31 March 2017
U.S. Travel Goods Sector Still Pushing for Expanded Duty-Free Treatment under GSP
A group of 18 industry associations that includes, among others, the American Apparel and Footwear Association, the National Retail Federation, the Toy Industry Association and the U.S. Fashion Industry Association, wrote to President Trump on 20 March to request that all statutorily eligible travel goods be added to the list of products eligible to be imported duty-free from all Generalised System of Preferences beneficiary countries. The addition of handbags, luggage and other travel goods to the GSP programme could potentially undermine the competitive position of mainland Chinese and Hong Kong exporters in the U.S. market for these products.
As previously reported, a 30 June 2016 presidential proclamation added handbags, luggage and other travel goods under 28 HTSUS subheadings (including luggage, backpacks, handbags and pocket goods such as wallets) to the list of GSP-eligible products but only for least-developed beneficiary developing countries (of which there are currently 43) and African Growth and Opportunity Act beneficiary countries (of which there are currently 38). As a result, large U.S. suppliers of travel goods like the Philippines, India, Indonesia and Thailand have continued to face regular duties.
A range of industry associations and U.S. lawmakers have since urged the White House to change its position, both during the latter stages of the Obama administration and the early stages of the Trump presidency. USTR held a hearing on 18 October 2016 to explore the possible addition to GSP of handbags, luggage and other travel goods made in more advanced beneficiary developing countries but declined to issue a final pronouncement by the expected January 2017 deadline, instead leaving that decision to the new administration. With U.S. Trade Representative designee Robert Lighthizer still awaiting confirmation in the Senate, USTR has not yet taken a formal position on this matter.
The associations note in their letter that it was the “articulated bipartisan will of Congress to designate all travel goods products duty-free when imported from all GSP countries.” The letter adds that, after thorough vetting, the U.S. Congress, the U.S. International Trade Commission and the inter-agency Trade Policy Staff Committee all agree that GSP benefits should apply to all eligible countries for all travel goods in question. The associations assert that such a designation would spur real relocation of U.S. sourcing from mainland China, which is not eligible for GSP, and would give the United States more enforcement leverage over the GSP countries’ trade policies and actions.
While the current letter does not comment on the specific outcomes of the 18 October 2016 hearing, a previous letter by some of these associations stated that the hearing conclusively demonstrated that a designation for all GSP beneficiaries satisfies each of the four GSP statutory criteria in Section 2461: (1) further economic development in developing countries through export expansion, (2) facilitate currently unrealised competitiveness of developing countries, (3) align the U.S. GSP programme with those of other major developed countries, and (4) avoid economic harm to U.S. manufacturing interests. The associations observed that “designating the remaining GSP countries would support the previous, limited-eligibility designation by creating a more competitive travel goods industry that recognises the realities and requirements of its global supply chain.” Additionally, full beneficiary designation would “also accord to GSP beneficiary countries and to U.S. companies with the prerequisite tools to accomplish diversifying travel-goods sourcing beyond its current dominance by a single country.”