December 29, 2013

Outcome of trade talks splits state

A proposed new international agreement has implications for Maine companies that compete with and sell to Asia.

By Kevin Miller kmiller@pressherald.com
Staff Writer

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New Balance, which manufactures athletic shoes in Maine, is the only shoe company in favor of tariffs.

2002 file photo/The Associated Press

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Maine wild blueberries are ready for harvesting at the Dolham Farm in Warren in this file photo. The state's growers would likely benefit from the elimination of trade tariffs.

2012 file photo/The Associated Press/Robert F. Bukaty

Additional Photos Below

Exports of semiconductors and components accounted for $460 million of the Maine total, according to the report. The remaining 24 percent represented: $46 million from exports of aerospace products; $27 million for fisheries and marine products; $20 million in wood and paper products; $18 million in pharmaceuticals/medicines; and $32 million classified as “other.”

“Maine has good trade ties with several of these countries, ... however, Maine producers currently face steep tariffs and other barriers on certain exports to these countries,” according to Trade Partnership Worldwide’s report. It was produced for the Business Roundtable, an association of CEOs from companies with combined revenues of $7.4 trillion.

The port says trade talks “ will provide an avenue for removing these barriers and increasing Maine exports.”

South Portland is home to two major semiconductor manufacturers – Fairchild Semiconductor and Texas Instruments – that combined employ more than 1,200 workers. Neither company returned requests for comment last week.

However, Texas Instruments listed the trade talks and other open-trade issues at the top of the company’s 2013 public policy priorities, noting that approximately 90 percent of the company’s revenues come from sales outside of the United States. Malaysia is a major purchaser of semiconductors.

STAKES HIGH FOR NEW BALANCE

New England’s multibillion-dollar footwear industry could serve as a case study in the fierce, big-money debate over tariffs.

For months, Massachusetts-based New Balance, which employs nearly 1,300 people in Maine and Massachusetts, has been battling six other New England shoe manufacturers over whether to eliminate import tariffs as part of any trade deal.

Like all other major sneaker companies, New Balance relies on overseas factories – including some in Vietnam – to produce the majority of the brand’s sneakers. But New Balance manufactures or assembles 25 percent of its shoes at three Maine factories – in Norridgewock, Skowhegan and Norway – or at facilities in Boston and Lawrence, Mass.

As the only major sneaker company still manufacturing domestically, New Balance wants the Obama administration to keep the tariffs on shoes produced in Vietnam’s low-wage factories. Adidas, Saucony and the four other New England-based companies that produce shoes overseas but employ thousands of designers, marketers and other workers in the U.S. argued that eliminating the tariffs will lower shoe prices and lead to more jobs in the U.S. as their companies grow.

In August, the six companies publicly invited U.S. Trade Ambassador Michael Froman to visit their company locations after Froman toured New Balance’s Norridgewock factory. Froman’s predecessor to the job, Ron Kirk, received a similar tour of one of New Balance’s three Maine factories in 2012 after repeated requests (and some prodding) from Maine’s congressional delegation.

The biggest player in the sneaker business, Nike, has hired several high-priced lobbying firms in Washington to push to eliminate the tariffs. The result has been a lobbying and public relations war between sneaker rivals that could decide the fate of the few remaining footwear factories in this country.

“We work together on other issues,” New Balance’s LeBretton said of his industry rivals when asked about the tariff-related tensions. “On this issue, there’s no cooling. There is not a situation where we are going to see eye-to-eye on this issue.”

Both Froman and Kirk have pledged to take New Balance’s concerns into consideration, but neither indicated a willingness to keep the tariffs in place.

A spokeswoman for the U.S. trade representative said the office regards athletic footwear as a “sensitive product” and that U.S. negotiators are taking into consideration the importance of the tariffs to New Balance.

One option is phasing out the import taxes. But even with a phase-out the question becomes: How long?

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Additional Photos

click image to enlarge

A Fairchild fabricator inspects a wafer at the plant in South Portland. Semiconductor manufacturers do a lot of business in Asia and should benefit from the elimination of tariffs.

2003 Telegram photo/John Patriquin

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A sternman holds a lobster caught off South Bristol. America's commercial fishing fleet and seafood dealers favor a trade agreement because Asia is a booming market.

File photo/The Associated Press/Robert F. Bukaty

 


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