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April, 17 2015 |  Download PDF |  Share

A Race to the Bottom: Trans-Pacific Partnership and Nike in Vietnam

 

 

A Race to the Bottom:
TPP & The Quintessential Case of Nike in Vietnam

By Charles Kernaghan

Nike is truly the canary in the coal mine, pointing us to what unfettered “free trade” looks like, and what the world will look like under the Trans-Pacific Partnership (TPP).   

In the year 2014, Nike produced over 365 million pairs of athletic shoes, while at the same time refusing to make a single sneaker in the United States.  Meanwhile, they are making these shoes at a tremendous profit while paying their overseas workers pennies. In fact, Nike’s largest production center is Vietnam, where more than 330,000 workers, mostly young women, toil in 67 factories making goods for Nike.  Everyone knows that Nike shoes do not come cheap, selling in the U.S. from $60 to $120 to well past $200.

According to U.S. Customs records analyzed by the Institute for Global Labour and Human Rights, there were at least 16,423 shipments of Nike Athletic footwear exported from Vietnam to the U.S. in 2014, with an estimated customs value of $491 million!

In February 2015, we looked at a sampling of ten shipments of Nike sneakers from Vietnam destined for the U.S. market.  It did not take long to find that the average customs value of the Nike sneakers was just $5.27 per pair!

Meanwhile, Nike’s presence in Vietnam led to a continuation of wages as low as 27 cents an hour in 2012, with a slight increase to 48 to 69 cents an hour in January 2015, which is well below subsistence levels.

It is common that Vietnamese workers have no legal rights.  Nor has Vietnam ratified the United Nations Conventions on freedom of association and the right to organize.

Nike’s CEO, Mark Parker, announced that “Fiscal year 2015 is off to a strong start.  Our connection to consumers and ability to innovate, combined with our powerful global portfolio, is a complete offense… Nike has never been better positioned to realize our tremendous growth potential.”

Nike’s revenues for the year ending February 2015 totaled $30.3 billion.

Let’s be honest.  For years, Nike has been exploiting the 330,000 Vietnamese workers, mostly young women, who are poorly paid and denied their most fundamental rights.


But every once in a while, the truth leaks out.  In this case, it was Thanh Nien News in Vietnam that spilled the beans:

“Analysts acknowledge that Vietnam’s abundance of cheap labour has played an increasingly pivotal role in wooing foreign firms looking to set up overseas manufacturing operations in a country with a population of 90 million.

“This edge appears to be working well in the context of rising labor costs in China and political mayhem in Thailand… They [foreign and local companies] warn any further wage hikes will cause grave consequences on Vietnam’s competitiveness in the near term, adding it needs to be considered ‘very carefully.’”

 — Thanh Nien News, “Vietnam Approves Minimum-Wage Hike of 15 Percent in 2015,” November 11, 2014

On March 10, 2015, Ms. Hilary Krane, Chief General Counsel at Nike, send an email to all 44,000 Nike staff, asking them to lobby for the Trans-Pacific Partnership, telling them that the TPP would:

“reduce duties on footwear and apparel among TPP countries, including Nike products manufactured in Vietnam for sale in the U.S.  For Nike, rolling back these duties will allow us to grow in new markets, reinvest in innovation, and offset costs of doing business.”

In short, Nike is after even cheaper prices, and expanded access to Vietnamese workers with no legal rights, no voice and no way out.  Is this how we want to live?


If Nike had the guts and morals, Nike would demand that their products made in Vietnam be made by workers who are guaranteed their freedom of association, their right to organize and to collectively bargain.

I am certain that many Nike workers are desperate for reform which will allow them to make a living wage and to freely organize unions to defend their interests.  Together we can work on making this a reality!

 

Trans-Pacific Partnership countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. The wages in Vietnam, Mexico, Peru and Chile range from 48 cents to $1.86 per hour. The United States has trade deficits with Vietnam, Mexico, Malaysia, Canada, and Japan.

 

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