Obama puts Nike in trade spotlight despite sweatshop stigma of past

By Roberta Rampton and Krista Hughes

WASHINGTON, May 6 (Reuters) - President Barack Obama will make a high-profile pitch for a Pacific trade deal he promises will protect workers on Friday at Nike Inc, a company once reviled for using Asian sweatshops to make its famous sneakers.

In choosing the company's Oregon headquarters as the backdrop for his message, Obama risks reminding people of global trade's downside just when he needs to convince nervous Democrats to back the 12-nation Trans-Pacific Partnership (TPP), a key plank of the administration's strategic pivot to Asia.

But appearing at Nike also allows Obama to talk about how things have changed from previous trade deals, and to associate his TPP with a company that says it has learned from the past mistakes of globalization.

Obama calls the TPP "the most progressive trade agreement in our history," but officials declined to say why he chose Nike to showcase a deal economists say will add $77.5 billion to U.S. annual economic output.

Stories exposing low wages and abuse at Indonesian shoe factories supplying Nike surfaced in the early 1990s, eventually sparking consumer boycotts.

In 1998, then-chief executive Phil Knight acknowledged that his product "has become synonymous with slave wages, forced overtime and arbitrary abuse" and pledged to raise standards.

Nike required contractors to sign a code of conduct and hired auditors to monitor changes.

Although the approach had little impact initially, conditions improved significantly after Nike began training and working more closely with suppliers, said Richard Locke of Brown University, who began studying the company in 2002.

"They're still being paid less than they would be paid here, because wage rates are lower in these countries," said Locke, who has pored over Nike's internal audit data.

"But the actual working conditions - pace, cleanliness, healthiness - it's like a modern factory anywhere."


Skeptics point to Nike's past as vindication for their message about the TPP's dangers.

"They are the symbol of what everyone is afraid the future under TPP will be, which is a United States brand name, a handful of well-paid, high-income professional jobs ... and then production offshore to the lowest possible wage venues," said Lori Wallach of consumer advocacy group Public Citizen.

Nike employs about 26,000 Americans, 8,000 in Oregon, where its shoes are designed. But they are produced by more than 1 million workers in nearly 700 contract factories, a third in TPP partner Vietnam, where unions say the minimum wage is $100-$140 a month. The pact would make importing those shoes cheaper.

Obama making the case that the TPP paves the way to more sustainable U.S. jobs could give political cover to Democrats braving union opposition to support legislation to speed deals like the TPP through Congress. Four of Oregon's six Democratic members of Congress have signaled support for the bill, which is expected to be voted on by end-June.

Nike said it is proud of its record in Oregon, where one in five jobs depend on trade and where it contributes $2.5 billion a year to the state economy, according to Hilary Krane, the company's general counsel and chief administrative officer.

"Our whole Oregon operation from the start has been built on international trade," she said.

Nike spokesman Greg Rossiter said the company had "fundamentally changed the way we do business" and improved conditions for workers in contract factories, although more work is still needed.

For Nike, Obama's visit allows it to align itself as part of the "solution" to the ills of globalization, said Peter LaMotte, senior vice president at crisis communications firm Levick.

"While there will always be those who remember Nike for the child labor issues, the vast majority of the American public will associate them more with Air Jordans," LaMotte said.

(Reporting by Krista Hughes and Roberta Rampton; Editing by Kevin Drawbaugh, David Chance and Andrea Ricci)

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