How Nike came to embody the good and bad of Obama's free-trade push

President Obama went to Nike Friday to exhort Congress to pass trade legislation. But fair-labor advocates say Nike is a poster child for the pitfalls of free-trade deals.

The Friday before Congress takes up trade legislation that President Obama dearly wants, he decided to make his case at the Beaverton, Ore., headquarters of Nike.

He could hardly have chosen a place that speaks more compellingly both to the promise of the Trans-Pacific Partnership (TPP) and to its potential pitfalls.

In an attempt to assuage fears that the TPP would send more jobs overseas, Mr. Obama highlighted that Nike is promising to create up to 10,000 United States-based manufacturing jobs if Congress passes the pact. That is just a taste of the benefits that the agreement will deliver to America and the world by lowering import tariffs, opening new markets to exports, and providing a means to compete with China, he said.

But for years, fair-labor advocates have held up the company as a poster child for why free-trade deals such as the TPP hurt America. They outsource jobs to low-income foreign workers where labor rights are scarce. 

"It's almost like throwing people a curve ball – why would you ever go there given their reputation?" said Richard Locke, a professor at Brown University in Providence, R.I., who studies labor and environmental conditions in global supply chains and has been a Nike observer for years, in an interview with CBS News.

But Professor Locke also pointed out that Nike represents the potential for companies to reform.

"Nike has really worked hard [since the 1990s] in improving its environmental and labor conditions among its suppliers," Locke said.

After signing an agreement with Oregon to hire at least 500 full-time-equivalent employees by the end of 2016, Nike exceeded expectations by creating more than 2,000 Oregon-based jobs, The Oregonian reported in October.

Currently, the company says it employs 8,500 workers in Oregon and brings an economic impact of over $2.5 billion a year.

Nike and the Obama administration argue that the trade pact would save companies like Nike money, allowing them to invest in innovation, further develop manufacturing methods, and increase profits that would ultimately benefit the US economy. Aside from the 10,000 manufacturing jobs, the accord would create thousands of new construction jobs and more than 40,000 indirect jobs with suppliers and service providers during the next decade.

But critics argue that while the TPP may leave some jobs in the US for those with advanced degrees such as designers and product engineers, the majority of the low-skilled manufacturing jobs would go overseas.

"Nike epitomizes why disastrous unfettered free-trade policies during the past four decades have failed American workers, eroded our manufacturing base and increased income and wealth inequality in this country," Sen. Bernie Sanders (I) of Vermont, who recently launched a campaign for the Democratic 2016 presidential nomination, wrote to Obama in a letter this week.

Although Nike employs about 26,000 people in the United States, its contract factories overseas employ around one million people, roughly a third of them in Vietnam, The New York Times reported.

"Why would the president honor a firm that has grown and profited not by creating American jobs, but by producing in offshore sweatshops with rock-bottom wages and terrible labor conditions?" Lori Wallach, head of the consumer advocacy group Public Citizen's Global Trade Watch, said to CNN.

Meanwhile, the Obama administration has attempted to reassure the president’s liberal base that the protection of labor rights will be included as core component of the trade pact.

“The trade deal that the president hopes to sign is one that is not only good for American workers, good for the American economy, but is one that includes the strongest, boldest human rights protections, labor protections and environmental protections we’ve seen in a trade deal,” Eric Schultz, a White House spokesman, told reporters on Air Force One during the flight to Portland, Ore., on Thursday.

But critics say that labor standards added to previous trade agreements, like the North American Free Trade Agreement (NAFTA), did not improve working conditions for workers abroad.

Josh Earnest, another White House spokesman, said the key difference between TPP and previous trade agreements is that the proposed deal contains provisions "that would actually be enforceable," CBS news reported.

Obama is pushing Congress to give him trade promotion authority, also known as “fast track,” which would obligate lawmakers to vote yes or no on a proposed deal without permitting amendments. Without such trade authority, many observers say it will be difficult to complete the negotiations on the TPP, which is opposed by most of the president’s fellow Democrats in Congress.

The TPP would be the largest trade pact the United States has joined in more than two decades.