Congressman Mike Michaud, Chairman of the House Trade Working Group, has sent a letter signed by his Maine and Massachusetts colleagues urging U.S. Trade Representative Ron Kirk to ensure that the Trans-Pacific Partnership agreement does not undermine the American footwear industry. New Balance holds the distinction as the only athletic shoe company that currently manufactures footwear in the U.S. The company has over 800 employees at their Maine facilities in Skowhegan, Norridgewock, and Norway. Michaud visited New Balance's Skowhegan facility last month on his "Make it in Maine" tour of Maine manufacturers and one of the concerns the company had was the impact of U.S. trade policy on their business.
"The footwear industry has been gutted by foreign imports, including those from Vietnam," said Michaud. "Our trade negotiators need to make sure that this trade deal doesn't off-shore what's left of our shoe manufacturers."
Between 1999 and 2007 alone, domestic production fell by nearly 75%. This decrease of production has led to the closure of footwear manufacturing facilities and the significant loss of manufacturing jobs. Since 1997 more than 28,000 American jobs in the footwear manufacturing sector have been lost, a decline of nearly 65%.
"With high unemployment, it's critical that our trade policy stops sending American jobs overseas and starts creating jobs on Main Street," said Michaud. "Our trade negotiators must make this trade deal different than the NAFTA-style agreements that have undermined U.S. manufacturing. Our economic recovery depends on it."
The full text of the letter Michaud and his colleagues sent can be found below.
The Honorable Ron Kirk
United States Trade Representative
600 17th Street NW
Washington, DC 20508
Dear Ambassador Kirk:
As you continue negotiations on the Trans-Pacific Partnership (TPP), we write to express our strong support for the domestic footwear industry. We urge you to ensure that this trade agreement does not spell the end for American-made footwear, a sector that still employs hundreds of Americans in our districts.
The U.S. footwear industry has diminished precipitously in the last 25 years as companies have shifted shoe production off-shore, taking with them tens of thousands of American jobs. Between 1999 and 2007 alone, domestic production fell by nearly 75%. This decrease of production has led to the closure of footwear manufacturing facilities and the significant loss of manufacturing jobs. Since 1997 more than 28,000 American jobs in the footwear manufacturing sector have been lost, a decline of nearly 65%.
The industry's decline is a direct result of growing foreign imports, which increasingly include footwear from Vietnam. In 1998 shoes from Vietnam represented less than one percent of American imports and the eighth largest U.S. source of foreign shoes. By 2007 that number had jumped to more than five percent, and Vietnam had become the second largest source of shoe imports to the U.S. A trade agreement that includes Vietnam, and that does not adequately protect domestic footwear manufacturers will only accelerate this trend.
The outsourcing of this once-strong, domestic industry is directly attributable to the lack of adequate labor rights and standards in countries such as Vietnam and China. According to industry analysis, wages are the second largest expense in footwear production and account for 18.3% of U.S. footwear manufacturing costs. With wages in Vietnam that are eight percent of those in the U.S., it is easy to see why domestic footwear manufacturers find it hard to compete, regardless of rising worker productivity. The relentless pursuit of lower wages also explains why some companies are moving their facilities from China to Vietnam. For example, Nike, the largest seller of athletic footwear and apparel in the world, reported for the first time in 2010 that the greatest percentage of its footwear production occurred in Vietnam, not China.
Given Vietnam's rise in the global footwear industry, TPP has significant implications for the import-sensitive domestic footwear industry. Current domestic tariff rates on imported footwear provide some countervailing measures against the intolerable foreign labor conditions that have allowed foreign manufacturers to undercut the domestic footwear producers. Higher duties help to level the playing field against Vietnam's state-owned enterprises and currency intervention policies. They also reduce the likelihood that China would transship underpriced footwear product through Vietnam to the U.S. If the TPP agreement removed, reduced, or phased out these tariffs, the remaining U.S. footwear producers would be unable to compete against footwear companies in Vietnam and American jobs would be lost.
At a time of nine percent national unemployment, it is imperative that our trade policy reduce the off-shoring of U.S. jobs and prioritize job creation here at home. In 1985 more than 25% of the shoes purchased in the U.S. were American-produced. Now less than two percent of shoes bought by Americans are made in the U.S. If TPP lowers U.S. footwear duties, the remaining American shoe manufacturers will be forced to close their doors and lay off over 1,000 American workers. We urge you to prioritize U.S. manufacturing and American jobs during the TPP negotiations by preserving current footwear tariff levels.
We look forward to working with you to ensure U.S. trade policy promotes and expands U.S. manufacturing and creates American jobs.