By William Mauldin And Sara Germano
WASHINGTON--President Barack Obama is mounting his latest
defense of a Pacific trade agreement with a visit Friday to the
headquarters of a quintessential importer, Nike Inc., a move that
scrambles the traditional political arguments for free trade.
By traveling to the huge importer of shoes from Asia, the
president will highlight the consumer benefits of a deal to lower
tariffs. Presidents almost always tout potential domestic job gains
in selling big trade deals.
The White House, in announcing the Nike trip, said Mr. Obama
will discuss ways to "open up new markets and support high-quality
jobs," but the president and his advisers have been pointing
recently to the consumer upside that trade deals deliver in the
form of lower prices. The Pacific deal would cut tariffs on
imported shoes.
Virtually all of Nike's manufacturing is conducted overseas,
with the lion's share coming from Vietnam, a participant in the
proposed Pacific deal. About 56% of Nike's revenue last year came
from outside North America, according to a company filing.
Labor and environmental groups blame the company for relying on
shoes produced in low-wage countries under questionable labor and
environmental practices.
"Nike fully supports the inclusion of strong labor provisions"
in trade deals, the company said in a statement. "We've made
significant improvements and driven positive change for workers in
contract factories that make Nike product."
Mr. Obama's trip to Beaverton, Ore., comes as a divided Congress
is considering "fast track" legislation that would expedite final
passage of the Trans-Pacific Partnership. With Mr. Obama facing
unified Republican opposition in most areas, the trade package may
be the one economic legacy left for him to pursue.
The Pacific pact would open trade among 12 countries, including
the U.S., Japan, Vietnam, Australia, New Zealand and Chile.
Congressional votes on trade in coming weeks and months could be
particularly tight in the U.S. House, where a strong minority of
Republicans and an overwhelming majority of Democrats appear to
oppose fast-track legislation.
The announcement of the Nike visit surprised Mr. Obama's trade
critics and supporters alike.
"In our view, Nike was kind of a bizarre choice for Obama's
speech. They were a pioneer in offshoring," said Elizabeth Swager,
executive director of Oregon Fair Trade Campaign, which opposes the
administration's trade ambitions and plans a protest outside Nike
headquarters in Beaverton on Friday.
"This is unusual," said Gary Hufbauer, trade expert at the
Peterson Institute of International Economics, which backs trade
liberalization. "Usually presidents visit export firms."
Some Portland-based manufacturers declined invitations to join
Mr. Obama at Nike, including members of a local trade group, the
Portland Maker Community.
For years, Mr. Obama and his economic team have followed
previous administrations in touting the ability of trade agreements
to reduce other countries' tariffs, unleashing U.S. exports and
supporting manufacturing jobs back home.
Those efforts did little to blunt strong opposition from labor
groups and allied Democrats. In recent days, Mr. Obama has begun
championing other types of gains that could accrue to the U.S.,
including potential benefits for the services industry that now
dominates the U.S. economy, as well as high-tech sectors.
In a recent interview with The Wall Street Journal, Mr. Obama
highlighted consumer gains from increased trade and
globalization.
"Over the course of 20, 25 years, what you saw was trade benefit
the U.S. economy in the aggregate with cheaper prices, inflation
low, the creation of a global supply chain that was good for U.S.
companies," he said.
The argument seems custom-made for Nike, which started as the
U.S. distributor for a Japanese shoemaker.
The U.S. imposes duties on athletic-shoe imports of as much as
20% of the value the shoes have at the border, typically under $10
for a pair of shoes that retails for $100 or more, officials say.
Those tariffs protect the few remaining American shoe factories,
including Nike competitor New Balance in Maine.
As part of the TPP, the U.S. is seeking to impose curbs on
Vietnam's state-owned enterprises and American-style standards on
labor, the environment and intellectual property. In return,
Vietnam, a powerhouse of footwear and apparel production, wants
lower barriers at the U.S. border for its clothing and shoes,
according to people following the talks.
The U.S. imported $1.71 billion in footwear last year from
Vietnam, compared with $270 million in 2005. Those shoes had a
retail value several times higher, generating income for
shareholders of Nike and other firms, along with their designers,
retailers, distributors and back-office employees.
"By allowing our trading partners to produce the goods in which
they are relatively more efficient, the United States can import at
lower prices than would prevail if we were to use our scarce
resources to produce the goods ourselves," the White House's
economic advisers said in a report this month.
The White House declined to comment in detail on the Oregon
speech. Spokesman Josh Earnest said Mr. Obama will use the visit
"to illustrate how a responsible trade agreement that includes
enforceable labor and environmental standards would strongly
benefit middle-class families and the American economy."
Mr. Obama faces some receptive lawmakers in Oregon and on the
Pacific coast, but not everyone is holding their breath for lower
prices.
"I'm certain he will make that argument," said Rep. Peter
DeFazio, an Oregon Democrat, adding that the "savings from tariffs
from Nike and other firms would more likely go to profits than they
would accrue to the lowering of prices for consumers."
Write to William Mauldin at william.mauldin@wsj.com and Sara
Germano at sara.germano@wsj.com
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