10 Nov 2017
Lawmakers Introduce Legislation to Add Footwear to GSP Programme
Sens. Maria Cantwell (Democrat-Washington) and Pat Roberts (Republican-Kansas) on 30 October introduced legislation (S. 2032) to make certain footwear eligible for duty-free treatment under the Generalised System of Preferences. Rep. Adrian Smith (Republican-Nebraska) introduced companion legislation in the House of Representative (H.R. 2735) back in June.
GSP provides duty-free treatment for more than 3,500 products imported from 120 beneficiary developing countries and an additional 1,500 products imported from least-developed BDCs. The combined lists include most dutiable manufactured and semi-manufactured products as well as certain agricultural, fishery and primary industrial products that are not otherwise duty-free. Footwear is currently statutorily excluded from GSP but the lawmakers are proposing to grant eligibility to the following items. Should the legislation be enacted into law, the administration would have the authority to issue a determination providing duty-free treatment to these items following the applicable review process.
- footwear classified under HTSUS 6402.91.42, 6402.99.21, 6402.99.31, 6402.99.32, 6404.11.79, 6404.19.79 and 6404.19.90;
- footwear classified under HTSUS 6404.11.8930, 6404.11.8960, 6404.11.8990, 6404.19.3715, 6404.19.3730, 6404.19.3760, 6404.19.5730, 6404.19.5760, 6404.19.7730, 6404.19.7760, 6404.19.8930, 6404.19.8960 and 6404.19.8990;
- a range of footwear with outer soles and uppers of rubber or plastics, providing protection against water imparted by the use of a laminated textile fabric, classified under HTSUS 6402.91.50 and 6402.99.33;
- certain sports footwear with outer soles of rubber or plastics and textile uppers classified under HTSUS 6404.11.90;
- certain golf footwear with outer soles of rubber, plastics, leather or composition leather and uppers of leather classified under HTSUS 6403.19.30; and
- certain other footwear classified under HTSUS 6403.91.60, 6403.91.90, 6403.99.60, 6403.99.90 and 6404.19.20
The lawmakers indicate that global trade and manufacturing dynamics have evolved since the enactment of GSP in 1974 and many footwear articles are no longer import-sensitive to industries in the United States. By continuing to keep footwear out of GSP and subject to high most-favoured-nation duty rates, U.S. footwear companies ostensibly have fewer sourcing options and U.S. consumers face unnecessarily high prices.
The lawmakers note that the addition of these footwear products into GSP may result in a shift in the production of those articles to countries designated as beneficiary developing countries or least-developed beneficiary developing countries under the programme, and thereby promote economic growth in such countries. Indeed, U.S. footwear imports from mainland China would be expected to suffer if duty-free treatment is ever provided to these articles. The mainland accounted for an overwhelming 58.0 percent of total U.S. footwear imports in 2016, although shipments fell by 13.0 percent to US$14,848 million. Non-GSP beneficiary Vietnam ranked second with a 19.1 percent share and shipments growing by 12.8 percent to US$4,886 million. The largest GSP beneficiaries include #3 Indonesia (5.6 percent share at US$1,441 million), #5 India (1.9 percent share at US$495 million) and #8 Cambodia (1.0 percent share at US$247 million).
Meanwhile, 40 members of the House of Representatives have called for Congress to approve a long-term extension of GSP before it expires on 31 December. After the programme’s last expiration it remained unauthorised for two years, costing importers millions of dollars, and there has been some concern that a similar lapse could follow the upcoming expiration.