AAFA: New Legislative Action Benefits Apparel Producers

The American Apparel & Footwear Association (AAFA) commends the introduction of the Generalized System of Preferences Update for Production Diversification and Trade Enhancement (UPDATE) Act (H.R. 6307), legislation that strives to make U.S. imports of travel goods such as luggage, backpacks, travel/sports bags, business cases/computer bags, handbags, and personal leather goods, eligible for duty-benefits under the Generalized System of Preferences (GSP) program.

The GSP UPDATE Act was introduced on August 2, 2012, in the U.S. House of Representatives by Rep. Ander Crenshaw (R-FL) and co-sponsored by Rep. Adrian Smith (R-NE).

"Now into the summer travel season and quickly approaching the back-to-school retail selling season, now is the perfect time to extend GSP benefits to cover travel goods," said AAFA president and CEO Kevin M. Burke.

"Whether buying luggage for the family trip or backpacks for back-to-school, American consumers will benefit from the duty savings created by this bill," he continued. 'At the same time, the bill will support U.S. workers employed by companies in the U.S. apparel and footwear industry who produce these product categories by enabling companies to lower prices and drive sales."

As introduced, the GSP UPDATE Act would recognize that travel goods are no longer an "import sensitive" industry by removing the current prohibition that prevents most travel goods from being eligible for duty-benefits under GSP. Under GSP, developing countries such as Cambodia, Thailand and the Philippines will be able to export travel products to the United States duty-free. Under the UPDATE ACT, China and Vietnam are not eligible to participate in the GSP program.

While making U.S. imports of travel goods potentially eligible for duty-benefits under GSP, the bill continues to protect the remaining domestic manufacturers by 1) excluding from GSP eligibility certain specific types of travel goods still made in the United States and 2) requiring the U.S. government to do a review, and request public comment, before implementing any duty-benefits for travel goods under GSP.

Duties on the lowest-cost travel good can be as high as 17.6 percent. Today, 99 percent of travel goods sold in the United Sates are imported, meaning that these duties amount to an unavoidable, hidden, and regressive tax on American consumers.

The Generalized System of Preferences (GSP) is a duty preference program. It provides duty free access to the U.S. market for a variety of products from developing countries that meet certain criteria, such as labor rights and intellectual property rights protection. Created by the Trade Act of 1974, the GSP program has historically been a very popular program and laid a foundation for the development of longer term U.S. import relationships with developing countries.

The GSP program has experienced some uncertainty because it was subject to short term renewals and has even been allowed to lapse several times. The program is currently scheduled to expire in July 2013, having been renewed most recently by PL 112-40, which was signed by President Obama on Oct. 21, 2011.

In 2011, the United States imported over $437 million worth of travel goods from GSP eligible developing countries. While GSP travel goods accounted for only five percent of total U.S. travel goods imports in 2011, the relatively low barriers to entry into travel goods manufacturing means that the addition of travel goods to GSP would provide developing countries significant new export and job creation opportunities, which is in line with the spirit and the purpose of the 1974 legislation.
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