Vietnam seeks free trade on shoes
BEN LUC, Vietnam – This is where many of Nike’s Deep Fusion running shoes are born. When a pair of them reaches the end of the assembly line at the huge Taiwanese-owned factory here, the cost of production is about $20 to $25. At malls across the United States, the retail price ranges from $59.99 to $107.
About $3 of that reflects a tariff on U.S. imports of athletic footwear.
Vietnam wants to eliminate the 8 percent to 15 percent tariff as part of a free-trade negotiation with the United States and nine other Pacific nations. U.S. Trade Representative Ron Kirk leads those negotiations for President Barack Obama, and he got Vietnam’s perspective on the tariffs when he went to Hanoi in August.
More engagingly, the tariff is the center of a dispute between Nike and New Balance, two U.S. firms that are exchanging blows and waving flags over whether it still makes sense for Americans to manufacture running shoes.
Both companies get more of their shoes made in Vietnam than anywhere else. But Boston-based New Balance Athletic Shoes Inc. is the last company left making some of its mass-market running shoes in the United States. The privately owned firm had $2.04 billion in revenue last year and employs 1,350 workers at five factories in Massachusetts and Maine.
Nike Inc., with annual revenue of $24.1 billion, is the biggest athletic shoe maker in the world. Virtually all of those shoes are made overseas for the Beaverton, Ore.-based company. Company officials say cutting the tariff on Vietnamese-made shoes would allow Nike to cover higher raw materials costs and invest more in maintaining competitiveness.