Federal Programs and Policies
Note: This topic page may contain material that has not yet been updated to reflect the new Farm Act, signed into law on February 7. ERS has published highlights and some implications of the Act’s new programs and provisions. Sign up for the ERS Farm Bill e-newsletter to receive notices of topic page updates and other new Farm Bill-related materials on the ERS website.
How workers, farms, firms, and communities adjust to the change brought on by expiration of Multifiber Arrangement (MFA) quotas in 2005 depends on many factors. There are several existing programs that assist workers and communities adversely affected by trade, and also several policy instruments that may be invoked that could affect the trade situation. In addition, farm policies affect the profitability of cotton production.
The U.S. Department of Labor administers the Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA) programs. These programs assist workers who have lost their jobs as a result of increased imports or because production shifted to a foreign country. TAA benefits include income support, relocation allowances, job search allowances, a health coverage tax credit, and occupational training, if desired. The ATAA program allows older workers to accept reemployment at a lower wage and receive a wage subsidy. Workers aged 50 and over may apply for both the TAA and ATAA programs, and then choose which program they wish to participate in.
To be eligible for benefits, a worker group must first request certification as workers adversely affected by trade. If a worker group is certified, then individual workers within that group may apply for TAA or ATAA benefits.
The U.S. Department of Commerce's Trade Adjustment Assistance for Firms program provides financial assistance to manufacturers affected by import competition. This cost-sharing program pays for half (up to $75,000) the cost of consultants or other experts for projects to improve a firm's competitiveness. Project areas include marketing, engineering, information technology, and quality.
Southern States have taken the lead in funding research to identify and develop new markets and providing outreach to modernize textile and apparel plants. Clemson Apparel Research and Catawba Valley Community College's Hosiery Technology Center in South Carolina and North Carolina State University's College of Textiles support a number of initiatives to revitalize the textile and apparel industry through the appropriate application of technology and management practices. Most Southern States have at least one public college or university with a specialization in the industry. Many of these programs are linked with the Manufacturing Extension Partnership—a collaborative program of the Federal Government, State governments, and industry to increase the competitiveness of small U.S. manufacturers—which provides assistance in adopting technology or new management practices, available in all 50 States.
Communities that lose population and employment because of developments in the textile and apparel industries may need more help from Federal programs than is provided by general community assistance. Population loss can lead to problems such as job loss, declining sales for businesses, declining revenues for local government, and declining house values. Federal assistance comes in many forms, including assistance for housing, infrastructure, transportation, education and training, welfare, and health. Of particular importance are the following:
- USDA, Rural Development (housing, business, and infrastructure assistance);
- U.S. Department of Housing and Urban Development, Office of Community Planning and Development (housing and community development); and
- U.S. Department of Commerce, Economic Development Administration (economic development assistance).
Although MFA quotas have been completely phased out, other policy instruments, such as tariffs and preferential agreements, will affect the market. Global tariffs on textiles and apparel remain significantly higher than for most other manufactured products. Nontariff trade barriers are also a factor, including anti-dumping duties, import "rules of origin," safeguards, elaborate custom procedures, stringent labeling requirements, and outright bans on apparel imports. Countries with preferential market access typically pay lower tariffs, which will also influence production and trade.
For more information, see Textile and Apparel Trade After the Multifiber Arrangement.
Cotton and Farm Policies
Cotton policies affect Southern States because cotton-related industries, infrastructure, and consequently, employment, have developed around cotton production. As U.S. production, use, and trade of cotton have become more efficient and globalization has taken hold, cotton policies have evolved. Because there is much overlap between cotton production areas and textile and apparel plant locations, current and future cotton programs will be another factor in determining the net effect of the expiration of the MFA.