Shoe Company New Balance Says US Gov't Basically Offered It A Bribe To Support TPP

from the wow dept

We’ve mostly focused on the impact of the TPP and trade deals on the internet (and also on national sovereignty), because that’s the kind of stuff that interests us most around here. We’ve spent a lot less time looking at the more traditional free trade arguments, in part because that’s not nearly as controversial, and in part because — despite claims to the contrary — there really aren’t that many tariff-related barriers that make a big difference any more. It’s generally good to reduce such tariffs, and in response you see the typical response from firms based on whether or not they benefit from those reduced tariffs. The “benefits” of free trade tend to be focused on the companies looking to expand into those markets where tariffs are being lowered or abandoned — and not so much for companies competing against products from those same countries. Frankly, I find arguments that the companies who freak out about trade deals because it will mean more competition against them a bit tiresome, because I tend to believe competition is a good thing for innovation.

However, the Boston Globe has quite a story about one such company, the sneaker company New Balance, which was quite worried about how the TPP would increase competition from shoemakers in Vietnam. Again, I find those concerns to be overblown, but the next part of the story is where it gets interesting: New Balance is now claiming that it stopped publicly complaining about the TPP after the US government more or less promised it a big government contract, which never came through:

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.

But no order has been placed, and New Balance officials say the Pentagon is intentionally delaying any purchase.

New Balance is reviving its fight against the trade deal…

The US government, of course, is insisting the issue of a contract is entirely separate from the TPP, but New Balance said an explicit offer was made. The company notes that while most of the uniform worn by the military is American made, there has always been an exception for sneakers because so few were actually fully made in the US. New Balance apparently decided to change that in hopes of getting a government contract, and the administration more or less said that this would work if New Balance shut up about opposing the TPP:

In 2014, the Pentagon relented. With competition among US manufacturers, officials said they were ready to consider domestically made shoes.

LeBretton said a representative for the Obama administration then asked New Balance to accept a compromise version of the trade deal, partly in exchange for a pledge of help getting the Department the Defense to expedite the purchase of US-made shoes.

The Globe claims that the Defense Department says the reason that it didn’t give New Balance a deal was because its shoes weren’t durable or cheap enough, but even if that’s true, the very idea that the government more or less tried to buy off the company’s opposition to the TPP seems highly questionable.

Of course, I wonder, should the TPP get ratified and should the Defense Department then agree that it will only buy American made sneakers… one wonders if Vietnamese sneaker makers would then have an ISDS corporate sovereignty case against the US government? After all, it would be harming “future profits” that the Vietnamese sneaker-makers would have been expecting, and a “buy American” rule could clearly be seen as a non-tariff trade barrier to foreign goods, no?

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Comments on “Shoe Company New Balance Says US Gov't Basically Offered It A Bribe To Support TPP”

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John Fenderson (profile) says:

Re: Re: Hard to feel sorry for New Balance

Someone should tell that to New Balance’s public affairs VP:

“We swallowed the poison pill that is TPP so we could have a chance to bid on these contracts,” said Matt LeBretton, New Balance’s vice president of public affairs. “We 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. [But] the chances of the Department of Defense buying shoes that are made in the USA are slim to none while Obama is president.”

Anonymous Coward says:

Bribery hypocrisy

Any bets how aggressively the administration would have acted if the deal had been proposed in reverse? That is, if a New Balance official had suggested the government could get a really good deal on a contract if certain officials started parroting the company line at trade meetings? Apparently it is bribery when you buy off the government, but perfectly legal when the government buys you off.

Darrin Silverman says:

The TPP would force other countries that take are genetically modified products and beef filled with bovine growth hormone. In exchange we would have to take other countries products like Canada who Slaughter horses for food in Vietnam who eats dogs. Vietnam could try selling us dog meat and if we didn’t accept it they could sue us in isds clause. And these WTO courts are made up of corporate attorneys who 95% of the time side with the company losing money over the country.

Andy says:

Soverenty claim

I would love it if they sued the American government under tpp rules and i would hope that it would be a few billion dollars payment to the company, yes it is taxpayer money but i can guarantee that American companies are going to use this regulation to suck trillions from various countries who do not want American businesses due to health and safety reasons.

Wendy Cockcroft (user link) says:

Re: TPP Wet Dream

LOL @ this in principle, but now imagine the Vietnamese trying to enforce the judgement.

This FTA is rigged in favour of the biggest players. The idea that Vietnam has the same rights and the same chances of winning in an ISDS tribunal is just that; an idea. The truth is, they wouldn’t stand a chance and if they won I’d hate to imagine the repercussions on them.

aidian says:

TPP shows some big tariffs still exist in agricultures....

…specifically apples and other tree fruit, which are big big deal in Washington (state). Right now there are significant tariffs on American exports into many pacific rim countries. Getting those tariffs out of the way would matter a lot to the economy here.

That said, still not worth it, for two reasons:
1) The TPP is terrible for so many reasons I won’t belabor here.

2) The deal just isn’t very good. At the risk of sounding like Donald Trump, the USTR didn’t do a good job negotiating.

Too motivated to make a deal, the U.S. negotiators didn’t have the leverage they should.

Check out the remaining tariffs, their slow phase out and the vauge wording about when they’ll finally be abolished:

Anonymous Coward says:

New Balance lost my business...

Since the early 1990’s most of my shoes have been New Balance (NB) because they fit my hard to fit feet. I noticed a couple of years ago their prices starting going up a fair percent, from around $85 for the shoes I used to buy up toward $150, and their designs morphed.
The money issue sucks, but when recently tried on several new pairs in on of their stores, they have probably lost me as a customer forever. Like around 1967 or 1968 when I took a bite into a Twinkie, and discovered the cake was no longer made with milk, but with casein. And then in 1975 when I took my next bite of a Twinkie and discovered the cream filling no longer contained any milk or cream or dairy product at all.
NB has abandoned me for some reason. To heck with Vietnam.

Anonymous Coward says:

Down, down, wages are down.

Grab a bargain Corporations, we now have the TPP wages drop so you too can save big dollars at the factory door.

How could the local company compete on price when they pay $5 per hour, not $5 per day.

But don’t worry folks, soon we too will be paid an exciting $5 per day when the TPP goes through.

What an exciting time it is to be a worker!

Anonymous Coward says:

M. Masnick,
I’m not an avid reader, I’ve just been taken to your article from reddit, but your understanding of economy seems to be the one of a preschooler. You “find these concerns to be overblown” and you see competition as a good thing. So you won’t mind American employees of US based factories working for the same salary as an Asian worker or simply losing their jobs because the company can’t stay competitive with another country with a different economy and a workplace based on exploitation? With articles this good, there’s no chance of somebody with a basic knowledge of the English language to replace you for a fraction of the cost…

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