table at the 

WTO negotiations. And they promised that this wouldn’t be done, 

but to make a long story short, it is on the table. We found out 

when we got to Cancun that USTR had placed our trade laws on 

the table to be bargained. And to me, anything that’s been on the 

table and you bargain and our trading partners are desperate to 

get rid of them, something’s going to happen. And I was just wondering if that gave you any pause for concern. 

Mr. JOHNS. We are very nervous about that issue. 

Co-Chair BECKER. Pardon? 

Mr. JOHNS. We are very nervous about that whole issue. You are 

correct, any time it appears on the table, it’s prone to be a giveaway and there are a lot of industries, there are a growing number 

of industries that don’t want to see that happen. The dilemma is 

if everybody played by the rules, you wouldn’t need it. The problem 

is nobody plays by the rules. 

Co-Chair BECKER. That’s good. Thank you. 

PANEL III: TRENDS IN TRADE AND SOUTH CAROLINA 

MANUFACTURING 

Chairman ROBINSON. Well, I wish to again, on behalf of my fellow Commissioners and Co-Chairs of today, thank all of you for a 

very provocative and important set of testimony. You know that we 

are taking it very seriously and, you will hear back from us loud 

and clear on these subjects. And we’re going to try to catalog an 

action plan. This is not a matter of, as I’ve said, academia. We’re 

looking to resolve these issues fairly and forcefully with the Congress with the Executive Branch, and with the general public. So 

you can be sure that we’re going to use all of our executive time 

that’s been invested in this exercise wisely. So, with that, I thank 

you and I would ask for our third panel to gather with apologies 

for the delay in getting that third panel underway. If no one would 

object, we would like to resume today’s field investigation with our 

third panel of the day, Trends in Trade in South Carolina Manufacturing. We’re very pleased and privileged to have with us a group 

of panelists that are going to talk about the broader trends in the 

trade and manufacturing area for the State. Donna DeWitt is with 

us, the President of the South Carolina AFL–CIO, and she’ll help 

us examine the needs of South Carolina’s manufacturers, workers 

and how trade with China impacts them. Jon T. McClure, President of ISO Poly Films, Inc., will speak on South Carolina’s plastics 

industry and how they’re fairing in the China trade. And finally, 

Mr. Richard Dillard, Director of Public Affairs for Milliken & Company, will likewise be on this panel and address these same category of issues. So, with that, we’d like to proceed with Donna 

DeWitt, please. 

92

STATEMENT OF DONNA DEWITT

PRESIDENT, SOUTH CAROLINA AFL–CIO 

Ms. DEWITT. Thank you. Well, first of all, let me thank the CoChairs of the event, Co-Chair Becker and Co-Chair Robinson and 

all of the Commission for this opportunity. I especially would like 

to thank David Ohrenstein, the Executive Director of the Commission, for his professionalism and patience in dealing with us in 

South Carolina. I think throughout this process David began to understand that Southerners don’t deal with ice crisis as well as folks 

from up north. So, therefore, you don’t have a written statement 

from me and I have assured David that I will get you a written 

statement. It will be forthcoming. And once again, my staff is here 

with me today and we have been donning sweatshirts, jeans, and 

tennis shoes and visiting with the different candidates here in our 

State, and so we are delighted to be with you this afternoon and 

we’ve had a very busy schedule, and we really appreciate you being 

here with us. And I’m going to share the South Carolina AFL–CIO 

labor perspective of the economic impact of the China trade on the 

industrial and community base of our State. And I hope you will 

indulge me because I’ve heard some of the statements of the prior 

speakers and I know that you’ve seen many of the statements from 

the AFL–CIO from Secretary-Treasurer Richard Trumka speaking 

recently of the trade issue and also of President John Sweeny with 

more recent employment numbers. But I would like to talk to you 

as a native of South Carolina, having been born and raised here 

all of my life, about the impact that we see as a labor perspective. 

I apologize also that President Ken Riley of International Longshoremen 1422 could not be here. They changed his airline schedule. I think he would have brought a very good perspective of 

what’s happening in our State ports. It is the most productive port 

in the world next only to Hong Kong. And along with my staff, Ken 

has taken us on a tour of the port and it was very enlightening to 

see what is happening through the ports of South Carolina. So I’m 

sure that a lot of the speakers today will have questions dealing 

with the numbers and I could quote you the numbers, but you 

know the numbers. What I’d like to do and what David sent me 

to talk about is the trade impact and what it’s done in South Carolina, the trends. So I’d like to give you a little history since most 

of you are probably visiting here, and so I’d like to just tell you a 

little bit about the labor history from our perspective, and that is 

beginning in the ports of Charleston two centuries ago. The same 

ports that we watch the busy ports today import and export, that 

same port imported forty percent of the slave labor of our country. 

Forty percent of it came through Charleston ports. So there was a 

huge trade industry in those ports in the 1700’s. Also in the beautiful city of Charleston, if you look around at the architecture, 

you’ll see some of the skills of the first guilds of our country. And 

those guilds were formed in three of the first cities in the colonies 

because the artisan and the craftsman and the skillsman couldn’t 

compete with the charges of the wages that were being charged by 

the slave labor, which the plantation owners would send into the 

city of Charleston to compete, so they formed the guilds. So we do 

have a very long and rich history of organized unions in South 

Carolina, as well as the trade industry. But then I think if you look 

93

at the western part of our State, and I know you’ve heard from the 

manufacturers this morning, and I know that Mr. Becker, Commissioner Becker, and many of you know of the era of the 1930’s. And 

if you’ve read the book The Uprising of ’34, it’s documented, of the 

impact of the strike of ’34 and the struggles of the textile workers 

in our State to organize in ’34, and it was here in South Carolina 

where seven of those workers were killed during that strike. So we 

do have a very long history of struggle with trade. But if you’ll take 

the time to walk around the Statehouse grounds, you’ll see the 

complexity of the trade here in South Carolina, as well, in the 

monuments as you walk. And you’ll see some that still are very, 

very difficult to deal with on the Statehouse grounds here in South 

Carolina. As one legislator put it, the only thing wrong with southern men is that they eat too much rice and worship their ancestors. 

And it’s pretty evident as you take a stroll around the Statehouse 

grounds, of some of the complexities that we’ve dealt with. However, if you’ll stop just to the left of me to the Statehouse grounds, 

there’s a beautiful monument that was erected to honor the African-American here in South Carolina, and I think we are the only 

State or one of very few States that has done that. It’ll take you 

through that history of where the slave ships came in and it’ll walk 

you through the history of South Carolina from the African-American perspective and you will see there engraved in bronze an astronaut, a Congressman, a Supreme Court justice of our State. So 

throughout the struggles of labor in our history, we’ve achieved 

great things, many things. So, what I would say to you today is in 

overcoming those struggles, we look now where are we. Where are 

we with trade in South Carolina and the impact on these workers? 

We’ve come so far. And the South Carolina worker is unable to invest in a stock market that’s based on the profits of products that 

are made and produced in China. We can’t do that here in South 

Carolina. And we look at other countries whose culture, whose 

work culture has remained basically unchanged for centuries, and 

yet we know when we look at that African-American monument, 

that we have been able to overcome circumstances in 200 years. 

And now we find ourselves dealing with a trade issue that we dealt 

with 200 years ago. So we feel like we’ve made progress in South 

Carolina. So we want to encourage you and we want to look at 

where we are and we want to say that we need to look at other 

countries and other nations. We need to look at China and we need 

to use an example of our athletes, our athletes here in our country. 

We need to look at how they compete globally in Olympics for a 

gold medal and the rules are there and they’ll never change. They 

compete with other nations with the same rules. And we’ve worked 

hard with a free enterprise system, as well as a system that has 

struggled to provide safety in the workplace, an environment that 

protects the families, and in South Carolina we’ve struggled with 

that, as well. So, when we look at other countries, we see that 

countries deserve to have the respect of our country. They should 

be willing to assure that the same local rules apply to all of the 

players in a global trade environment just as they do when we 

compete in an Olympic sport. The rules shouldn’t change. We’ve 

had to overcome many struggles as a nation and, as a state, to ignore the ability of another nation to address the impact of global 

94

trade on its economic and social standards is unconscionable. I 

would just end by saying to you is there a correlation to the fact 

that South Carolina’s ranking among women who are killed by 

their spouses or their partners is the highest in the Nation? Is 

there a correlation to what we are struggling with that we have the 

highest growth in the Hispanic community of any State? These are 

things we have to ask when we look at the evolving changes in our 

trade. And we ask ourselves are these things impacting our citizens 

in South Carolina? So I’m here to say from all of the workers, and 

we’ve heard from folks that have real expertise in steel and in textile, but as a South Carolinian and someone who’s been here all her 

life, who has seen the changes that we’ve been able to make, the 

struggles we’ve overcome, the struggles we continue to make, we 

would ask you to look at the nations that we have trade agreements with and that we would ask that they respect what we have 

worked so hard for in a free enterprise system and with workers 

who have struggled to accomplish so much. Thank you. 

Chairman ROBINSON. Thank you very much for that eloquent 

presentation. 

Mr. McClure. 

STATEMENT OF JON T. MCCLURE

PRESIDENT AND CHIEF EXECUTIVE OFFICER, ISO POLY FILMS, INC. 

Mr. MCCLURE. Thank you. My name is Jon McClure. I’m a lifelong resident of Greenville, South Carolina, in the upstate of South 

Carolina. I am the founder and president of ISO Poly Films in 

Gray Court, South Carolina, which is just south of Greenville, in 

a little rural town. We built a world-class facility. I risked everything I had, which at the time I started, wasn’t much, but it was 

all I had. I built a plant that I felt I could compete with anybody 

in the world and I still believe that today. Although we’re a small 

facility, we have over $15 million in capital equipment that’s been 

put in place in the last seven years. Of course, it pays good wages 

to our people that run the plant, as well as taxes to the community, 

and these are all things we want to do. In 1991, I traveled to Taiwan, Hong Kong, and to China long before people really started to 

recognize China as a real threat. I felt like I wanted to look the 

enemy straight in the eye because I thought they were the enemy, 

not that I wanted to fight them, I just wanted to size up my competition. I felt like my competitor is my enemy. There’s no way to 

compete with a plant in China manufacturing plastic products that 

has a high labor component, so I built a facility that has a low 

labor component. I also couldn’t compete with a plant where the 

workers are made to go to the restroom in . . . and I don’t want to 

be too graphic here, but six inches of human waste and urine in 

the basement, and I personally witnessed that. I came back and I 

said if can manufacture a product and my labor and direct overhead is lower than the cost of freight to get it from Asia to America, I felt like I was safe and could compete in a world market. I 

didn’t know anything about a pegged currency, and this was prior 

to them pegging the currency. At that time, China was a net importer of plastic resins and today they still are a net importer of 

plastics resins. That’s a little background. My written report gets 

a little more specific. I’m here unofficially representing 20,000 

95

small plastic producers in America, small and large, but primarily 

small producers like myself. We have seen a tremendous change in 

the environment just in the last few years. You would think that 

we’re an industry that would be nothing like textiles and nothing 

like steel, but the economics are similar. 

China is the fastest growing contributor to the plastics trade deficit. The U.S. plastic producer in general is highly efficient and 

automated, including ISO Poly Films. Labor is not a major component of cost. In most cases, the shipping from Asia is greater than 

all direct costs to produce the identical item in the U.S. Thus, it 

is my opinion that the data strongly proves that the U.S. plastic 

producer can be more than healthy and thriving on a level playing 

field. There’s great debate, we’ve heard it here today, about the 

currency and subsidies, but if you take those away, we’re healthy 

and we can grow and we can reinvest. 

Both South Carolina and the United States Departments of Commerce tout the plastics industry as one of those growth industries, 

one of those industries of high-tech; they don’t know what I know. 

It is a growth industry, but we’re under the same threat as the textile industry and the steel industry’s under. This is the case today, 

but there is an abundant amount of data available to prove that 

something is bad wrong and we need to address it. 

Overall the U.S. plastics industry employs 1.4 million workers 

nationwide in 2000; another 772,000 persons are employed in the 

upstream and production of plastics presently and different types 

of additives and equipment to manufacture plastics. This is approximately 14 percent of all manufacturing jobs in the U.S.A. 

There are nearly 20,000 industry establishments operated in 

2002. Approximately 310 billion in shipments and another 83 billion were generated by upstream supply industries, bringing the 

total shipments from the plastics activity 393 billion. 

We were a growth industry up until 2002 and since 2002 the industry shrunk in the U.S.A. The employment and plastics industry 

grew 1.7 percent per year between 1980 and 2002. The total of the 

plastics manufactured and plastics wholesale trade was at the 

same 1.7 percent a year during that period of time. 

The real value added in plastic manufacturing industry moved 

3.1 percent a year from 1980 to 2002, which means we were consistently getting more efficient in what we do. The value of the 

shipments grew by 2.9 percent. 

The current situation, the U.S. plastics industry has amassed a 

$14 billion trade deficit in 2002 with more than half of that shortfall coming from China. This data was gathered by Society in Plastics Industry. 

This report goes on and goes a little deeper and where typical reports from the government only show actual products that are imported, the plastics report goes deeper and says, okay, a car’s coming into the U.S. and it has plastic bumpers and plastic parts in 

it, and it was really staggering what happens. Actually, in NAFTA 

time period we grew. You know why? Because we’re not labor intensive. The Mexican economy did not have a way to manipulate 

their currency or raw materials so the industry grew during that 

period. There are several case studies that I have listed in my written statement. 

96

Just a few weeks ago, on January 20th, the first tariffs or the 

what do they call anti-dumping tariff has been put in retail plastic 

bags, which is the bag like you’d see in a store. Mainly what you’d 

see in a grocery store or a Wal-Mart. 

If you look at my reports, you’ll see that in 2002, the Chinese exported 29 billion bags to the U.S. for a total of $146 million in revenue. Which is $5.04 per thousand bags. 

Do the math there and you divide it out, they sold the bags for 

less than the cost of my raw material. There is an income statement in my presentation. And if the labor was zero and it was produced in China and shipped to America, the cost to get it here is 

sixteen cents a pound. My cost to produce the same product and 

deliver it to my customer is sixteen cents a pound. How they are 

undercutting us right and left? I’m in an industry right now that’s 

relatively healthy, but I can see what’s happening in the future. 

We are investing a lot of our capital into technology and patents 

and aggressively because we don’t want to happen to us what’s 

happened to a lot of the earlier testimony. 

[The statement follows:]

Statement of Jon T. McClure

President and Chief Executive Officer, ISO Poly Films, Inc. 

Executive Summary 

China is the fastest growing contributor to the plastics trade deficit. The U.S. 

plastics producer, in general, is highly efficient and automated. Labor is not a major 

component of cost. In most cases, shipping cost from Asia is greater than all direct 

cost to produce the identical product in the U.S. Thus, it is this author’s opinion 

that the data strongly proves that the U.S. plastic producer would be more than 

healthy and thriving on a level playing field. There is great debate concerning China’s exchange rate with the dollar, direct and non-direct subsidies and the effects 

on U.S. competitiveness with China. Below you will find my case documenting undeniable facts that something wrong is going on in China and it has nothing to do 

with the cost of labor in the United States as it relates to production of plastic related products. 

Both the South Carolina and United States Departments of Commerce tout the 

plastics industry as an example of a high-tech growth industry. This is the case 

today; however, there is an abundance of data showing that our industry is under 

attack. If this is allowed to go unchecked, most small- to medium-size plastic producers will be forced out of business or forced to move offshore. 

ISO Poly Films, Inc. shares the opinion presented by the Society of Plastics Industry (SPI) to the House Ways and Means Committee of October 30, 2003. Further 

exploration into the causes of the deterioration of the U.S. plastics trade surplus resulting in a rapidly increasing plastics trade deficit needs to be understood, especially with regard to the double-digit growth in imported Chinese products. Much 

of the deterioration in the plastics industry trade balance has been with China. 

Where it is due to deleterious domestic and international policies that have coalesced to drive plastics processors out of business or offshore and forced workers into 

unemployment, U.S. policymakers must undertake efforts to change these policies. 

If unfair trade practices are responsible, then the U.S. must use its resources to address and rectify such policies. We want to compete with the Chinese on a fair and 

level playing field both internationally and in our domestic marketplace. 

Plastic Industry Size

(Source: Society of Plastics Industry) 

Overall, the U.S. plastics industry employed approximately 1.4 million workers 

nationwide in 2002. Another 772,000 persons were employed by upstream industries 

that supplied the plastics industry, which brought the employment impact to 2.2 

million—about 2 percent of the U.S. workforce. 

The nearly 20,000 plastics industry establishments operating in 2002 generated 

approximately $310 billion in shipments. Another $83 billion was generated by upstream, supplying industries, bringing the total annual shipments from plastics activity to $393 billion. 

97

Rate of Growth

(Source: Society of Plastics Industry) 

Employment in the Plastics Manufacturing Industry grew 1.7 percent per year between 1980 and 2002. The total of Plastics Manufacturing and Plastics Wholesale 

Trade was the same, at 1.7 percent per year. 

Real value added in the Plastics Manufacturing Industry grew 3.1 percent per 

year from 1980 to 2002. The value of shipments by this industry grew 2.9 percent 

per year. 

The comparative growth rates suggest that productivity in Plastics Manufacturing 

grew about 1.2 percent per year from 1980 to 2002. This is almost equal to the productivity growth rate achieved by manufacturing as a whole. 

As mentioned above, plastics industry growth rates slowed significantly in terms 

of shipments, employment and establishments toward the end of the 1990s and into 

2002. This slowdown mirrors what happened to the rest of manufacturing as a result of various economic factors. 

Over the past 22 years, plastics industry employment, real shipments and real 

value added grew significantly faster than manufacturing as a whole. 

Current Situation

(Source: Society of Plastics Industry) 

The U.S. plastics industry amassed a $14 billion trade deficit in contained plastics 

products in 2002, with more than half the total shortfall attributable to China, according to a new report from the Society of the Plastics Industry, Inc. (SPI). 

Unique to the SPI report is data collected on the import and export of plastics 

that are contained in other products, such as automobiles, appliances, medical devices, computers and phones. Government data on the plastics industry takes into 

account only per se plastics, or those that are included in the plastics chapter of 

the Harmonized Tariff Schedule. The schedule includes some plastics products, but 

does not take into account plastics that are incorporated into other goods, such as 

automobiles and televisions. 

According to the new SPI report, U.S. imports of both contained and per se plastics products grew 43.6 percent between 1997 and 2002, while exports in both categories grew only 10.7 percent in the same time period. 

Data from the report also indicates that the plastics industry’s per se trade surplus (not including contained plastics products) that existed through the 1990s reversed after 2000, with net exports falling 23.3 percent in 2002. 

Examples of Plastics Business Lost to China

(Source: Society of Plastics Industry) 

Case 1: A plastics cutlery and housewares manufacturer lost 14% of his sales val- ued at $4 million to imports from China. The imported products are being sold for 

less than the U.S. manufacturer’s raw material cost alone. The manufacturer says 

he cannot understand how this is possible when the products have to be made then 

shipped halfway around the world. Lower-wage Chinese labor is not the issue because the manufacturing process is quite automated. This manufacturer would like 

to see the U.S. Government do a study to understand how his prices can be so undercut by the Chinese. To retain customers, the manufacturer has had to lower selling prices while absorbing higher prices for raw material that have resulted from 

high natural gas prices in the U.S. This company has taken the right steps to remain competitive and successful among U.S. and European competitors, but it is 

worried about the impact on his business from the increasing imports from China. 

The manufacturer is concerned that his lost profits means less money to invest in 

the company to help ensure its future and the jobs of his employees.

Case 2: A manufacturer makes Class II patented medical devices, which are registered with the FDA, and sells them internationally. He discovered that unauthorized copies of his patented products made in China were being offered for sale in 

Canada. For this manufacturer, the lack of enforcement of Intellectual Property 

Rights is his biggest concern for the long-term viability of his business because he 

is convinced that China is developing the capability to make and copy increasingly 

sophisticated products.

Case 3: A household goods manufacturer found his product for sale in Europe 

packaged to look like it was his, including the Made in the USA label. However, 

the U.S. manufacturer did not make it here or anywhere. It came from China, including the Made in the USA label!

Case 4: A packaging company, which believes that it is THE low cost producer 

in the U.S., lost a $600,000 per month customer to China for whom he had already 

cut his price to the bone.

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Case 5: A medical molder that makes proprietary stints for the medical imaging 

market had his product knocked off overseas for sale in less regulated markets overseas. 

United States Department of Commerce Ruling

(Source: U.S. Dept. of Commerce) 

On January 20, 2004, the Department of Commerce (the Department) announced 

its preliminary determinations in the antidumping duty investigations on imports 

of polyethylene retail carrier bags (PRCBs) from the People’s Republic of China 

(PRC), Malaysia, and Thailand. We have preliminarily found that producers/exporters have sold PRCBs in the U.S. market at less than fair value, with margins ranging from 0.12 percent to 122.88 percent.

Import Statistics: In 2000 PRC exported to the Untied States 20,404,942,000 

bags for $107,326,789 at $5.25 per 1,000 bags, in 2001 PRC exported 23,467,582,000 

bags for $132,696,703 at $5.65 per 1,000 bags, in 2002 PRC exported 29,154,545,000 

bags for $146,959,406 at $5.04 per 1,000 bags. 

On average the approximate weight of 1,000 plastics bags is 12 pounds, which 

would give the average selling price of $.42/lb. This is at or below U.S. raw material 

costs. Apart from subsidies, the Chinese producer cannot compete with the American producer. Below is an actual data showing a hypothetical USA vs. Chinese producer. As you can see without exchange rate and/or other subsidies the Chinese 

could not compete with the U.S. producer. 

See Appendix 

The Chinese importer to the U.S. in now quoting $.60 per pound delivered to the 

U.S.A. on plastic film. This model clearly demonstrates that their cost savings is not 

in labor, but in raw material subsidies, other subsidies, and their exchange rate. For 

argument sake, lets conclude the only way to beat the U.S. producer is through 

some type of subsidies. It is our opinion that if the above model is used, even more 

production will be moved to China in the near term unless something is done to 

counterbalance these subsidies. 

China’s Currency Policy

(Source: Society of Plastics Industry) 

China continues to follow a policy of one-way market interventions to maintain 

its currency at a level that economists estimate is between 15 and 40 percent undervalued. We believe that the artificially undervalued Chinese yuan is having a serious adverse impact on the competitiveness of U.S. manufactured goods and is contributing to a migration of world manufacturing capacity to China, and to an erosion 

of the U.S. manufacturing base. We believe that China is in violation of both its 

IMF and WTO obligations by manipulating its currency for trade advantage. Therefore, we think that the Treasury Department must immediately enter into negotiations with the Chinese government to successfully resolve this matter. Otherwise, 

China’s continued maintenance of an undervalued exchange rate with the U.S. dollar will continue to promote major distortions in trade and investment, to the detriment of American companies and workers, including plastics. 

China’s Industrial Policies and WTO Non-Compliance

(Source: Society of Plastics Industry) 

China has attracted over $400 billion of foreign direct investment (FDI), most of 

it in the last six years. This compares with $1.3 trillion for the U.S., $497 billion 

for the U.K., $482 billion for Belgium-Luxemburg, and $480 billion for Germany. As 

FDI flows to China are now expanding by over $50 billion per year, China will soon 

have accumulated the second largest amount of FDI in the world. 

Experts have concluded that China’s undervalued currency is just one of several 

factors behind its success in attracting massive inflows of FDI, particularly into its 

manufacturing sector. China has pursued industrial policies that have catalyzed its 

growth as a manufacturing powerhouse. The Chinese government has designated a 

number of ‘‘pillar industries,’’ for which it provides preferential benefits for domestic 

development and foreign investment. Manufacturers in China are supported 

through a wide range of national industrial policies, which include: tariffs; limitations on foreign firms’ access to domestic marketing channels; requirements for technology transfer by foreign investors; government selection of partners for major 

international joint ventures; preferential loans from state banks; privileged access 

to listings on national and international stock markets; tax relief; privileged access 

to land; and direct support for R&D from the government. 

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Some of these industrial practices violate China’s WTO obligations. The Administration needs to engage more forcefully with the Chinese government where it violates China’s commitments under the World Trade Organization (WTO). 

Conclusion 

ISO Poly Films, Inc. is stepping up to the challenge by continuing to innovate and 

further increase productivity to compete in the global marketplace. 

We do not fear our global competition; we fear playing in a game that is dominated by large multinational corporations and their lobbyists to set the rules that 

benefit only the shareholders of their corporations. ISO Poly Films, Inc. and the 

U.S. plastics industry could thrive and provide good paying jobs for our citizens and 

a tax base for our communities, however we must have a level playing field. 

It is our opinion that multinational corporations are complicit with the Chinese 

government’s willingness to subsidize their operations in China. How long will it 

take for small- to medium-size businesses to follow suit? Eighty percent of Americans work for small family-owned businesses. These businesses cannot withstand 

the willingness of our government to stand by and allow unfair and subsidized trade 

to overtake the American plastics industry and other manufacturers that are the 

foundation of our country’s economy.

100

Exhibit I 

USA

$ Per #

China

Operation

$ Per #

Net Sales 0.86 0.60 Exchange Rate pick up 30%

Cost Of Materials 0.52 0.32 Cost of Raw Material 40% less 

Subsided Raw Materials

Materials Gross Margin 0.35 0.28

Conversion Costs 

Direct Labor & Overhead 0.05 0.00 Assume Labor at Zero 

Other Direct Costs 0.04 0.02 Assume Director cost at 3%

Assume Equipment Cost the 

Depreciation Expense 0.04 0.04 same as US

Total Conversion Costs 0.13 0.06

Freight Expense 0.03 0.10

Total Conversion &

Frt. Cost 0.16 0.16

Total Cost Of Goods Sold 0.67 0.48

Gross Margin 0.19 0.12

Selling, Gen. & Adm. Expenses 

General & Administrative Exp. 0.04 0.01

Selling Expense 0.03 0.05

SG&A Depreciation 0.00 0.00

Total Sell. Gen. & Admin. Exp. 0.08 0.06

Operating Income or (Loss) 0.11 0.06

Add Back: Depreciation Expense 0.04 0.04

Operating Cash Flow (EBITDA) 0.15 0.10

Chairman ROBINSON. It’s a compelling story and you have a 

sense of pricing predator close to your heels that’s already consumed entire industrial sectors of your colleagues that have testified today or is in the process of so doing. We’re delighted you’re 

staying ahead of the predator for the time, but we certainly do appreciate that it’s gaining on you and something needs to be done 

because there’s only one way it can gain and that’s through unfair 

practices. 

Mr. Dillard. 

101

STATEMENT OF J. RICHARD DILLARD, JR.

DIRECTOR OF PUBLIC AFFAIRS, MILLIKEN & COMPANY, IMMEDIATE

PAST CHAIRMAN, SPARTANBURG AREA CHAMBER OF COMMERCE

AND BOARD MEMBER, SOUTH CAROLINA CHAMBER OF COMMERCE 

Mr. DILLARD. Thank you. It’s a pleasure to testify before you 

today. My name is Richard Dillard and I’m Director of Public Affairs for Milliken & Company, a large privately-held textile and 

chemical company headquartered in Spartanburg, South Carolina. 

We were founded in 1865. We are a Malcolm Baldrige National 

Quality Award winner. We were recently named the sixteenth best 

company to work for in America by Fortune Magazine. And, unfortunately, last year, we announced we would be closing two of our 

modern facilities due to markets being taken by low wage produced 

imports. Thus, we see trade policy is destroying not America’s menial and unwanted jobs, but America’s best jobs. Today Milliken 

still has over forty manufacturing facilities throughout the Southeastern United States. Those jobs along with others in our industry 

are in jeopardy. We also have manufacturing facilities in nine other 

countries to serve their regional markets. We make goods there to 

sell there. 

The testimony I am presenting is the result of a collaboration of 

those in our company who have witnessed and experienced the devastation of unnecessary job loss, as well as those who are fully engaged in monitoring our Washington trade policy. I’ve worked for 

Milliken for twenty-eight years. During that time, I’ve witnessed 

the wealth-creating power of manufacturing jobs, for thousands of 

middle-income families in our company and others in our industry. 

I am not an economist and I can only present to you some startling 

observations that we see as a threat to America’s manufacturing 

base and which are currently decimating our industry. 

For the past ten years, the textile industry has been devastated 

by imports due to dysfunctional and irrational national trade policies. 

During this period, we saw a U.S. trade policy that created 

NAFTA, accepted membership in and governance by the World 

Trade Organization, and enacted a myriad of unilateral preferential trade agreements that include almost 100 countries in 

Sub-Saharan Africa, the Caribbean, and Central America. 

The effect has been the loss of over 900,000 jobs in the domestic 

textile and apparel industry and millions of additional manufacturing jobs in other sectors. You already heard the discouraging 

numbers and statistics today. Regardless, we are told these trade 

agreements are win-win propositions. 

Yesterday, protectionist decried the loss of buggy-whip manufacturers with the onset of the automobile, or they believe the loss of 

jobs was created by the onset of advanced manufacturing technology replacing workers. They were called Ludites. 

Today, we are seeing the loss of jobs not in the buggy-whip sectors, but in every sector exposed to international competition. We 

are losing jobs because of imports and the national policies that encourage them. 

Speaking from my industry’s perspective, you may have arrived 

today in a vehicle plush with velour seats, walked into this building on carpet, probably ate lunch on a table cloth with cloth napkins, in a room with curtains and fabric drapes, and are wearing 

102

fabric from head to toe. In fact, demand for textile products has 

never been greater. And there is no logical reason we should not 

be doing everything we can to provide U.S. jobs and to use Americans to make these products that we use every day and will forever. 

Unfortunately, for our country, the textile and apparel industries 

are only the canary in the mine for all of U.S. manufacturing. It 

is not just basic industries like steel and textiles that are losing 

jobs. Almost without exception we are sustaining losses across the 

board, high tech, low tech, capital intensive, labor intensive. 

The People’s Republic of China is the 800-pound gorilla on today’s trade scene. China has been charged with everything from 

manipulating its currency and utilizing slave labor to improperly 

subsidizing state owned enterprises. These things and many others 

allow China to increase their ability to penetrate our market to the 

detriment of our country and its people. At Milliken, we do not 

blame China. China is merely doing what nations do. They act in 

their own self-interest. The issue before us is why are we not acting in our own national self-interest. 

China with its 1.4 billion people must create one million jobs a 

month to have jobs for new entrants in their employment sector. 

It is a political imperative. According to many observers, without 

this necessary job creation, social and political instability will follow. That is China’s problem, not ours. Surely it’s not a burden 

U.S. manufacturing workers must bear. 

When Henry Ford decided almost a hundred years ago to triple 

the wages of his autoworkers so that they might afford the automobiles they were making, he began the creation of the greatest 

market economy in the world. People that worked could buy things. 

Today whether it’s a running shoe made in China or an automobile made in Mexico, the offshore production worker cannot afford the item they are manufacturing. Consequently, it must be exported to another market. Usually that market is the market of 

first and last resort, the United States. 

Were we to sacrifice all of our manufacturing jobs to China, they 

could theoretically absorb all fourteen million of them in a few 

short years. We would be left with no manufacturing, and China 

would still have the need to create one million jobs a month in perpetuity. We will have become a third world nation. It will be no 

one’s fault but our own. 

At Milliken we know and so does every manufacturer, that we 

can take any fellow human being, whether he be Chinese, Mexican, 

or Irish, and with proper training and equipment, he or she can 

produce as well as anyone else in the world with the same equipment and training. Since technology and capital can cross international boundaries with a click of a computer’s mouse, we know 

that other human beings elsewhere can do what we can do and can 

do it as well as we can do it, only they can do it at a fraction of 

the cost. 

No one is saying that we should build walls around our country 

and that we should stop trade. Trade is good, but only to the extent 

that it benefits us. Each nation must do what is in its own selfinterest. Our political leaders are using free trade as a goal rather 

than as a strategy for economic development. China is fully capable 

103

of becoming the workshop of the world from apparel to advanced 

technology products at the expense of the American worker. 

No one here has the solution. However, the maddening situation 

is that no representative in Washington is looking for one. That is 

our fault, the American people. Not the politicians. Representative 

government is guaranteed by our Constitution. Good government is 

up to us. Thank you for having this hearing. I hope someone is listening. 

[The statement follows:]

Prepared Statement of J. Richard Dillard, Jr.

Director of Public Affairs, Milliken & Company

Immediate Past Chairman, Spartanburg Area Chamber of Commerce, and

Board Member, South Carolina Chamber of Commerce 

It is a pleasure to testify before the U.S.-China Economic and Security Review 

Commission this afternoon. My name is Richard Dillard, and I am Director of Public 

Affairs for Milliken & Company. Milliken is a large privately-held textile and chemical company headquartered in Spartanburg, S.C. and founded in 1865. We are a 

Malcolm Baldrige National Quality Award winner and recently were named the 

16th Best Company in America to work for by FORTUNE Magazine. Unfortunately, 

last year, we announced we would be closing two of our modern facilities due to our 

markets being taken by low wage produced imports. Thus we see U.S. trade policy 

is destroying, not America’s menial and unwanted jobs, but America’s best jobs. 

Today Milliken still has over forty manufacturing facilities throughout the southeastern United States. Those jobs along with others in our industry are in jeopardy. 

We also have manufacturing facilities in nine other countries to serve their regional 

markets. We make goods there to sell there. 

The testimony I am presenting is the result of collaboration with those in our 

company who have witnessed and experienced the devastation of unnecessary job 

loss, as well as those who are fully engaged in monitoring our Washington trade 

policy. I have worked for Milliken for twenty-eight years. During that time I have 

witnessed the wealth-creating power of manufacturing jobs for thousands of middleincome families in our company and others in our industry. I am not an economist 

and can only present to you some startling observations that we see as a threat to 

America’s manufacturing base and which are currently decimating our industry. 

For the past ten years the textile industry has been devastated by imports due 

to dysfunctional and irrational national trade policies. Our massive job losses and 

numerous bankruptcies are not because the workers and executives in our industry 

all of a sudden forgot how to manufacture textiles. Our industries’ devastation is 

caused by major trade policy paradigm shifts that were instituted by a government 

that pays more attention to capital (as a consequence of corporate-related campaign 

contributions) than to labor. From the beginning of time the pendulum has swung 

between labor and capital as to who should benefit from the value-added in a manufactured good. For decades the pendulum has been pegged at the capital end of the 

pendulum’s swing. 

During this period we saw a U.S. trade policy that created NAFTA, accepted 

membership in, and governance by, the World Trade Organization, and enacted a 

myriad of unilateral preferential trade agreements that include almost a hundred 

countries in Sub-Saharan Africa, the Caribbean and Central America. Most of these 

were negotiated and passed in a vain effort to resurrect failed third world economies 

and for other geopolitical reasons. 

The purpose of our Nation’s trade initiatives was not to develop our manufacturing base in the United States, it was otherwise. The effect has been the loss of 

over 900,000 jobs in the domestic textile and apparel industries and millions of additional manufacturing jobs in other sectors. You have already heard the numbers and 

statistics today. Regardless, we are told these trade agreements are ‘‘Win-Win’’ 

propositions. 

When each and every manufacturing sector is being decimated, we are not experiencing ‘‘creative destruction.’’ Under that theory, yesterday’s jobs are replaced with 

other jobs further up the manufacturing and value-added food chain. Yesterday, protectionists decried the loss of buggy-whip manufacturers with the onset of the automobile. Or, they believed the loss of jobs was caused by the onset of advanced manufacturing technology replacing workers—they were called Luddites. 

Today we are seeing the loss of jobs not in the buggy-whip sectors, but in every 

sector exposed to international competition. We are losing jobs, because of imports 

104

and the national policies that encourage them. This includes sectors that are not 

in the buggy-whip categories, but in industries vital to having a diverse manufacturing and employment base, and in products that are used each and every day. 

Speaking from my industry’s perspective, you may have arrived today in a vehicle 

with plush velour seats, walked into this building on a carpet, you’re sitting on upholstered chairs, probably ate lunch on a table cloth with cloth napkins, in a room 

with curtains and drapes, and are wearing fabric, head to toe . . . in fact demand 

for textile products has never been greater . . . and there is no logical reason we 

should not be doing everything we can to provide U.S. jobs and use Americans to 

make products that we use every day and will forever. No one is asking you to protect buggy-whip manufacturers or their workers. 

Multinational corporate foreign direct investment has created massive global overcapacity in every industry. From autos, to t-shirts, to D–RAMs, the world makes 

more than it can consume—the victim in this environment is the unskilled worker 

and his company that chooses to manufacture in the developed countries. 

Unfortunately for our country, the textile and apparel industries were only the 

‘canary in the mine’ for all of U.S. manufacturing. It is not just basic industries like 

steel and textiles that are losing jobs. Almost without exception, we are sustaining 

losses across the board—high tech, low tech, capital intensive, and labor intensive. 

Dozens of manufacturing sectors have been decimated, both durable and non-durable. 

This job loss is neither a regional phenomenon, nor one peculiar to particular 

States—we are losing jobs everywhere to outsourcing, offshoring, and unregulated 

international trade. China is fully capable of becoming the workshop of the world 

from apparel to advanced technology products. 

So it seems the problem is not with individual U.S. manufacturing sectors or even 

with individual States—it is with our national trade and economic policies being decided by the Congress and the Executive Branch in Washington, DC. These policies 

have our country running a current account deficit of one million dollars a minute! 

As a society we are consuming more than we produce, and spending more than we 

earn. This is a prescription for disaster. 

No one in Washington sees the problem, so no one is looking for a solution. After 

all, the safest job in America is an incumbent politician—they only lost a fraction 

of their jobs in the last two years. That is our fault (the American people), not the 

politicians. Representative government is guaranteed by our Constitution. Good government is up to us. 

The People’s Republic of China is the 800-pound gorilla on today’s trade scene. 

China is being charged with everything from manipulating its currency and utilizing 

slave labor to improperly subsidizing state-owned enterprises. These things, and 

many others, allow China to increase their ability to penetrate our market to the 

detriment of our country and its people. At Milliken we do not blame China. China 

is merely doing what nations do—they act in their own self-interest. The issue before us is why we are not acting in our national self-interest? 

China with its 1.4 billion people must create one million jobs a month to have 

jobs for the new entrants into their employment sector. It is a political imperative. 

According to many observers, without this necessary job creation, social and political 

instability would follow. That is China’s problem, not ours. Surely it is not a burden 

the U.S. manufacturing worker must bear. 

However, allowing China to insist on export-led job growth puts manufacturing 

in this country in peril. Under the guise of trade liberalization, our government has 

allowed China to continue on this path and seems willing to let our consumer market decide whether manufacturing stays in this country or not. 

We did not let the market decide whether we would go to the moon—no, we assured it when we created NASA. We did not let the market decide whether we 

would have the greatest housing industry in the world—no, we gave mortgage interest tax deductions and assured it. Nor did we let the market decide whether we 

would be able to feed ourselves and a good part of the world—no we subsidized our 

agriculture. 

When Henry Ford decided almost a hundred years ago to triple the wages of his 

autoworkers so that they might afford the automobiles they were making, he began 

the creation of the greatest market economy in the world. People that worked could 

buy things. They might even make enough to buy things that they did not need for 

their survival. This is called discretionary income. There is precious little discretionary income in today’s economy, unless ‘discretionary’ has come to mean ‘buying 

on credit.’ Today being rich is having credit, not wealth. We are frittering our 

wealth away at an alarming rate because we are not creating it among the majority 

of our people. 

105

Today globalization is starting to disintegrate for the simple reason that the people producing the goods cannot afford to buy them. Whether it is a running shoe 

made in China or an automobile made in Mexico, the offshore production worker 

cannot afford the item they are manufacturing. Consequently, it must be exported 

to another market—usually the market of first and last resort is the United States. 

The U.S., after all, had become the greatest consumer market in the world, which 

in earlier more robust times drove the greatest manufacturing base in the world. 

We are now in decline and decay. 

Today, with globalization, no developing country can triple its wages so that its 

workers can become consumers. Name-brand marketers, retailers, and offshore producers will leave and go to another low-wage developing country flavor-of-the-month 

in a nanosecond. 

Last year, the Dominican Republic lowered its minimum wage from $150 a month, to $100 a month—just so that they could remain in the hemispheric apparel 

manufacturing business. This is called the race to the bottom. Examples abound. 

Mexico is losing jobs to China too. Their wages are already too high to compete. The 

fifty or sixty countries who gain from textile and apparel exports today, will be reduced to five or ten tomorrow. Devastation of entire national economies will result. 

There will be no more Henry Fords tripling their workers wages so that they can 

become consumers. 

The United States, a first world country with naı ̈ve notions of global trade, is 

hemorrhaging excellent jobs at an alarming rate. However, the jobs we are creating 

do not pay as well, nor do they provide retirement and health care plans (the Clinton Administration created 23 million jobs in eight years, but not one net new job 

was created in an industry subject to international competition). As a result, we are 

not creating jobs in industries subject to international competition—namely manufacturing. There are no service economies with a quarter of a billion people who can 

maintain the role as ‘sole remaining superpower.’

Were we to sacrifice all of our manufacturing jobs to China, they could theoretically absorb all 14,000,000 of them in a few short years. We would be left with no 

manufacturing, and China would still have their need to create a million jobs a 

month in perpetuity. We will have become a third world nation. It will be no ones 

fault but our own. 

Our problem rests with our elected officials. Our Constitution (through the genius 

of our Founding Fathers) gives the power to Congress (that branch of government 

created and designed to be closest to the people) to ‘regulate foreign commerce’ [Article I, Section 8, Clauses 1 & 3]. The people, through the election process, would 

guide Congress in this endeavor. In theory, our Founding Fathers felt the evil to 

be remedied was the king trading away the riches of the realm for purposes other 

than the good of the people. 

Unfortunately for us, our children, and grandchildren, thirty years ago Congress 

started delegating their constitutional prerogative to the Executive Branch (the 

king) with Fast Track and Trade Promotion Authority (TPA). During that period 

this Nation went from the largest creditor nation in the world, to its largest debtor 

nation. Now our foreign debt is so great the value of our dollar is crashing and foreigners are taking ownership of our land, companies and Treasury bonds. Interest 

rates will start to rise as a consequence of our lenders’ increased risk, and the last 

bubble will burst—the debt bubble. 

American triumphalism and hubris are also to blame. The notion of being the ‘sole 

remaining superpower’ has gone to our policymakers’ heads. There is this notion 

that the American working man and woman can outproduce anyone in the world. 

That somehow we are either genetically predisposed, or are preordained by God, to 

maintain this lofty role. At Milliken we harbor no such illusions. 

At Milliken we know, and so does every manufacturer—that we can take any fellow human being (whether he or she is Chinese, Mexican, or Irish) and with the 

proper training and equipment, he or she can produce as well as anyone else in the 

world with the same equipment and training. Since technology and capital can cross 

international boundaries with the click of a computer’s mouse, we know that other 

human beings elsewhere can do what we can do, and as well as we can do it—only 

they can do it at a fraction of the cost. 

We also know there is very little made in America that cannot be made cheaper 

elsewhere. China has 1.4 billion human beings. Tens of millions of them are disciplined, adequately educated, and willing and able to work for rock bottom wages 

that cannot be matched in the West for good and sufficient reasons. If India, China, 

Cambodia, and Vietnam only train a fraction of their people, they can take every 

worthwhile job in this country. There are after all, well over two billion people in 

the world that live on two to three dollars a day. We either decide to protect what 

we have, or reconcile ourselves (and our children and grandchildren) to losing it. 

106

It is imperative that we protect our jobs, the manufacturing base, and our middle 

class, or we will become a nation divided. We will have those who have a college 

degree of some kind (about one-third of our population), and we will have those that 

do not have advanced degrees. It is incredible that Washington, in a democratic republic, seems willing to create an underclass of the two-thirds of the American 

workforce that are classified as unskilled workers. One must remember that free 

trade pits the unskilled workers of one nation against all the unskilled workers in 

the rest of the world. The U.S. ‘unskilled’ worker cannot win that competition. We 

are a first world nation and there is no going back without social and economic 

chaos. We will remain a first world nation only so long as we are willing to keep 

and defend it. 

At Milliken we know this Nation became great by the sacrifice, blood, sweat and 

tears of many earlier generations of Americans. We believed in independence, not 

interdependence; managed and regulated trade, not free trade; in sacrifice now for 

future rewards, not instant gratification on credit. We believed in the importance 

of creating a stable middle class. Great men, not financiers, decided our Nation’s 

future course. 

The middle class is a buffer between the poor and the rich—something no third 

world nation has. Our economy, at one time, sustained a $65,000 a year autoworker 

that could support his family, buy a house and a car, and could even pay to send 

his kids to college (and if his wife would agree, might even buy a mountain cabin). 

He did this with a high school degree (you will recall that two-thirds of our workforce has less than a college degree of any kind. This has not changed in half a century which indicates that this will not necessarily change tomorrow or in our lifetimes). We either find, create, or preserve jobs that can provide a middle class income for the majority of America with less than a college degree or, as my daughters 

would say, ‘‘This Nation is toast.’’

We are not better off when major automakers went from being the largest domestic employers in America to being the largest domestic employers in Mexico. WalMart, with 1.4 million workers is now our largest domestic employer. This is an example of what happens if you take the needs of the consumer—rather than the 

needs of the Nation—to its absurd conclusion. 

No one is saying that we should build walls around our country and that we stop 

trade. Trade is good, but only to the extent that it benefits us. Each nation must 

do what is in its own self-interest. If the purpose of our economy is to enrich our 

people and to give stability to our society, then a radical shift in course is warranted. We, and our market, have become a playground for multinational corporations of suspect national loyalties. Our political leaders are using free trade as a 

goal, rather than as a strategy for economic development. The politicians are owned 

by the multinationals that have not generated net employment growth in this country in decades. China is only their low-wage flavor at the moment. China is a symptom of our national problem, not the cause. 

There are other options available to be studied. Warren Buffett has one whereby 

we could only import goods to the extent that we export goods. Buffett, who is buying foreign currencies for the first time in his life, knows that we cannot sustain 

half trillion dollar annual current account deficits. He says you only buy foreign currencies when you think yours will collapse. 

Sir James Goldsmith suggested that the United States should invite any company 

that wished to sell goods here, to become a corporate citizen of America. The company could bring its capital, its technology, build U.S. facilities, hire Americans at 

American wages, pay U.S. taxes and compete on the only level playing field that 

exists—that which exists among the several States, the largest market in the world. 

Their level playing field would have the same exchange rate; the same environmental law; the same labor law; the same safety regulations; and, the same taxes 

and social welfare safety net for its workers. To think that we can create a level 

playing field on a global scale is Utopian at best and absurd at worst. 

No one here has the solution. However the maddening situation is that no Representative in Washington is looking for one. Thank you for having this hearing. I 

hope someone is listening.

Chairman ROBINSON. We are listening and I agree that our political leaders tend to look at free trade as a goal and not a strategy. 

I think that particularly resonates among the Commissioners. With 

that, we’d like to take advantage of the question period at this 

stage and, in that respect; I’d like to move first to the Co-Chairman 

of today’s hearing, Commissioner Becker. And we’d like to also stay 

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disciplined, if we may, at the five minute rule as we are still a little 

bit behind and we’d like to move through, if we could. 

Panel III: Discussion, Questions and Answers 

Co-Chair BECKER. In addition to the two possible solutions that 

you mentioned in your written testimony here, Warren Buffet said 

that we should only import goods to the extent that we export 

goods, and Sir James Goldsmith suggested that the United States 

should invite any company that wished to sell goods here to become 

a corporate citizen, bring its capital, its technology, its expertise, 

hire Americans, build plants in America, hire American workers, 

and you don’t have an exchange difficulty or anything else. You 

quoted two people. Are these suggestions from yourself? This is 

what you projected yourself? 

Mr. DILLARD. Certainly, these are parts of what we would call 

managed trade philosophies. 

Co-Chair BECKER. I was going through the ATMI, that’s an acronym I had to learn rather recently, in which they suggested rather 

strongly as a matter of fact in their written material that Congress 

must negotiate effective and comprehensive trade laws, new ones, 

with all of our trading partners. And absent that, if they can’t do 

that, then stringent quotas have to be applied. Is this something 

that you would agree with? 

Mr. DILLARD. Yes, sir. 

Co-Chair BECKER. You would agree with that? 

Mr. DILLARD. Yes, sir. 

Co-Chair BECKER. I——

Mr. DILLARD. We see the problem from our perspective with the 

quotas is that as long as they can ship as much as they want to 

us with no restrictions, at the prices that they can produce it, that 

it will devastate certainly the industry that I’m in. You probably 

heard some of that this morning from the other panel. 

Co-Chair BECKER. Many other people believe that too. I was just 

wondering where Milliken came down——

Mr. DILLARD. Yes, sir. 

Co-Chair BECKER. —on this. When you were talking about China 

being the 800-pound gorilla; in South Carolina, Milliken is the 800-

pound gorilla when it comes to textiles. There’s another recommendation that they made at the ATMI was that we stringently 

reject—what they call the fatally flawed CAFTA agreement and 

that we be very concerned with trans-national shipments into any 

trade, any country in which we have trade relationship with, which 

would be virtually everybody. And if we included FTAA, it will include the whole Western Hemisphere that would come into this. 

Are these causes for concern with you or do you——

Mr. DILLARD. Yes, sir. Yes, sir. 

Co-Chair BECKER. —subscribe to this yourself? 

Mr. DILLARD. Yes, sir. CAFTA, any extension of or creation of 

any more NAFTA type agreements in which we’re thrown into 

other economies that are at a significantly lower standard of living, 

at least from where I sit, and, again, I say I’m not an economist, 

but as I see it, we subject ourselves to a harmonization of our wage 

rates in this country when we’re thrown into economies with a 

lower standard of living than we have. Certainly the effect would 

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be a harmonization whereby they come up, but at the same time 

we’re going to be lowering our standard of living. 

Co-Chair BECKER. Well, that’s consistent with other recommendations that we have. I just wanted to see where you all fell. 

Lastly, and you may have heard me ask this question of the Nucor 

representative about our trade laws, including our safeguard provisions, are now on the table for negotiations with other countries 

through the USTR through the WTO and if this gives you pause 

or concern with the United States at least bargaining, willingness 

to bargain our trade laws, how do you feel about that? 

Mr. DILLARD. Well, I think the conversation previously in which 

you said that . . . I recall you talking about the WTO coming into 

play and putting our trade laws intended to benefit us in jeopardy 

through that body is a tremendous concern for us. We also agree 

that the safeguards for China that were put in place as a tenant 

of them joining the World Trade Organization, have to be preserved because severe market disruption, at least in the business 

that we’re in, will result, and we’ll see a complete wiping out of our 

domestic textile industry if those safeguards are not used. 

Co-Chair BECKER. And lastly, if you have any suggestions, any 

ideas, that at least haven’t been brought forward up to this point, 

concerning the termination of the multi-fiber agreement at the end 

of this year, December 31st, if there’s a way to preserve that or any 

suggestions or ideas you have in that regard. 

Mr. DILLARD. I don’t know that I’m prepared to present any additional—I wasn’t here for the morning sessions, so to provide any 

input on that, other than it should go forward and that in addition 

I don’t know if it was brought up this morning. But certainly we 

feel that we should continue a strengthening of our Buy American 

laws for our defense system. We should certainly even extend that 

to Buy American for the Department of Homeland Security. 

Co-Chair BECKER. Let me rephrase that a little bit. How disastrous would it be for Milliken if the multi-fiber agreement is allowed to terminate at the end of this year? 

Mr. DILLARD. With all due respect, Milliken being a privatelyheld company, I would prefer to not speak specifically on those 

issues, as far as direct impact on Milliken. 

Co-Chair BECKER. Fair enough. Does anyone else have any 

thoughts on any of these points? 

Mr. MCCLURE. What I would do about the WTO? 

Co-Chair BECKER. Pardon? 

Mr. MCCLURE. Suggestion on what I would do about the WTO? 

Co-Chair BECKER. I’m saying either one of the . . . Mr. 

McClure——

Mr. MCCLURE. I would suggest for us to put the sovereignty in 

our Nation under the third world and have the courts (inaudible). 

And we should not have to take a negotiation from anyone. Remedies. We talked about the dumping lawsuit. A group of about ten, 

twelve of our industry went and did this, companies that banned 

together, and it took two million dollars just to find a lawyer and 

another two million to take it through. So it’s very expensive, backwards. If I was breaking into your house, I’d call the Sheriff, the 

Sheriff would come. I caught you; I’d hold you there with my gun 

and I’d say, ‘‘He broke into my house. Arrest him.’’ They’d arrest 

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him. They’d take him to jail. I wouldn’t have to hire a prosecutor. 

They’d file the case; you’ve got a case. Broke into his house, put 

him in jail. It’s that simple. That’s the way America used to work. 

Why doesn’t it work that way in trade? 

Co-Chair BECKER. Exactly and——

Ms. DEWITT. Excuse me, Mr. Chairman, I think it’s evidenced to 

all of us that we have come to the point where organized labor can 

sit down with Milliken and sit down with the business community 

and say that we’re not happy with the trade agreements that we 

have. We see the impact on our workers; we see the impact on our 

companies and we feel from the South Carolina AFL–CIO perspective that these trade agreements need to all be reexamined; we 

need to look at them closely; we need new trade agreements that 

will be fair trade, so that we can address the concerns that we all 

have. I lobby these halls and have done so probably twenty-five 

years, and I think in the last couple of years is the first time that 

we have been able to come together to say things are not working, 

these trade agreements are not working, so I think that’s evidence 

and that we need new trade agreements and we need to make sure 

they are fair trade agreements. So I think that’s the statement 

that’s coming from every community. 

Mr. DILLARD. Commissioner Becker, if I could qualify my statement. I didn’t mean to say I didn’t want to answer your question. 

But as far as Milliken specific, I would say that certainly what impacts one company in our industry impacts all companies in our industry. And we would certainly oppose any weakening of any laws 

that prevent the U.S. Government from counteracting unfair trade 

practices that would have a devastating impact on our industry. 

Chairman ROBINSON. Commissioner D’Amato, Vice Chairman 

D’Amato. 

Vice Chairman D’AMATO. Thank you very much for your testimony, all three of you. I do have a quick question for Ms. DeWitt 

and I just wonder if you have . . . if you compile data in South Carolina, specific data, as to the impact of the China trade on South 

Carolina, both from the point of view of the impact as a result of 

import competition and the impact as a result of outsourcing. It 

would be useful for us to have that specific data if you’ve developed 

that. 

Ms. DEWITT. I’m sorry; I don’t have it with me. 

Vice Chairman D’AMATO. Not with you, but if you developed it, 

we’d like to get it. 

Ms. DEWITT. Yes, I’m sure I can get that for you and I’m going 

to . . . perhaps Mr. Raynor may have had that this morning when 

he testified. But I will, and I’m sure that maybe David can follow 

up with that, and I will try to get that for you. 

Vice Chairman D’AMATO. Yes, and in addition, we’d like to know 

how the situation in regard to that impact changed after it got into 

the WTO. In other words, trying to get an assessment as to what 

the impact of their membership did in the WTO in terms of the 

overall numbers. 

Ms. DEWITT. And let me say that I have had a study done by 

the State Workforce Investment Board and as most of you know 

that when there is a plant closing or downsizing, the Warren Act, 

you know, leaves a trace that you can find those workers. UnfortuVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00117 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
110

nately, if it’s fifty workers or less, or one-third of the workforce, 

those workers fall below a radar screen, so I’ve had the State 

Workforce Investment Board compile a list. I don’t have it with me, 

but I’ll probably be able to get that data. And what they did for 

us was look at those that have put in for trade—the TAA and if 

they have been approved and so we have staggering numbers of 

small businesses of fifty or less. I was amazed at the number of 

small businesses, so I will follow up on that. We are researching 

it from the State Workforce Investment Board. 

Vice Chairman D’AMATO. Thank you. 

Chairman ROBINSON. Thank you. Commissioner Dreyer. 

Commissioner DREYER. I was interested in the statement that no 

representative in Washington seems to be looking for a solution, 

since certainly your Senators were very passionate this morning on 

solutions. And I am just wondering are you feeling you’re up 

against perhaps other States with other concerns whose representatives have other interests, such as selling as much wheat as they 

can? Let’s say, they’re from North Dakota or somewhere like that. 

Is that the problem? Does one interest group cancel out another? 

Ms. DeWitt, you said you lobbied the halls here for some time. I 

assume someone is lobbying the offices, working the halls in the 

Capitol. What sort of feedback are you getting? Is it that other 

States’ interests that are crowding yours out or what? That’s a 

question for everybody. 

Mr. DILLARD. I would say I would qualify that statement that I 

made with, ‘‘until today,’’ certainly you are seeking a solution here 

and we appreciate that. In terms of representatives in Washington 

that don’t seem to be looking for the solution, the numbers seem 

to speak for themselves. We continue to hear of the tremendous 

loss of jobs across the board in all of manufacturing. However, 

there doesn’t seem to be a serious effort to remedy the situation 

with any real long-term solutions. We hear a lot of talk about it, 

but still as we talk, here in South Carolina we saw the loss of 

41,000 jobs last year. We see looming on the horizon in 2005 as all 

quotas come off on Chinese products, textile and apparel coming 

into the U.S., the possibility of wiping out our entire industry here 

in this country, 680,000 jobs wiped out simply because, at this 

point, we haven’t seen any clear indication that anything is going 

to be done about that. The fact that we allowed China to come into 

the WTO at the very end of the ten year phase-in of the agreement 

and, in doing that, didn’t give them the same ten years of phasein that all the other countries that were part of that agreement 

had to abide by, again says that we’re not looking out after our own 

self interests. 

Commissioner DREYER. Is it that your representatives are not 

looking out for your self-interests? That’s what I’m trying to get at. 

You were describing a situation here in which something is very 

clearly wrong with the system and this reminds me by analogy of 

something someone has just gone out and killed somebody and 

there’s no question that this individual did it, and so we then get 

into an excuse mentality: ‘‘Well, he watched too much television 

when he was a child or he ate too many Twinkies,’’ and so it isn’t 

the perpetrator who is to blame, it’s the system. I hear you saying 

111

it’s the system, but the system here has points you can work on 

and that’s what I’m trying to get to. 

Mr. DILLARD. Exactly. And certainly, the two champions that you 

heard from, I didn’t hear their remarks, but I happen to know they 

are champions of the issue we’re discussing today. Senator Hollings 

and Senator Graham are certainly seeking solutions. There are 

representatives, and I’m not going to get into today specifics and 

names of those, but I will say that in a State that has been . . . that 

has had textiles, the industry that I’m in, as a backbone almost 

since its beginning, for the representatives of that State, all of 

them, not to be tap dancing on the Administration’s desk saying, 

‘‘We’ve got a problem here; we’re losing our workforce in South 

Carolina,’’ that tells me that they all are not seeking solutions. And 

they should be doing that because we’re seeing the erosion of our 

entire manufacturing base, not just textiles, and we’re seeing it at 

a rapid pace and the problem is off-shoring where we create policies that encourage companies—if they can’t compete with imports 

coming in, then to relocate operations over in China, and produce 

those goods really cheaply and then ship them back to the U.S. at 

a fraction of what we can produce them for. 

Commissioner DREYER. And there’s no hope of voting these people out of office if they’re not——

Mr. DILLARD. Well, there’s hope. 

Ms. DEWITT. And I would like to address that as well. I’m so 

glad that Mr. Dillard spoke to the testimony you had this morning 

because surely we have had some champions on this issue in South 

Carolina and it may be indicative of the State and the particular 

industry. And I think it’s only recently, and I think you’ll agree 

with me on this, Mr. McClure and Mr. Dillard, that we had very 

strong support for fighting the trade issue in past . . . well, in ’92. 

However, it’s been recently, more recently and in recent votes that 

we’ve seen a more, and I’m just going to say more partisan trend, 

a more partisan trend. I can say that. You folks may not be able 

to say that. I can say that. It’s more of a partisan trend in our 

State with some of our elected officials and I don’t believe they are 

actually voting their conscience. I see that in the Statehouse everyday. They come up to me, ‘‘I really would like to help you,’’ but I 

know how they’re going to vote on an issue. And a lot of these 

issues do impact the working issues of our State. I wish that we 

could work together on all issues as we are working on the trade 

issue. But we have really had some champions on this issue in 

South Carolina. And I see it becoming more and more of a partisan 

issue. 

Chairman ROBINSON. If I may, Commissioner Bartholomew. 

Commissioner BARTHOLOMEW. Just actually one quick statement. 

I thank all of our witnesses for appearing today and also for the 

work that they are doing in their communities. I wasn’t going to 

make this statement, but I’m going to take Commissioner Dreyer’s 

questions, and I think that one of the answers is that the policy 

is being shaped by the campaign contributions of multi-national 

corporations and special interests and their interests are not surprisingly their own. We shouldn’t expect anything different. But 

their interest is not necessarily the national interest or in the interest of the communities that you all are working in. I think that 

112

it’s really important and would implore that people hold their elected leaders accountable for the differences between what they say 

and how they pass their votes. 

Mr. MCCLURE. I’ll add something to your comment. I serve on 

two industry boards and this topic has become very hot. One industry board more than the other, but they’re both plastic industry 

boards. Typically these boards have larger multi-national type company representatives on the board. One trade group, fifty percent 

of the dues come from multi-national companies. The other one, it’s 

a third, a third, a third, so we have processors, equipment manufacturers and suppliers of the resin, which the resin supplies are 

typically the multi-national corporations. In a recent meeting, and 

I won’t specifically say who, we were discussing how to come out 

with a trade policy. One of the multi-national representatives said, 

and I quote, ‘‘I don’t give a damn about China. I’ve got a plant in 

China. I can’t compete here; I’ll move to China.’’ So that’s the attitude we are up against. Now the Chinese they know how to work 

the system and whether it’s the Presidential campaign here, he’s 

right on track. He’s right on the economy. That’s the leader who 

I’m talking about, he’s right on the economy. And the new economy 

has all the answers. Our Governor in South Carolina is very good 

in my opinion. I think he is doing a super job, people may disagree 

with me, but he talks about the new economy. Well, that’s fine, 

that’s a generation away. Right now, we’re going broke. This State 

is taking in approximately $900 million less in tax revenue this 

year than three years ago. If that’s not telling you something’s bad 

wrong that 65,000 people have lost their jobs, and I’m just saying 

I’m on the list of the next industry that China’s going to take . . . 

knock off, but it’s not just China. It’s going to be wherever. 

Chairman ROBINSON. Thank you. Commissioner Reinsch. 

Commissioner REINSCH. Well, having missed your testimony, for 

which I apologize, I had a conference call, it wouldn’t be prudent 

to ask questions, and I was going to pass, but I did want to make 

one comment based on something that Commissioner Dreyer said. 

I can’t resist. The fact that you haven’t won doesn’t mean that it’s 

a flawed system. It could just mean you haven’t won. And I think 

one of the things that I’m thinking about here is that this is a 

democratic system; Congress votes on these things. These issues do 

come before Congress and before the legislature, and I know everybody does the best they can to make sure their side prevails. I 

think there’s no question that your side hasn’t prevailed. We got 

into extended discussions on that this morning. But I wouldn’t 

agree that that means there’s something wrong with the system. 

What it means is you don’t have enough votes. And, there’s some 

things you can do to get some more votes, but I wouldn’t argue that 

it’s a systemic fault. Thank you, Mr. Chairman. 

Chairman ROBINSON. Thank you. Commissioner Mulloy. 

Commissioner MULLOY. Mr. Dillard, your testimony was a really 

nice piece of work. You identified one flaw in the system, fast 

track. We began doing this thirty years ago. The Congress gives 

the President the right to negotiate these trade agreements. And 

Congress only gets an up or down vote. They can’t change them in 

any way. What this means—remember the fellow that came in here 

and talked about captive before—the little provision that was stuck 

113

in there. Somebody worked on somebody in the Administration to 

stick that in the agreement and all the other people who will have 

something they want in that agreement, like Citibank, if they want 

services, they lobby to get the agreement regardless of the fact of 

what it’s doing to your textile guys, and there’s no way for Congress, they can only vote up or down. They can’t amend it. This is 

a new phenomenon. It went into law thirty years ago and as you 

graphically point out, at the time this went into law, we weren’t 

running these massive trade deficit. Thirty years later, we got a 

$500 billion trade deficit. That’s one thing. Secondly, well, how did 

the European Union, they started with six countries and now they 

have fifteen. But when they were going to bring in countries they 

started with France, Germany, and then when they brought in Portugal, they didn’t bring them in immediately. They phased them in 

because they said you, Portugal, have a lower standard of living; 

they put restrictions. Portugal had to update its trade laws, had to 

increase its wages, and phased them in so it wasn’t such a shock 

to the system. Look what we’ve done in this country. We’ve gone 

into a worldwide trading system, globalized, without any kinds of 

protections like that. Nobody has labor laws like we do. Nobody has 

environmental standards. So we’ve thrown this thing wide open for 

a race to the bottom. That is what is going on here. And I’m urging 

you to please work on your Congressmen and Representatives. But 

I think this has to be a debate at the national level and it will only 

come when the people of the country begin to understand what is 

going on and insist that it be changed. And we have to have a national strategy to do it. This isn’t just one little thing. You’ve got 

to have a different perspective. I’m saying that our national interests, our national standard of living, our people, matter, and they 

have to be taking account of how we’re doing the system. And so 

I really appreciate what you’re doing here and your testimony and 

I’m a true believer that this cannot go on; we’ve got to change it. 

I thank you for what you’ve done. You helped me realize that what 

I’ve been thinking and how this was working and my observations 

over the number of years have a foundation in reality in what is 

happening to the country at large. Thank you. 

Mr. MCCLURE. When I read about the U.S. China Commission a 

number of years ago and read its first report, I carried the report 

to my Congressman and met him in Washington and sat down. 

‘‘Have you ever heard of this report?’’ And he said, ‘‘No.’’ And I 

said, ‘‘You better read it.’’ ‘‘You better read it.’’ And he has and I 

think he’s a strong supporter of workers in this State. I just wish 

we could get more like that. 

Commissioner MULLOY. Another thing you mentioned in your 

testimony was you read a book called Sir James Goldsmith’s, The 

Trap. What he said is you can have free trade between the United 

States and you; you can have free trade between the U.S. and Canada. Because there are similar standards of living and similar environmental, other things. He said what you have to do, you can’t 

throw it into a WTO where everybody’s equal. You’ve got to bring 

in these other people more gradually, the same way the Europeans 

brought in the countries like Portugal that didn’t fit in at first. 

They made them step up. And we’ve done exactly the opposite of 

what Europeans did when they were creating the European Union 

114

when we created the WTO. There is an outline that he says how 

to work this thing. I don’t know if it’s right or wrong——

Mr. DILLARD. Right. 

Commissioner MULLOY. —but at least it’s worth thinking about. 

Mr. DILLARD. It is and certainly ‘‘The Trap,’’ the book, was written many years ago, I guess. I think Sir James Goldsmith was a 

member of the European Parliament. 

Commissioner MULLOY. European Parliament? 

Mr. DILLARD. He was previously a businessman. The interesting 

thing that I would point out is that Roger Milliken brought the 

book to my attention about ten years ago in 1994, I guess it was. 

He sent it to a number of people in our company just urging them 

to read it. Sir James provided copies to everyone because he believed, as Mr. Milliken did, in similar philosophies, I guess. And I 

have the letter that Mr. Milliken sent with it in ’94, but it tells me 

that he was thinking about this back then and urged us to read 

the first section on the General Agreement on Tariffs and Trade, 

GATT. And I was just scanning through that last night just for the 

heck of it. And it’s amazing, really amazing, what Sir James Goldsmith predicts will happen, which is happening right now, and at 

that time the Internet was just really beginning, but he talks about 

the transfer of capital that will cause severe worldwide economic 

disruption because you can transfer at the stroke of a button at 

that time, it didn’t talk of a computer mouse, but he speaks of what 

will happen when you are able to take your what we would call 

comparative advantage and then move labor and manufacturing to 

another country and then ship goods back to our market and, 

therefore, giving that country absolute advantage rather than comparative advantage. 

Commissioner MULLOY. Right, but let me just . . . I wanted to ask 

one last thing. I think you all, and Mr. Dillard in particular, you 

said China’s not an enemy and I agree with that. They have a national strategy. They had 150 years of being down. They were once 

a great civilization and they fell down and had a very bad period. 

They want to . . . they’re hungry. They want to assume and they 

have a national strategy of how to do it. And we think it nothing 

that it can’t happen to us; we can’t run down the hill. But if you 

really watch what is going on in economic statistics, what really is 

happening is we are going down the hill. So, I’m not an enemy of 

China. I just think we ought to be looking out for ourselves and figuring out how to do it. 

Mr. MCCLURE. Well, I didn’t say they weren’t the enemy. I said 

they weren’t the problem. 

Commissioner MULLOY. Yes. 

Mr. DILLARD. I said they were an enemy as a competitor. 

Chairman ROBINSON. Well, unfortunately, our time for this panel 

has concluded. It’s a shame because there’s so much more that we 

would value going over with you, but we thank you very much for 

your participation and I think you can tell by the animated nature 

of the questions that this was not falling on deaf ears. 

Mr. DILLARD. Can I make one last point? 

Chairman ROBINSON. Please. 

Mr. DILLARD. Is it out of order? 

Chairman ROBINSON. No. 

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Mr. DILLARD. Something that kind of popped into my head that 

I had seen and you received information from this gentleman, 

Charles McMillion, some data about South Carolina. 

Commissioner MULLOY. Yes. 

Mr. DILLARD. But Charles is an economist and he uses the U.S. 

Bureau of Labor Statistics for his information, but he pointed out 

to me that in a normal recovery, economic recovery, which we say 

we’re in, twenty-five months into that normal economic recovery, 

that we should have added six percent jobs during that period of 

time from the bottom trough of that recovery, which would equate 

to almost eight million jobs, 7.8, I think, million jobs. Instead in 

that period of time we’ve lost an additional million jobs. So, it certainly proves something is out of kilter in terms of the off-shoring 

problem. 

PANEL IV: COMMUNITY IMPACT 

Chairman ROBINSON. We certainly agree that that’s the case and 

we thank you all again and we would ask if our fourth panel panelists would come forward on community impact. Again, with apologies for the delay in your starting time. Well, as you have already 

been very indulgent of us and we, again, apologize for the delay in 

getting to our fourth panel on community impact. We would like 

to begin if you’re willing. In this panel we have with us, Jack 

Hutchison who is economic development coordinator for the 

Georgetown County Economic Development Commission. Evans 

Tindal, director of operation of Cheraw Yarns Mill, and State Senator, Larry Martin. And Senator, I think your position indicates 

that we would like very much to hear from you first. 

STATEMENT OF LARRY MARTIN

A STATE SENATOR FROM THE STATE OF SOUTH CAROLINA 

Senator MARTIN. Well, thank you very much. That certainly 

wasn’t necessary, but I’m very honored and, Mr. Chairman, I appreciate it so much. One thing I’ve been thinking about as I observe the Commission today is how hard the job that you have to 

sit and listen, to be attentive, and I can tell you that I’ve observed 

and participated in a lot of public hearings in my time and you 

have done that very, very well—listening and watching and being 

attentive and asking very, very good questions. On behalf of the 

people of South Carolina, we appreciate you being here today. I 

think I’m the only seated Member of the legislature that’s actually 

testifying, but Senator Graham was a Member of the legislature 

back a number of years ago before he got elected to U.S. Congress 

and did a good job, and I actually served in the Statehouse. Not 

with him, but served here. A matter of fact, in this room was the 

first hearing that I attended a number of years ago. But in the 25 

years or so that I’ve been associated with State government—I’m 

one of those folks that Ms. Dewitt has lobbied over the years here 

in Columbia—I’ve never seen anything like what’s going on in our 

communities. When we talk about community impact and how it’s 

affected us and I’m sure that my fellow presenters here from the 

low country—I’m from the up country up near Pickens and near 

Clemson, for those of you that follow the Tigers when we play football, not so good basketball, but we’re coming, we’ll get there. In 

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any event, from one end of the State to the other, South Carolina 

has had and enjoyed a very diversified economy. We’re talking a lot 

about textiles. I’ve worked all my adult life in the textile industry. 

When I’m not participating in public service, that’s where I earn 

my livelihood. But I can tell you, Mr. Chairman, Members of the 

Commission, that there is a very diverse economy in South Carolina or has been and it has been primarily in the manufacturing 

business. When you hear reference to the new economy, we’ve had 

a lot of manufacturing facilities come in from all different parts of 

the world. Literally, from around the world, come into South Carolina and we’ve been a very good place to do business. When Senator Hollings spoke this morning there was mention made about 

the technical college system in South Carolina. That’s something 

that he began back in the early 60’s, 40 years ago, and I can tell 

you that that has been the catalyst on which South Carolina has 

moved forward and has really developed a very diverse economy 

and a high percentage of our workforce, as a result, work in manufacturing. Governor Hollings has spent a lot of time, our general 

assembly has spent a lot of effort in passing legislation, promoting 

legislation, to bring in economic development, to bring in jobs, and 

we’ve had that. The problem is today we’ve seen across the board 

the type of impact. The textile industry has been adversely affected, but so have a number of other businesses. A gentleman 

spoke earlier from Laurens County. He hit the nail on the head. 

He feels like he’s going to be next and he has good reason to believe that, but let me tell you what the result is and the impact 

on our communities. Each job loss in South Carolina is a direct result of a $2,100 loss in revenue for State and local governments. 

We’ve lost 10,000—you’ve heard the job loss, I won’t go through all 

that. But it’s unprecedented for South Carolina, and this is what 

I’m talking about from my experience. I remember the early ’80 recession of ’81, ’82, somewhere along in there, the late 80’s, early 

90’s, and then we had the long run of the 90’s. We’ve never seen 

anything like this where we had back-to-back consecutive years of 

static or less economic activity in terms of general fund revenue 

from one year to the next. We actually lost money and I can tell 

you that it’s impacted us in a variety of ways. I’m sure these gentlemen will talk about how it’s impacted Main Street. We’ve seen 

that in the community I’m from in Pickens. We lost a textile plant 

that had been there for years, the largest employer in that community. We saw the water rates, the sewer rates, go up as a result 

of that large anchor company go under. We saw the local impetus 

behind our United Way effort every year go under. The largest benefactors, the local hospital, go away, and Main Street so adversely 

affected. I can tell you, as I drive across the State going to various 

hearings like your seating here, or go for other reasons and take 

the back roads and see those plants boarded—and it’s not just textile plants because I mentioned earlier the other types of industries 

that have been adversely affected. I can tell you it’s a sad state of 

affairs. It’s had a direct impact on our schools, on our towns, our 

ability to provide water, sewer, that type of thing. It’s had a direct 

impact on our ability as a State to deliver basic services. Our Medicaid, at a time when unemployment goes up, and we’ve seen it go 

up in areas that we never thought possible, and in a time like this 

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when you have a higher unemployment, you have the need to plug 

the basic community services. We don’t have the general fund revenue to do it. Last year the Federal Government bailed us out to 

some degree. They borrowed money to do it. Put off one year what 

we’re going to have to do this year in terms of our State budget 

and I can tell you, we’re having a very difficult time. They mentioned the 350 million dollar deficit. It’s probably more like eight 

or nine hundred million this year just to get us back where we 

ought to be, to fund our basic student costs, to fund our Medicaid 

program, to fund Corrections. You wouldn’t believe what we’ve 

done in Corrections, what we’ve done to mental health, what we’ve 

done to the Department of Juvenile Justice, what we’ve had to do 

in other areas to keep our education funding up and to keep the 

Medicaid program going in South Carolina. The number of State 

Troopers that you don’t have. There are a lot of areas of South 

Carolina’s economy that have been adversely affected and, friends, 

I don’t mind telling you, I don’t see it turning around. That’s where 

this situation is not cyclical anymore; it’s structural as I see it. And 

we’ve got to do something. 

With having said that, you all have asked some great questions. 

I’ve presented a little bit of written testimony to read into the 

record and I can tell you that on behalf of the people that I represent, and I think all the Members of the legislature, we appreciate you being here. It means a lot to us because you’ve been attentive. I think you are going to take the message back to Washington that, ‘‘Look, these folks have got problems down in South 

Carolina.’’ And it’s not just in South Carolina. I think if you go 

across the border in any direction you’ll find the same kind of 

thing. We’ve seen it in the northern part of the State where I’m 

from, getting into northeast Georgia and North Carolina, as well. 

And it’s tough, it really is. So thank you for coming and thank you 

for what you’re going to do in hopefully assisting Congress in acting responsibly on this important issue. Thank you. 

Chairman ROBINSON. Well, thank you. Those are, again, very eloquent remarks. I can tell you we’re . . . we’re going to try to make 

it difficult to ignore our messages. I can tell you it’s not just going 

to be writing it down and sending it out to the airwaves. It’s going 

to be a matter of talking to our Congressional sponsors and working hard to have our findings understood and, most importantly, 

our recommendations and remedial actions taken seriously in 

terms of legislation. Again, this is an action-oriented Commission. 

This is not just another hand wringing or recording operation I can 

assure you. And I think that we share your fear that it’s not cyclical, it’s structural, and that should this trend line continue, as it 

already has broken records, is very worrying indeed. And it is true 

that South Carolina is but a symptom of a national challenge and 

a growing national crisis, but I think it is already a crisis in South 

Carolina and that’s why we think it’s so important to be here because there’s no time for normal remedies here such as waiting for 

two years to find out the outcome of a 201 case or something of 

that kind. That’s of little interest to us. We want something faster, 

we want something more robust, and with that I’d like to turn to 

Mr. Hutchison, please. 

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STATEMENT OF JACK HUTCHISON

ECONOMIC DEVELOPMENT COORDINATOR

GEORGETOWN COUNTY ECONOMIC DEVELOPMENT COMMISSION 

Mr. HUTCHISON. Thank you. I’m Jack Hutchison with the 

Georgetown County Economic Development Commission and I’d 

like to share with the panel today just what the impact has been 

there in Georgetown and Georgetown County. You all heard earlier 

about Georgetown Steel closing up. The impact that that plant has 

had is just one part of the story for the county. We’ve had, over 

the past two years, about 1,200 job losses; in our manufacturing 

workforce of 4,100 people, which equates to about 23 percent of our 

workforce. Now, out of our total workforce, the manufacturing portion of it equates to 22 percent and leaves 78 percent in other areas 

of mostly service. To show you the impact of what the steel mill 

means to the city of Georgetown, they pay 20 percent of the property tax base of the city. That will go away now. Also, prior to 

bankruptcy, the mill had appealed to the State to substantially reduce property and equipment taxable values. We don’t know what, 

if any, the impact is going to be from now on. About 165,000 more 

dollars to the city will be lost from water sales and license sales. 

Of the 78 percent of the remaining workforce, we don’t know how 

that will affect the small businesses. The city could lose license fees 

and other things. It means that the budget of the city of Georgetown is being heavily impacted. The city will be losing about 15 

city jobs and most of those are going to be in public safety, I’m told 

by the city administrator. You’ve got other areas in the county, 

such as Andrews. Due to the steel mill closing down, we had a nail 

plant go out of business. We’ve had one company to move to Costa 

Rica, and one company to move to Mexico. People come up to me 

and they say, ‘‘Why are we getting so many Mexicans coming into 

South Carolina?’’ I said, ‘‘It’s simple.’’ I was told by the company 

that moved to Mexico when they first announced they were going 

to lose some jobs or move some jobs to Mexico I went over to talk 

to the plant manager and I asked him, I said, ‘‘Tony, are you all 

leaving?’’ He said, ‘‘Jack, I’ll tell you, when can get made in Mexico 

for $10 a day for what it’s taken us $10 an hour for here, what do 

you think?’’ And I said, ‘‘I think you’re gone,’’ and so we’ve lost the 

rest of those jobs this year. I was in Wal-Mart in the other night 

with my wife and I was standing there and I got to looking at a 

sign that said, ‘‘In 2002 we raised $117,000 for community 

projects,’’ and then I looked over and it says, ‘‘For 2003 they had 

raised $9,000.’’ I couldn’t believe it; I couldn’t believe the sign, that 

there had been that much impact, but that was from donations 

from people and that sort of thing. Our community United Way is 

way down this year. All aspects of the community have really been 

affected and we’re out there every day trying to come up with solutions. We’ve just finished our yearly planning session and I don’t 

know if we’ve come out with any good solid plans or not because 

they said, ‘‘Well, you need to retrain your people for a higher tech.’’ 

Well, then you look around and they say, they’re moving a lot of 

high tech jobs to India and to other places. So what are you training for? These are some of the questions I think that our Congress 

has to start looking at. Those are just some observations that I 

have and that we’ve been thinking about on the local level. But I 

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appreciate you all giving us this opportunity to express our feelings 

and share with you. 

Chairman ROBINSON. Well, thank you very much. I was just 

sharing with our Vice Chairman the notion of the cascading impact 

of these job losses. I was very impressed that it impacts on charitable donations and the operations of the hospital, sewer, water 

costs. It is a debilitating chain reaction through the community 

that I think you expressed very well and I regret that Georgetown 

has bore the brunt of this. One out of every four jobs is in crisis 

according to your testimony. 

Mr. HUTCHISON. Well, if you could excuse me? 

Chairman ROBINSON. Please. 

Mr. HUTCHISON. The U.S. Chamber, years ago, put out a little 

publication that says what 100 new jobs mean to a community and 

I think it created about 57 other jobs. Whatever 100 you lose, it’s 

going to go the opposite way. 

Chairman ROBINSON. That’s right. 

Mr. HUTCHISON. And that’s the impact. 

Chairman ROBINSON. Well, I think that this has been established 

for a long time and yet how easy it is to ignore it, forget it, be in 

denial about it, and I think official Washington has real problems 

there and I think that if it’s not a systemic problem or flaw, it certainly is a flaw in the way we’re represented right now. In any 

event, I’d like to turn to Mr. Tindal for his testimony. 

STATEMENT OF EVANS TINDAL

DIRECTOR OF OPERATIONS, CHERAW YARNS MILL 

Mr. TINDAL. Thank you, Mr. Chairman. I can’t help but notice 

that I’m the last scheduled speaker today and so I want to tell you 

what an honor it is to be making a keynote address this afternoon. 

I can tell you that I’ve been in attendance for the entire hearing 

today and as much as I was looking forward to coming and testifying I’m about to bust right now and I’m so glad that you did not 

call for a five minute break before my testimony. This is a story 

that I think the Commission needs to hear. I am Evans Tindal and 

I’m from Cheraw, South Carolina and that’s, Cheraw, the origins 

of the word are Native American and so it’s been mispronounced 

many times before, and I’m here today to represent the Greater 

Cheraw Chamber of Commerce Economic Awareness Committee. 

Now, Cheraw is a town of 6,000 located in Chesterfield County in 

the northeast part of the State. And to truly understand the impact 

that China has had and has the potential to have on Cheraw it is 

important to understand our origins and our history. Cheraw is the 

oldest inland community in South Carolina. The first settlers to 

come to the area came in the 1730’s. Like today, its very existence 

was tied to commerce. It was settled because of its importance as 

the highest navigable point on the Great Pee Dee River. Even then 

trade was the key to Cheraw’s economy. Because of this fact, 

Cheraw played a role in the Revolutionary War and was occupied 

in 1779 by British troops under the command of General Cornwallis. We survived this assault and occupation only to be overrun 

and occupied almost a century later in the War Between the States 

by General Sherman. Cheraw persevered and, thankfully, was not 

destroyed after weeks of occupation. The citizens of Cheraw have 

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always had the ability to adapt and survive under the most difficult situations. Now, unfortunately, the assault we face today is 

more subtle, but no less dangerous. Since the middle 1900’s until 

very recent years the town has thrived driven by a strong industrial base. In our small town we have 14 industrial plants including two Fortune 500 companies and this has provided us with a diverse citizenship, a strong community, and a high quality of life. 

However, since 1997 we have lost 716 industrial jobs and witnessed 

the closing of several plants. Now, many of these jobs can be tied 

directly to China and all have been significantly influenced by the 

surge of cheap goods into the American market from the so-called 

People’s Republic of China. The impact of these 716 industrial jobs 

in manufacturing wages alone is over 19 and a half million dollars 

lost annually. Additionally, it has been well established by economists that every manufacturing job supports 1.4 service jobs. We 

have seen tangible evidence of this in Cheraw as our service jobs 

have disappeared taking another 15 and a half million dollars of 

service wages out of the local economy. This combined loss of wages 

of over 35 million dollars has a tremendous impact on a community 

our size. Unemployment in our county in November was 11.1 percent. In addition to loss of wages we have seen an erosion of our 

tax base along with a loss of water and sewer revenues. This totals 

over half a million dollars annually in the town of Cheraw alone. 

Property values, property values have actually decreased in the 

last three years and there are more houses on the market than 

anyone can remember. The citizens of Cheraw have always given 

generously to charities and churches, but now we are seeing the financial realities of unemployment and uncertainty overcome the 

spirit of generosity. In my own church, which was established in 

1768, we have seen our congregation and, likewise our contributions, diminish as members have lost jobs or been forced to move 

to find other employment. The industrial jobs in Cheraw not only 

provide good wages, but also health care benefits. As people are 

stripped of these benefits, the quality of medical care in our community is sure to deteriorate. Now, I feel especially well qualified 

to discuss the impact of China on my community because I’ve been 

personally connected to 60 of the 716 industrial job losses. These 

jobs were lost in my company. I am the Director of Operations for 

Cheraw Yarn Mills, the oldest company in Cheraw. In our 87 years 

we have seen many changes and met many challenges. We survived the Great Depression. We have invested heavily in capital 

equipment and have as modern a facility as can be found anywhere 

in the world. We have financed these investments internally and 

that is to say we have absolutely no debt. Our employees are empowered and work with no direct supervision. We have a strong 

focus on product development and have discovered and penetrated 

several new markets in the last ten years. We are ISO certified and 

have a reputation as being the highest quality supplier in our business. Our second leading cause of turnover, the first being China 

by a large margin, but our second leading cause of turnover is 

death and retirement. It is extremely rare that someone leaves us 

on their own volition or that we have to terminate for cause. Quite 

simply, we are a well-run company that is a very good place to 

work. Two years ago we were forced to shut down one of our five 

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business units. The customers that this area served were driven 

out of business by imports from China and other Asian countries. 

That market just disappeared for manufacturers from this country. 

Sixty jobs were affected at our company, and while we worked hard 

to relocate as many people as possible, many had nowhere to go. 

I sat down one on one with each of these employees. Some had 

worked for our company for over 20 years; many had never worked 

anywhere else. I looked into their eyes and I saw their disbelief, 

I saw their uncertainty, I saw their fear. Thankfully, I often saw 

courage as well. I have been profoundly affected from the experience and it is not one that I wish to repeat. The impact of China 

on the community? I know it, I understand it, I am a part of it. 

I am a part of it because I am so connected with the impact of 

China on the individual. The real cause of alarm, as has been said 

today and as all of you know, is what we have seen as manufacturing leaves our community to be replaced in China is just the beginning. The exodus of jobs really begins with removal of quotas 

scheduled January 1, 2005. If nothing is done before then, I fear 

our community will be affected so significantly and so quickly we 

will all be helpless to save it. Now, while Cheraw is a very special 

place, its fate is not unique at all. There are towns, large and 

small, in Maryland, Ohio, Kansas, California, and all over the Nation that depend on industry to feed its citizens, fund its schools, 

support its churches, and breathe life into its very existence. Now, 

perhaps there is, as some would argue, a positive side to the revolution that is diminishing the manufacturing base of our country. 

Perhaps it is inevitable that it happens, and though unfortunate, 

the pain of transition is a necessary part of this change. Now, even 

if this were so, then surely the revolution, the transition, should 

not be driven by the artificial and contrived advantages that result 

from one communist country’s illegal manipulation of their currency. Surely a vision of a worldwide free enterprise system is not 

set up to support the 40 percent currency advantage that China enjoys. If each employee in my company agreed to work for free we 

could not even offset half of this disadvantage that we suffer from 

China’s currency policies alone. Some action must be taken to see 

that natural forces shape the fortunes of our businesses and communities. Some action must be taken that the best interest of our 

citizens are protected. Some action must be taken to ensure the national defense of our country supported by a strong industrial base 

is maintained and, most importantly, some action must be taken 

to see that communities like Cheraw and many others, some that 

I’m sure you are familiar with, some action must be taken that our 

communities and our way of life is preserved. Thank you. 

Panel IV: Discussion, Questions and Answers 

Chairman ROBINSON. Well, thank you very much, Mr. Tindal. I’m 

sure I speak for my fellow Commissioners in telling you that yours 

was one of the more poignant and moving testimonies that we’ve 

received today of many and it certainly hit home. I wish this dais 

were also filled with Bush Administration officials that could have 

heard your panel, much less those of your colleagues that preceded 

it. I’m delighted to know that we have these proceedings on broadcast-quality tape. We’re certainly going to make use of it in WashVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00129 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
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ington, not only for our own website, but others because there’s no 

substitute for hearing it firsthand and put in such a powerful way 

as all of you have in your respective arenas. But the story of 

Cheraw will stay with us and is not going to be taken lightly. With 

that, I’d like to turn it over for questions beginning with our CoChair, Commissioner Becker. Okay. 

Vice Chairman D’Amato. 

Vice Chairman D’AMATO. Good. 

Chairman ROBINSON. Commissioner Dreyer. 

Commissioner DREYER. If you were to be on this Commission, 

since we are mandated to present our report to Congress, what 

would you suggest we put in the report to help do that? 

Senator MARTIN. Well, I’ve heard a lot of statements today about 

the WTO, about quotas, about multi-fiber agreement expiration. 

There’s a lot that I don’t know about those issues. I know that 

China, based on my reading of it, came into the WTO in 2001. 

What little I kept up with there seems to be a direct correlation 

to job loss, an accelerated correlation to job loss has occurred since 

that time. I don’t believe it would be fair for quotas to expire or 

if there are other agreements that were scheduled to expire and 

just drop all the walls that are in place. I would highly recommend 

to the Commission that it keep those quotas in place, that you urge 

the Administration to take action within the WTO. That’s what 

was promised. Nothing was said at this table earlier about which 

of our Congressional Members supported the WTO, the fast track 

authority of the President. Well, I can tell you one of the votes that 

I’m familiar with. It was represented in the media here locally. 

Well, I was promised that the best way to enforce these agreements 

was to get them in the WTO and then we could enforce the agreement. No, that hadn’t happened. So I think we let the horse out 

of the barn before we ever got serious about getting our hands on 

it. And I would urge you to state without any equivocation how serious this is in terms of what it will do. I think that Mr. Tindal 

summed it up. A lot of communities like Cheraw, Pickens, Easley, 

around this State, around this country—South Carolina—let me 

tell you this, South Carolina has the third highest mortgage delinquency in the country. We’re proud people—I put that in my written comments—we’re proud people. We pay our debts and we work 

hard, but you know, when you lose a job and there’s no job to replace it in your community, and you don’t have the resources or 

family money to fall back on, what do you do? 

Commissioner DREYER. You default on your mortgage. 

Senator MARTIN. You default on your mortgage. And that’s 

what’s happening rapidly in South Carolina and even more so, I believe, after the first of the year if we aren’t successful in keeping 

in place what is there to keep the horse at least partially penned 

up. 

Mr. TINDAL. From my part I would say that, perhaps all the solutions to this difficult problem won’t be coming out of Cheraw, South 

Carolina, but I will offer a few simple ideas. First, echoing what 

was just said. We must find a way to extend the quotas beyond 

January 1, 2005 and understand that that is not at all solving the 

problem, but only buying us time that it can be solved. Secondly, 

to me all of the tactics, policy violations, whatever you want to call 

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it, that China does, the manipulation of their currency is the one 

that is most tangible. There is no one on any side of this issue that 

doesn’t believe that China is manipulating their currency for trade 

advance. You cannot find anybody that has any of the facts that 

doesn’t believe that. Something has to be done about it. And I don’t 

know all the details about legislation and law and world trade, but 

I do know that we have a market here; we have the market that 

everybody wants. If we want to do something about it, we most certainly can, we hold the market. It’s really a matter of us deciding 

that we do want to do something about it. Well, I can tell you 6,000 

people in Cheraw want to do something about it. 

Vice Chairman D’AMATO. Let me just say, Mr. Tindal, you are 

absolutely right. Access to the American market is the golden goose 

for these folks and we have given it away too frequently and the 

reason is we don’t have enough political will to stand up for ourselves. That’s really the bottom line when you cut through all the 

issues, is whether we have the political will. The people in the community of Cheraw and other communities. 

Commissioner DREYER. Mr. Hutchison. 

Mr. HUTCHISON. I agree with these gentlemen. 

Chairman ROBINSON. If I might, we’ll go down the row if we can. 

Commissioner Bartholomew. 

Commissioner BARTHOLOMEW. Yes, sir. Once again, I want to 

thank our witnesses who have given us a very real picture of 

what’s going on. I guess the question I have, though, is, is the Administration providing the resources that your community needs 

for job training, for job creation, for revenue replacement? It’s a 

snowballing effect, isn’t it, when people lose their jobs? We’ve heard 

about hospitals, we’ve heard about charities, we’ve heard about all 

sorts of things, the impact on the community. Are you getting what 

you need for basic health care, for education, and the basic services 

that communities need to provide in order to give people the stability they need to rebuild their lives? 

Mr. HUTCHISON. I don’t believe any of the people in South Carolina are looking for charity or a handout. They’re looking for jobs. 

And the manufacturing, I’ve learned all my life, manufacturing is 

the only wealth creator. You can just flip so many hamburgers and 

that don’t create wealth but manufacturing does. And we’re losing 

that every day and it started back some time ago. I’ve been in this 

business about 35 years and I have never seen it go as fast as it’s 

going now. We’ve gone through ups and downs before, but as I was 

saying earlier, I think Mr. Malloy, that it bothers me as a citizen 

when Congress tries to pass a law that says for our national defense that it’s got to be 100% American made and then the Defense 

Department says, ‘‘No, we can’t live with that because 40 percent 

of our stuff is made out of the country.’’ Well, that frightens me. 

Senator MARTIN. Well, the answer to your question, as I alluded 

earlier, we did get some revenue from Congress back in the spring 

that helped tide us over. That money won’t be there this year. 

There’s an ever increasing demand on State government services 

and that will continue to grow as our unemployment, unfortunately, has grown. Retraining—we’ve made a tremendous effort in 

that regard as had been pointed out earlier. What are you going 

to retrain them for? You’ve got to have some jobs to train them for 

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and there’s been just a big void, a big hole if you will, in the jobs 

that are coming to South Carolina. I will say that in the upstate 

there’s been a partnership. Senator Hollings mentioned this morning, that’s developed between Clemson and BMW and the State 

and that has the potential for putting upstate South Carolina and 

the whole State on the map in terms of that part of the economic 

engine of this country. But that’s four or five years away of even 

getting started. Graduate school for automotive research and so 

forth, is four or five years away. What are we going to do in the 

meantime if everything dropped December 1 and Cheraw and Pickens and every other community is decimated? There’s not enough 

retraining money in the world for the job if it doesn’t exist. 

Mr. HUTCHISON. People aren’t going to retrain if there’s not a job 

out there for them because it’s a hopeless situation. 

Commissioner BARTHOLOMEW. Mr. Tindal. 

Mr. TINDAL. I can only support what’s already been said. My 

complaint and the reason I’m here is not because of a dissatisfaction with those things that you mentioned, but only that there will 

be a need for those to begin with and, as it’s been said, the retraining to learn how to cook fries at McDonalds is about 15 minutes 

and it’s very inexpensive and really that’s the job that’s available 

when a plant goes out of business. 

Commissioner BARTHOLOMEW. I think it’s important that everybody has stated how proud people in South Carolina are and, of 

course, we’re part of a great Nation where people are proud. That 

the kinds of things that we’re talking about are not what anybody 

should think of as charity. We’re talking about investing in human 

capital, which is investing in the people of this Nation, and unless 

they’re healthy and unless they have the highest quality education 

they’re not going to be able to be part of the new economy, however 

the new economy is defined. So thank you for the leadership you’ve 

shown in your communities, and we will do what we can to take 

the message back. 

Chairman ROBINSON. I’d like to turn over the questioning to CoChairman Becker at this stage who deferred his opportunity, but 

now would like to take advantage of it and then we’ll move to Commissioner Mulloy. 

Commissioner MULLOY. Thank you. 

Co-Chair BECKER. Thank you. Listening to Commissioner Bartholomew reminded me of some things that we’ve experienced in 

single industry towns particularly, when they shut down. As a 

sense of despair sets in when there’s no jobs and everybody knows 

there’s no jobs and the health care runs out, and the city services 

become strained or there’s no relief, there’s another element that 

seems to pervade into this whole feeling and it’s broken homes, the 

divorce rate goes up. Educational opportunities that are underway, 

children in college, the money runs out so they come home or leave 

and have to try to find work. And spousal abuse goes up pretty 

high after a while, and I guess because of the pride and the despair 

and the hopelessness that people face, alcoholism and mental 

health. These situations where we’ve brought people in, where a 

shutdown has been over an extended period of time. Those things 

surface right along with what all you’ve said. I just wanted to offer 

that out there as things and some people hesitate to say that or 

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even want to talk about that in a public forum. But they are things 

that you have to face when hope seems to run out. Thank you. 

Chairman ROBINSON. That’s also why it’s important that we have 

such a diversity of backgrounds on the Commission itself. Commissioner Becker, having been a President of the United Steelworkers 

Union, obviously has seen up close the devastating multidimensional effects of job loss. And so this is not an academic exercise 

for us. It’s something very present for the Commission. 

Commissioner Mulloy. 

Commissioner MULLOY. One of the things, we are actually doing 

a hearing next week in Washington. And we’re bringing in right 

across the board people who evaluate what is happening with regard to China. Now, the reason that’s so important is China didn’t 

meet, did not have a free market economy, the criteria for entrance 

into the WTO. So they were kind of given a waiver. But then they 

were locked in to a very strict compliance record. And so they were 

kind of given a waiver. So following their WTO compliance is enormously important. Secondly, I was actually in Geneva in 1993 

when the WTO was created. I wasn’t there to help create it. I was 

there to keep financial services out of it because there’s a principle 

in WTO that’s called MFN. That means if you make a commitment 

in the WTO, say we gave European banks a clean run at our market, say the Japanese weren’t giving us anything in their market, 

but if we give commitments to the European banks, the Japanese 

get the same thing under the MFN principle, most favored nation 

principle. So the other countries weren’t giving us a lot of entry for 

our banks. And so we kept, we kept financial services out of that, 

the original WTO agreement. But I saw it. I was there when this 

all happened. The second thing to understand is under that same 

principle, if we reduce tariffs on an item from China, say we give 

them a ten percent tariff on automobiles from China into the 

United States, that doesn’t mean that China has to give us a ten 

percent duty on our autos going to China. In fact, they have a 25 

percent duty on our autos going to China. So it’s a skewed, it’s a 

skewed system. And some of these agreements were made with the 

idea we helped developing countries move ahead. But we didn’t understand the phenomenon of bringing a country like China and 

now, with new technology, a country like India into this global 

trading system. So there’s an enormous impact that we’re not facing up to. Now you noted the last three years seems to be accelerated. Well, that’s when China came into the WTO. You understand 

that. And what that meant was that our market was locked open. 

We’re locked open. We have to either get out of the WTO because 

if we put tariffs on Chinese goods, they’ll take us to the WTO and 

those tariffs will be ruled illegal. So there’s a big phenomenon 

going on here. I think people have to get educated as to how all 

this is working. You have to get to your elected representatives. 

This is a big problem. I’m a great believer in the American democracy. I think if the people wake up and really go after this issue, 

I think we can get it changed. I’m not saying that we have to. But 

we have to have a strategy. And we have to understand how it’s 

been created and then put together a policy. Senator Martin, I really appreciate your testimony, all of you. But Senator Martin, why 

do you think that people have not paid attention to this issue? 

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You’re an elected representative of the people. And what do you 

think is needed to make them aware of it? 

Senator MARTIN. A couple things. Trade is a very complex 

issue—the way we play those games in Washington and international arenas. That’s not something that the average person is 

going to keep up with. The second thing is that with the job loss 

that’s been accelerated as it has, people are beginning to keep up 

with it. They’re beginning to realize and recognize up until the 

mid-1990s, late 1990s, it was all textiles. Basically the textile industry was old, it just hadn’t kept up even though we had invested 

and we had a great story I felt to tell. But I think the big reason 

is that we haven’t had the other sectors of the manufacturing economy hit as they have been hit here in South Carolina. And people 

are beginning to wake up and realize, look, this isn’t right. You 

mentioned what you did about the WTO, that the average person 

has no idea that they have a tariff on our autos. That BMW can’t 

sell autos into China. But if they were made there they could send 

them back here duty free under the WTO rules. 

Commissioner MULLOY. With a much lower duty than the one 

in——

Senator MARTIN. Or low duty. But the point is, once the American people ask those questions and wake up, I think there will be 

a demand. I think it’s been said, I’ll probably make a political 

statement and I probably ought not do this but I’m going to go 

ahead and do it anyway. The President’s election is a debate about 

whether that’s a foregone conclusion in South Carolina. And it 

probably is in terms of whether South Carolina is going to vote Republican or vote Democrat in November. But the most important 

vote that South Carolinians will cast in November is probably not 

for the Presidency in terms of trade. It’s probably the other U.S. 

Senate seat to fill Senator Hollings Senate seat and to ensure that 

we’ve got a United States Senator. And I’m going to send that message in the area that I live; that we’ve got a Senator in Washington 

that reflects our view on trade. It’s not going to go to Washington 

and listen to the multi-national, come back here and talk a great 

line about oh, we’re going to make sure the agreements are in force 

and all that kind of thing. And then go to Washington and the first 

thing they do is vote to put a WTO agreement in place that cuts 

our throat. So you can be assured, based on past actions of certain 

folks in this Senate race, I intend to send that message loud and 

clear in my area of the State. 

Chairman ROBINSON. Amen. 

Commissioner MULLOY. And I have just one last thing. I’m hopeful. I’m always thinking that democracy works. But one more thing 

on whether you bring a case to the WTO against China. People 

think well, we need China’s help on Korean nuclear weapons and 

therefore we don’t want to alienate them. So we’ve got to just focus 

on your economic issues and say, that’s a separate matter. If you 

haven’t, too often we’re playing off our economic interest for some 

kind of short political gain. 

Commissioner DREYER. Which we’ve never gotten. 

Commissioner MULLOY. And I think it’s very important again 

that the people understand what’s going on and hold people to account. I’m not one who says that I think you really need to change 

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it. The national leader has to understand these issues and want to 

do something about them. I personally don’t, I think it’s nice to 

have Congressmen and Senators, but I really don’t think you can 

deal with this issue. And including President Bush, sensitize him 

to it. And again, I don’t mean to be political. But I really think it 

takes the very top of the government to get this done. 

Chairman ROBINSON. Thank you, Commissioner Mulloy. Before 

we open microphone, which we’re keen to do, Vice Chairman 

D’Amato had a quick point leading into that exercise. 

Vice Chairman D’AMATO. Yeah. I just have a question. And I 

think I know the answer. But I think it’s an interesting question. 

I’ve heard today people suggesting that a new made in America 

type of movement should be undertaken, in other words, fabrics, 

garments, products that are made in America get a label and people would be encouraged to buy American. You’ve got Wal-Mart 

here. 

Mr. TINDAL. I’ve heard of them. Yes, sir. 

Vice Chairman D’AMATO. Is there any sensitivity that the other 

end of the problem that you face is coming in to the shelves of WalMart and are people concerned about what they are buying? We 

might be concerned but, hey, one of the reasons I lost my job is this 

stuff’s coming in on the shelves, maybe I shouldn’t have bought it. 

I’m serious. Do you want to buy the products that was the reason 

that your neighbors were put out of work or is there a sense of the 

relationship I guess is my question, yet between the job loss and 

the consumer, benefits that come as a result of this process? 

Mr. HUTCHISON. I don’t think people really have studied it that 

much because, you know, we’ve got all of our own self-interests. 

And they go into Wal-Mart and say, hey, I can get it here for this 

amount where I can go to a local merchant, I’m going to have to 

pay more for it. I’m going to just buy it here, not realizing that 

most of it’s imported. A personal story. I went into Wal-Mart and 

bought a radio. And it happened about the time that the Chinese 

took control of that plane. It made me mad and I happened to look 

on the box and I said this is made in China. So I carried it back. 

I said here. They said anything wrong with it? And I said yes, it 

was made in China. I went back to the shelf and tried to find one 

that was not made in China and I could not find one. I walked out 

without one. 

Mr. TINDAL. The situation you describe is kind of a downward 

spiral too. As a primary income winner in a family loses his job and 

the family becomes more price-sensitive to the goods that they buy 

and are more likely to go to Wal-Mart or whatever big retailer it 

is and buy based on price alone. So it’s a difficult situation but 

thought is going into made in America and buying campaigns and 

that side of it too. At the same time we’re careful not to blame the 

U.S. consumer for the situation that we’re in. But——

Chairman ROBINSON. No. But sensitizing the U.S. consumer to 

the connectivity. We have nationally funded drug advertisements, 

you know the ones, staying off of drugs, how an individual paying 

for cocaine or marijuana ultimately goes to the terrorists who execute the family in Columbia or something along these lines. In 

other words, we’re trying to establish and explain a lot more complex connectivity and linkage in many of our taxpayer-funded camVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00135 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
128

paigns than this. This is actually very straightforward. And I can 

tell you that, we’re not trying to penalize the consumer. We’re also 

not trying to in effect blame the consumer here. But at the same 

time this is one of those moments where South Carolina is already 

there and the rest of the Nation is headed there. This is one of 

those times where we’re going to have to stand together on this as 

a people. Or we’re going to be divided and sliced and diced to an 

unrecognizable degree in the circumstances that we’ve recorded 

here today. And that we are on an unsustainable trajectory right 

now because of currency manipulation and too many other forms 

of subsidy to name, not to mention administered pricing and the 

fact that we’re dealing with at the end of the day hardly a free 

market in China but a communist. These are the facts of the case 

and they are difficult to dispute. And we have to key off of that reality and start to translate it into our day-to-day lives including the 

lives of consumers. Anyway, these are the kind of sentiments that 

we’re going to be bringing back from this experience and not just 

emotional ones but trying to translate them and channel them into 

achievable near-term policy prescriptions for the Congress of the 

United States. That’s our task. And we will be undertaking that 

task and that mission with the utmost seriousness. That you can 

count on because we get it. And Mr. Tindal, you and others, I hope, 

have seen it in the course of the day. In my view, there has been 

a hundred percent laser beam focus on what’s being said, it’s implications for South Carolina and its implications for the United 

States. So you can be assured that we’re going to look at all these 

possibilities including a regeneration, a re-igniting of a ‘‘Buy America’’ campaign that educates every American to get the picture that 

this is a kind of crisis that has already arrived here in South Carolina and very much in the making for our Nation as a whole and 

that we’re going to have to step into this. And if the government 

is too slow to act, this is going to have to be a citizen’s event. 

Mr. HUTCHISON. One last comment. I think maybe a hundred 

million spent on a campaign like this would be dollars better spent 

than a billion and a half on marriage counseling? 

Chairman ROBINSON. Well, I think so. I think so too because we 

found out in that Hainan case that you raised when our reconnaissance aircraft was forced down and the pilot and the crew were 

held hostage by the Chinese. Average Americans filled shopping 

carts in K-Mart, and particularly Wal-Mart, and went to the cashiers and then walked away and said this is what they would have 

purchased had they not been made in China. And that happened 

spontaneously, no advertising, no nothing, with tens of thousands 

of Americans. And when that made the front page of the New York 

Times, this hostage event ended two days later because ironically 

the Chinese got that. They were very slow to see the diplomacy. 

They didn’t really believe the State Department. They didn’t believe the resolve even of the White House. But they did understand 

the implications of an estrangement of the American consumer and 

the linkage of Americans’ outrage toward the holding of our people 

hostage with the willingness to buy Chinese goods in the store. 

Maybe that’s going to communicate a message to them, not just to 

our own government, and send a powerful message to Beijing that 

the free lunch program at our expense must end. And with that, 

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I would very much thank you all again for a memorable set of testimonies. I also would like to begin using the balance of our time for 

the open mike, public comment part of our program. And we have 

a sign-up sheet here. And although our time is tighter than we 

wanted it to be, I would like to begin asking if Sally Kay is with 

us. Sally, of the Hosiery Association, you have the floor. 

OPEN MICROPHONE FOR PUBLIC COMMENT 

Ms. KAY. Good afternoon, ladies and gentlemen. Thank you for 

this opportunity. Again, my name is Sally Kay. I am President of 

the Hosiery Association, and a native South Carolinian. We also 

have very many members that are located in South Carolina. But 

we are a national trade organization. We’re located in Charlotte, 

North Carolina. And I’m here to talk to you today about the whole 

entire family of leg wear, socks, panty hose, trouser socks, you 

name it. There is an association for everything. And yes, we are a 

part of the textile industry, but we also are one of the more vibrant, what we believe to be bright spots of the textile industry. I 

would like to share with you today a couple of interesting facts and 

to talk specifically about China and its impact on us. Prior to the 

Chinese joining the WTO in 2000, there were 159,000 dozens of 

pairs of socks exported from China into the United States. This 

past year, 2003, there were 18 million dozen exported into the 

United States. That accounts for over 11,395 percent increase in 

socks. We are talking about manmade fiber. In 2001, China was 

ranked number eleventh in overall exports. In 2003, not only are 

they number one, but also they are exporting over three times the 

amount of the nearest country in that. And again the concern of 

the sock manufacturers is what has already happened in the synthetic fibers. When quotas come off cotton socks, there is great concern that there will be the same such action. Therefore, we believe 

on behalf of the Hosiery Association, again its sock manufacturers, 

its members constitute over eighty percent of all the hosiery that 

is made in this country, plans to file a petition to evoke those safeguards against China. Again, I think it is important to note that 

while world imports were only up 23.3 percent this past year—

world imports that is—China’s imports increased. Their exports to 

us increased by 564 percent. I also would like to say that over 23 

companies have closed within the past year. These are directly attributed to China, and that 3,500 employees have lost their jobs. 

I think it’s also important to note that over 70 percent of all our 

products were sold through the big box retailers. And they have 

that mentality. Therefore a lot of this is being driven by price. 

Therefore, the wholesale market value of socks is under significant 

price pressure, which is again impacting the whole supply chain for 

our economy. And I do believe that there is a significant concern 

over market access issues between the U.S. and China as it relates 

to retail and distribution. There is great contrast because it’s unequal and that there are again very few large retail companies in 

America but they control the majority of our market. However, in 

China there are very few chain stores. That eases market penetration. And there’s even language in the U.S.-China bilateral trade 

agreement which restricts the growth of chain stores in China. I 

think it is about equity, and obviously I think these facts state that 

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there has been exacerbation. I note since China’s entrance into the 

WTO. And again, my association’s been around since 1905. We’re 

getting ready to celebrate our hundred-year anniversary. And the 

domestic sock industry, the manufacturers themselves represent 

over 34,000 people in this country. And we do believe that some action must take place now because our children are tomorrow’s leaders and we certainly hope they have something to celebrate during 

the next hundred years. Thank you. 

Chairman ROBINSON. Thank you, very much Sally. Those were 

very useful statistics to bring out and couldn’t be more compelling. 

We will certainly factor them into our deliberations in Washington 

and they will be reflected in the proceedings. And I’m also glad 

that again we have a good audience for today’s proceedings. So I 

thank you. 

Commissioner MULLOY. Sally, if you can identify that provision 

of the China bilateral trade agreement that restricts the chain 

stores to give us better access. 

Ms. KAY. Documentation for that? 

Commissioner MULLOY. Could you give us that? That would be 

very important to look at. 

Ms. KAY. Sure. Be glad to. 

Chairman ROBINSON. And Vice Chairman D’Amato had a quick 

question. 

Vice Chairman D’AMATO. You talked about a petition. What’s the 

timing of that? When you finish writing it? 

Ms. KAY. The draft is in hand. 

Vice Chairman D’AMATO. Okay. So when you do that, would you 

give us a copy of it? 

Ms. KAY. Certainly. And just again it goes through CITA and 

also too we were already talking about, we mentioned earlier about 

working through officials, through working through various Commerce people, Senators who were aware of that and we’ll be glad 

to issue a copy of it as well. 

Vice Chairman D’AMATO. Great. Thank you. 

Chairman ROBINSON. If I might move to our next, our next 

speaker. Jim Jontz from Americans for Democratic Action. We 

want to all chime in and join Commissioner Bartholomew in welcoming you and are delighted that you can be with us today. 

Mr. JONTZ. Thank you, distinguished Commissioners. I appreciate very much the opportunity to speak this afternoon. I am a recovering politician. I had the honor of representing Indiana’s Fifth 

District in the Congress for six years in the late 80’s and early 90’s. 

And then my constituents were wrestling with trade issues that affected the automobile parts industry, affected the steel industry of 

course, and affected our agricultural economy. And as Commissioner Bartholomew noted I’m afraid, none of the problems we saw 

then have been solved and several new dimensions of the problems 

have been made manifest to us. I think that this hearing today is 

an excellent idea. I hope that the Commission can travel to other 

parts of the country and if your budget allows, other field hearings. 

Commissioner Becker will be interested to know that late last year 

I testified at a hearing similar to this that was being held in Gary, 

Indiana, by a Committee of the State legislature of Indiana that 

had been assigned the topic of investigating the impact of trade on 

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the manufacturing economy of Indiana. And we heard compelling 

testimony then from workers; one I remember was a worker in a 

plant in Valparaiso, Indiana that I used to represent in Congress, 

a steelworker where the plant was closing because of movement of 

the facility to China. Then just two weeks ago I was in attendance 

at a citizens hearing in Keene, New Hampshire where a couple of 

local State legislators and religious leaders convened a hearing to 

listen to testimony of citizens from southwestern New Hampshire 

about the impact of trade on their community. And we heard Robin 

Ito, one of the last, I’m afraid to say, textile workers in the State 

of New Hampshire. Testified that his job and the job of his colleagues at a particular mill are potentially, will potentially be gone, 

again because of offshore competition. We heard testimony from 

Jay Dewitt who had been spending the last couple of years at a 

workers assistance center in the northern part of the State, where 

a paper mill had closed because of the trade. So there are a lot of 

stories that need to be told and I think that the importance of educating the public about these issues is really important. I suppose 

it’s not coincidence that your hearing today is in Columbia, South 

Carolina at a very important time in our Nation’s political process. 

So perhaps it’s not out of bounds for me to share with the Commission that this last year I have been spending in Iowa, New Hampshire and South Carolina, more Americans for Democratic Action, 

working with community organizations in all of these States, labor 

unions, students, family farmers, the faith community, some businesses who share concern about the global economy and our Nation’s trade policies. And so I come here this afternoon with an unusual responsibility, which is as a Hoosier, to ask if I can enter into 

the record a statement from 31 groups in South Carolina on the 

subject of trade. And this is not directly about China, although 

China is referenced in this statement. It’s a statement really about 

what kind of trade policies our country should have and it’s addressed to all of the Presidential candidates, but I think to the public at large and hopefully will be of interest to your Commission. 

And one of the things that it illustrates is that there is a broad 

concern within society, not just with owners of the businesses who 

are directly affected, not just the workers at the businesses that 

are directly affected, but people in South Carolina of all walks of 

life understand that our country’s trade policies concerning China 

and other countries have not been good for this State. So a diversity of groups, environmental, farm, women’s groups, peace groups, 

and unions not just representing manufacturing sector, but bus 

drivers, fire fighters, communications workers, postal carriers, theater movie screen operators, they recognize that they have something at stake here too. I was very pleased earlier to hear the discussion, I believe it was Mr. McClure, who made reference to how 

we have all been told that we should endure the loss of manufacturing jobs because the new economy was on the way and somehow 

that was some mitigation for the loss of our country’s industrial 

base. I don’t think anybody here accepts the premise that we 

should be complacent about losing our industrial base. But I think 

that the notion that somehow the trade policies that have failed us 

in terms of protecting industrial jobs are going to create a new vibrant service economy are now being viewed with a great deal of 

132

skepticism by people across the country. New Hampshire is a new 

economy. The textile and the shoe jobs that were the basis for the 

economy there are largely gone. New Hampshire is a State where 

new jobs are in information technology, white-collar jobs, and et 

cetera. Well, I can tell you, having spent a lot of time there since 

last year, workers in that sector of the economy are not very optimistic about their jobs because they’re seeing them being shipped 

offshore too. And but the labor community, citizens of all kinds of 

backgrounds are studying the trade agenda that is now underway, 

expanded from the WTO, the free trade Americas, and they see 

that it extends not just to manufacturing and agriculture but to the 

other 70 percent of the economy, services. And they understand 

that the point of the objective of these new trade agreements and 

services is to give corporations more rights and the impact of that 

isn’t undermined, the well-being of workers in all of those sectors. 

So I think it’s good to have on the record, although the topic of 

focus for your Commission is manufacturing, that the argument 

that somehow we should be complacent about the loss of manufacturing jobs because there’s something new right around the corner 

is not an argument that the American people are buying. I want 

to just cover a couple other points quickly. I’m not sure that we 

have as large a turnout from the public this afternoon as might be 

desirable, but of course you’re competing with a lot today. And I 

should share with you that earlier today over at the Township Auditorium there were two or three thousand citizens, not just of 

South Carolina, but all of our country who were there because they 

had some questions for the Presidential candidates. And I think 

every Presidential candidate was asked about jobs and every one 

of the candidates talked about trade. And so at least at some level 

we’re making the connection. But I want to quickly add that there’s 

a lot of learning that yet needs to occur. And the testimony that 

you have heard this afternoon and the deliberations of your Commission I think are very valuable to share with the public at large 

and with our Nation’s leaders and perspective leaders because I’m 

afraid that when they hear that . . . I know that when they hear 

that their sense that . . . of emergency about the need for new policies is going to be strengthened. Indeed it does bother me sometimes, people talk about the jobs issue and try to ignore the trade 

. . . the rules of trade doesn’t have anything to do with what’s happening with jobs. I think you understand that it isn’t just our trade 

rules, but when you live in a global economy and the rules that our 

Nation has been pursuing have been pretty much focused on how 

to facilitate the flow of capital to other countries, to China and 

elsewhere, when that’s been the objective of our trade policies, why 

are we surprised that in fact the capital is moving to places where 

workers are paid much less and environmental, human rights protections are very weak. So I think we’ve made some progress. 

There was a poll released recently that perhaps some of you saw 

out of an outfit from the University of Maryland. The initials are 

PIPA, Program on International Policy Attitudes. I may have that 

wrong. That was quite interesting in terms of showing the level of 

public awareness. Question was asked of respondents nationwide, 

do you agree with the statement that the United States should be 

expanding trade with other countries and that we’re going about it 

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the right way. Only 23 percent of the respondents said they agreed 

with that statement. Do you believe the United States should be 

expanding trade with other countries and that we’re going about it 

the right way? Only 23 percent said they agree with that. Almost 

as many said we shouldn’t be expanding trade. The majority of 

folks said, yes, we should be expanding trade but out country is 

going about it the wrong way. We’re not paying attention to the interests of workers. Eight out of ten said that we should be paying 

more attention to the interests of workers. Two thirds said we 

should be paying more attention to the interest of the environment. 

And it also, if I’m remembering the poll correctly, eight out of ten 

said that they agreed with the statement that if we expand trade 

more slowly or we delay trade agreements in order to include protections for workers and the environment, do you think that that’s 

okay and eight out of ten said yes. They said let’s take our time 

and get it right. Well, we can take our time with new trade agreements. We cannot take our time with the situation that we face at 

the present. But I think the public is alert to the problem and I’m 

hoping that the work of this Commission will help educate them 

about some dimensions of it that we haven’t been focused on. And 

I’ll submit this statement for the record from 31 groups in South 

Carolina who I’m sure all would have liked to been here if they 

were not chasing Presidential candidates today and thank you so 

much for coming to South Carolina. 

Chairman ROBINSON. Well, we very much appreciate your insightful remarks and we will take your document on board for the 

record of these proceedings. If you’ll just hand that to Bob Bean of 

our team. Thanks once again. We are a little short on time, but 

there are two people left on the sign-up sheet. I apologize if there 

are more than two, but those are the two that we have in front of 

us. And regrettably that is all that we would have time for in today’s proceedings. But if Sarah Williams is with us from the Carolina Peace Resource Center, we’d like to hear from Sarah. 

Ms. WILLIAMS. I’ll make it very quick so that the other person 

can have some time too, because I’m certainly not an authority on 

trade or anything. I’m just a citizen of South Carolina, a health 

care worker out of work. That’s a shame because I’m a physician’s 

assistant and I can do health care for half the cost of a physician. 

Both the physicians that I’ve worked for over the past year have 

had to leave their private practices because they don’t have enough 

clients, well, enough money from the insurance companies or the 

Medicaid in order to stay in business in their private practices, and 

they’ve had to go on and do independent work with other companies, so I’m not working as a P.A. I’ve been out of work for six 

months, and in that time I’ve been getting very politically active. 

I’m at the Carolina Peace Resource Center. It’s wonderful. And 

through that I would like to mention that in learning more about 

fair trade instead of free trade. And I know these are catchwords, 

the race to the bottom. But Mr. Becker, you hit it right on the nose. 

What’s going on in this country is going on around the world. 

China is not our enemy. Mexico, South America, they’re not our 

enemy. They’re people like me that want jobs, want better families, 

better homes, a living wage. So I come from across town—we were 

over at the Township today—over 4,000 people were there. Jobs, 

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health care, education, not just jobs, we need living wages, right? 

Living wage. A living wage, that’s all. I want to work. One of the 

jobs I lost by the way is at the free clinic where I gave my services 

away. But my physician and supervisor had to go out of private 

practice. So I can’t even take care of all these people that have lost 

their jobs, still have their diabetes, hypertension and the in-stage 

consequences of those diseases. So without job they have no health 

care. If we could think of a better system where corporations that 

belong to America are made to incorporate in America and pay 

taxes to America, where they are made to meet some minor worker 

rights responsibilities and environmental responsibilities I think 

that we would have a better . . . now, you asked would the people 

recognize it. We have a fair trade coffee club. We only buy fair 

trade coffee, which is from South America. And a lot of us are in 

that movement. For Christmas, we only gave gifts that were made 

locally. We made them ourselves, and we’re making this movement 

with blue jeans and we’re looking more and more to do that, but 

not American made, fair-trade made. Let’s make the world . . . this 

is a world, a global, one world and we need peace and prosperity. 

We don’t need trade wars. We want a peaceful world with peaceful 

trade. And we can do that if we think in terms of our global economy but bringing everybody up, not racing to the bottom. So, thank 

you. And tonight from seven o’clock at the Methodist church on 

Washington Street we’re having an interdenominational prayer 

meeting and you all are welcome to come. I know you all had a 

hard day. 

Chairman ROBINSON. Thank you very much, Sarah. And thanks 

for what is a very positive view of what could be the future of the 

planet. And because obviously no one here is interested in other 

than global fair trade and prosperity at the end of the day. It’s all 

a matter of how you get there. And I just wish the Chinese people 

really had an opportunity to be more like us genuinely. But that’s 

not going to happen until they have free speech and they shut 

themselves of a communist utilitarian system I’m afraid, and that’s 

one of the reasons why we have to be concerned about the prospects, as we’ve discussed today. With that, if Brian McCanlis is 

with us from the National Business Association. 

Mr. MCCANLIS. Yes, thank you. You all have done an excellent 

job today. I appreciate you being here. I’m going to be very brief. 

One of the Commissioners said earlier in testimony that he didn’t 

believe that the process of international trade agreements was 

flawed. My experience in going to Washington, D.C. before the Senate Finance Committee, the House Ways and Means Committee, 

which considers all trade deals, is that it is flawed. I believe that 

it is tainted and corrupted by multi-national money. You’ve had a 

legitimate, viable hearing today. What I’ve experienced in Washington, D.C. is that the Members of the Senate Finance Committee 

for the most part, and the House Ways and Means Committee for 

the most part, already have their mind made up. It doesn’t matter 

what kind of data I have, it doesn’t matter what kind of merit 

there is to my argument. It doesn’t matter. They’ve got checks from 

the multi-national corporations. Their ears are closed. Their minds 

are closed. So I believe that it is a very flawed situation. Addressing the jobs training issue, that is not the answer. The 40-year hisVerDate Dec 13 2002 09:52 Mar 08, 2004 Jkt 201098 PO 00000 Frm 00142 Fmt 6602 Sfmt 6602 D:\CHINACOM\201098.TXT APPS06 PsN: 201098
135

tory of retraining people for jobs, according to a professor at Oregon 

State University, is that once that cycle is completed, women only 

make 47 percent of the poverty line. Men make 54 percent of the 

poverty line. So it’s not working. The process is rigged against us. 

And we need some change. But I thank you for what you’re doing. 

This is one of the best Commission hearings I’ve ever attended and 

I’ve attended a lot of them. So I salute you and I thank you. I salute you. 

Chairman ROBINSON. Well, thank you very much and I would 

say that the salute is returned. But it’s also the case that many 

of us on the Commission, not all as you can tell, believe that we 

do have systemic flaws. That this is not just a matter of not enough 

votes in a process that’s working properly. I regret to say that I 

think that the system myself is in need of some serious reform and 

those flaws has to be addressed. So believe me, this is not a group 

that thinks that we just have some tinkering on the margins with 

the existing process. This is going to require more radical creative 

visionary solutions and a great deal of American unity and resolve 

among the people and communicating that in no uncertain terms 

to their collective representatives. Big money is spoiling our future 

and there’s no question about the fact that too much, too many 

ears are closed and for the wrong reasons. And there’s a lot of suffering as a result of that and it’s very narrow-minded, it’s very 

short-term. It’s very profit driven and it’s very destructive for the 

United States of America. I would like to ask if there is anyone 

else. Yes, please. I don’t know your name, so if you could please 

state it. 

Mr. WOOD. My name is Lloyd Wood. I’m with the American Manufacturing Trade Action Coalition and I wanted to address a couple 

technical points that were raised by Co-Chairman Becker and Commissioner Reinsch about the multi-fiber agreement, the MFA, and 

how it works. The MFA, when it was agreed to be phased out in 

1995, the countries that asked for the phase-out of the MFA were 

third world countries, were the least-developed countries. And one 

of the things that’s been expressed maybe to some extent that it 

might be politically difficult for the United States to advocate, to 

take a leading position on the continuation of the MFA. AMTAC 

represents a significant chunk of American textile industry, and 

one of the things we’re very strongly supportive of was an extension of the MFA. But what I will say is this, these third-world 

countries realize what is happening out there and certainly I know 

that we, through other international textile associations have been 

contacted, people have contacted us about this problem, and you’ve 

seen other governments make hints about maybe doing something 

like this. But they’ve met with resistance from USTR. Last year 

they had a meeting—I think it was the U.S. African Business 

Council or something to that effect—where basically you had African business representatives and diplomatic representatives holding conference in Washington D.C. And textiles were brought up, 

and basically Ambassador Zoellick took them to the woodshed for 

bringing up even any thought of extending the MFA. It should be 

the position of the U.S. Government that the MFA should be extended so that if a third-world country asks, if there is a request 

for an emergency session with the WTO, this issue be brought up, 

136

it should be the position of the U.S. Government that that is something that they would support. And I would tell Commissioner Bartholomew that your former boss, Minority Leader Pelosi, and 11 

other Members of the Democratic leadership wrote a very eloquent 

letter to President Bush asking for basically that. There are going 

to be 30 million people that lose their jobs worldwide with the expiration of quotas and that we should be very supportive of extending 

the MFA. And certainly that letter would be fit in the record very, 

very well. So one of the concrete things that this Commission could 

ask for is that the U.S. Government take a formal position that if 

there is a request for a meeting of the WTO to extend the MFA, 

the U.S. should be supportive of that. 

Second, very quickly, you talked about concrete things that need 

to be done. What can we do? I would urge the Commission to focus 

on recommendations that the United States can unilaterally implement. And what I mean by that is this. If you are talking about 

what can we do to get China to stop currency manipulation? The 

answer has been the government asks China to end currency manipulation. Well, that’s not a process we can control. We are depending on China to act rather than be dependent on us to act. 

And so with the crisis of job losses and the crisis we’re seeing in 

manufacturing, our position is we don’t have the luxury of waiting 

for somebody else to act and that our government needs to be 

proactive and act first. Thank you so much. You guys have done 

a wonderful job with the hearing and let’s hope that a lot of people 

are going to watch it. Thank you. 

Chairman ROBINSON. Yes. Thank you so much. Commissioner 

Bartholomew had a response. 

Commissioner BARTHOLOMEW. Just one. Well, actually, two comments. Commissioner Reinsch and I were having a version of the 

very discussions about the role of the . . . it’s ironic that the developing countries had wanted a phase-out of the MFA are not the 

countries who are recognizing what’s going to happen to them. 

Countries like Sri Lanka and Bangladesh, and Pakistan—countries 

that have a vibrant textile producing industry. That’s the first 

thing. The second thing is that the letter that you referred to—I 

want to of course acknowledge the leadership of Congressman John 

Spratt from here in South Carolina who is a very important Member of Congress and who is really one of the point people on this 

issue in helping out the textile industry in the House of Representatives. 

Mr. WOOD. And the other thing I know the Textile Commissioner 

in Washington, I would say it’s a non-partisan issue. You’ve got Republicans and Democrats that are supportive and some Republicans and Democrats are against. So it’s very interesting out there 

about kind of regional breakdown that you see. But there’s certainly a lot of people out there that have been very supportive of 

this issue and when we had left last year there was a letter sent 

to Congress asking for implementation of the China safeguard, 

there were more than 170 Senators and Representatives that 

signed that letter, including Minority Leader Pelosi, so certainly we 

are getting help from a lot of different corners on Capitol Hill. But 

unfortunately, not enough. 

137

Commissioner MULLOY. I told you before that we did a hearing 

on China’s exchange rate policies in September. I mentioned Senator Schumer came and testified. I also want to mention that your 

Senator, Senator Lindsey Graham came and gave very good testimony. Subsequent to that he invited me over to meet with him at 

his office to talk further about these issues. This is not a partisan 

issue. This is something that both parties should be aware of in 

trying to figure out how to deal with. 

Mr. WOOD. Absolutely, I totally agree. 

Chairman ROBINSON. And finally, before turning it over to CoChairman Becker who’s going to gavel close today’s proceedings, I 

would only say that we also very much share your view that the 

destiny of our country in the areas of trade and manufacturing 

based concerns is very much in our hands. There are some circumstances where obviously we’re going to want to have dialogue 

with China and there are going to be other circumstances where 

multi-lateral consensus is a good and proper thing. This is not to 

say that we should just be proceeding solo as a nation. But I can 

tell you in the crisis that we’re facing here on our manufacturing 

base and what we’ve heard today in the context of South Carolina, 

this is going to require unilateral U.S. action and resolve. There’s 

no question about that. And we’re certainly up to it as a Commission and we’re going to be making powerful recommendations that 

we step up to this. It can’t be watered down, it can’t be diluted to 

the lowest common denominator. This is a time to stand up and 

take our destiny into our own hands. So those are my concluding 

words and I’d like to turn it over with thanks to Co-Chairman 

Becker and we’ll close out the proceedings. 

Co-Chair BECKER. I thank you very much, Mr. Chairman. There 

have been some very eloquent statements made here at the end. I 

won’t try to equal them and I don’t think they need to be said 

again. I want to thank everybody for their patience and hanging 

in there. I am thrilled to death. When we set this hearing up, I 

didn’t quite know what to expect; I know what I hoped. But this 

Commission hearing has exceeded my fondest wishes. I want to 

thank you. I’m proud of all of you and your statements and your 

feeling and the way that you’ve expressed them. I want the Commission to know that I’m very proud of them too. And with that 

we’ll just close the hearing and have a good trip back to wherever 

you’re going. 

[Whereupon, at 5:22 p.m., the hearing was adjourned.] 

138

Testimony of U.S. Representative John M. Spratt, Jr. (D–SC) 

Mr. Chairman, thank you for the opportunity to testify on behalf of the people 

of South Carolina. I represent the Fifth Congressional District of South Carolina, 

which lies well within the textile belt. Since 1997, 51,000 textile workers have lost 

their jobs in South Carolina and 66 textile plants have closed. The surge of imports 

from China is a significant cause of the problem, and unless something is done, the 

problem will only get worse. 

Since China joined the World Trade Organization (WTO) on January 1, 2002, its 

exports of textile and apparel products to the United States have more than doubled. China’s exports grew by 117% in 2002 and by an additional 114% by September 2003. We have been accustomed to import competition in textiles and apparel, but this surge represents the largest single increase in our history. Almost 

all of these imports (96%) are in categories that were released from quota control 

on January 1, 2002. China’s increase has been so great—2.8 billion square meters—

that it has surpassed the combined increases in textile and apparel imports coming 

from every other country in the world. 

As things stand, I see four significant barriers to fair trade between the United 

States and China:

(1) China pegs the yuan at an artificially high value to the dollar, making Chinese imports cheaper than ever. 

(2) China has no sense of balance and has caused enormous market disruption 

by flooding the United States with cheap imports. 

(3) China uses legal access to our markets to the maximum and then flouts the 

rules of fair trade by illegally trans-shipping textiles and apparel to the 

United States in huge quantities. 

(4) China has no sense of reciprocity and has failed to open its markets to our 

exports, even though it has substantial dollar reserves.

China’s surge has been significantly abetted by pegging the yuan to the U.S. dollar. Currency manipulation has allowed China to gain a 38% unfair price advantage, 

on top of the advantage it already enjoys due to cheap labor. I introduced H.R. 3364 

with Rep. Sue Myrick (R–NC) to impose a 27.5% duty on any Chinese imports unless China halts the manipulation of its currency within 180 days of enactment of 

our bill. H.R. 3364 was referred to the Committee on Ways and Means where it 

awaits consideration. 

To limit the surge of Chinese textile imports, I and 144 of my colleagues in the 

House wrote the President asking him to invoke the Chinese textile safeguard. The 

safeguard was designed to protect U.S. textile and apparel products from disruption 

by large volumes of Chinese imports. This safeguard was included as key provision 

in the Chinese/U.S. textile bilateral in 1997 and reaffirmed as part of China’s WTO 

accession agreement in 2001. It should be used and used aggressively, and having 

agreed to the safeguard twice, China should not be heard to complain when it is 

used fairly. 

Although this safeguard was first agreed to six years ago, the Committee for the 

Implementation of Textile Agreements (CITA) did not publish procedures for implementing the measure until May 2003. This delay caused considerable damage to the 

U.S. textile industry. While China’s exports to the U.S. grew by 117% last year, the 

domestic industry lost nearly 300,000 jobs nationwide since January 2001. China is 

the single largest exporter of textile and apparel products to the U.S. for 12 straight 

months, increasing at an annual rate of over 100%. As soon as the procedures were 

published, the industry began the process of getting the safeguard triggered. 

On July 24th, the domestic textile and fiber industry petitioned President Bush 

to invoke the China safeguard in four categories: knit fabric; cotton and man-made 

fiber gloves; cotton and man-made fiber dressing gowns and robes; and, cotton and 

man-made fiber brasseries. The petitions for knit fabric, brasseries, and dressing 

gowns were accepted. The petition for gloves was rejected because the China safeguard is not applicable to a product under quota. Although knit cotton and manmade fiber gloves are no longer under quota, imports of woven cotton and manmade fiber gloves remain under quota until January 1, 2005. The industry will file 

a new petition on knit cotton and man-made fiber gloves early this fall. 

CITA announced its approval of the first safeguard petitions on November 18, 

2003. The United States will now begin a consultation process with China to limit 

growth of these imports. Once the Chinese are notified of the consultation, shipments from China will be limited to 7.5% above the amount that entered the country during the first 12-month period of the most recent 14 months preceding the request for such consultations. During the consultation process, which can last no 

more than 90 days, the United States may reach an agreement with the Chinese 

139

that will resolve this issue. If we do not reach agreement, the safeguard will remain 

in effect for the remainder of the year. I emphatically support use of the China safeguard in as many product categories as may be necessary to restore some measure 

of fairness to our trading relationship. 

I adamantly oppose the Bush Administration’s proposal to eliminate all tariffs by 

2015. Textile tariffs are our last line of protection, and modest protection at that. 

I have written U.S. Trade Representative Robert Zoellick asking him to drop the 

proposal during the round of WTO negotiations in Cancun, Mexico, and I urge again 

that we take tariff reduction totally off the table. 

The United States should establish stronger enforcement methods and more punitive measures against countries like China that illegally trans-ship textile and apparel products into the United States. The Government Accounting Office (GAO), in 

a report released on January 23, 2004, found that the Customs and Border Protection Service targeted less than .01% of textiles shipments for inspection in 2002. According to GAO’s report, under CBP’s in-bond system, foreign textiles and apparel 

can transit through the U.S. before formally entering U.S. commerce or being exported to a foreign country. The report further found that ineffective controls often 

enable cargo to be illegally diverted from its supposed destination, and ultimately 

circumvent quotas and duties. CBP’s penalties are set lower than the value of the 

cargo, so violators do not view the low payments as a deterrent against diverting 

their cargo. GAO also noted, after global textile quotas end in 2005, CBP will lose 

its authority to conduct foreign factory visits in former quota countries, and this will 

weaken its ability to curb illegal trans-shipment, mislabeling, and false declarations. 

One of the most significant pieces missing from our trade relationship with China 

is a sense of reciprocity on their part. When we agreed to open our markets to 

China, we did so with the understanding that China would import American-made 

goods. In November 2003, the United States imported $4.3 billion in textiles from 

China, and only exported $192.5 million to China. When China entered the WTO, 

the textile industry was assured that many of the trade barriers preventing our exports from accessing China would be removed. Trade figures do not bear this out. 

The United States must press China to remove all of its trade barriers, visible and 

invisible, in order for our two countries to remain trading partners. 

Mr. Chairman, thank you for accepting my testimony today. With textile quotas 

scheduled to be eliminated at the end of 2004 and the Bush Administration proposing to eliminate all textile and apparel tariffs by 2015, it is crucial that the four 

points I have laid out be implemented to protect the textile industry from China’s 

heavily subsidized industry through 2008. The United States cannot afford further 

erosion of its manufacturing base, and protecting our textile industry is a strong 

step toward stopping the erosion. 

140

South Carolina Fair Trade 

Ten years ago the North American Free Trade Agreement (NAFTA) was implemented with claims that it would create more jobs and bring higher wages to workers in both the U.S. and Mexico. However, this has not happened. What has occurred, instead, is an erosion of environmental standards, a rash of human rights 

violations, and a steady decline in the status of workers on both sides of the border. 

NAFTA’s provisions facilitating the flow of capital out of the U.S. made it easier for 

companies to relocate to Mexico where they have profited from less government 

oversight and lower wages. But now, some of these same companies are moving to 

China, seeking even lower wages in a ‘‘race to the bottom.’’ Unemployment, more 

severe poverty, and the reduction of household income has been the unfortunate 

consequence of NAFTA for too many of its supposed beneficiaries. 

South Carolina has lost 68,600 jobs from January of 2001 through September 

2003, of which 55,200 were in manufacturing. This past November President Bush 

visited Greenville S.C., a city that has lost 11,700 jobs in its metro section alone. 

Workers are advised to ‘‘retool’’ and ‘‘re-educate’’ themselves so they can move from 

manufacturing jobs into the high-tech industry. But now IT jobs are also being 

moved overseas as ‘‘Free Trade’’ expands to technology and intellectual property. 

At present, the Bush Administration is negotiating a new generation of trade 

agreements the most damaging of which would likely be the Free Trade Area of 

Americas (FTAA). The FTAA would extend NAFTA to 31 more countries in the 

Western Hemisphere. The FTAA would also expand NAFTA from manufacturing 

and agriculture into ‘‘services’’ such as water supply, electricity, heath care, public 

safety, the postal service, and education. ‘‘Free Trade’’ would mean diminished authority for local, state and federal government to provide andregulate services, while 

giving corporations greater power. 

The FTAA negotiations are unlikely to be completed when President Bush’s term 

ends in January 2004. A new occupant in the White House can use his or her power 

to stop the FTAA, and write new trade agreements that emphasize ‘‘fair trade’’ rather than ‘‘free trade.’’

Therefore, we urge all candidates seeking support in the South Carolina Presidential primary on February 3, 2004, to support fair and equitable trade policies, 

and clearly reject the proposed Free Trade Area of the Americas (FTAA), the Central American Free Trade Agreement (CAFTA), the expansion of the WTO, and 

other agreement that fail to meet the following criteria:

1. Trade agreements should promote protection of workers and the environment 

by including binding, enforceable measures within the core text of the agreements to insure that:

a) No country fails to enforce its environmental and labor laws and regulations, or lowers its environmental and labor standards to attract investment 

or gain trade advantages; and 

b) All countries protect in domestic law the rights established by the International Labor Organization (ILO) in its Declaration on Fundamental Principles and Rights at Work; and no nation is penalized for adhering to its 

obligations under the ILO or under international environmental agreements.

Labor and environmental provisions should be subject to the same dispute resolution and enforcement mechanism that apply to other aspects of the agreement. 

2. Trade agreements should not allow private corporation to compel a government 

to pay the corporation for lost profits that may have resulted from a government’s adoption or implementation of laws, regulations, or policies to protect 

the public welfare, including environmental protection, food safety, and worker 

safety. 

3. Trade agreements should allow governments in the U.S. and elsewhere to 

enact farm and food policies that create a sustainable family farm system and 

a safe and healthy food supply. 

4. Trade laws should not undermine the ability of governments to safeguard domestic industries against unfair foreign trade practices or to regulate the flow 

of speculative capital. 

5. Trade agreements should not cover ‘‘services’’ such as education, health care, 

transportation, construction, the postal service, public safety, water supply, 

other public services, energy, and waste disposal, encouraging privatization 

and deregulation in these sectors of the economy.

141

Signed:

South Carolina AFL–CIO 

South Carolina Rainbow Coalition 

Upstate South Carolinians for Fair Trade 

Greater Piedmont Central Labor Union 

UNITE 

Amalgamated Transit Union (local 610) 

CWA (local 3776) 

South Carolina Forest Watch 

Save American Manufacturing Now 

Thinking People 

Hilton Head for Peace 

IFF Onlys 

Prison Family Support Groups and Partnerships 

Carolina Peace Resource Center 

Lower Richland Community Council 

South Carolina Natural Guard 

Grimke Sisters 

Charleston Peace 

South Carolina Fair Share 

APWU (local 807) 

South Carolina Gay and Lesbian Pride Movement 

South Carolina Progressive Network 

Americans for Democratic Action 

Upstate Secular Humanists 

Peoples Coop 

Columbia Food not Bombs 

Charleston Food not Bombs 

IATSE (local 491) 

Columbia Central Labor Council 

Catawba Central Labor Council 

Malcolm X Grassroots Movement 

PACE (local 30925)

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(151)

STATUTORY MANDATE OF THE U.S.-CHINA ECONOMIC AND SECURITY 

REVIEW COMMISSION 

Pursuant to Public Law 108–7, Division P, enacted February 20, 

2003

RESPONSIBILITIES OF THE COMMISSION.—The United 

States-China Commission shall focus, in lieu of any other areas of 

work or study, on the following:

PROLIFERATION PRACTICES.—The Commission shall analyze and assess the Chinese role in the proliferation of weapons of 

mass destruction and other weapons (including dual use technologies) to terrorist-sponsoring states, and suggest possible steps 

which the United States might take, including economic sanctions, 

to encourage the Chinese to stop such practices.

ECONOMIC REFORMS AND UNITED STATES ECONOMIC TRANSFERS.—The Commission shall analyze and assess 

the qualitative and quantitative nature of the shift of United 

States production activities to China, including the relocation of 

high-technology, manufacturing, and R&D facilities; the impact of 

these transfers on United States national security, including political influence by the Chinese Government over American firms, dependence of the United States national security industrial base on 

Chinese imports, the adequacy of United States export control 

laws, and the effect of these transfers on United States economic 

security, employment, and the standard of living of the American 

people; analyze China’s national budget and assess China’s fiscal 

strength to address internal instability problems and assess the 

likelihood of externalization of such problems.

ENERGY.—The Commission shall evaluate and assess how China’s large and growing economy will impact upon world energy 

supplies and the role the United States can play, including joint 

R&D efforts and technological assistance, in influencing China’s energy policy.

UNITED STATES CAPITAL MARKETS.—The Commission 

shall evaluate the extent of Chinese access to, and use of United 

States capital markets, and whether the existing disclosure and 

transparency rules are adequate to identify Chinese companies 

which are active in United States markets and are also engaged in 

proliferation activities or other activities harmful to United States 

security interests.

CORPORATE REPORTING.—The Commission shall assess 

United States trade and investment relationship with China, including the need for corporate reporting on United States investments in China and incentives that China may be offering to 

United States corporations to relocate production and R&D to 

China.

152

REGIONAL ECONOMIC AND SECURITY IMPACTS.—The 

Commission shall assess the extent of China’s ‘‘hollowing-out’’ of 

Asian manufacturing economies, and the impact on United States 

economic and security interests in the region; review the triangular 

economic and security relationship among the United States, Taipei and Beijing, including Beijing’s military modernization and 

force deployments aimed at Taipei, and the adequacy of United 

States executive branch coordination and consultation with Congress on United States arms sales and defense relationship with 

Taipei.

UNITED STATES-CHINA BILATERAL PROGRAMS.—The 

Commission shall assess science and technology programs to evaluate if the United States is developing an adequate coordinating 

mechanism with appropriate review by the intelligence community 

with Congress; assess the degree of non-compliance by China and 

[with] United States-China agreements on prison labor imports and 

intellectual property rights; evaluate United States enforcement 

policies; and recommend what new measures the United States 

Government might take to strengthen our laws and enforcement 

activities and to encourage compliance by the Chinese.

WORLD TRADE ORGANIZATION COMPLIANCE.—The 

Commission shall review China’s record of compliance to date with 

its accession agreement to the WTO, and explore what incentives 

and policy initiatives should be pursued to promote further compliance by China.

MEDIA CONTROL.—The Commission shall evaluate Chinese 

government efforts to influence and control perceptions of the 

United States and its policies through the internet, the Chinese 

print and electronic media, and Chinese internal propaganda. 

(I)

LIST OF WITNESSES, COMMUNICATIONS, AND 

PREPARED STATEMENTS 

Page 

Becker, George, Hearing Co-Chair 

Opening remarks of .......................................................................................... 7

Opening statement ........................................................................................... 12

Prepared statement .......................................................................................... 14

Chapman, Norman, President, Inman Mills, Inman, South Carolina ................ 29

Prepared statement .......................................................................................... 31

Crolley, Larry, President, Craig Industries ........................................................... 35

D’Amato, Vice Chairman C. Richard 

Opening remarks of .......................................................................................... 8

DeWitt, Donna, President, South Carolina AFL–CIO .......................................... 92

Dillard, J. Richard, Jr., Director of Public Affairs, Milliken & Company, 

Immediate Past Chairman, Spartanburg Area Chamber of Commerce, and 

Board Member, South Carolina Chamber of Commerce ................................... 101

Prepared statement .......................................................................................... 103

Dillon, Timothy J., Senior Vice President, Commercial Georgetown Steel Company, LLC ............................................................................................................. 74

Prepared statement .......................................................................................... 76

Friedman, Sarah, Executive Director, Southeastern Apparel Manufacturers 

and Suppliers Association (SEAMS) ................................................................... 34

Graham, Lindsey, a U.S. Senator from the State of South Carolina .................. 2

Hollings, Ernest F., a U.S. Senator from the State of South Carolina ............... 15

Hutchison, Jack, Economic Development Coordinator, Georgetown County 

Economic Development Commission .................................................................. 118

Johns, Bob, Marketing Director, Nucor Corporation ............................................ 71

Martin, Larry, a State Senator from the State of South Carolina ...................... 115

McClure, Jon T., President and Chief Executive Officer, ISO Poly Films, 

Inc. ......................................................................................................................... 94

Prepared statement .......................................................................................... 96

McKissick, Smyth, Chief Executive Officer, Alice Manufacturing Company, 

Inc., Easley, South Carolina, and representing American Textile Manufacturers Institute (ATMI) ....................................................................................... 39

Prepared statement .......................................................................................... 41

Murray, Larry, Staff Representative, United Steelworkers of America 

(USWA) ................................................................................................................. 78

Raynor, Harris, Southern Regional Director and International Vice President, 

Union of Needletrades, Industrial and Textile Employees (UNITE) ............... 37

Robinson, Chairman Roger W., Jr. 

Opening remarks of .......................................................................................... 1

Opening statement ........................................................................................... 9

Prepared statement .......................................................................................... 11

Tindal, Evans, Director of Operations, Cheraw Yarns Mill ................................. 119