Industry Urges USTR to Add 29 Travel Goods Tariff Subheadings to GSP
Industry representatives on March 4 made their case to the Office of the U.S. Trade Representative to add all 29 HTS subheadings covering travel goods under review for addition to the list of eligible products under the U.S. Generalized System of Preferences. During USTR’s public hearing for the U.S. GSP Program 2015/2016 Annual Review of Products and Competitive Need Limitation Waivers, Allison Baron, a lawyer representing Michael Kors, claimed that, if added, the higher volume of “certain handbags and travel goods products” flowing to the U.S. would benefit U.S. consumers by allowing importers to offer “desirable goods” at competitive prices, defraying higher labor costs. USTR has published a list of subheadings for travel goods it accepted for GSP review during this cycle (here).
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The additions could also benefit U.S. production of raw materials that serve as inputs for travel goods manufacturing, Baron said. China suppliers “dwarf” GSP suppliers in providing inputs for U.S. travel goods imports, said Gail Cumins, a lawyer representing women’s clothing company Tory Burch. In 2015, all exports from the Philippines under subheading 4202, which includes the travel goods under review, represented 2.2 percent by value and 0.6 percent by quantity of the total shipments to the U.S., and Indian travel goods exported to the U.S. comprised 2.2 percent by value and 2.3 percent by quantity, Cumins said. By comparison, China represents over two-thirds of U.S. travel goods imports, Tumi Holdings Sourcing Director Alan Moore said during the hearing. Beneficiary developing countries would benefit from the 29 proposed additions, and the niche U.S. market of travel goods would not suffer, because the domestic market is not geared toward competition, Cumins said.
Tariffs on the petitioned goods range from 4.5 to 20 percent, and are among the highest remaining tariffs in the U.S., Moore said. Eliminating these tariffs would bring more profits for GSP suppliers and diversify sourcing operations and yield profitability for U.S. companies, he said. Moreover, the foundation for greater travel goods production has been laid in several GSP countries, Moore said, setting the stage for widespread manufacturing growth.
Cambodia, Kenya, Philippines Would Stand to Benefit from Proposed Additions
While Tumi doesn’t expect to change its sourcing strategy—most of its inputs come from the Dominican Republic under CAFTA—the company is looking at the “lay of the land” in Cambodia, which could be a possible future option, Moore indicated. Furthermore, Under Armour Vice President of Global Sourcing Peter Gilmore said executives from his company plan to visit Ethiopia and Kenya soon to explore those as possible sourcing options.
Representing the American Apparel & Footwear Association, the Travel Goods Association, and the Fashion Accessories Shippers Association, AAFA Executive Vice President Stephen Lamar said during the hearing that USTR should add the petitioned travel goods for duty-free benefits for all GSP countries, because of the “sheer dominance” of China in trade. “Providing that duty advantage helps create an incentive; it helps create the attention and the direction for a number of these other countries, even those that don’t have much of an industry, or that have some industry but maybe not diversified industry,” Lamar said. Providing more diverse sourcing options could help create even more opportunities for individual production to start in those countries, he said.
Under Armour sources about 60 percent of its backpacks and travel goods from China and 40 percent from Vietnam, Gilmore said. If the proposed travel goods are inducted into duty-free treatment, the company would shift one-fifth of its sourcing from these two countries to the Philippines, Indonesia, and Cambodia over the next two years, he said.