Expert: Dennis - 9/6/2004

Question
What exactly is offshore trading and how and why does it have a seemingly negative effect on American workers in the textile industry?  What are the pros and cons of offshore trading?

Answer
The term offshore trading generally refers to bank accounts or incorporations that occur outside the U.S. By incorporating in some place like Barbados, a company can avoid paying U.S. taxes.

I think you are referring to some other kind of offshore activity, as trading would have no special impact on any particular industry. Any company that incorporates in another country doesn't pay U.S. taxes.

The textile industry has been injured by foreign companies who pay their employees much lower wages. They can sell their products in the U.S. at a rate the U.S. companies can't even come close to matching.

If a U.S. company "moved" offshore with its headquarters, it would not have to pay U.S. taxes, but it would still have to pay U.S. wages to its workers if it had plants here. It could close its U.S. plants, and open plants "offshore," in order to compete with foreign companies, and that would hurt U.S. workers. However, that activity of moving its factories to another country is not called "offshore trading."

Sorry I can't be more helpful, but we seem to be talking about two different things.