WASHINGTON — Days before the Central American Free Trade Agreement went to a House vote, lobbyists for Wal-Mart, Nike and other retailers and apparel firms met with lawmakers to push for passage.
Domestic textile industry lobbyists, who were divided on the treaty, also held last-minute sessions with members. The accord giving importers duty-free benefits for apparel made in the CAFTA region finally passed by two votes.
Facing the increased pressures of international commerce, companies are ratcheting up their lobbying in Washington as ties among lobbyists, lawmakers and federal agencies have come under closer scrutiny. The renewed focus, manifested by proposed legislation to tighten controls on lobbying, has occurred because of the Jack Abramoff bribery investigation.
The fashion industry’s emphasis on lobbying comes as globalization has fractured the industry and often pits U.S. retailers and importers — shifting greater percentages of business offshore — against domestic textile and apparel manufacturers struggling to maintain a foothold.
“There has been an increase in both the intensity and numbers in lobbying in the textile industry,” said Michael Munger, professor of political science and economics at Duke University. “It has become a more political business. They are more exposed [to imports] and their future profitability is more contingent on actions by Congress.”
The retail sector, buffeted by the winds of consolidation and the global economy, is more organized, as well.
“It used to be retailers could count on consumers liking [imports] because they were cheaper, but there has been a backlash for some retailers,” Munger said. “If you live in North Carolina, free trade isn’t very popular and retailers have to do a lot more explaining.”
Lobbyists, many of them inside-the-Beltway players who have moved to the private sector from government positions, seek access to policymakers and try to influence the outcome of decisions. They direct strategy, suggest legislation, arrange meetings, organize letter-writing campaigns and seek to develop relationships that will further their goals. For the industry, that means focusing on the key trade committees — House Ways and Means and Senate Finance. Lobbyists even sit on advisory trade panels that provide input to the Bush administration.
“The government can make or break you,” said Brad Figel, global director of government and public affairs at Nike Inc., the world’s biggest athletic company, who heads the Washington lobbying office. “When you have a company representative sitting across from [a lawmaker or administration official], it is much more powerful and it means more.”
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Nike manufactures most of its apparel and footwear overseas. So, for example, government-imposed restrictions on apparel and footwear imports could have a major impact on the company.
Among retailers, Wal-Mart Stores Inc., with revenues of $312 billion, spent the most money on lobbying last year, a total of $1.62 million to run its own lobbying office in Washington and for outside law firms that employ former lawmakers, Capitol Hill staffers and administration officials as lobbyists, according to Congressional records. The lobbying expenditures are separate from campaign contributions, and Wal-Mart’s pale in comparison with the overall lobbying leader, General Electric Co., which spent $20 million to lobby in 2005.
Wal-Mart was followed by Limited Inc., which spent about $840,000 on lobbying; Sears Holding Corp., $544,182; Gap, $380,000; J.C. Penney, $90,000, and Dillard’s Inc., $40,000, the records show. In the vendor and textile community, Nike was tops at $450,000; Sara Lee Branded Apparel, $340,000; Milliken & Co., $200,000; Russell Corp., $60,000, and Levi Strauss & Co., $28,000.
Many companies supplement their lobbying by hiring law firms specializing in areas such as health care or taxes. Others largely rely on trade associations.
The effectiveness of lobbying varies. Although CAFTA was a win for retailers and importers seeking to cut tariffs, on another trade matter, they settled for a three-year import restraint agreement with China, considered a victory for the domestic textile industry. While the textile industry, concentrated in the Southeast, has a smaller investment in lobbying and represents fewer workers than retailing, its influence is substantial because of the elected officials from that region, lobbyists and lawmakers said. Associations representing textile interests also channel member contributions into lobbying, including the American Manufacturing Trade Action Coalition, which spent $200,000, and the National Council of Textile Organization, $102,700.
“We are a heavily regulated industry and we have strong and well-organized opposition from the domestic industry,” said Nike’s Figel. “It’s best to have a strong presence here.”
Before joining Nike in 1995, Figel was a trade lawyer on the Senate Finance Committee. He manages a three-person lobbying office here, and seven lobbyists in offices in Brussels, Moscow, Singapore, Beijing, Ho Chi Minh City and Bangkok.
Among the top issues for Figel and Nike last year were negotiations between the U.S. and China on an import restraint agreement, which culminated in quotas restricting $6 billion worth of Chinese textile and apparel products.
This year, Nike is lobbying on issues related to Vietnam’s efforts to join the World Trade Organization, including the size and phaseout of tariffs on footwear and apparel, and is opposing an attempt by the U.S. textile industry to include a special safeguard mechanism similar to the one China agreed to when it entered the WTO.
Wal-Mart opened its lobbying office here in 1998, investing less than $50,000 that year. The retailer has boosted efforts to improve its image and rebut criticism on several fronts, including employee health-care benefits and wages. It employs eight full-time lobbyists here, said the company’s chief lobbyist, Lee Culpepper.
“It is important to have a presence here and that is the [big] reason why our office has grown so much,” said Culpepper, Wal-Mart’s vice president of federal government relations. Culpepper was a chief lobbyist for the National Restaurant Association and worked more than eight years on Capitol Hill for former Sen. Sam Nunn (D., Ga.) and former Rep. Richard Ray (D., Ga.).
“If we aren’t out there telling our story ourselves, someone else will go tell it for us and not in a way that is always accurate,” he said.
One of Wal-Mart’s top priorities is an application before the Federal Deposit Insurance Corp. to open an industrial loan company to handle its electronic payment processing. The bid generated some intense opposition on Capitol Hill and among smaller banks fearful Wal-Mart will put them out of business.
Levi Strauss has established a different lobbying and advocacy model. The company’s chief lobbyist is based at its San Francisco headquarters and Levi’s uses consultants here.
Helga Ying, Levi’s director of worldwide government affairs and public policy, said the company will press for the Tariff Relief Assistance for Developing Economies Act, which seeks to give the least-developed countries duty free access to the U.S. and contains a provision for allowing companies assembling apparel in those nations to use fabrics and yarns from anywhere in the world.
The House and Senate introduced two different bills last year, but there has been no movement on the legislation.
Ying, who worked for Sen. Edward Kennedy (D., Mass.) for four years, first as a legislative assistant in the U.S. Senate Committee on Labor and Human Resources and then as a legislative assistant in Kennedy’s foreign policy office, said she will advocate a proposal made in the WTO to extend duty free treatment to the lion’s share of imports from the world’s poorest countries.
Levi’s will monitor trade deals with Colombia, Peru and Ecuador for co-production flexibility and also push for strong labor provisions in trade deals.
Textile giant Milliken is one of only a few textile firms that operates a lobbying office. Most textile, yarn and fiber companies are represented by the American Manufacturing Trade Action Coalition and the National Council of Textile Organizations.
“Manufacturers should have a stronger voice in Washington, but that is not always the case,” said Auggie Tantillo, executive director of AMTAC, who was an administrative assistant and staff director for former Sen. Strom Thurmond (R., S.C.). In addition, Tantillo was a deputy assistant secretary for textiles, apparel and consumer goods at the Commerce Department. “The influx and advent of big-money politics has really undermined the voice of manufacturers in Washington.”
Tantillo said the textile industry traditionally has depended on its significant employment presence and concentration in one region to give it a “natural political advantage.”
One of AMTAC and NCTO’s top issues this year is a drive to carve out a separate textile sector negotiation within the WTO global trade talks as U.S. and international domestic textile and apparel groups seek to limit tariff cuts on imports and extend the U.S.-China import restraint agreement beyond 2008.
The two associations will also be engaged on Vietnam’s entry to the WTO and will continue to seek a special safeguard provision that would allow domestic industries to petition for quota protection in the event or threat of import surges. “We have focused more sharply on our links to the Hill over the last three years and we’ve tried to reinvigorate the [House] Textile Caucus,” said Cass Johnson, president of NCTO. “The fact that we were shrinking also allowed us to focus our attention in a sharper way.”
Rep. Howard Coble (R., N.C.), co-chair of the House Textile Caucus, came face to face with textile lobbyists on both sides of the CAFTA debate, and ultimately voted against the deal, saying he saw “more problems than solutions.”
“When it comes close between representatives [lobbyists] in the industry, a second barometer I have to study is personal responses from people actually involved in textiles,” he said.
“I had friends in the textile industry who were in favor of CAFTA and, fortunately, they are still my friends,” Coble said. “There is no issue where I or any other member is able to please all of his friends all of the time.”