Capital Trade Examines the TPPs’ Potential Impact on Athletic Footwear Trade

Capital Trade has prepared a report on the impact of a proposed TPP on the U.S. athletic footwear industry.  The study was released by the Footwear Distributors and Retailers of America on August 20, 2013 and is available on its web site.  The analysis is based on government and industry data and conducted using COMPAS, a partial equilibrium model developed by the Staff of the United States International Trade Commission to assess the economic effects of changes in customs duties.

The main conclusions of the study are:

·       The elimination of duties on athletic footwear as part of the TPP would have extremely small output and employment effects (1.4 percent or less on average) on the U.S. athletic footwear industry.

·       The most significant impact of the duty eliminations modeled in this study is the large shift to Vietnam from other supplier countries — primarily China — as a source of U.S. imports.

These effects are driven by two conditions.  First, the product attributes of athletic footwear produced in Vietnam more closely resemble athletic footwear produced in China rather than athletic footwear produced in the United States.  Second, the share of U.S. consumption accounted for by U.S. production is already extremely low.  Thus, other sources of imports will bear the brunt of TPP duty reductions, and China is the main source of those imports.

These conditions do not necessarily hold for other U.S. industries.  For example, domestic manufacturers of less differentiated products (e.g., hot rolled steel or steel concrete reinforcing bar) would be at greater risk from duty reductions, all other things being equal.