The Obama Administration released the full text of the Trans Pacific Partnership (TPP) agreement on Thursday, providing the sporting goods industry its first opportunity to vet the details of an unprecedented trade deal they say could free up billions of dollars to fund innovation and even U.S. jobs.
This spring, a Deutsche Bank analyst said the pact could enhance Nike's gross margins by 4 percentage points because the company imports so many of its products from TPP signatory Vietnam. That would have translated to $560 million in additional gross profit in the company's last fiscal year. Nike has said that would allow it to create more jobs in the United States, including advanced manufacturing jobs.
The Administration has said there may be additional edits to the final text as it goes through a final review prior to the president's signature, which is expected to occur within 90 days, or by Feb. 4, 2016. Though Congress could vote whether to
approve or reject the deal the next day, most analysts don't expect leadership to scheduled a vote on such a divisive matter until after federal elections in November.
The Obama Administration announced it had reached an agreement on TPP Oct. 5 but had not released the full text of the agreement. U.S. athletic and outdoor apparel and footwear brands, with the notable exception of Patagonia, have generally supported the trade agreement, which lowers or eliminates tariffs on thousands of items.
While a variety of trade associations gave the agreement tentative approval Oct. 5, they said they would not push for the pact's ratification by Congress until after confirming details in the final text.
On Thursday, Outdoor Industry Association said it will conduct a thorough review of the agreement in consultation with its members. OIA has lobbied for the agreement to include provisions that will help lower product costs on performance apparel, footwear and equipment not already made in the United States. It argues those tax cuts will save consumers billions of dollars and fuel innovation here in the United States, while creating more American jobs and encouraging more people to get outdoors. It has also stressed to the administration that the TPP must also include the strongest labor and environmental protections possible to reflect our industry’s values.
“While we are confident of the significant commercial benefits in the agreement, it must also reflect the outdoor industry's values of social and environmental responsibility to get our support, as we've made clear to the administration and Congress from the very beginning,” OIA Executive Director Amy Roberts said Thursday.
The National Council of Textile Organizations, whose support will be important to winning support from southern Congressional delegations, said it “will immediately initiate a thorough analysis of the text to determine its impact on our members, the U.S. textile industry as a whole, and our Western Hemisphere trading partners.”
“Based on our generalized understanding of the final agreement reached in last month, we believe that many of the U.S. textile industry’s key objectives have been met, including a yarn forward rule of origin for most products and reasonable duty phase-outs for sensitive textile and apparel items,” NCTO said in a statement released Thursday. “While we need to thoroughly familiarize ourselves with the fine details of the agreement, we feel that the U.S. government was able to achieve a well-balanced outcome for all parties, including U.S. textile manufacturers and our partners in the Western Hemisphere.”
Any disappointment could dilute industry support for the pact in Congress, or lead to outright opposition.
“We applaud Ambassador Michael Froman and our trade negotiators for reaching this historic agreement and making it available to the public as soon as possible,” said FDRA President Matt Priest. “We look forward to closely reviewing TPP and helping footwear companies understand its positive impact as well as our next congressional advocacy campaign.”