Rising concern about inflation could help Outdoor Industry Associations trade agenda this year as Congress considers lowering tariffs in a bid to counter the rising price of Chinese and other imports on U.S. consumers. The OIAs trade agenda revolves around reducing tariffs vendors pay to import some of their most innovative products.
“You have an innovative industry that has never taken ownership of its custom codes and that has caused us to be one of the mostly highly taxed industries out there,” said Frank Hugelmeyer, OIA president. “Somebody like a Wal-Mart or a Target is out there reducing duties on virtually everything they import, so when your are a specialty retailer, or specialty brand, this puts you at a distinct competitive disadvantage.”
The outdoor industry pays an average tariff rate of about 14% on its imports – several times what other industrial sectors pay, Hugelmeyer said. Because vendors and retailers often markup their costs 100%, tariffs could be pushing up retail prices on a $100 import by as much as $50.
“The climate to reduce costs for the American people is increasing,” said Hugelmeyer. “Duty reduction bills are likely to get more popular for that reason. The timing for our initiative could not be better than right now.”
In 2006, OIA was able to persuade Congress to eliminate or substantially reduce tariff rates on six categories of waterproof/breathable footwear. The association argued that as performance products using high-tech laminates like Gore-Tex and eVent, the boots and trail-running shoes deserved their own categories with lower tariffs. Until then, some of the products were being lumped in with imports of rubber boots, said Hugelmeyer. This year, OIA hopes to reduce tariffs on performance outerwear and affordable footwear products.
“We are now going after products that are non-controversial, where we know there is not domestic production,” Hugelmeyer said.
The prospect of lowering tariffs should help OIAs newly minted political action committee, which kicks off its fund-raising tonight in Washington D.C. during OIAs annual Capitol Summit. The annual event usually attracts about 50 industry luminaries, including OIAs CEO-packed board, for a few days of lobbying on Capitol Hill. Hugelmeyer hopes to raise $20,000 for the PAC during the summit, which comes as vendors are struggling to contain costs and preserve margins.
The political donations will be used to back federal candidates willing to support not only OIAs trade agenda, but greater spending on national, state and local parks.
While the Bush Administration has generally sought to cut funding for such programs, it is working with OIA, conservation, environmental and recreational user groups to launch the National Park Service (NPS) Centennial Challenge.
The initiative seeks to establish a ten-year, $100-million-a-year fund to match private donations that would raise $2 billion to refurbish parks in time for the 100th anniversary of the NPS in 2016. Congress approved $25 million in matching funds for the current fiscal year, but has not yet established the fund despite an estimated $800 million annual shortfall in the NPS operating budget.
Hugelmeyer said the Centennial Challenge and trade legislation have the best chance for success this year, since Congress is likely to postpone voting on major spending bills until after the election.
