Date: 1982-07-23
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. I speak today in order to call to the attention of my colleagues the significance of a recent decision of the World Bank authorizing a textile industry loan In the Philippines. The loan Is in the amount of $157.4 million and is to be used for the purposes of "textile sector restructuring." and was made to the Development Bank of the Philippines and the Board of Investments. In their review of this project. and In their recommendation of its approval. members of the Reagan administration argued that exports of yarn. fabric. and garments from the Philippines were of such low volume as to be no problem to the United States. and that subsequent domestic demand for textile productswithin the Philippineswould absorb any increase in production capacity reached over the next few years. Given this rationale. they recommended and voted approval of the loan. Not only was poor and incorrect analysis used to justify making this loan. Mr. Speaker. but the loan was made at highly subsidized terms thereby further making our textile industry less competitive. If only our businesses. farmers. or consumers could get a loan on terms similar to that given to the Philippines. we would soon be out of this severe recession we are now in. Listen to these terms of the World Bank loan to the Philippines to subsidize their textile industry. The loan is for 20 years. with an initial grace period of 5 years and interest at 11.6 percent a year. It would be beneficial. indeed. if our consumers and producers would obtain loans with these terms. Maybe then. for example. the bankruptcy rate for businesses. now the highest ever. would diminish. There are however. Mr. Speaker. other important facts that ought to be considered before passing judgment on this decision. inasmuch as they pertain to the textile industry. Here. I would draw attention to some very important statistics to be borne in mind: First. over the past 20 years. the overall growth rates in productivity in the U.S. fiber industry. the fabric industry. and the apparel industry. have exceeded the average growth in productivity for the economy. These industries are. therefore. very important contributors to the U.S. economic portfolio. Second. increases in apparel imports. however. over the years have deprived not only the U.S. apparel industry. but also its suppliers in the U.S. fiber and fabric industries. of a significant share of domestic growth in the United States. Our fiber and fabric Industries. which are competitive in world export markets. are often denied the opportunity to grow by serving the largest apparel exportersmainly from the Far East market areas. .Third. these large and growing apparel exporting countries either pursue protectionist policies or have industrial or regional structures that link together fiber. fabric. and apparel production in order to increase their competitiveness in fiber and fabric. The United States does not. enjoy this type of production environment. nor has it sought to establish it. Fourth. by using linkage to foreign apparel producers selling into U.S. markets. foreign fiber and fabric makers are able to gain volume and resulting production efficiencies sufficient to increase their competitiveness at a rapid rate. while the competitiveness of U.S. producersdenied both domestic market growth and growth through sales to large apparel exporting countriesslowly continues to erode. Mr. Speaker. these are the conditions that are driving this country headlong toward the adoption of protectionist legislation. and. while I am not speaking today as an advocate of this approach. it is becoming increasingly difficult for many of us to overlook this option for many of our industries. Textiles is but one of a multit(ide of examples to be considered. The administrations decision was reached with full knowledge that our textile/apparel trade deficit is headed toward a record $6 billion for the yeara deficit that has increased by 44 percent during the JanuaryMay 1982 period alone over the same period in 1981. The administrations decision was reached with full knowledge that unemployment in the textile industry stands at 12.5 percent as of last May. Employment. at 775.000 persons is down by 84.000 from last year. And finally. the administrations decision was reached with full knowledge that production has dropped by 15 percent. and imports continue their impact on declining production. Mr. Speaker. our trade agreement with the Philippines is due to be renegotiated next month. We can only hope that our representatives will take serious note of other equally distressing trends perhaps best depicted by the fact that our inports in textiles from the Philippines grew from $212 million in 1980 to $260 million in 1981. while our exports of textiles to the Philippines dropped from $39 million in 1980 to $37 million in 1981. It is evident that the loan granted by the World Bank can only have one direct effectto upgrade the spinning. weaving. and knitting capacity of the Philippine industryeventually to the point where there will no longer. exist any need for purchases of raw material from the United States. I cannot understand how this administration can vote in favor of a loan -which can have no effect domestically other than further depressing employment and production in one of our most depressed industriesthe textile industry. Mr. Speaker. legislative jurisdiction over the World Bank and its affiliates resides within the House Committee on Banking. Finance and Urban Affairs. of which I have the honor to be chairman. I want to note for all today. that the next appearance of administration officials requesting additional funding for the World Bank before our committee will feature some very hard and blunt questioning. I will demand answers as to both motivation and results drawn from such choices as are evidenced through this most recent administration loan action. Voting in favor of a World Bank loan to upgrade the textile industry in the Philippines. was a vote to further strangle the textile industry in the United States.e