Feb 26, 2016
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US brands lobby for duty-free exemption

Feb 26, 2016

A large group of US brands are lobbying the US International Trade Commission to be covered under a law that would enable them to manufacture travel goods duty free in qualified countries.

Coach Explorer Duffel, a product that would be covered by GSP. Photo: Coach

Congress passed legislation last year that removed a 40 year old restriction on travel good taxes under the Generalized System of Preference (GSP), which provided more detail than the general provisions of the WTO rules governing international trade (formerly known as GATT).

The brands are asking to cover backpacks, purses, handbags, wallets, laptop and phone cases made in countries included in GSP. Currently jewelry is covered, as accessories are included in GSP protection.

The total amount of goods that could be covered by this extension of coverage by GSP is valued at over $9.5 billion dollars, according to petitions filed.

Brands including Coach, VF Corp., Michael Kors, Kate Spade, REI, and Columbia Sportswear, are actively petitioning the ITC about how gaining duty free status would expand their sourcing and manufacturing and be beneficial to the global supply chain as well as the consumer.

The current lobbying is to lift restrictions on American brands so that they may source duty free with GSP covered countries. As of now, China and Vietnam lead dollar values in imported travel goods to the US. Neither China nor Vietnam are eligible for duty free trade under GSP.

Most noticeably, countries such as the Philippines, India, Indonesia and Thailand all export travel goods to the US. These countries would qualify for GSP inclusion, which would mean the US brands could expand sourcing and production in these countries significantly.

For companies that are already looking to diversify business out of China or Vietnam, GSP could really help continue to grow the market. Angus McRae, Global Supply Chain Officer for Coach, said, “Coach views the Philippines, a GSP beneficiary, as a “major sourcing partner with the potential to grow immediately.”

Stephen Lamar of the American Apparel & Footwear Association pointed out domestic benefits as well. “Among other things, GSP status for these products for all countries will support the more than 100,000 high value-added travel goods industry jobs in retail, design, brand management and distribution here in the United States,” not to mention having the potential to offer consumers lower price travel goods.
The ITC has accepted and is currently reviewing over 20 petitions for inclusion, and will hold hearings on the matter next week.

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