How OIA Clinched a $90 Million Tariff-Relief Deal
For the past four years, OIA and member companies worked to eliminate steep import duties on backpacks and sports bags. This could save your company—and your retail partners and customers—a lot of money. Here’s how we did it and what it means for you.
Earlier this year, the Trump administration announced that starting on July 1, 2017, brands will no longer have to pay import tariffs—sometimes called hidden taxes—on certain travel goods that are made in any of the named 129 poor, developing countries, including Thailand, the Philippines, Indonesia and Cambodia.
The 17.6-percent tariff on imported backpacks? Gone.
A 20-percent tariff on sports bags? Eliminated.
Since 2013, Outdoor Industry Association has led the coalition to eliminate these tariffs. What does it mean for you? If you important qualified goods from the named countries, it means significant savings that can go right back to your company and help lower costs, create jobs, fuel innovation and get more consumers to use your products.
How We Made It Happen
Nothing in Washington comes easily, and that’s certainly true of any trade legislation. But with a balanced trade agenda representing importers and domestic manufacturers alike and an outdoor recreation economy generating $887 billion in consumer spending and supporting 7.6 million jobs, OIA is in a unique position to work in a bi-partisan manner to get things done to help outdoor companies.
And that’s what happened here. Over a four-year period, across two administrations—while dodging a few curveballs and responding to several surprises and challenges—OIA worked with its members and other trade associations to:
- draft legislation designating a specific group of travel goods—including backpacks—to be made eligible for the Generalized System of Preferences (GSP) program. (The GSP program is the main trade-preference program for poor, developing countries. Qualified products enter the U.S. duty-free.)
- secure passage of the legislation, which was signed into law by President Obama
- develop a broad-based coalition to file petitions with the administration to make the case that these products should be duty-free if they come from GSP countries
- testify before the administration and lobby Congress on the need to approve the petitions
- secure a decision by President Trump to make these travel goods from all GSP countries duty-free by July 1.
A Little More Background
We recognized that many outdoor companies were looking to move manufacturing operations out of China—where costs continue to rise—and wanted to identify new sourcing options. It was clear that many GSP countries were the perfect fit. In developing this legislation and seeing it through the final decision in July, OIA members were instrumental in providing import data, supply-chain analysis and boots on the ground in Washington, D.C., in the halls of Congress and with the two administrations.
And the effort was fully consistent with the mission of the GSP program, to provide developing countries the opportunity to expand export markets and spur economic growth.
How Your Company Can Take Advantage of the Generalized System of Preferences Program
- First, check to make sure your product falls under one of the 28 approved tariff lines that are now duty-free under the GSP program. You can find a full list of eligible travel good products here in spreadsheet format.
- Second, you must import your travel goods from a beneficiary GSP country. If you import from countries like the Philippines, Indonesia, Thailand, Burma or Cambodia, be sure you’re utilizing this duty-free benefit for travel goods.
- Finally, you must meet the required rule of origin. Under GSP, 35-percent of the value of the product must originate in the GSP country.
Outdoor companies have already begun to utilize this program and expand imports from GSP countries. If your company already sources from a qualifying GSP country or if you’re looking to diversify your sourcing options, please contact OIA’s Manager of International Trade, Rich Harper, to learn more.