As I write this series of blog posts on WCIT’s policy priorities, one of the nice things is being able to draw inspiration from current news. You don’t want to read State of Trade for obscure factoids…no, you want that same ripped-from-the-headlines feel that you get from watching an episode of Law & Order, except without the cool theme music.
Of course, you might doubt my ability to apply that standard to the Affordable Footwear Act, since you don’t necessarily see shoe tariffs above the fold in your local newspaper. But never doubt the State of Trade blog. Thanks to the Washington Post, via Seattle Times, I’ve got your major news story on footwear pricing right here. So what does this story tell us, what does it have to do with the Affordable Footwear Act…and what the heck is the Affordable Footwear Act anyway?
As always, let’s start with the basics. There are a variety of reasons that countries put tariffs on certain imported items, but one of the most common is to give a competitive advantage to domestic producers of that good. So, if we make steel and Japan makes steel, our steel producers might want tariffs on imported steel to make sure theirs gets purchased by US customers.
And that is exactly why we have a tariff on imported shoes. Except, despite the tariff, there’s no longer much of a US shoe manufacturing industry to protect. About 99 percent of all footwear sold in the United States is now being imported, with more than 80 percent of all footwear sold in the United States being imported from China. And when that happens, all you’re accomplishing with those import tariffs on shoes is making 99 percent of shoes more expensive. What the Affordable Footwear Act would do is very simply eliminate shoe import tariffs on certain shoes, mostly lower- to moderately-priced and children’s footwear.
The Washington Post story explores the vital question for understanding this issue: how do we balance the competing priorities of maintaining the last vestiges of the domestic shoe manufacturing industry with the desire for consumer products to be more affordable:
As workers in New England look around at the shuttered textile and shoe mills that still dot many towns, some see the tariff as the least the United States could do for what’s left of the battered industry. In their view, removing the tariff only rewards those companies like Nike and Adidas that have shut U.S. factories and concentrated their operations elsewhere…But while the tariff may be protecting New Balance’s 1,000 U.S. workers, it appears to have done little to protect the rest of the U.S. shoe industry, which employed as many as 250,000 people in the 1950s but fewer than 15,000 people today…Since about 99 percent of shoes sold in the United States are imported, removal of tariffs likely would save consumers money and help improve profits for retailers and companies that do their manufacturing overseas.
Now, it’s really important to point out that the question is not “would we rather have 15,000 jobs or cheaper shoes?” As I said in my post on the importance of importing to Washington’s economy, there are a ton of jobs created by retailers who then sell those imported shoes. As Nike notes in the article, “while the company has no shoe manufacturing in the United States, it directly employs 22,000 in the country.”
And so, what we’re really saying is “would we like to try to fight (a losing battle?) for domestic shoe manufacturing jobs or would we rather increase jobs in shoe retailing?” As Washington residents, we side on the latter, not only because we love to pay less for shoes, but because – with Nike, Columbia Sportswear, REI, Amazon, Nordstrom and others in the Pacific Northwest – we’re one of the largest beneficiaries of job creation from increased imported shoe sales. It’s no coincidence that, in 2009 when the bill was reintroduced, both Senator Murray and Senator Cantwell signed on as co-sponsors, because they get this fact.
By the way, the Washington Post article is not technically about the Affordable Footwear Act, but the Trans-Pacific Partnership, which we’ll deal with in our next post. But, because Vietnam is 1) one of the countries that is part of the TPP negotiations and 2) a significant manufacturer of shoes sold to the US, the passage of TPP or the passage of the Affordable Footwear Act would result in the same reduction of tariffs on Vietnamese shoes. However, the Affordable Footwear Act would still be necessary to lower shoe tariffs for imports from all the other countries that make shoes, especially China. Because, I’m no trade expert or anything, but I’m pretty sure we’re not going to be negotiating a free trade agreement with China any time soon.