TPP and the lure of cheaper shoes
It’s pretty hard to find American-made shoes these days.
You’ve got a few options: New Balance makes some of its shoes here. Keen recently opened a plant in Portland, Oregon. And for work boots, there are still a raft of brands to choose from. But in 2012, the lion’s share of the American shoe market is dominated by companies that make their products in foreign factories, mostly in Asia.
This despite a tariff on shoe imports that has been in place since the 1930s. But that tariff might go the way of the buffalo. Companies that oppose the tariff (like Nike) because it eats into their profits are calling for its elimination when the U.S. hashes out the details of a proposed trade deal with a group of Asian and South American countries. This deal is called the Trans-Pacific Partnership (TPP), and the latest round of its preliminary negotiations is just getting under way in Singapore.
The possibility of losing the shoe tariff is giving companies that make shoes in the United States indigestion: If the tariff is dropped, it will only lower the price of imported shoes by a few dollars. But in the long run, it only strengthens the hand of businesses that long ago took their plants overseas.
Whether or not the shoe industry will grow even tinier in the U.S., the future of this tariff offers an interesting look at all of the different forces at play as the TPP talks play out. Remember, International trade is a bargain. It was only a few days ago that Japanese leader Shinzo Abe was in Washington to discuss Japan’s tentative entry to the TPP negotiations, and he got a promise out of President Obama that his country’s agriculture sector wouldn’t have to give up its tariff protections before Japan could talk about wider trade.
We think the White House should play hard ball during these talks, too: If our trading partners want more market access in America, they should promise not to fool with their currency to give their own industries an unfair advantage over American imports. We hope that the Administration sticks up for U.S. businesses (and the workers they employ) that choose to keep their operations stateside as these TPP talks go forward.
We’ve said it before, and we’ll say it again: When manufacturing goes, the innovation follows. If our government fights to keep it Made in America, odds are we’ll have wealth we can bargain with in future trade negotiations.
Image by Flickr user Tobyotter, used following Creative Commons guidelines.
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