Last US sneaker manufacturer wants to maintain balance in new trade pact

The last U.S. manufacturer of athletic shoes is working with a coalition of lawmakers to convince trade officials to preserve footwear duties in an Asia-Pacific agreement that they say will allow them to continue operating on American soil.

New Balance, which still produces about 25 percent or 7 million pairs of shoes here, and a group of New England lawmakers are insistent that the Trans-Pacific Partnership (TPP) maintain about 20 duties they argue will protect five U.S. factories from closing and moving overseas — three in Maine and two in Massachusetts.

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The push comes amid opposition within the footwear industry, which operates largely outside the United States, and wants to see the tariffs on shoes either eliminated or phased-out within the trade agreement.

"We're not asking for special treatment," Matt LeBretton, who heads up the government affairs team at New Balance, told The Hill.

"We want a carve-out of the tariffs for the products we're making here, we aren't asking for special subsidies or tax incentives," LeBretton said. 

Eliminating or phasing-out the tariffs would "decimate" what is left of the industry, he said.

LeBretton said the tariffs allow the firm to compete against much cheaper imported shoes, especially from Vietnam, in an already highly competitive industry.

While many shoe manufacturers have already moved their facilities overseas, New Balance, which has been in business for more than 100 years, continues to make shoes in the U.S. and they say they want to stay put.

Their plants employ 1,300 workers.

"We have a commitment to our domestic operations," LeBretton said.

Sen. Susan Collins (R-Maine), an advocate against the tariffs, said the company has "made a real effort" to involve their employees to become more productive and efficient while fighting a rising tide of low-cost imports into the United States. 

"Obviously given that they pay good wages and benefits they're at a competitive disadvantage compared with what they would be paying if they did the work in China," Collins told The Hill.

Nine countries, right now, are part of the ongoing negotiations of the TPP agreement and one of them, Vietnam, is the fastest growing exporter of footwear in the world, a major concern for New Balance, because business costs are appreciable in the United States.

Vietnam pays a tariff on rubber footwear but that could go away under the TPP deal, jeopardizing the future of New Balance's business here.

Still, there are bigger voices arguing against those tariffs, such as the Footwear Distributors and Retailers of America and the American Apparel and Footwear Association, which are working to nix the duties, arguing that U.S. consumers are paying an unnecessary shoe tax on products that, the majority of which, aren't produced here anymore.

"An effective TPP will also benefit American consumers by eliminating duties and holding down prices," Matt Priest, president, Footwear Distributors and Retailers of America, said recently.

He said those tariffs amount to a $600-million tax that "makes no sense" because 99 percent of all shoes sold here are manufactured outside the United States.

LeBretton called fighting that push against the tariffs a "daunting task" arguing that 1 percent of manufacturers remaining need the protections to continue production.

The fight by New Balance highlights the White House's agenda to bolster manufacturing and keep jobs from leaving the United States.

Still, the Obama administration is in a tough spot and won't likely find it easy to attempt to help a microcosm of an industry that was thriving here before a mass exodus started in the 1980s as foreign countries opened up to U.S. businesses that wanted to establish manufacturing plants within their borders.

That is where a group of lawmakers come into play.

The possibility of the tariffs' elimination has pushed the issue up the agenda for New England lawmakers, who sent a letter to U.S. Trade Representative Ron Kirk in December asking him to maintain the tariffs or risk losing the rest of the shoe-making industry to outsourcing. 

Sen. Olympia Snowe (R-Maine) prodded Kirk for a status on the talks over the tariffs during a Senate Finance Committee hearing on Wednesday.

"The concern is that the agreement will not exclude the reductions in imported products from Vietnam which is really the largest producer of rubber footwear and would have a severe impact on an industry and jobs with respect to New Balance," Snowe said.

"It would provide a severe disadvantage to this industry without question since Vietnam pays on average 46 cents an hour, whereas New Balance pays $10 an hour," he said.

Kirk tried to assure Snowe that the administration was working toward the best possible resolution.

"We have done everything we can or attempting to do in this TPP, whether it's footwear and others, to make sure we have a proper balance, that we continue to give American families the consumptive benefits, but we help Americans that are still making products in doing what the president has simply said," Kirk said.

"What's remaining of our textile industry is vibrant. It's fully integrated in many cases," he said.

Snowe didn't sound convinced in a post-hearing release.

“Based on his answer today, he [Kirk] clearly doesn’t grasp the gravity of the impact the Trans-Pacific Partnership agreement could have for these workers, their families and the specialized industry as a whole," she said.

“These are precisely the kinds of jobs that we must support, particularly since more than 28,000 jobs in the footwear industry have gone overseas in the past 15 years," she said.

"At a time when so many American manufacturers are struggling, New Balance has provided stability and economic opportunities in my home state of Maine.”


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