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Experts say changing trade pacts could hurt North Carolina

Marcos Godoy of Mexico City manufactures car dash mats at a maquiladora belonging to the TECMA group in Ciudad Juarez, Mexico, on Dec. 27, 2013. Donald Trump and Hillary Clinton both want to make changes to trade agreements to bring jobs back to the United States, but experts say those changes could put additional pressure on North Carolina industries that have already suffered from recent international commerce pacts.
Marcos Godoy of Mexico City manufactures car dash mats at a maquiladora belonging to the TECMA group in Ciudad Juarez, Mexico, on Dec. 27, 2013. Donald Trump and Hillary Clinton both want to make changes to trade agreements to bring jobs back to the United States, but experts say those changes could put additional pressure on North Carolina industries that have already suffered from recent international commerce pacts. AP

Donald Trump and Hillary Clinton both want to make changes to trade agreements to bring jobs back to the United States, but experts say those changes could put additional pressure on North Carolina industries that have already suffered from recent international commerce pacts.

Republican presidential candidate Trump says he would shred the North American Free Trade Agreement, which allows Canada, Mexico and the United States to conduct business with one another without racking up steep export tariffs. Democratic presumptive nominee Clinton has said that she would like to renegotiate that agreement and review the Trans-Pacific Partnership plan to strengthen economic ties between a dozen different countries.

The push to address the job losses that the trade agreements are blamed for causing in states such as North Carolina has become a central issue in this year’s presidential campaign. North Carolina has shed more than 348,000 manufacturing jobs since the implementation of NAFTA in 1990s.

But any pledge to bring jobs back to the United States by getting rid of NAFTA – as Trump has promised to do – is a false narrative, said Norman Ornstein, a congressional scholar at Washington-based think tank American Enterprise Institute.

“There’s zero chance that he will get support from enough members of Congress to undo a treaty,” he said. “The question is not whether he can formally do that. Although there are provisions within NAFTA for withdrawal, it still requires votes in Congress. It’s really how much damage he can do to the treaty and the trade interactions in North America unilaterally.

“Now, you could imagine a skillful president sort of understanding the legislative process who wanted to do that to figure out ways of chipping away at it here and there, but that sure doesn’t define Trump.”

North Carolina businesses’ sale of goods to Canada and Mexico has generated about $10 billion per year over the past four years, while nationwide the export industry made roughly $30 billion per year in profits for the past three years, according to a U.S. Census Bureau report. The report shows that the top three export goods sold by state companies to foreign countries are civilian aircraft parts, over-the-counter medication and tobacco. Money made from trade transactions supported 164,023 jobs in the state in 2014, according to a U.S. Department of Commerce report.

Companies in the Charlotte-Concord-Gastonia area have raked in the bulk of those sales. Collectively, they netted $12.9 billion of the state’s $30 billion per year in 2014 worldwide exports, the U.S. Census Bureau report states. Rep. Robert Pittenger, R-Charlotte, said he would be in favor of having a president retool NAFTA so long as he or she can come up with a better trade plan from which companies in his district could benefit.

“North Carolina benefits from free and fair trade,” he said. “Revisiting the current agreement is a prudent exercise. The president would have my support, subject to an equitable bilateral agreement with respective countries that would replace NAFTA.”

The Greensboro-High Point area came in second with $3.5 billion in global export sales that year, the U.S. Department of Commerce report states.

The state is still struggling to recover from the purge of manufacturing jobs, said Michael Walden, an N.C. State University agricultural and resource economics professor. Its textile industry was hit particularly hard in the aftermath of the agreement’s implementation, he said.

“Small towns that were thriving are now ghost towns, and largely rural North Carolina and small town North Carolina have not been able to recover and find industries to replace textiles and apparel,” he said.

Additionally, the furniture industry has taken a hit from trade agreements that broadened the spectrum of international competition, said Kent Hughes, a public policy fellow at The Woodrow Wilson International Center for Scholars.

“I can remember a time when my friends would even drive to North Carolina to get furniture right from the factory so that they could get a special price,” he said. “Now, for the most part, the lumber is shipped to China and then turned into furniture of one kind or another and shipped back to the United States.”

Another woe on the horizon for furniture companies is the Trans-Pacific Partnership agreement, which would allow foreign countries to capitalize on an expanded trade market, he said. The leaders of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam spent five years crafting the trade plan and signed a finalized proposal in February of this year. The agreement has yet to be ratified.

Correction: An earlier version of the story misstated the amount of North Carolina businesses’ sale of goods to Canada and Mexico per year for the past four years. It is $10 billion.

Maggie Ybarra, 202-383-6048 @MolotovFlicker

Jobs to Mexico, Canada

▪  A North Carolina plant of Dell Inc. announced in 2009 that it would close its location in Winston-Salem and move to Mexico. The plant shed more than 600 jobs in the move.

▪  Mechanical pipe joining systems company Victaulic cut 90 jobs in 2014 on its way out of the Leland Industrial Park in Brunswick County and into Mexico.

▪  Arrow International in 2014 revealed a plan to move more than 600 jobs – including those held by plastics workers in Asheboro – from North Carolina and California to Mexico as well as the Czech Republic. The relocation plan was originally projected to take place over the span of three years.

▪  Compression hosiery brand Jobst began closing its facility at Rutherford College in 2015 in preparation for moving its U.S. production down to Mexico. Roughly 200 North Carolina manufacturing jobs were lost in the process.

▪  California-based entertainment company Lionsgate announced that it would be moving 100 jobs from the Charlotte area to Canada after Gov. Pat McCrory signed House Bill 2.

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