Rural America Pays Heavy Price
With Free Trade

By William Amt, NADO Research Foundation Program Manager, EDFS

Proponents agree that US participation in the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) has positively impacted the US economy. By reducing trade tariffs and quotas, NAFTA contributed a 78 percent growth in US exports to Canada and Mexico in its first six years. Jobs related to these exports increased 34 percent between 1993 and 1999. But not all sectors of the US economy have benefited.

Employment in the textile and apparel industries has dropped considerably since the implementation of NAFTA in 1994 and the WTO’s 1995 Agreement on Textiles and Clothing. Rural communities in the southeast whose economies depend on these industries have felt a significant negative impact.

Historically, the textile and clothing industries were lured by low labor costs, migrating from the costly urban northeast to the rural southeast during the past century. Nearly 75 percent of US textile employment and more than 25 percent of apparel jobs are located in six southeastern states: Alabama, Georgia, North Carolina, South Carolina, Tennessee, and Virginia. In 1987, 38 percent of the rural counties in these states relied on textiles and/or apparel firms for 20 percent or more of their employment.

“The county is trying to diversify its economy and rebuild its tax base as the textile sector downsizes.” - Harold Shapiro, executive director, Catawba Regional Council of Governments

These industries started downsizing before NAFTA due to increased automation, lower labor costs overseas and cheaper imports. Between 1985 and 1993, the textile sector reduced in size by four percent nationally, and employment in apparel fell by 12 percent. After NAFTA and other agreements went into effect during the mid-1990s, textile employment fell 22 percent between 1994 and 2000 and apparel dropped 37 percent. Between 1987 and 1997, textile employment in the six states fell by 20 percent, and apparel 34 percent.

Regions Take Action

Economic Development Administration (EDA) funded districts are helping communities where plants either close because of cheaper imports or relocate to lower cost labor markets. Union County, South Carolina, served by the Catawba Regional Council of Governments in Rock Hill, has seen its textile employment fall from 4,400 in 1995 to 2,000 in 1999. Harold Shapiro, Catawba’s executive director, said, “The county is trying to diversify its economy and rebuild its tax base as the textile sector downsizes.” Some displaced workers travel 30 miles or more to find jobs in a diverse industrial region along Interstate 85 outside of the county. To attract new employers to Union County, EDA provided funds to upgrade the wastewater treatment that serves a new industrial park in the US Highway 176 section of the county. In this park, Union County and local businesses are cooperatively purchasing needed land to construct a spec. industrial building. Nearby Chester County, South Carolina, has also experienced textile layoffs, but an EDA-funded sewer project and wastewater plant upgrade near I-77 have generated $200 million in investment and 2,000 new jobs over a 20-year period, helping to offset textile losses.

Rural counties in the South Central Tennessee Development District in Columbia, Tennessee, were hit hard by apparel plant closings. In 1995, Wayne County had five firms with 596 employees. Today two remain employing about 200. South Central’s Executive Director, Joe Max Williams, reported that EDA funded an economic development strategic plan for the county in 1998 to identify ways to expand the economy. South Central recently partnered with the Tennessee Valley Authority, USDA Rural Development, Tennessee Department of Economic and Community Development, Buffalo-Duck RC&D, South Central Tennessee Workforce Board, and local government officials to form Communities Tomorrow, which will formulate and implement community and economic development strategies for the region.

For More Information, Contact: Harold Shapiro at 803/327-9041 or email exec@catawbacog.org; Joe Max Williams at 931/381-2040 or email jmax@sctdd.org.

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