The American Apparel & Footwear Association (AAFA) welcomed the introduction of the Generalized System of Preferences Update for Production Diversification and Trade Enhancement (UPDATE) Act, legislation that would make U.S. imports of travel goods like luggage, backpacks and handbags, among other items, eligible for duty-benefits under the Generalized System of Preferences (GSP) program.
The GSP UPDATE Act was introduced in the U.S. Senate by Senators Mark Begich (D-AK) and Roy Blunt (R-MO). The legislation joins a companion bill introduced in the U.S. House of Representatives on May 22, 2013.
"Every time American families pack their bags and travel to visit family, commute to work, or ride the bus to school, we are reminded that Congress has a valuable opportunity to provide real cost savings for U.S. consumers," said AAFA Vice Chairman Rick Helfenbein, President of TellaS Ltd.
"Extending duty free benefits to travel goods makes essential products more affordable and creates development opportunities in the countries that need them most. Under the GSP UPDATE Act, countries like the Philippines and Cambodia will have increased opportunity to compete in the global market while providing U.S. consumers with more product choices. I applaud Senators Begich, Blunt and Wyden for their leadership on this important issue."
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 like Cambodia, Thailand, and the Philippines, will be able to export travel products to the United States duty-free. Under the GSP 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.
Background
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 is subject to short term renewals and has even been allowed to lapse several times, most recently in July 2013. Unfortunately, the much-lauded GSP program has remained expired due to Congressional gridlock with unclear timing for renewal, though it is virtually certain to be re-instated as soon as possible.
