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What Effect Will TPP Have on the Footwear Industry?

A shift in manufacturing from China to Vietnam will be the most important effect of TPP on the footwear industry, Footwear Distributors and Retailers of America (FDRA) President Matt Priest said in a press call.

The FDRA has tracked 21 percent growth in volume from Vietnam year-to-date, and, in 2014, U.S. footwear companies paid $449 million in duties from TPP countries, with the largest share of the imports coming from Vietnam. As Vietnam begins to assume a more prominent place in the industry, its exports are expanding beyond athletic styles to include a variety of categories and footwear companies, Priest explained. Some mass footwear providers like Payless and Target have moved into the country, as well as companies in the fashion and leather businesses.

FDRA’s 2014 data from the tariff schedule shows that of the 120 footwear classifications at the 8-digit level, 102 will be duty-free on day one, and the other 18 lines will be considered sensitive by the U.S. government and will experience substantial upfront cuts. Furthermore, these sensitive lines will have a phase-out schedule so that the duty is reduced over time.

The FDRA feels optimistic about the passage of TPP and is encouraging its members to send 10,000 letters to Capitol Hill. “The dynamic that was at play with TPA hasn’t changed,” Priest said. He went on to explain that he is optimistic since President Obama is still in the twilight of his term and is maintaining the support of the Republicans on TPP.

Priest says he anticipates U.S. Representative Kevin Brady playing a large part in pushing TPP through, having led a lot of trade agreements. Priest also anticipates essential support coming from Speaker Ryan who has been very positive about the potential effects of TPP and who Priest anticipates will work strategically to pass the agreement. “Ultimately I think we have a leadership that believes in trade,” Priest said.