Title: WSJ.com - In Textile Country, Free Trade Tears At Party Loyalties
Author: Christopher Hutchison
Company: House Information Resources

| May 12, 2004 | |

PAGE ONE

In Textile Country,
Free Trade Tears
At Party Loyalties
One Carolina Republican
Flirts With Protectionism;
Another Doesn't Budge
Losing Roger Milliken's Vote
By MICHAEL M. PHILLIPS and JEANNE CUMMINGS 
Staff Reporters of THE WALL STREET JOURNAL
May 12, 2004; Page A1
North Carolina Republican Rep. Sue Myrick -- free trader and Bush acolyte -- had a change of heart last summer. She accused President Bush of being "out of touch" with her constituents, who blame the president's free-trade policies for their lost manufacturing jobs. "If he doesn't care about us, we won't care about him come election time," Ms. Myrick told a local Chamber of Commerce, as jaws dropped around the room.
South Carolina Republican Rep. Jim DeMint -- free trader and Bush acolyte -- is standing firm. He told fellow Republicans in March not to support trade barriers that would shield local goods from foreign competition. He criticized those "who want to build a wall around this country and go back to the textile-mill villages."
For Republicans, free trade poses a volatile political dilemma, and how they resolve it will have a big impact on their party and the presidential campaign. With elections approaching, public debate is focused on lost jobs, shuttered factories and Chinese competition, especially in hard-hit Carolina textile country. Lawmakers who backed a free-trade agenda during the Clinton and Bush years now must decide whether to abandon their principles -- and distance themselves from the president -- and court votes from the unemployed and disaffected. Or they can stick to their ideals of unimpeded global trade and hope to ride out a populist backlash against import competition.
The decision is especially tough for congressional Republicans, who have championed free trade for at least two decades. Economists have long argued that removing tariffs and quotas on imports helps consumers by reducing the price of those goods and services from abroad. But imports also can muscle out domestic goods and services, hurting U.S. firms and their workers.
President Bush has, at times, supported protectionist measures such as steel tariffs and farm subsidies. But now, with the national economy recovering, he regularly attacks "economic isolationism." Two weeks ago, four Bush cabinet members rejected calls for trade sanctions against China to punish it for keeping its currency weak against the dollar and barring trade unions. Both practices make Chinese goods cheaper for Americans.
Congressional candidates, though, can't look just at the big picture. They must deal with free trade's economic effects locally, where the policy may hurt more people than it helps -- and where the losers are more vocal politically.
In North and South Carolina, the gains and losses from trade are mixed. Since 1990, the Carolinas textile and apparel industry has shed 248,000 jobs, due to foreign competition and efficiency gains, according to the Department of Labor. In February, unemployment in South Carolina reached 6.3%, the fourth-highest in the nation.
But foreign investment in both states also has increased dramatically, producing an additional 109,000 jobs between 1990 and 1999, the most recent year for which data are available, according to Economy.com, a consulting firm. The foreign investments typically have been in the automobile and chemical industries, which pay higher wages than textile and apparel factories.
The two Republican Carolina lawmakers, Rep. Myrick and Rep. DeMint, have chosen to walk very different paths through this charged political and economic environment.
Protectionist Fight
Free-trade skepticism is a big change for Ms. Myrick, 62 years old, a feisty breast-cancer survivor who is given to wearing a jeweled American flag brooch. From 1987 to 1991 she was mayor of Charlotte, a city dominated by international banks, and pushed a free-trade agenda. She helped persuade Lufthansa AG to open a Charlotte-Frankfurt air route to spur commerce and investment. Since being elected to the House in 1994, she has supported free-trade deals with China and Vietnam, despite protests from local textile interests who feared competition. And she has voted to give the president authority to negotiate new trade pacts.
As a free-trade advocate, she has won re-election four times by wide margins. But she says her outlook began to shift as the textile and apparel makers in her district, which includes Charlotte and nearby textile areas, lost sales and jobs. By last July, unemployment in Gaston County reached 8.8%, two percentage points above the state average. The county's mills complained they couldn't compete with cheap Chinese imports. Especially galling, she says, was the unwillingness of the White House to impose restrictions, permissible under World Trade Organization rules, to limit soaring imports of bathrobes, bras and knit fabrics, which were battering Gaston County manufacturers.
When she arrived at Belmont Abbey College to meet with the Gaston County Chamber of Commerce last August, she was bubbling over with frustration. "People are angry," she told the business executives. "I understand why they are angry, and I agree with why they are angry." The remarks surprised her constituents. "Sue Myrick criticize President Bush? Isn't that like Bat Girl criticizing Batman?" wrote Don Hudson, a Charlotte Observer columnist.
Over the following months, Ms. Myrick kept up the pressure on the administration. In September, she signed a congressional letter urging Mr. Bush to restrain textile imports. Then she led a group of six lawmakers, including Rep. DeMint, who convinced congressional appropriators to add $9.5 million to hire customs agents to find and seize Chinese textiles whose manufacturers were falsely labeling them as coming from other countries, trying to skirt U.S. import limits.
In October, she co-sponsored a bill that would slap a 27.5% tariff on all Chinese imports. She says that's needed to counter an unfair advantage Beijing gets by keeping its currency artificially weak. Although the tariff isn't expected to become law, it ran counter to the administration's China policy. Since then, China has said it is considering allowing its currency to strengthen, which probably would make Chinese goods more expensive in the U.S. But Beijing hasn't taken any concrete steps.
Ms. Myrick still faced pressure at home to ratchet up her protectionist fight. At an October steel-industry dinner in Charlotte, home of Nucor Corp., the big steelmaker, Fred Reese, president of Western Carolina Industries, told Ms. Myrick that business groups, unhappy with the president's free-trade stance, aimed to register hundreds of thousands of new voters. The implication: many would vote Democratic. "I would liken it unto the anger of a betrayed spouse," Mr. Reese, himself a Bush supporter in 2000, said of the anti-Bush feeling among Republican manufacturers.
A November poll by the Southern Political Information Network, a Democratic political consulting firm, showed statewide anger at incumbents of both parties. In Ms. Myrick's district, 44% of those surveyed said they wanted a new congressional representative, while just 22% said they were happy with the incumbent.
Ms. Myrick says she relayed the rising discontent to party leaders and the White House. "Everybody is at risk," she says in an interview.
The White House finally lent her a helping hand in November, when it decided to limit imports of Chinese bathrobes, bras and knitted fabrics. But the Charlotte Republican soon may have another tough call: whether to vote for the Central American Free Trade Agreement, which could boost apparel imports from that region. Local textile firms oppose the pact, but the administration supports it.
Now, with the election drawing closer -- and Mr. Bush expected to carry North Carolina -- she is toning down her criticism of the White House. "The administration has gotten its act together and is doing something," she says.
Her Democratic opponent, Jack Flynn, a small-business owner from Charlotte, dismisses Rep. Myrick's tougher stance on trade as an "election-year conversion." But her trade hawkishness has won her points locally.
Bob Austell, the mayor of Cherryville and a Democrat, praises Ms. Myrick for being willing to "stand up and say George Bush is wrong."
A Free Trader
Though South Carolina's textile counties are hurting as badly as North Carolina's, Rep. DeMint has adopted a very different strategy from Ms. Myrick's. He rose to political prominence as a free trader and he remains one. Rather than trying to co-opt textile-industry opponents, he confronts them.
Trim and dapper with just a whisper of his native South Carolina accent, Mr. DeMint, 52, grew up in Greenville, in a region once called the "textile capital of the world." But since 1990, Greenville has become the epicenter of foreign investment in the state. More than 250 foreign firms, including German auto maker Bayerische Motoren Werke AG, have facilities along Interstate 85, which cuts through Greenville. Mr. DeMint has benefited from the influx: As the head of a local marketing firm, his clients included state ports and export-dependent pharmaceutical firms.
Mr. DeMint first won election to Congress in 1998 and now hopes to move to the Senate. He faces five Republican opponents in the June 8 Senate primary. He will likely face a protectionist-leaning Democrat if he makes it to the general election. And the state's powerful textile lobby is against him.
Outside Greenville, the three-term lawmaker often drives by an oversized billboard, put up by the textile industry, that asks: "Have you lost your job to free trade yet?"
"Those billboards are for me," says Mr. DeMint.
Rep. DeMint staked his career on his support for free trade in 2002. He supported granting the president broader authority to negotiate new trade deals, a move the textile industry opposed. Initially, Mr. DeMint had said he would oppose the free-trade bill. But late in the House debate, he switched his vote to "aye" after extracting a letter, signed by House Speaker Dennis Hastert (R., Ill.), promising to protect American dyed and printed fabrics. The legislation passed by one vote.
That vote ratcheted up political tensions at home. But Mr. DeMint still argues free trade will boost the U.S. economy.
Mr. DeMint's fiercest foe is Roger Milliken, the 88-year-old chairman of textile giant Milliken & Co., based in Spartanburg, S.C. Mr. Milliken backed Mr. DeMint in his first House race in 1998, when trade wasn't a big issue. But the Milliken-DeMint relationship has worsened as Mr. DeMint has failed to budge in his support for free trade. Milliken lobbyist Jock Nash compares the Milliken-DeMint relations nowadays to "the Hatfields and McCoys."
In 2002, Mr. Milliken recruited a state lawmaker to challenge Mr. DeMint in the primary. Textile executives aired more than $200,000 worth of anti-DeMint TV ads. But the free-trade incumbent, aided by a visit from President Bush, won with more than 63% of the vote. The next day, Mr. Nash, the Milliken lobbyist, sent out an e-mail vowing Mr. DeMint "is toast in regard to any further statewide political aspirations," unless he stopped supporting free trade.
In the current Senate contest, Mr. Milliken helped recruit Mr. DeMint's chief Republican primary opponent, former governor David Beasley. Mr. Beasley takes credit for luring international companies to the state in the 1990s. But now he's calling for "fair trade," though he has yet to define that term.
In Cheraw, S.C., textile executives are backing voter-registration efforts, figuring mill workers will vote against Mr. DeMint. Textile executives also have held fund-raisers for Mr. Beasley. According to financial disclosure reports, the Beasley campaign raised $1.2 million in the first three months of 2004. At least $160,000 of that came from the textile industry. Mr. Milliken, his family, and his company executives donated more than $50,000 of that sum.
The U.S. Chamber of Commerce traditionally remains neutral in primaries but is backing Mr. DeMint. On Feb. 9, Mr. DeMint and Bill Miller, the chamber's political director, visited three cities to announce the surprise endorsement. At one stop, Charleston Marine Containers Inc., in Charleston, S.C., which makes steel shipping containers, Mr. DeMint shared the stage with 15 workers in hard hats, a backdrop intended to highlight local jobs that depend on free trade.
Now the chamber is running television ads on Mr. DeMint's behalf.
"We can't go backwards," Mr. DeMint said recently, sitting in his sparsely furnished campaign office in the state capital of Columbia. "We have to sell our philosophy."
Write to Michael M. Phillips at michael.phillips@wsj.com^3 and Jeanne Cummings at jeanne.cummings@wsj.com^4

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