Last year President Obama went to Nike headquarters to promote the Trans-Pacific Partnership (TPP). But Nike doesnâ€™t make shoes in the US,Â and TPP would force companies like New Balance to stop making shoes here. New Balance kept quiet about this, but now says the administration offered the company a big contract in exchange for its silence. New Balance is talking now, because the contract never came through.
A Contract In Exchange For Silence?
The Bangor Daily News has a big story this week, â€śNew Balance claims Defense Department strung it along on military sneaker contractâ€ť:
New Balance officials say theyâ€™ve broken their silence over the Trans-Pacific Partnership because the Obama administration has failed to offer the company a chance for a contract to sell sneakers to the military.
â€¦ New Balance held its tongue about the TPP for nearly a year, he says, because federal officials told the company that if it did so, New Balance would get a shot at a military contract.
This is a very big deal. Last Mayâ€™s post, â€śObama To Visit Nike To Promote the TPP. Wait, NIKE? Really?â€ť, explained what TPP means for the domestic shoe industry:
While the President visits Nike, New Balance is struggling to be able to keep some of its manufacturing in the U.S. Currently New Balance makes shoes in five factories in the U.S. Their executives say if TPP passes, lower tariffs on shoes made in places like Vietnam will force them to close their U.S. factories.
â€¦ If the President gets his way and TPP passes, the tariff on non-U.S.-made (Vietnam) shoes will end and New Balance â€“ like so many other companies struggling to manufacture inside the U.S. â€“ will have no choice but to end its U.S. manufacturing operations. Meanwhile Nike, already manufacturing in Vietnam and Malaysia and currently selling shoes that cost $10 to make for over $100, will gain even more of an advantage, which obviously will not be passed on to consumers. If you are able to get a certain price for a product, why reduce it?
This is just one example of how even more American workers would lose their jobs if TPP passes.
TPP would lower tariffs on shoes (and everything else) coming into the country from low-wage TPP countries. Companies like Nike would be rewarded for closing factories here in the past. Companies like New Balance would be forced to close factories here in the future.
New Balance says the government offered the company this contract if it would keep quiet about what TPP would do to domestic manufacturers. The military buys a lot of sneakersÂ â€” as many as 200,000 pairs each year. It currently buys non-US-made sneakers, in spite of rules saying they should buy US-sourced when possible. So New Balance should have this contract anyway. (TPP would prohibit us from requiring the purchase of US-made goods with our own tax dollars.) But the government apparently used the promise of the contract to buy the companyâ€™s silence about the job-killing effect if TPP passes.
The Boston Globe has more on this, in â€śNew Balance accuses Pentagon of reneging on sneaker dealâ€ť:
New Balance is renewing its opposition to the far-reaching Pacific Rim trade deal, saying the Obama administration reneged on a promise to give the sneaker maker a fair shot at military business if it stopped bad-mouthing the agreement.
After several years of resistance to the Trans-Pacific Partnership, a pact aimed at making it easier to conduct trade among the United States and 11 other countries, the Boston company had gone quiet last year. New Balance officials say one big reason is that they were told the Department of Defense would give them serious consideration for a contract to outfit recruits with athletic shoes.
â€¦ â€śWe swallowed the poison pill that is TPP so we could have a chance to bid on these contracts,â€ť said Matt LeBretton, New Balanceâ€™s vice president of public affairs. â€śWe were assured this would be a top-down approach at the Department of Defense if we agreed to either support or remain neutral on TPP.
The government offered a lucrative contract to a company, to keep quiet and not alert the public to the potential job-losses from TPP. Just, wow.
This story raises the question of what else the administration is doing to get TPP through, and why. For example, last year the â€śFast Trackâ€ť Trade Promotion Authority bill prohibited the administration from entering into â€śtradeâ€ť agreements like TPP with countries that violate human rights, in particular human trafficking. Malaysia violates human rights by enabling human trafficking. Malaysia is a TPP country.
So the administration solved the problem by declaring that Malaysia doesnâ€™t do that after all, even though they do.
Last yearâ€™s post â€śObama Administration Makes Malaysia Slavery Problem For TPP Disappearâ€ťexplains:
[T]he trade promotion authority law â€¦ prohibits the U.S. from entering into â€śtradeâ€ť agreements with â€śtier 3â€ť human-trafficking countries.
According to news reports, the Obama administration found an easy â€“ and extremely cynical â€“ fix: just change Malaysiaâ€™s rating to a â€śtier 2.â€ť Problem solved. But human rights groups, labor and members of Congress are â€śoutraged,â€ť â€śshockedâ€ť and â€śdeeply disturbed.â€ť
â€¦ Human trafficking? Slavery? Sex slaves? People kept in cages? Mass graves? Abuse of workers? No problem. Just tell the State Department to ignore it.
Another post, â€śDid Obama Administration Downplay Malaysia Slavery To Grease Trade Deal?â€ť, elaborates,
Cheap labor is the whole point of our corporate-rigged, NAFTA-style trade agreements. Companies get to move jobs, factories, even entire industries out of the U.S. to countries where people are exploited, the environment is not protected and â€ścostsâ€ť like human safety are kept low.
But even so â€¦ tolerating slavery? Flat-out slavery? Really? Unfortunately, it looks like thatâ€™s what is happening with fast-track trade promotion authority, The Trans-Pacific Partnership (TPP) and the Obama administration.
â€¦ Malaysia was a Tier 3 country in the 2014 TIP report. The 2015 TIP report was supposed to be released in June but was delayed coincident with the passage of fast-track legislation with the slavery clause. The report was released Monday, and changes Malaysiaâ€™s TIP rating from the worst â€śTier 3â€ť to a â€śTier 2,? even though there is little or no change in Malaysiaâ€™s actual performance.
Promising a company a big military contract if they would keep quiet about the job-killing effects of TPP? Letting a country off the hook for actual slavery?
The TPP is all about pushing jobs out of the country in search of lower wages so executives and shareholders can pocket that wage differential. But slavery? Really? Contracts for silence about how it will close US factories? Really?
What else is going on to push this corporate-favoring â€śtradeâ€ť agreement?
This blog originally appeared at ourfuture.org on April 15, 2016. Â Reprinted with permission.
Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.