Problem Statement:
The Trans-Pacific Partnership (TPP) and Michael Froman (United States Trade Representative) need to decide whether it is necessary to reduce tariffs to benefit Americans and the economy or keep the tariffs in order to keep certain manufacturing jobs in the United States.
Background:
This case represents a prime example in terms of market demand and competition. Nike is one of the world’s largest athletic suppliers for a various number sports and other activities. Nike is well established globally and has over a million employees across 42 nations. New Balance has also been in the market a long time since 1906, but not quite as large as what Nike has to offer. “New Balance ranks as the fourth largest athletic footwear and apparel company in the world with $2.4 billion in annual sales” (Assche, 2014). Both companies have been very successful with their products and have an excellent reputation and image. Many consumers are brand loyal to both companies and it will be extremely interesting on what side the TTP takes when it comes down to focusing in on the importance of tariffs.
Question 1: With regard to the elimination of import tariffs on Vietnamese footwear, is what is good for Nike Inc. also in America’s economic interest? What about New Balance? The elimination of import tariffs on Vietnamese Footwear will not only benefit Nike, but the American economic interest as well. “The United States is the world’s largest footwear market valued at $71.7
Producing product overseas puts Nike at risk of overseas sourcing, manufacturing, and financing. Nike buys and sells to different countries using different currencies. The currency rate fluctuates very often and Nike, at times could take a loss. This is a risk most companies cannot take. Nike has the ability to produce materials, import product and sell product in international market during a time of disease outbreaks, terrorist attacks, and military conflict. With these risks there are few companies who can afford to take these risks (aflorzak.com). This also proves no new threat for Nike.
A positive impact of Nike’s offshoring strategy was that it allowed Nike to meet the growing market demand of its customers that resulted from global economic growth. It created convenience so customers in other parts of the world could easily acquire Nike’s products and increased customer satisfaction as a result. Moreover, their strategy had a positive impact on the quality of the products offered in various markets. Since labor in Asian markets was able and very willing to meet the quality standards of Nike’s demands in order to retain production contracts, they could meet the expectations that Nike customers presented (Locke, 2002).
Nike Enterprise possesses heaps of segments all over the world such as North America, Central & Eastern Europe, Greater China, Japan, and Emerging Markets. In addition, there are also manifold merchandises manufactured and distributed beyond the United States. Hence, large amount of purchase and sale transactions in different currencies are executed by Nike enterprise. If foreign currency exchange rates and interest rates waver, Nike enterprise may suffer a decline in revenues, growth in cost, and lower margins and earnings.
The purpose of this document is to explore the history of the North American Free Trade Agreement (NAFTA), the effects NAFTA has had on Canada, the United States of America (specifically American labor and job market) and Mexico. It will also delve into the current state of NAFTA, the advantages and disadvantages to American economy and what the future holds for this historic trade agreement. NAFTA has effected many parts of the world and not just the three countries who originally signed the agreement. It has caused several negative effects for many, especially citizens of the United States; but what evidence is there of this claim.
What I have learned about the Trans-Pacific Partnership is that, it is an exchange between American and other eleven nation, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. TPP help American jobs with more higher-payment and to sold more Made-in-America items to other foreign countries so American jobs and workers would be strong and supportive. TPP ensure that any small business including farmers, and inventors can battle in part of the fastest creating business section. TPP fought for a way and a deal that puts American laborers first, so that nobody can beat them if they compete.
As Canada is not a very large country population wise, it is crucial that Canadian companies are protected from large, capital-orientated companies worldwide. Although the Trans-Pacific Partnership will eliminate many tariffs, the beef and pork industry will still benefit greatly. Canada exported about $3.9 billion dollars worth of product to the potential TPP markets in the years 2012 to 2014 (The ABCs of TPP. (n.d.). Retrieved November 23, 2015, from
The relationship between international politics and offshore athletic shoe production is a surprisingly complex one. Its origins are in the era of the Cold War, when American shoe companies began moving their production offshore. Nike closed the last of their factories based in the United States in 1975, choosing instead to put their factories in the countries that were close allies. While China now produces one third of all athletic shoes, most athletic shoe factories were located in South Korea from the seventies through the nineties (Enloe, 272).
Nike hold foreign factories to: those prevailing in that country or those prevailing in the United States?
If I were the president of Nike I would enforce the movement of our manufacturing factory to the United States of America. I understand that it would be more expensive, but Nike sells high end shoes and can afford to raise the price by a few dollars. In the year 2014 Nike’s net income was about 3 billion dollars. Nike would also benefit from the movement because there would be more money in circulation and it would increase consumer spending. I would use investors money to conduct test to prove that Nike Shoes out perform competitors. Having the manufacturing factory in the United States would make it easier to regulate the working conditions and ensure procedures are being followed. Morality and ethics is a major concern for Nike. Ethics is
Not only does Nike have a responsibility to be in compliance but also the host governments have a responsibility to protect the citizens who live and work in these countries. The enforcement of
Nike has caused places such as Vietnam’s wages to go up, as well as their standard of living. An increase in their economy can be seen, and this is due to competition.
As mentioned earlier, the TPP is a major potential free trade agreement between twelve of the Pacific Rim countries. The countries are Australia, Canada, Japan, Malaysia, Mexico, Peru, The United States, Vietnam, Brunei, Chile, New Zealand, and Singapore (Freil, Sharon, Gleeson, Thow, Labonte, Stuckler, Kay, and Snowdon 1). Interestingly enough, this agreement is the technical successor to the P4 agreement that was initialised in 2006 (Elms 29). This agreement was held between Chile, Brunei, New Zealand, and Singapore. In 2008 the U.S. showed large interest in joining this agreement giving spark to a new agreement that has enticed other Pacific Rim countries (Elms 29). Taking charge of this new agreement the U.S. has laid down most of the TPP 's foundation to create an agreement that should allow for a
The Trans-Pacific Partnership (TPP) is a proposed trade agreement between twelve Pacific Rim countries concerning a variety of matters of economic policy, about which agreement was reached on 5 October 2015. (https://en.wikipedia.org/wiki/Trans-Pacific_Partnership) In 22 September 2008, United State of America joined the agreement. Since then, new countries such as Australia, Canada, Japan, Malaysia, Mexico, Peru and Vietnam also joined the TPP, bringing the total number of participating countries in TPP to twelve. The TTP groups represents a markets of nearly 658 million people on earth and the total combined GDP is $20.7 trillion, and the TPP market also represent for
The Trans-Pacific Partnership (TPP) is an economic free trade agreement currently being negotiated between New Zealand and 11 other Pacific Rim nations (Wyber & Perry, 2013). It seeks to reduce trade restrictions including tariffs, create shared guidelines for intellectual property rights, sanction codes for environmental and labour regulations, and create an investor-state dispute settlement (ISDS) system (Fergusson, McMinimy & Williams, 2015). The implications of the TPP are immense, encompassing nearly 40% of global gross domestic product (GDP), with the potential to affect various aspects of a nations’ domestic policy environment (Wyber & Perry, 2013). On-going formal mediations have taken place since 2008; however public interest in the ramifications of the agreement has increased as negotiations have proceeded (Wyber & Perry, 2013). This is likely a result of its growing media coverage, which has raised public awareness to the issue. The private nature of TPP negotiations has evoked widespread controversy and debate throughout the media (Jairath, Johnstone & Moore, 2015). While confidentiality amid trade agreements is common, some consider that the TPP has been concealed in specific secrecy, giving more influential power to industries involved (Wyber & Perry, 2013).
A compelling case for the TPP was laid out by the Washington post, it looked at the direct and indirect effects of this policy. His first main focus was the economic effect of jobs and businesses. First examined was jobs, businesses that are gone are not coming back and reducing the already low tariff, set 2% max by WTO, would not cause significant job losses. Another aspect of effects on jobs was the increased globalization of business, Companies are beginning to rely on global networks where one countries exports still benefit the US economy. Used Apple’s cooptation with china in the production of the IPhone, even though the product was assembled in china the research and many of the parts were assembled in the US thereby benefitting both countries’ economies. Not only would it support globalization but it