Objective: students will be able to use internet research to
understand the positive and negative results of barriers to
trade.
After reading this article, list the following information:
1.
List positive results of tariffs.
2.
List negative results of tariffs.
3.
Be prepared to share your answers with the class.
Relaxed tariffs help poor, spark questions
Bill returns textile jobs to N.C. county, but some say lawmakers did it to help
firms with political ties.
By Barbara Barrett
Washington Correspondent Posted: Tuesday, Sep. 07, 2010
Levonia Hargrove, 52, of Norlina works at the Glen Raven manufacturing facility in Norlina. After layoffs last year, the company is planning to hire 38 new employees. COREY
LOWENSTEIN - [email protected]
More Information
Tariff suspensions from N.C. senators
Here are some tariff suspensions proposed by North Carolina's two senators. Each proposed about three dozen suspensions in total:
Deere; acrylic fiber to benefit Glen Raven; window shade material to benefit Hunter Douglas; film stock to benefit Baxter International; various chemical components to benefit BASF, Syngenta, DyStar, Ciba Specialty Chemicals, Chemtura and Bayer CropScience.
U.S. Sen. Kay Hagan, a Democrat from Greensboro: Chemical components to benefit DyStar, Syngenta, Celanese, Clariant and CABB North America; imported fibers to benefit Consolidated Fiber, National Spinning and Glen Raven; lithium to benefit FMC Corp.; window shade material to benefit Hunter Douglas.
WARREN COUNTY A few blocks from the restored antebellum homes that draw tourists to this rural county, wooden shacks sink into the sandy soil, their tin roofs bowing low, walls askew.
Young people and factories have long been known to leave Warren County.
Not much new comes in. So when the last local textile plant announced in August that it would bring back its third shift, word spread quickly.
The Glen Raven textile mill in Norlina had 38 jobs available, paying $8.50 an hour and up. In Warren County, a sparsely populated place hugging the Virginia border about 50 miles north of Raleigh, the unemployment rate hovers above 11 percent.
The new jobs were created partly because Congress relaxed some tariffs. That benefits poor areas such as Warren County, but the U.S. Treasury will lose hundreds of millions of dollars altogether. The congressional action raises questions about whether lawmakers are giving breaks to politically connected businesses or trying to throw a lifeline to struggling communities.
Allen Gant, Glen Raven's president and chief executive officer, calls his new third shift the result of a combination of small things - including good inventory decisions and a growing retail market in boat cushions, convertible car tops and fancy patio furniture.
But among the reasons, Gant acknowledges, is a little-known but massive piece of legislation that Congress passed in late July after more than three years of dickering.
The Miscellaneous Tariffs Bill, as it is known, contains hundreds of provisions to erase or reduce the government tariffs that companies pay on raw materials imported from foreign countries. Glen Raven's plant in Norlina spins European-made, acrylic fluff into spools of yarn. The yarn is shipped to Anderson, S.C., where it is woven into fade-resistant outdoor fabric under the brand Sunbrella.
Gant has given $7,100 to Coble's campaign since 2007. More than $2,000 of it came two weeks after Coble first submitted the bills in 2007 to benefit Gant's company.
Gant gave $4,600 to Burr's campaign in the same time and funneled $30,400 to the state GOP through Burr's joint fundraising committee.
Federal election records show no contributions to Hagan's campaign. (However, Gant has given $3,500 to U.S. Rep. Virginia Foxx, who opposed the tariffs bill.)
Coble, whose mother worked in a textile mill, said he's a longtime friend of Gant and that the contributions have nothing to do with the legislation he introduced. He also pointed out that Gant has long been a campaign contributor.
"There could be the perception, given the current climate, that people might say, 'This shouldn't happen,'" Coble said. "But I don't see anything irregular about it."
Coble, along with many company executives, argue that the tariff suspensions shouldn't even go through Congress but rather directly through the trade commission in the U.S. Department of Commerce.
"That would remove it one step further from the political arena," he said.
Coble 'a lead dog on this'
North Carolina isn't known for wielding heft around Capitol Hill, but the state has found its niche in the Miscellaneous Tariffs Bill.
In a House Ways and Means Committee spreadsheet released in July, one of every seven tariff suspension requests came from North Carolina - more than 120 in all.
The undisputed king of tariff-suspension bills in the House of Representatives is Coble, who submitted 49 bills - 43 of them successfully. His tariff suspensions benefited a host of
companies, along with the National Council of Textile Organizations. Most of the firms make textiles, and most are from North Carolina.
"I've been a lead dog on this," Coble said in an interview. "When you realize how many additional jobs are created, it does make sense."
The first applications for the Glen Raven jobs were accepted in early August.
People waited up to five hours for an interview. Someone fetched water so no one would faint in the heat.
"It was so many people," she said last week. "Some people got tired of waiting. They left. I wasn't going nowhere."
Frances Sondgeroth, who runs the Industrial Staffing job agency, interviewed 345 people - 54 just on that first day - before the company stopped accepting applications.
In total, 400 people put in for the 38 positions.
Treasury to lose millions
The Congressional Budget Office estimates that the U.S. Treasury will lose about $300 million through 2015 because of the corporate breaks in suspended tariffs.
But lawmakers and company leaders say this is money the Treasury shouldn't have had in the first place.
Tariffs exist to protect domestic suppliers from foreign imports. Before the International Trade Commission signs off on each request for a tariff suspension, it must certify that no U.S. company makes the same product.
Todd Wemyss, the Norlina plant manager, said the last U.S. supplier for the fiber his plant needs closed years ago. Now, he said, Glen Raven is unfairly penalized for importing its raw material.
The National Association of Manufacturers said the dollars add up. The group told Congress in July that the Miscellaneous Tariffs Bill would increase U.S. production by $4.6 billion and support almost 90,000 jobs.
"I'm sure the government could use the revenues," said U.S. Rep. Mel Watt, a Charlotte
Democrat. "At the same time, these companies employ people. I haven't done the math on what we lose in tariff revenues versus what we gain in income taxes from employees and corporate taxes from the companies.... I'm not going to nitpick if we're losing tariff revenue."
Watt submitted 18 bills, the second-highest number in the state's House delegation. All were to benefit Quality Colors LLC of High Point; a few were co-sponsored by Hagan.
The bundle of tariff suspensions was renamed the Manufacturing Enhancement Act by Democratic leaders and passed the House in late July 378-43.
Some Republicans, including U.S. Rep. Virginia Foxx of Banner Elk, opposed it after their leaders claimed the suspensions amounted to earmarks - which the party had pledged to fight.
Foxx's spokesman, Aaron Groen, said Friday that Foxx supported the tariff suspensions but voted "no" because she wanted to be consistent in abiding by the party's earmark moratorium.
president Steve Ellis. "According to Congress, tariff suspensions are earmarks. Certainly it meets the definition: It's benefitting one company."
Ellis also pointed out that companies routinely classify their raw materials into narrow categories in order to get under the benefit limit of $500,000 a year. "There are all kinds of ways to game it," he said. "I would say we'd be better off, rather than having hundreds and hundreds of tariff exceptions, looking at the whole tariff structure."
In Warren County, Thelma Carter got the call from Glen Raven. She was given her apron, earplugs and seam ripper. She was told she'll return to her old job, on her old shift, working with women she has known for years.
"Thank you, Jesus!" Carter laughed, clapping her hands in prayer. "I'm ready."
