The fiery trade rhetoric that helped President Trump take the White House translated — at least on Thursday — into more options when it comes to duty-free imports of luggage, handbags, backpacks and pocket goods.
A presidential proclamation from Trump extended duty-free treatment to travel goods from a much broader array of countries that use the Generalized System of Preferences, which in total covers 120 nations. The change goes into effect July 1.
President Obama cracked the door open last year, allowing for duty-free imports of travel goods to the U.S. from the least developed countries and those in the African Growth and Opportunity Act. The news at the time came under the heading, “Aiming to Promote Poverty Alleviation and Economic Growth in Poorest Countries.”
Not surprisingly, the Trump administration is taking a more hard-nosed business-minded approach with the office of U.S. Trade Representative Robert Lighthizer touting a “New Trade Preference Program Enforcement Effort.”
Lighthizer said: “Trade under GSP provides strong incentives for developing countries to make market-oriented reforms and provide greater access for American goods and services. The actions announced today are aimed at strengthening our trade enforcement efforts and supporting U.S. manufacturing.”
The USTR’s office noted the move launched a “self-initiated review of Bolivia’s compliance with the GSP eligibility criteria related to child labor, the first such self-initiation of a review in this century.”
In that sense, the move offered an important window into the White House’s approach toward trade.
“The Obama administration was more interested in looking at the GSP program as a tool of development, the Trump administration is looking at it more as a tool of job creation and enforcement,” said Stephen Lamar, executive vice president of the American Apparel & Footwear Association, which advocated for the changes both administrations made to the GSP.
“We look at it with all those things in mind,” Lamar said. “If there’s a stick, there’s also a carrot. It’s not a carrot or stick approach.”
U.S. brands and retailers pushed for the travel goods change to broaden their sourcing options and USTR’s office noted that the move “is expected to be neutral with respect to overall U.S. import levels, and therefore also to the U.S. trade balance, though this action may shift some of the overseas production of these products from non-GSP countries to GSP countries.”
Specifically, that means travel goods makers could move production from China, which is dominate in the area, to countries such as Philippines, Thailand, Pakistan, Indonesia and Sri Lanka. (China, for instance, accounted for $1.6 billion worth of handbag and pursue imports to the U.S. last year, just under half of total imports.)
Rick Helfenbein, president and chief executive officer of the AAFA, noted, “Today, the industry pays in excess of $90 million a year on duties, which can now be repurposed toward well-paying jobs for U.S. workers, lower costs for U.S. consumers, and/or increased investments in product innovation.”
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