Congress Sends Obama Trade Bills Expected to Save Industry Millions

Both houses of Congress approved key trade legislation this week that will refund millions of dollars in duties incurred by the sporting goods industry since 2013 and could lead to savings of hundreds of millions of dollars a year  in the footwear industry, according to industry lobbyists.

Trade Promotion Authority (TPA)
The Senate approved TPA Wednesday in a 60 to 38 vote Wednesday after President Obama personally lobbied several Democrats to switch their votes. Through TPA, Congress essentially assures U.S. trade partners that it will vote promptly on any trade agreements a President brings them without seeking amendments. Presidents have sought such agreements for decades to induce foreign governments to negotiate, but Congress has not renewed the legislation since 2007. The bill passed this week renews TPA through July 1, 2021 and will provide the Obama Administration with additional leverage as it strives to consummate the Trans Pacific Partnership (TPP), which will rewrite the rules of trade between the United States and 11 other Pacific Rim countries. The TPA is also likely to govern how the Obama Administration or its successor negotiates the Transatlantic Trade Investment Partnership, which will govern trade with the European Union.

TPP and TPA are supported by the sporting goods industry's major trade associations, including Outdoor Industry Association (OIA), the Sports and Fitness Industries Association (SFIA), the American Apparel and Footwear Association (AAFA) and the Footwear Distributors and Retailers Association (FDRA).  OIA backs TPP because it will eliminate U.S. tariffs on certain outdoor products not made in the United States, while securing long tariff phase-outs and strict trade rules on outdoor products that are made  domestically.  The FDRA has said the TPP has the potential to save the footwear industry hundreds of millions of dollars annually.

The Senate approval of TPA marked a crucial milestone in a long and arduous process. The Obama Administration will now turn its attention to closing a final TPP deal and pushing it through Congress.. While supporters prevailed in last week's vote on the TPA, there is no guarantee they will win the day if and when the President brings TPP to Congress for the up or down vote. Chances for approval diminish the closer that vote gets to the 2016 presidential elections, when all 435 members of the House and 34 members of the Senate are up for re-election.

Trade Preferences Extension Act of 2015
President Obama is expected to sign Trade Preferences Extension Act of 2015 bill into law following approval in the House Thursday and the Senate Thursday. The bill includes long-term renewal of the African Growth and Opportunity Act (AGOA), the Haiti HOPE/HELP trade program, the retroactive renewal and update of the Generalized System of Preferences (GSP) program, and important clarifications to the tariff classifications for protective active footwear and performance outerwear.

The GSP/trade preferences bill extends the program, which provides duty-free treatment for 140 beneficiary developing countries for nearly all dutiable categories of sporting goods equipment, until December 31, 2017, according the Sports and Fitness Industries Association (SFIA). The extension would be retroactive to the program’s July 31, 2013 expiration,  which means millions of dollars held  in escrow would flow back into the industry.

The bill also includes new definitions and tariff classifications in the Harmonized Tariff Schedule (HTS) that will lower the import tariff on certain performance footwear with a waterproof liner from 37.5 percent to 20 percent and could lead to lower duties on recreational performance outerwear OIA has sought since 2007 through its US OUTDOOR Act legislation.
“For the first time the HTS will recognize that these are unique products, distinct from ready-made, mass market apparel,” OIA Trade Policy Advisor Rich Harper explained to The B.O.S.S. Report Friday. “While it does not contain the duty relief in the OUTDOOR Act, these new classifications will help the industry better track imports and sets the stage for eventual duty elimination.”

In addition, the bill includes a provision that would allow the filing of petitions requesting that travel goods – including such items as gym bags – of textiles or leather be added to GSP eligibility.

“With the update of the GSP program, we can now begin a process that will allow travel goods such as phone cases, luggage, backpacks, and handbags, imported from developing countries to receive duty-free access to the United States under the GSP program,” said Juanita D. Duggan, AAFA's president and CEO.