In advance of President Obama’s trip to Asia in April, the Trans-Pacific Partnership talks have reached the stage when the urgency to conclude the trade agreement has skyrocketed and the most difficult decisions will finally be tackled. Among these decisions is how to treat footwear in the agreement.
As with nearly every issue in the trade talks, the Obama administration faces a choice. They must choose between promoting goods stamped with “Made in the U.S.A.” or lowering costs for operations overseas.
I believe they should prioritize American business owners who have faced a similar decision and chosen to keep their investment, their production and — most importantly — their jobs here.
I do not doubt that the footwear decision is one of many that U.S. Trade Representative Michael Froman must juggle among other competing priorities to close the agreement. But it is one that has enormous economic ramifications here in Maine, where the country’s largest concentration of footwear manufacturing is alive and well and where communities would collapse were it to be sent overseas. And Froman knows this — he’s been to Maine and visited a New Balance facility with me. He’s heard firsthand the impact this agreement could have on hundreds of hardworking New Balance associates.
But how the U.S. proceeds on this issue isn’t just relevant locally — it has nationwide implications that must be considered.
Our trade negotiators must wrestle with how we define economic strength and how we shape our economic integration with Asia. Can we be a global economic leader only by zeroing out our tariffs knowing the flood of foreign imports could close our factory doors? Do we have to buy Asian-manufactured goods as a way of establishing economic ties with the region? Or is there a way to deepen our economic relationships without depriving our own communities of the jobs that sustain them?
These questions are at the heart of the disconnect between popular opinion and the official U.S. trade agenda. And I believe the fate of the domestic footwear industry lies in Froman’s answers.
Vietnam is currently the second largest exporter of athletic footwear to the United States. Only China exports more shoes to our market. Although the average American tariff on footwear has been steady at 10 percent for decades, Vietnam’s footwear sector has increased its U.S. market share nearly fivefold in the last 10 years. Clearly, lowering tariffs is not key to the strength or growth of their shoe industry.
Removing duties will likely allow Vietnam — whose sector has long been controlled by the state — to sell even more shoes in the U.S. This will come at a significant cost to Maine and to the footwear sector’s supply chain nationwide. But will lowering these tariffs definitively enhance our economic relationship with Vietnam? Will it be a key part of the U.S. geopolitical strategy in Asia?
I don’t think so.
Advancing the interests of our domestic manufacturers will not limit our ability to increase ties with Asia. On the contrary, preserving American middle class jobs will strengthen our economy and our ability to engage with our trading partners.
Succumbing to pressure from countries whose economic advantage comes from winning the race to the bottom not only weakens our standing internationally but also undermines the foundations on which our economy has been based for more than 200 years. The Trans-Pacific Partnership could either grow the American middle class — and the American footwear sector — or it could offshore it.
To me, the choice is clear.
Mike Michaud represents Maine’s 2nd Congressional District in Congress and is the chairman of the House Trade Working Group.