There appears to be real progress on the issue of tariffs agreement with China, according to representatives of Outdoor Industry Association, following a very successful Capitol Summit packed with meetings and briefings April 28-29 in Washington, D.C.
During a speech to the 42-member delegation of OIA members representing outdoor industry leaders from across the United States on the morning of April 28, U.S. Secretary of Commerce Carlos Gutierrez stated that innovation has been the driving force behind the success of what he termed an economy that the administration believes is, "the envy of the world."
In his speech, he acknowledged the work of OIA and the outdoor industry companies in helping his department with the textile negotiations with China, and stated that the assistance led to the current ski pant tariff exclusion.
Gutierrez stressed that the administration, as evidenced by the American Competitiveness initiative, is working very hard to ensure that the United States leads the world in innovation.
"We need to ensure that we continue to have an environment that is conducive to risk taking and entrepreneurs, not government regulation, and we will accomplish this by strengthening the private sector," said Gutierrez.
He also noted that consumer spending remained strong and that productivity growth was higher on average than at any time since World War II. Gutierrez also stressed that he believes the future for continued growth and a continued strong economy is through global competition, since 95 percent of the world's consumers live beyond U.S. borders.
During a brief question and answer period, Sally Jewel, CEO of REI, pressed Gutierrez to state what the U.S. Commerce Department's position was on the Land and Water Conservation Fund (LWCF) as the future of that funding affected the economic climate for the outdoor industry.
Gutierrez soft-shoed more skillfully than dancer Ben Vereen in stating that the president believed it was not a matter of choosing one or the other -- health of the environment or the economy -- but that both could and should be achieved. However, he also stated the question was one best answered by the Interior Department.
When Frank Hugelmeyer, president of OIA, asked Gutierrez about China, and issues important to the outdoor industry regarding tariffs, the secretary answered by stressing that the U.S./China relationship is THE relationship of the future. He said that the administration was working very hard on ensuring equal access to the Chinese market, just as the Chinese are finally addressing the issues of intellectual property protection.
As Gutierrez strode from the lectern, he was accompanied by Hugelmeyer as he exited the room. When Hugelmeyer returned a few minutes later, the group was informed that Hugelmeyer had managed to corner Gutierrez with David Spooner, assistant secretary for import administration at the U.S. Department of Commerce. During the minute of discussion, Hugelmeyer reinforced that IF the administration continued to lump outdoor industry products such as performance pants, and now performance trail shoes and boots, in with unrelated products simply because of archaic codes, it was effectively restricting and destroying the very innovation it claimed to promote.
Spooner, in front of his boss, reportedly told Hugelmeyer that he was fully aware of the issues and that he would be working very hard, alongside the outdoor industry, to find resolution. Gutierrez apparently expressed his support too.
Throughout the first day, the trade and tariffs lobbying group was told support was forthcoming and changes were going to be made.
OIA is currently working hard on two fronts:
1. While the ski and snowboard pant tariff exemption that was granted late in 2005 was a positive step, it didn't go nearly far enough. Many U.S. Customs officials are not interpreting the exemption correctly and significant quantities of ski and snowboard pants are still not being allowed into the United States. In addition, the definition excludes other performance outerwear pants, which means outdoor industry companies will suffer potentially significant and unnecessary losses.
Hugelmeyer told us that when a decision is reached, likely in early May, OIA believes that it will be a step in the right direction, but will not go nearly far enough. He added that the issue will require much more negotiating and lobbying efforts throughout the year to get the matter permanently resolved.
2. Duty rates on footwear is among the highest in the United States, averaging 10 percent and going as high as 37.5 percent in the case of performance trail shoes and boots. The U.S. average for all imports is 1.5 percent. Many outdoor industry shoes that feature innovative coated or laminated fabrics are currently assessed a duty rate of 37.5 percent because the footwear falls into the highly regulated "protective footwear" category.
OIA, working with Ron Sorini of Sandler, Travis & Rosenberg (OIA's trade and tariffs counsel), is seeking to have an exemption for performance trail footwear and boots via new legislation dubbed the Miscellaneous Tariff Bill (MTB). Several senators who will be introducing this bill have stated that they will include the OIA footwear recommendations as part of the bill. Sorini told SNEWS® that what this will mean is that 10 categories of footwear will have the tariff rate dropped to zero, and two others will be reduced to a more reasonable 20 percent.
SNEWS® View: The importance of the Secretary of Commerce taking time to address the outdoor industry during its time in Washington, D.C., cannot be underscored. In large part due to OIA efforts, as well as key lobbying from outdoor industry company leaders, this little $33 billion industry is now firmly planted on the Commerce Department's radar, and that is all good.
We would humbly point out that THIS is why you, as an outdoor industry member, must participate in events such as the Capitol Summit, and why OIA continues to assert a stronger presence in Washington, D.C. It is during hallway meetings, following quick speeches, and in private office briefings that the words get spoken which are remembered and have influence. It takes time, and it takes effort -- but every drop of sweat equity spent comes back tenfold in results when budget time and legislation time comes around.
With the MTB legislation, savings to the outdoor industry will be huge. It will mean that companies will no longer face the unpleasant choice of either bringing in innovative footwear at an unreasonable retail cost just because of a 37.5 percent tariff, or stripping out the innovation just so the shoe won't be subject to tariffs and, as a result, carry a lower retail that may be more appealing to consumers.