WASHINGTON — Trade groups are voicing their frustration to the U.S. Trade Representative and lawmakers after the Obama administration issued a decision that excluded trade benefits for travel goods from several countries.
In a letter to USTR Michael Froman, four trade groups said they were “disappointed” and “stunned” that their views were “disregarded” in the administration’s decision last week that expanded duty-free benefits for imported travel goods under the Generalized System of Preferences to a limited group of the poorest countries in the world.
The decision gave African countries under the African Growth and Opportunity Act and other countries such as Cambodia and Haiti the ability under GSP to ship luggage, backpacks, handbags and wallets, among other travel goods, to the U.S. duty-free.
But the administration declined to include countries such as the Philippines, Thailand, Pakistan, Indonesia and Sri Lanka, which all have some travel goods production.
“We worked closely with Congress in developing the important legislation to make the 28 travel goods items eligible for GSP. We expected that universal support by stakeholders and the record of prior GSP determinations would produce a fair and commercially and developmentally meaningful result for GSP beneficiary countries and our member companies,” they said in a letter to Froman. “We made absolutely clear to Congress and to the administration that if our members are to diversify in a significant way beyond China, countries such as the Philippines, Thailand, Pakistan, Indonesia, and Sri Lanka must have access to the duty-free benefits of GSP.”
The letter was signed by the American Apparel & Footwear Association, Outdoor Industry Association, Travel Goods Association and Sports & Fitness Industry Association.
The USTR office did not respond to requests for comment.
“We urge you in the strongest possible terms to make all 28 travel goods items eligible for the benefits of GSP for all beneficiary countries as soon as possible to resolve the significant commercial uncertainty and policy incoherence that the administration’s partial decision has created,” the coalition of industry groups said, requesting a meeting with Froman.
Several officials representing brands spanned out over Capitol Hill on Wednesday to press lawmakers to pressure the administration to extend the duty benefits to the other countries.
Companies such as Coach Inc., Michael Kors, Tory Burch, VF Corp., Kate Spade, Ann Inc., REI and Columbia Sportswear petitioned the government either individually or as part of coalitions for duty-free benefits on an array of travel goods under GSP.
The GSP program provides duty-free benefits for more than 5,000 types of products from 122 designated countries and territories. While the entire GSP program does not cover most apparel and textile imports to the U.S., it does cover accessories, such as jewelry.
Congress passed legislation last year that removed a 41-year-old statutory prohibition on travel goods under the GSP program that then allowed companies to petition the government to include imports of certain travel goods for duty-free treatment.
USTR reviewed 20 petitions from companies, industry associations and some foreign governments in a bid to expand the GSP program to include travel goods for the first time. Hearings were also held in the matter.
The estimated amount of U.S. imports of the travel goods covered by the 20 petitions was $9.54 billion in 2014, according to four petitions filed on behalf of several brands and retailers by Sorini, Samet & Associates LLC. Of that total, China accounted for roughly $6.73 billion in travel goods imports to the U.S. China is not eligible for GSP benefits.
In its review, the administration weighed, among other things, the impact of lifting duties on imports on U.S. travel goods manufacturers against the benefits to U.S. companies that source the majority of those products abroard and to developing countries seeking to expand their market share in the categories.
One travel goods manufacturer went on record in opposition to extending the benefits to travel goods, stating it would negatively impact domestic producers. That company, Korchmar, a 99-year-old travel goods manufacturer based in Naples, Fla., said providing duty-free benefits to imported travel goods under GSP would have a negative impact on the domestic industry.