July 11 (Bloomberg) -- Tariffs on footwear imports should end as part of a trade deal being drafted by Pacific-region nations, a bipartisan group of U.S. lawmakers told the Obama administration, fueling a debate over shoe-industry jobs.
“We believe these tariffs do not benefit consumers or advance important trade objectives,” 15 senators led by Ron Wyden, an Oregon Democrat, and Lamar Alexander, a Tennessee Republican, said yesterday in a letter to U.S. Trade Representative Michael Froman. A similar letter was sent by 47 House members.
The import duties highlight a split between U.S. footwear makers and distributors including New Balance Athletic Shoe Inc. and Nike Inc., both of which are trying to protect jobs in their industries as the U.S. negotiates the Trans-Pacific Partnership free-trade accord. The 11 TPP nations, which will include Japan by the end of the month, are seeking to create an economic zone with $26 trillion in annual output.
Nike wants the duties eliminated, saying the cost savings will let the Beaverton, Oregon-based company devote more resources to product design, marketing, sales and distribution.
“A TPP agreement modernizing the current footwear tariff structure would allow Nike to further reinvest into innovation and maintain our global competitiveness, resulting in more high-paying jobs in the U.S.,” Sean O’Hollaren, the company’s vice president of government and public affairs, said yesterday in a statement.
New Balance of Boston, the last major company to make athletic footwear in the U.S., says the duties help sustain American manufacturing jobs.
“Design and development jobs can go anywhere, be anywhere,” Matt LeBretton, New Balance’s director of public affairs, said today in an interview. “Manufacturing jobs are different” because U.S. factories employ workers in the U.S., he said.
LeBretton said eliminating the tariffs won’t necessarily lead to lower prices for consumers and that larger shoe manufacturers could offer lower prices now. New Balance’s focus, he said, is “how do we make more shoes here, not how do we make more money so we can make more shoes elsewhere.”
Nike, which reported net income of $2.5 billion on $25 billion in revenue for the year ended May 31, is a member of the Footwear Distributors and Retailers of America, a Washington-based group that says the import duties peak at 67.5 percent and is pushing to end the tariffs.
Closely held New Balance, which also makes shoes outside the U.S., isn’t a member of the group and says that most tariffs on athletic footwear are from 10 percent to 20 percent.
U.S. footwear distributors and retailers paid $297 million in import duties on products delivered from TPP nations, Matt Priest, the group’s president, said in a phone interview. About 99 percent of the tariffs were levied on products from Vietnam, he said.
Other nations forging the Pacific accord are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru and Singapore. Negotiators have said they want to reach an agreement by the end of the year.
Representatives Earl Blumenauer, an Oregon Democrat, and Aaron Schock, an Illinois Republican, led House members in sending a similar letter on the footwear duties to Froman.
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