Close Call

The intense and even passionate debate in the House over imposing punitive limits on textile imports has ended with a narrow victory for President Reagan, whose veto of the protectionist legislation was upheld, and with the reassurance that the United States will continue to honor important international trade accords. But while those who sought to slash textile imports by up to 30% were defeated, they were not left entirely disappointed. In the weeks leading up to the vote the Administration acted to negotiate new agreements limiting the growth in fabric imports from Taiwan, Hong Kong and South Korea, which together account for more than one-third of the textiles entering the country. These understandings probably would not have been reached without the pressure of the threatened legislation.

Over the last half-dozen years the American textile industry has indeed been sorely wounded, though Commerce Secretary Malcolm Baldrige for one now sees signs of recuperation taking hold. Between 1980 and 1984 textile imports doubled, while the jobs of an estimated 300,000 American textile workers disappeared. According to the Labor and Commerce departments, though, most of those jobs were lost between 1980 and 1982, before the real surge in imports began. What this suggests is that the problems of the industry are by no means the result of aggressive foreign competition alone. John Kenneth Galbraith once suggested that “depressions disclose what the auditors missed.” By the same token, a soaring demand for imports may say a lot about the basic inefficiencies and failure to modernize of competing domestic producers.

Although few Americans realize it, a complex structure of quotas and tariffs has long protected the domestic textile and apparel industries, with consumers paying dearly for those restrictions. The most recent in a long line of studies on the costs of textile protectionism, published earlier this year by the Institute for International Economics, found that import limitations increase prices at the wholesale level alone by $27 billion a year, meaning that retail prices are raised even more. Had the latest protectionist bill passed, that hidden tax on consumers could only have gone up.

At the same time, retaliation against American products sold overseas would have been not only invited but perhaps made inevitable. The ultimate result would have been that while some jobs were saved in the textile industry, other jobs connected with overseas trade would have been lost. Trade is indeed a two-way street. Lately an excess of traffic on that street has been moving in one direction. Protectionist barriers won’t even out that flow. Increased American competitiveness and a more aggressive search for markets overseas will.