Made in South Korea
The American textile industry may soon suffer from both too much and not enough when it comes to international trade regulations. The New York Times reports:
A proposed free trade agreement with South Korea, which the House and Senate are scheduled to consider this week, would open the American market to a manufacturing powerhouse that has its own high-technology textile industry.
This will open up American textile companies to further competition from South Korean imports, which will be able to undercut domestic prices by 25 to 30 percent. Is that a bad thing?
Economists generally argue that free trade agreements benefit all participating countries by creating a larger market for goods and services. But that benefit derives in part from the movement of some activities to the lower-cost countries….
The production of shirts and sheets has shifted steadily from the United States to countries with lower-cost labor. Economists argue that this process strengthens the economy as companies and workers shift to more productive and lucrative kinds of work.
Meaning a net gain for the American economy, while potentially sacrificing industries such as textiles to more cost-effective foreign outsourcing.
Still, the deal doesn't simply let the global market play its course unimpeded. The "free trade" agreement features regulations designed to manage international trade:
Textile industry executives are particularly incensed that for some products, like the roofing fabric produced by Highland, the deal requires the United States to reduce tariffs more quickly than South Korea.
And it's not like the administration hasn't built favors into the deal for other industries. The Detroit News reports:
The free trade deal won the backing of Detroit's Big Three automakers, the United Auto Workers and nearly all of Michigan's congressional delegation after the Obama administration won new protections for U.S. automakers that weren't included in the original treaty reached by the Bush administration.
For more on the politics of free trade, check out Reason's archives. For the Reason Foundation's take on the current trade agreement, click here.
