FN Summit: Working a System Mired in Regulations, Politics

Politics is a hot topic. And in a presidential election year, the major issues get even hotter.

Kevin Burke, president and CEO of the American Apparel & Footwear Association, said the political climate in the nation’s capital has posed problems for the shoe industry.

“Washington is at loggerheads with itself,” he said. “Both Democrats and Republicans want dominance. There hasn’t been a new trade initiative in four years.”

Burke said President Barack Obama is heavily supported by trade unions, and “organized labor doesn’t like trade agreements.”

What’s more, Burke said, industry executives are facing an increasingly regulated environment, one that is expected to worsen in the next few years. According to a survey of AAFA members, 30.8 percent noted government regulations are among their most pressing concerns, behind factory costs, at 38.5 percent.

“[Footwear] is one of the most regulated industries in the world,” said Burke. As a result, that slows down the speed and ability of manufacturers to get product into the market, he explained.

As an example, Burke highlighted California’s Proposition 65, the Safe Drinking Water & Toxic Enforcement Act of 1986. “[Such regulations] make it more difficult to get product on the shelf [there] and more expensive,” he said.

While Burke cited challenges regarding imports today, he said it is equally difficult for U.S. companies to sell shoes overseas, even in the countries where their products are being made.

According to the AAFA survey, the top three countries for footwear consumption outside the U.S. are China (with 27 percent of votes), Brazil (16 percent) and India (12 percent).

Like the U.S., these countries have government restrictions on the footwear category, creating their own form of protectionism, according to Burke. “They [want] to keep the U.S. out unless your [company] cuts a deal,” he said.

To aid AAFA members in expanding their businesses overseas, the organization will issue a report titled “New Intelligences,” a tip sheet addressing many of the nuances that come with entering each nation.

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