Footwear Industry Tries to Find Right Fit for TPA and TPP

“Selling shoes is like selling legislation,” said Sen. Mike Enzi during the Footwear Distributors and Retailers of America’s Footwear Innovation Summit held Thursday in Washington D.C. The former shoe store owner turned politico has championed the Trade Promotion Authority (TPA) and the Trans-Pacific Partnership (TPP), and along the way, pulled out of some of his old shoe dog selling tricks.

In the footwear industry, Enzi said, you have to know who you’re customers is, you have to listen to the customer and see how that matches up to your inventory—and it isn’t always an exact match. “If you come as close as you can and be better than anyone else, you can make a sale,” he said. “That’s why I try to do with legislation. I listen to them. I see how it fits in my inventory and I make some adjustments if I can.”

Enzi expects TPA to be passed. “Things are happening at the Capitol that haven’t happened in a while,” he said, noting, “More bills have been passed this year than we have in the last two years.” With that momentum the senator said there’s a good future ahead and expects TPA to be passed by the Senate soon.

The path for TPP to be passed isn’t as complete. Enzi said one of the things that can hold up a bill is the tendency for the other side of the aisle to want to put some things in there that will force the other countries to raise their minimum wage, to reduce their working hours or put different kinds of restrictions on the people that work there.

“Usually the countries that we’re dealing with aren’t very interested in doing that or they would have done it anyway, so Trade Promotion Authority allows a bill to be agreed to with just a majority vote and that is usually pretty essential if we are going to have any agreements,” Enzi said.

Despite some of the recent global headwinds, Brown Shoe Company president of global sourcing and supply chain Dan Friedman said the company is optimistic about the future and reaping the benefits of its innovative investments in global sourcing. Part of Brown Shoe Co.’s global sourcing plan is to migrate business away from China and explore other markets.

However, innovation costs time and money, which is why the $2.6 billion company is hopeful that trade deals like TPA, TPP and AGORA can be approved so companies can continue to make investments.

The sourcing exec believes TPP has the potential for something much greater. As China continues to position itself as a major global player, Friedman said, “TPP has the capability of helping America reorient and reestablish itself in the larger global economy.” Through TPP, Friedman said global GDP should “flourish” into more balanced growth for counties like Japan, Singapore, Malaysia and Vietnam. “By encouraging investments in other countries participating in TPP, the U.S. will establish itself as a stabilizer and influencer in a very economically dynamic region,” he stated.

Enzi pointed out that the effects of TPP will be felt at home, too, noting that the U.S. footwear industry paid nearly $2.7 billion in import duties in 2014 and $450 million was to TPA countries alone. “The trade agreement has the potential to save American families and footwear companies hundreds of million dollars a year in costs,” he explained.

For those very same reasons, the FDRA has sent 3,066 letters to Congress advocating for TPA and TPP since the start of the year. However, don’t expect to go to the Hill and talk to a member of Congress, Enzi warned. Instead, look for small victories, like meeting with one of the members of the staff.

“When you leave, write a note and be very effusive on how they listened and what they listened to—the points you wanted to make,” Enzi said. A little flattery, he said, will guarantee you that letter will wind up on the senator’s desk.

To make that message resonate on a deeper level, Enzi suggested finding someone from a small business who has the same problems as all of the rest of the people in the industry, and have them testify before Congress. “Small business plucks at the heartstrings more than big corporation these days,” he explained.

Nike seems well aware of this point. Despite being responsible for one percent of all duties collected by the U.S. government, Nike is trying to take a grassroots approach to advance the TPA and TPP agenda with its Advocacy Amplified program.

“Innovation is everything. We innovate to serve the athlete. We innovate to grow the company,” said Wayne Monfries, vice president, corporate tax and trading for Nike Inc. “We innovate to win at the end of the day because that’s what we are here to do—we’re in business and in business to win.”

Monfries said the company a few years ago realized it couldn’t sit back and be a bench warmer in the duty and trade space. “We had to get on the field and participate in a place that we historically didn’t participate in,” he said.

Nike changed the game, becoming a constituent by expanding its footprint across the country with retail stores, sales offices and distribution centers. Monfries said Nike is able to engage the representatives in those areas through letters, calls and community events. “We try to use a very recognizable brand to get our voice heard and the industry’s voice heard,” he said.

Monfries recognizes that after a while, Washington can turn a deaf ear to tax directors and trade and custom directors. “They want to hear from real people—that’s when we have to reach out to our employees, educate them so that they can have a voice, write those letters and understand why they are going after and making those efforts,” he said.

“It’s a very global economy and we need to recognize that and get our laws to recognize that, which is why we are in the advocacy place to begin with,” Monfries explained.

On new policies, Enzi said, take what you can get. “Comprehensive is a terrible way to do bills. In my opinion, comprehensive means the bill is going to be so vague that no one is going to understand it.” And compromise, he said, means one side gives up half of what it believes in and the other gives up half of what it believes in, “We wind up with something no one believes in.”

Instead, Enzi uses his 80 percent rule. “I have found that you can get 80 percent agreement on almost all the issues. The trick is finding one that you want to work on and be willing to leave out part of what you don’t agree on,” he said. “Usually there’s 10 percent on each side that can be overly aggressive or overly restricted and those two clash. The trick is to get them to leave that out and continue to working on it until they find a new way to do it.”

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