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Footwear executives pound pavement for Obama trade deal

Footwear executives pound pavement for Obama trade deal
© Greg Nash

The U.S. footwear industry is ramping up a lobbying campaign behind President Obama’s Pacific Rim trade agreement. 

The Footwear Distributors and Retailers Association (FDRA) and nearly three dozen of its members were canvassing Capitol Hill on Wednesday, urging lawmakers to pass the 12-nation Trans-Pacific Partnership (TPP), which they say will significantly reduce tariffs and create jobs.

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“Our message is now is the time to get this thing done,” said Matt Priest, FDRA’s president, whose group represents more than 120 companies and 250 brands. 

“This is really is about American jobs, domestic manufacturing jobs, retail jobs, warehouse jobs and consumers,” he said.  

Priest said the group’s members span across nearly every congressional district in the country, which he called “advantageous to our effort.” 

"We will use that leverage as an organization to ensure that members know the importance of how TPP will drive things to consumers and help drive jobs," he said.  

The footwear industry paid $3 billion in duties last year, even with very little domestic production, and the TPP could quickly slash more than half a billion off those costs, a reduction that Priest called “very significant.” 

Tariffs on footwear average from about 10 percent and can reach up to 67.5 percent.

The footwear industry has been a consistent ally of the Obama administration’s trade agenda and the TPP.

But the deal faces massive headwinds in Congress amid harsh criticism from both parties and the leading presidential campaigns.

Most congressional Democrats are already opposed to the agreement and Republicans are stressing that they won't help pass the TPP until the White House resolves their concerns on issues like the treatment of pharmaceuticals and tobacco. 

The footwear businesses insist that the TPP would have far-reaching benefits for their companies and argue that it is imperative for the United States to take the lead in the Pacific Rim and get ahead of China. 

Rick Muskat, FDRA’s chairman who's family started Deer Stags Concepts in the 1960s, said that the United States faces a choice between taking that leadership role in the Asia-Pacific or ceding it to Beijing.

“If we back out of this deal it’s likely that China moves in with all those nations, so who’s writing the rules?” 

Muskat said his message to Capitol Hill will to be argue for the broader economic and security importance of the TPP. 

“We think at FDRA, and I think personally from my experience of traveling the world, is that our engagement with the rest of the world is very important to our national security,” he said. 

“I think it would be a huge mistake for the United States long term to not be able to go forward with this deal.” 

A reduction of tariffs is a key selling point of the Obama administration in trying to convince wary congressional lawmakers to back the 12-nation TPP agreement. 

Bruce Andrews, deputy secretary of the Commerce Department, told the footwear representatives on Tuesday that "ultimately, 85 percent of footwear products coming into the United States will be immediately duty-free under TPP."

Eric Harrison, head of the J. Renee’ Group, said that his Dallas-based business needs the TPP to grow operations. 

Harrison, who runs the company his parents started in 1974 with his brother Kai, said that with lower duties and less hassle, “I can go hire more people. I can invest more capital, which is what they want us to do to help get the economy going.” 

About 90 percent of his company’s shoes are made in China and they face high duties coming into the country. 

Harrison said that the lawmakers in Dallas are largely supportive of trade, and that he planned to visit Republican Reps. Pete Sessions and Kenny Marchant, as well as about six others, during his trip to to Capitol Hill. 

“I think I’m preaching to the choir with them a little bit but it’s good to get in front of these guys and say, ‘look you know there’s real people out here and we’re a small business in your district and we’re fully behind this deal because it’s going to help,’ ” Harrison said. 

In a March letter to U.S. Trade Representative Michael FromanMichael B.G. FromanOn The Money: Sanders unveils plan to wipe .6T in student debt | How Sanders plan plays in rivalry with Warren | Treasury watchdog to probe delay of Harriet Tubman bills | Trump says Fed 'blew it' on rate decision Democrats give Trump trade chief high marks US trade rep spent nearly M to furnish offices: report MORE, four domestic footwear producers said that if they didn’t have the duty burden they could add jobs and expand their businesses, another message they intended to share on Capitol Hill. 

“We continue to manufacture in the U.S. to meet the needs of specific market segments, but in order to remain competitive, we also import large numbers of shoes to meet the diverse demands of American footwear customers,” they wrote.  

“Rather than help us keep manufacturing jobs, these tariffs today only serve as an added cost in our supply chains and a hidden tax on American consumers.” 

The four manufacturers — Wolverine Worldwide, Elan-Polo, LaCrosse Footwear and H.H. Brown Shoe Company — said that “TPP would greatly benefit our industry, because it would reduce some of the outdated duties that limit footwear job creation.

For example, in 2015, the U.S. imported more than $4.3 billion in shoes from Vietnam while importers paid about $509 million in import duties.  

“The savings that TPP would provide to our industry — $450 million in the first year alone and $6 billion over the first decade — could be used to strengthen our domestic operations,” they wrote. 

Footwear makers say the cost savings from a reduction in tariffs would allow them to offer better quality products for the same price and possibly lower prices.

Ed Rosenfeld, FDRA vice chairman and CEO of Steve Madden, said the TPP will be really important because, at the end of the day, the industry wins “when we try to create value for our consumers.”

“TPP is critically important now because we’re not just competing with other shoe brands, we’re competing with all the other things that our customers spend their money on,” Rosenfeld said.