Why Is Obama Visiting Nike to Promote His Trade Bill?

The company is a big exporter—but not from the United States.

BOLOGNA, ITALY - SEPTEMBER 26 2014: Exposition of nike sport shoes.
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S.V. Dáte
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S.V. Dáte
May 6, 2015, 4 p.m.

Pres­id­ent Obama’s big push for trade le­gis­la­tion that he says will boost Amer­ic­an ex­ports hits the road Thursday to Port­land, Ore., en route to a mult­i­bil­lion-dol­lar sportswear gi­ant that ex­ports next to noth­ing.

Nike made $12.4 bil­lion in profits last year, thanks in large part to 1 mil­lion sub­con­trac­ted work­ers at factor­ies primar­ily in low-wage coun­tries in Asia. For years, the com­pany has faced al­leg­a­tions that a num­ber of those factor­ies use sweat­shop con­di­tions and il­leg­ally low wages to pro­duce sneak­ers and clothes that Nike then sells in much wealth­i­er coun­tries.

And ac­cord­ing to a 2014 fil­ing with the Se­cur­it­ies and Ex­change Com­mis­sion, the only things Nike man­u­fac­tures in the United States are “Air-Sole” cush­ion com­pon­ents and “small amounts” of oth­er plastic products it sells to oth­er man­u­fac­tur­ers.

The com­pany is loc­ated in the home state of Demo­crat­ic Sen. Ron Wyden, a free-trade ad­voc­ate and Obama’s lead ad­voc­ate in the Sen­ate for his trade agenda. But wheth­er an ap­pear­ance at an enorm­ous mul­tina­tion­al with a checkered labor his­tory will help Obama sell the plan to a skep­tic­al party base re­mains un­clear. Wyden him­self, cit­ing Sen­ate busi­ness, is not even plan­ning to be there.

“Nike really epi­tom­izes off­shor­ing jobs to coun­tries with hor­rible en­vir­on­ment­al and labor prac­tices,” said Eliza­beth Swager of the Ore­gon Fair Trade Cam­paign. She is plan­ning to take a bus­load of pro­test­ers to the com­pany’s headquar­ters when Obama’s there. “I’m kind of sur­prised they picked Nike.”

So why Nike? The White House has been coy—and field­ing an in­creas­ing num­ber of ques­tions as the trip ap­proaches.

White House press sec­ret­ary Josh Earn­est on Wed­nes­day hin­ted that the choice would make more sense after Obama’s vis­it to the gleam­ing 270-acre cam­pus in Beaver­ton, just out­side Port­land: “It will be­come much clear­er to all of you why this is a use­ful il­lus­tra­tion of the sig­ni­fic­ant “¦ eco­nom­ic be­ne­fits for the Amer­ic­an people.”

He later ad­ded: “On Fri­day, when the pres­id­ent ap­pears at Nike, we will have a more spe­cif­ic, ro­bust dis­cus­sion about why ex­actly the pres­id­ent is there.”

Earn­est said that the com­pany’s 2013 de­cision to donate $50 mil­lion to first lady Michelle Obama’s “Let’s Move” fit­ness cam­paign did not play a role in the White House’s choice.

As to the com­pany’s less-than-stel­lar repu­ta­tion, Earn­est said those ques­tions were best handled by Nike it­self.

“I’m con­fid­ent “¦ they would be happy to ex­plain their re­cord to you on those is­sues,” Earn­est said. “There is, you know, an of­fice some­where, prob­ably in Beaver­ton, Ore­gon, with very well com­pensated, ex­tremely skilled com­mu­nic­a­tions pro­fes­sion­als who can say all kinds of nice things about Nike.”

Earn­est’s sug­ges­tion not­with­stand­ing, Nike did not re­spond to quer­ies from Na­tion­al Journ­al.

In re­cent weeks, Obama per­son­ally has been talk­ing up both a “fast-track” trade-pro­mo­tion bill cur­rently be­fore Con­gress and the Trans-Pa­cific Part­ner­ship trade deal still un­der ne­go­ti­ation among the United States and 11 oth­er Pa­cific Rim na­tions on four con­tin­ents. The trade-pro­mo­tion bill would lim­it Con­gress’ in­put in trade agree­ments to a simple up-or-down vote. Most pres­id­ents have en­joyed that ne­go­ti­at­ing free­dom, but the last trade-pro­mo­tion law ex­pired in 2007.

“We will make the case on the mer­its as to why it will open up mar­kets for Amer­ic­an goods, Amer­ic­an ex­ports, and cre­ate Amer­ic­an jobs,” Obama said at a re­cent news con­fer­ence.

But the ac­tu­al shoes and cloth­ing Nike mar­kets come from com­pan­ies that run factor­ies in de­vel­op­ing coun­tries. In 2014, ac­cord­ing to the SEC fil­ing, 96 per­cent of all Nike foot­wear came from Vi­et­nam, China, and In­done­sia. The lower man­u­fac­tur­ing costs in those coun­tries helped the com­pany to a 45 per­cent profit mar­gin.

“Work­ers there are paid less than 60 cents an hour,” Swager said. “Those are work­ers who can’t even af­ford the products they are mak­ing.”

Nike has 48,000 dir­ect em­ploy­ees world­wide, mainly in man­age­ment, re­search and design, and dis­tri­bu­tion. About 8,500 of those work at the Beaver­ton headquar­ters Obama will vis­it.

It’s not that Obama doesn’t have oth­er op­tions in Ore­gon.

Port­land it­self has ac­tu­al ex­port­ers, from makers of elec­tron­ic equip­ment and bi­cycle parts to Douglas Krah­mer, who grows blue­ber­ries on 500 acres on three tracts out­side the city. He sup­ports Obama’s trade pack­age if it would lower tar­iffs his ber­ries face in Asi­an mar­kets.

“The lev­el­er the play­ing field, the bet­ter it would be,” Krah­mer said. Of the 4 mil­lion pounds of blue­ber­ries he har­vests each year, about a third cur­rently are ex­por­ted. “We have a lot more blue­ber­ries here than we can con­sume do­mest­ic­ally. A new trade agree­ment would cer­tainly be help­ful.”

Krah­mer said he was in­vited to at­tend the pres­id­ent’s event at Nike but was not asked to host it at his farm. “I have pro­duct­ive things to do. So I’m good. I don’t feel a bit left out,” he said.

Nike ori­gin­ally came un­der fire a dec­ade ago for con­tract­ing with factor­ies em­ploy­ing child labor, pay­ing wages be­low loc­al min­im­ums, and hir­ing su­per­visors who used both verbal and phys­ic­al ab­use. More prob­lems sur­faced two years ago with sub­con­tract­ors in In­done­sia.

In re­sponse, Nike on its web­site now ex­plains its goals re­gard­ing its labor “Code of Con­duct,” which in­cludes prom­ises to pay wages promptly, not re­quire ex­cess­ive over­time, and not use child laborers un­der 16 years of age. A re­port on the site said that 93 per­cent of its factor­ies had not re­por­ted in­cid­ents of ex­cess­ive over­time.

At the end of 2013, however, nearly a third of Nike’s con­trac­ted factor­ies still had not met its low­est “bronze” stand­ard, al­though that fig­ure rep­res­ents an im­prove­ment from 2011, when only half of the factor­ies met that rat­ing.

“In a per­verse way, the pres­id­ent go­ing to Nike to pro­mote trade em­phas­izes everything that is wrong about this trade agree­ment,” said Lori Wal­lach of Pub­lic Cit­izen, a lib­er­al group foun­ded by act­iv­ist Ral­ph Nader. “The firm, and its founder, cre­ated the mod­el of low-cost, off­shore pro­duc­tion that has evis­cer­ated the United States man­u­fac­tur­ing base.”

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