OIA’s Policy Work Reflects Balanced Trade Agenda

January 10, 2013

To get a sense of what a balanced trade agenda looks like, one need look no farther than the recent work Outdoor Industry Association® (OIA) has done to secure temporary tariff suspensions on some imports and influence the negotiation of a major U.S. trade agreement. In both instances, OIA worked closely with its members, other trade associations, Congress and the Obama administration to ensure that U.S. tariff and trade policies reflect the realities of today’s complex global supply chains, and also support outdoor manufacturers producing in the United States.

OIA has helped member companies save $30 million during the last several years by vetting and submitting their requests for duty relief through what are called miscellaneous tariff bills, or MTBs. Approximately every two to three years, Congress approves a master MTB bill to provide temporary duty relief on hundreds of imported products. OIA submits an MTB to Congress only after determining the requested relief will not injure U.S. manufacturers.

“The legislative initiatives we pursue are designed to be temporary so that OIA can re-evaluate U.S. manufacturing capabilities before seeking renewal of any tariff preferences on outdoor products,” explains OIA Senior Director of Government Affairs Alex Boian, who leads the MTB process for OIA. “In addition, we work closely with U.S. manufacturers and the trade associations that focus on domestic industries to ensure they have visibility and input into OIA initiatives.”

Last year, for instance, OIA submitted requests to lower duties on several types of imported footwear through Dec. 31, 2015. Many of the requests seek to extend previously granted duty relief on specific types of waterproof/breathable footwear that use laminated textile fabrics. Among the companies requesting the bills are several that continue to manufacturer other kinds of footwear in the United States, including one who recently opened a U.S. production line.

When the Obama administration suddenly and unexpectedly announced its opposition to the bills in November 2012, OIA issued an action alert, urging the outdoor industry to speak out in favor of the bills. Outdoor industry companies rallied, sending nearly 200 emails to Congress and the administration in less than one week. The campaign prompted the administration to reverse course and lift its opposition to eight of the bills that extended tariff suspensions on certain outdoor footwear. Read more in “Outdoor Industry Scores Major Trade Victory.”

MTBs haves played a vital role in sustaining the outdoor specialty business model and supporting thousands of U.S. jobs that might not otherwise exist. Just one of the footwear MTBs submitted by OIA, for example, would reduce duties by $896,000 annually, according to U.S. International Trade Commission estimates. While that may not seem like a large sum, it is multiplied several times over as those products move through the value chain.

Brands can invest the savings in equipment and staff to develop new materials, fabrications and designs and otherwise accelerate innovation that further enhances the price-to-performance ratio of their products. They can pass some of the savings along to dealers in the form of lower wholesale prices. This, in turn, provides the healthy margins needed to sustain the specialty retailing model. Consumers may benefit the most as every $1 reduction in landed cost generally translates to a $4 to $5 reduction in retail prices.

Tariff issues also pose challenges for companies that produce within the United States, since even domestic manufacturing often relies on materials that come from elsewhere.

“As a domestic manufacturer of mass-market sleeping bags, we depend on raw materials that are just not available in the U.S.,” said Harry Kazazian, founder and CEO of Exxel Outdoors, the largest sleeping bag factory in the Western Hemisphere, located in Haleyville, Ala.

“I think OIA is providing a very valuable service in working with its manufacturing members to navigate through the complicated process of applying for temporary tariff suspensions through the MTB,” remarked Kazazian.

“Obtaining duty suspensions will significantly contribute to Exxel’s ability to remain competitive with Asia,” Kazazian explained. “This will help us continue manufacturing in the U.S. and expand our operations, creating more American jobs in the process.”

Another good example of OIA’s balanced trade agenda has been its work advising the Obama administration on the Trans-Pacific Partnership (TPP), the multi-lateral talks aimed at liberalizing trade among the United States, Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. While OIA is urging immediate phase-out of tariffs on a long list of outdoor products now imported from partner countries, it is also asking the Obama administration for measures that support U.S. manufacturers.

In general, OIA supports immediate liberalization (i.e., duty phase-out and liberal rules of origin) for outdoor products that have little to no potential for domestic manufacturing. OIA has also identified specific outdoor products that are produced domestically and, therefore, might need more protection.

OIA is calling for a 10- to 15-year phase-out of duties on a long list of “import-sensitive” products currently made in the United States to give U.S. producers ample time to adjust to the new trade regime. This list includes camping stoves, fuel containers, sleeping pads, snowshoes, rubber boots and many other products. OIA is also advocating so-called “short supply” provisions that would enable manufacturers to use fabrics imported from outside TPP countries when it can be proven that such materials are not available in sufficient quantities.

The approach acknowledges the diversity of OIA membership and how the success of many outdoor companies relies on their ability to execute quickly through increasingly complex global value chains, said OIA President and CEO Frank Hugelmeyer.

“The outdoor recreation economy is as diverse as the broader U.S. economy,” Hugelmeyer wrote in a letter introducing OIA’s submission on the TPP to U.S. Trade Representative Ron Kirk. “As such, OIA’s membership is composed of both importers and domestic manufacturers. Our companies range in size and character: from small, family-run shops, to global manufacturers of outdoor products, and multi-billion dollar retailers. OIA’s trade agenda represents the diversity of our membership, and OIA’s submission is a reflection of that diversity.”