The reduction or elimination of tariffs in the Trans-Pacific Partnership, which represents 40 percent of the world’s economy, has the potential to both hurt and help Maine industries, says Sharon Anglin Treat, a former state representative who is heavily involved in the debate over free trade agreements.
The Maine jobs most at risk from passage of the TPP are the 900 at New Balance’s manufacturing facilities in Norridgewock, Skowhegan and Norway, according to Treat, who sits on Maine’s Citizen Trade Policy Commission and for the last four years has served on a federal advisory committee for the U.S. Trade Representative’s office.
The TPP is expected to include the reduction or elimination of tariffs on imports of athletic footwear manufactured in countries like Vietnam, although details of the trade pact have not been released yet. Oregon-based Nike, which manufactures its shoes in Vietnam, has advocated for the rollback on tariffs while Boston-based New Balance, the only major U.S. athletic shoe company that still manufactures some of its footwear domestically, has warned such action would increase competitive pressure and could lead to job losses in Maine and Massachusetts.
“We don’t know to what extent tariffs have been gotten rid of on athletic footwear,” Treat said. “The goal going into the agreement was to get rid of those, period. But is it over 100 years or five years or two years? We don’t know because we don’t have access to the (agreement’s) text.”
She said the last news she had of the negotiations indicated they weren’t “really positive in terms of the New Balance situation.”
Because New Balance is the only athletic shoe company still manufacturing in the United States, it doesn’t have the lobbying power of its foreign-sourced competitors.
That means it’s not in a good bargaining position, said Treat.
“I would not be at all surprised if (tariffs were) something that was sacrificed,” she said. “That’s a lot of jobs in the state.”
Several attempts to reach New Balance officials were unsuccessful on Monday.
Conversely, reducing tariffs could also open up greater export opportunities, according to Janine Cary, president of the Maine International Trade Center.
The seafood industry, for example, could find more opportunities in the Asian markets because of a reduction of foreign tariffs on imported U.S. seafood, she said.
This has happened before, she said. As a result of the U.S.-Korea free trade agreement, which went into effect in 2012, Maine lobster exports – either live, salted or in brine – to South Korea increased 533 percent, from $1.5 million in 2012 to $9.6 million in 2014, according to trade statistics compiled by the World Institute for Strategic Economic Research.
Currently, 61 percent of Maine exports are already headed to one of the 11 TPP countries and support 68,700 jobs in the state, according to data compiled by Business Roundtable, a research and advocacy organization.
“We will be looking at the various potential export opportunities and where there have been some higher duty rates and bringing them down could be helpful,” Cary said.
One little-known aspect of the TPP that could have long-standing implications for Maine and the country is the “investor-state dispute settlement” rules, Treat said. The rules would effectively allow foreign corporations to sue the U.S. government if they think any state or federal laws are too restrictive and could negatively impact their businesses. The suit, however, would be handled in a private arbitration rather than the U.S. judicial system, but would be fully binding on the country.
Treat said such a rule could allow a foreign corporation to sue Maine because it believes, for example, that a state law banning a chemical from consumer products is too restrictive. If the foreign company were to win such a fight, the U.S. government would have to pay damages or change the law, according to Treat.
“People in this country don’t know about it, but it’s essentially giving foreign corporations or foreign subsidiaries of U.S. companies additional rights in the courts that our local businesses don’t have,” Treat said.
The TPP still needs to be approved by Congress. Under a new federal law, the text of the trade agreement is required to be provided to the public 60 days before Congress votes on it.
Treat, who joined a conference call with the office of the U.S. Trade Representative on Monday, said there’s still no timeline for the release of the text.
Republican U.S. Rep. Bruce Poliquin toured New Balance’s facility in Norridgewock this year. This summer he opposed President Obama’s request for “fast-track” trade promotion authority because, he said, “it was not a good deal for Maine businesses, such as New Balance,” but the authority was conferred.
“I look forward to reviewing all the details of the Trans-Pacific Partnership agreement and hearing Mainers’ opinions,” Poliquin, who represents Maine’s 2nd District, said Monday.
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