At the Outdoor Retailer trade show in Denver this week, experts spoke to the particular challenges facing the outdoor industry, as well as the government programs that stand to lessen the burden on companies sourcing from China.
The Outdoor Industry Association (OIA) has been lobbying to alleviate pressures on U.S. companies by pushing for the renewal of legislation that would cut duties. “Our goal is to promote predictable and stable federal trade policy for outdoor companies, which has been particularly challenging over the past several years,” Richard Harper, director of government affairs for the Washington, D.C.-based trade group, said Wednesday.
One headwind that the industry currently faces is the fact that the Generalized System of Preferences (GSP), which gives preferential trade status to developing nations creating an array of products, was not renewed after it lapsed late last year. “Congress did not act in a timely fashion, which unfortunately has been the case for the past several years,” Harper said.
However, there is new legislation now before Congress that would not only renew the program, but do so for six years, he added. Companies that have paid excess duties on goods will also be refunded when the GSP is renewed. “In addition to that, we’re also working on an initiative to add a certain group of products to the GSP program,” Harper said, including a range of performance footwear.
A Miscellaneous Tariff Bill (MTB), which would temporarily suspend duties on a number of products, is also working its way through Congress after expiring in late 2020. Ron Sorini, principal at OIA law partner Sorini, Samet and Associates, said that the firm first cottoned onto the MTB as “a mechanism to start getting rid of some of these really high tariffs that exist where there’s absolutely no domestic production” in 2005. Over the years, OIA and its members have successfully lobbied to have a number of different outdoor products to the list, and Sorini advised brands to look into the measure as a means of cutting down their tariff burden.
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“When you’re importing something, even if you’re paying a high duty, don’t assume that you have to keep paying it and that there’s not a process to get rid of it,” he said. Brands must first identify the products that they believe have the best chance of being included in the MTB based on a lack of availability from domestic manufacturers. Then, OIA can help them to craft a petition to eliminate the duty on those items. Success strongly depends on whether a product is classified under the correct heading, he said—a process that can be more complicated than brands often anticipate.
“The important thing is to define the product as narrowly and concisely to what you want to import as possible,” he said. “You want to make it easy as possible for Customs and Border Protection to implement that to identify the product.”
If a brand manufactures goods in the U.S. using components from China, it’s also worth looking into duty suspensions on those parts and pieces, Sorini said. “Any product that’s dutiable is worth looking at.”
According to Harper, OIA this year lobbied for the inclusion of eight footwear products including hiking boots and shoes as well as trail runners on behalf of a number of companies, like member VF Corp. “We filed about 16, and after a thorough vetting process by the International Trade Commission, it filed recommendations to Congress,” he said. “I think we are confident it will get through by the end of the year.”
The MTB was allowed to lapse because it was not President Biden’s priority upon taking office, Sorini said. “Anytime you have a transition in government—a new Congress, and new administration—they’re going to look at big picture items first,” he said, naming the $1 trillion infrastructure bill, which passed this week, as an example.
“Those are the things that Congress is looking at in the short term,” he said. But as embattled American brands head into the fall and holiday season hoping to recoup lost sales and get business back on track, the federal government is feeling pressure to deal with mounting tariff concerns. “I think that the odds are 75 percent or better that this will pass by the end of the year,” he said.