December 07, 2019
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Here’s what Trump spiking an Asia trade deal could mean for Maine

Gabor Degre | BDN
Gabor Degre | BDN
The New Balance manufacturing facility can be seen in Norridgewock in November 2016 file photo.
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PORTLAND, Maine — The last time New Balance spoke out on trade policy, its shoes ended up in trash cans and on fire.

That might be why the company was silent about winning a years-long trade battle its leaders said would protect about 900 Maine manufacturing jobs from an onslaught of shoe imports from Vietnam.

In one of his first acts in office, President Donald Trump on Monday officially withdrew the United States from negotiations for the Trans-Pacific Partnership, a free-trade deal proposed by former President Barack Obama’s administration to lower tariffs and establish new industry standards between the United States and 11 other countries.

Shoes were just a small part of the overall deal but one of the biggest parts for Maine, because of New Balance’s factories in Skowhegan, Norridgewock and Norway.

On the other hand, semiconductor manufacturer Texas Instruments, which has a South Portland factory, pushed for the deal. It said its product’s supply chain through Malaysia and Japan would benefit.

Overall, a study commissioned by the state concluded in November 2016 that the deal would have a modest positive benefit for Maine, which it assessed by projecting economic growth through 2032.

By that year, the report estimated the deal would have resulted in a net gain of 554 jobs and raised real state income by about $212 million. The boost wouldn’t be evenly distributed. For example, the study by the Margaret Chase Smith Policy Center at the University of Maine projected wood products output would dip about $18 million.

Federal trade statistics bear out the concerns of both companies, but they also show what a small share of overall trade Maine does with the countries that don’t have any kind of free-trade deal with the U.S.

Through November, more goods came into Maine from Vietnam than any other country, and Malaysia was the top recipient of Maine exports. Vietnam sent in more than $28 million in footwear while Malaysia received more than $138 million in electrical machinery and parts.

Nationally, Vietnam exported $4.4 billion in footwear to the United States through November. It was behind China, which exported $13.7 billion to the U.S.

But the deal’s impact was not only limited to those newly added countries. It also changed some agreements with existing members of the North American Free Trade Agreement, including Maine’s two largest trading partners, Canada and Mexico.

Those countries and the United Kingdom will be a major focus of trade discussions to come, with Trump planning to meet leaders of those countries in the coming weeks. Trump has said he plans to renegotiate NAFTA in ways he said would benefit U.S. workers that have seen multinational companies move manufacturing operations to other countries where labor costs are lower.

That process could have larger impacts for Maine, simply for the amount of seafood and wood products traded to NAFTA member countries. Trade in fish, crustaceans and other invertebrates between Maine and Canada was worth about $604 million through November.

A 2003 analysis of NAFTA by the firm Planning Decisions estimated the deal had by then cost Maine about 800 jobs in wood products, food, pulp and paper and metal manufacturing.

Those types of job losses have made trade an area in which Trump continues to find unlikely allies in the likes of Vermont Sen. Bernie Sanders, U.S. Rep. Chellie Pingree and major labor unions.

Sanders and Pingree praised Trump’s executive order Monday, and the Maine AFL-CIO has expressed opposition to the deal in the past, citing deals such as NAFTA as a domestic job killer.

A representative for New Balance said the company did not wish to comment on Trump’s latest move, and a representative from Texas Instruments did not return a request for comment.

 



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