Policy Implications

International Policy

North Carolina has been one of America's leading manufacturing states in textiles and apparel for years. Consequently, many policies have been enacted that both help as well as hurt the industry.

NAFTA

The North American Free Trade Agreement, signed in November of 1993, helped to establish free-trade guidelines between America, Canada, and Mexico. The effect of NAFTA has been felt throughout the state; however the nature of the outcome is still under debate.

The report by the Council of the Americas and the U.S. Council of Mexico-U.S. Business, NAFTA Delivers for North Carolina shows that the state has increased its exports of textiles and apparel to Mexico (560.1 million in 2001) and Canada (453.4 million in 2001). Although exports have increased, job losses continue to mount in the sector. Since NAFTA went into effect in 1994, the state has lost half its textile and apparel industry jobs. In an open letter to President Bush, Governor Mike Easley states that "the effects of past trade agreements have been devastating for the textile and apparel industries throughout the Southeast."

WTO

The Multi-Fibre Arrangement (MFA) has regulated the international sector for over thirty years. Originally negotiated for a four-year period, the MLA's intent was to help both developed and developing countries prosper. Limits were placed on exactly what quantity of textile and apparel goods could be exported from one country to another. Although the quotas were supposed to lessen as the years went on, the over time the limits became more restrictive to deloping countries.

The World Trade Organization has recently incorporated textiles and apparel into its trade policy. Under pressure to eliminate trade barriers, the WTO negotiated the Agreement on Textiles and Clothing in 1994. That pact was designed to gradually phase out the MFA quotas in a three-step process over a ten-year period:

1. 16% of tariff lines to be integrated into the Gatt (1995-1998)
2. 17% of tariff lines to be integrated (1998-2002)
3. 18% to be integrated after 2002 followed by the final 49% by the end of 2004 (2002-2004)

State Incentives and Programs

The North Carolina Department of Commerce has designed incentives and programs to help revitalize the sector. These include the William S. Lee Quality Job and Expansion Act, the Industrial Development Fund, and the Business Energy Improvement program. There are also environmental policies that apply.