Congressman Mike Michaud, Chairman of the House Trade Working Group, yesterday sent a letter signed by 18 of his colleagues urging U.S. Trade Representative Ron Kirk to maintain existing tariffs on footwear imports in the Trans-Pacific Partnership (TPP) to ensure American companies such as New Balance can compete on a level playing field. Michaud and his colleagues sent a similar letter last year.
Vietnam, the world's second largest footwear exporter to the U.S., is a participant in TPP negotiations and is pushing the U.S. to remove duties on footwear in the agreement. Like the footwear sector in China, Vietnam's footwear industry benefits from government intervention, currency manipulation, and low labor standards.
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 Norridgewock facility last month to pick up personalized sneakers he then delivered to President Obama with a message that the U.S. footwear industry is important to Maine's economy.
"Vietnam is one of the world's biggest footwear producers because they do not play by the rules," said Michaud. "Preserving U.S. tariffs is the only way the remaining American footwear companies can compete on a level playing field and keep jobs here in the U.S."
The letter also urged the Administration to include strong Rules of Origin in the agreement and require at least 55% of footwear products to come from TPP countries. Allowing more content to come from other countries will benefit Chinese footwear companies and further threaten the U.S. sector.
Between 1999 and 2007, 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%.
"For states like Maine whose economy depends on manufacturing, it is critical that we stop offshoring American jobs to our competitors," said Michaud. "Our trade negotiators must prioritize our manufacturing sector, especially as millions of Americans remain out of work and as we try to get our economy back on track."
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:
We are writing in advance of the next round of Trans-Pacific Partnership (TPP) negotiations to underscore the critical importance of maintaining existing tariffs on import-sensitive footwear and including strong rules of origin for these products in the TPP. Current tariffs and strong rules of origin are necessary for U.S. footwear manufacturers to compete on a level playing field with manufacturers from Vietnam, the second largest footwear exporter to the U.S. Without these tariffs, more than 4,000 American jobs in the domestic footwear industry will be sent overseas.
As you know, import-sensitive rubber and plastic footwear is covered by 24 tariff classifications on the Harmonized Tariff Schedule. These tariffs allow U.S. manufacturers to compete with countries such as Vietnam, which pays lower wages and offers significant governmental assistance to its footwear industry. Import-sensitive tariffs have not hindered footwear manufacturing in Vietnam or other countries, as only 1 percent of the footwear sold in the U.S. is manufactured here. The current tariffs have not limited options for consumers nor hurt other U.S. companies that maintain production overseas. Indeed, the only discernible result of lifting import-sensitive duties in the TPP would be the collapse of the domestic footwear industry. Conversely, there is no evidence whatsoever that eliminating the tariffs on sensitive footwear products will increase design and marketing jobs in the U.S.
In addition to maintaining import-sensitive duties, we ask that you insist on strong rules of origin (ROO) standards to ensure that footwear coming into the U.S. is actually produced in the country of origin and to prevent transshipments that seek to avoid paying tariffs. There is substantial precedent for this. The Korea FTA, for example, required imported footwear to meet a 55 percent regional content value as calculated by the build-up method. Due to the inclusion of Vietnam, the TPP should at a minimum include an equally strong standard. Including a weak ROO will give Vietnam an additional competitive advantage and undermine the benefits of import-sensitive duties.
For these reasons, we urge you to incorporate strong rules of origin and maintain existing duties on import-sensitive footwear in the TPP to protect American jobs and ensure that U.S. footwear manufacturers can continue to compete fairly in the global market.