Tariff Reduction Initiatives

Americans paid $6 billion more for shoes at retail than needed in 2016

FDRA has been advocating on behalf of the footwear industry for almost 75 years.  Headquartered between the White House and the U.S. Capitol in Washington, DC, FDRA is THE voice of the footwear industry and constantly pushes for both the full elimination of ALL footwear duties and for the free flow of footwear worldwide.

 

With 99% of all footwear sold in the U.S. imported, footwear tariffs, put in place in the 1930s, no longer protect American jobs but are actually harming the footwear industry from expanding jobs here in the US.  Rather than pay $2.5 billion in footwear duties in 2016, companies could have used those funds to innovate and hire new workers in the fields of design, marketing and retail as well as good paying blue collar jobs at ports, warehouses, and in trucking. It would have also saved American consumers $6 billion in 2016 on their shoes at retail!

 

Footwear tariffs are also some of the highest on any consumer good, averaging 11% but reaching upwards of 48% and 67.5% on certain footwear types. Meanwhile, items like iPhones have no duty rate.   Tariffs directly increase the cost of footwear at retail, hitting hard working families the hardest as lower cost basic shoes face significantly higher tariffs than men’s leather dress shoes (8.5%).

Footwear Companies paid $2.5 billion in duties in 2016, hurting consumers and job creation.

FDRA’s Legislative Initiatives

To accomplish its mission of eliminating outdated tariffs, the FDRA team meets constantly with U.S. and International officials, Members of Congress and Senators to tell the industry’s story and propel trade policy on footwear forward into the 21st Century.  FDRA staff have over 20 years of combined work experience serving in Congress and use their expertise to push for a number of legislative initiatives to end tariffs on footwear – initiatives focused on lowering consumer costs and creating American jobs.  FDRA members seeking current information on trade agreements and initiatives can find that in our intel center here.

North America Free Trade Agreement (NAFTA) Renegotiation

FDRA supports efforts to strengthen and update the North American Free Trade Agreement (NAFTA), but also recognizes the agreement as it stands today is critical for the U.S. economy, American businesses, and American consumers. While NAFTA continues to play an important role for many U.S. companies including manufacturers, its current limitations on footwear rules of origin have greatly inhibited the ability of the footwear sector to develop in North America. In fact, in 2016, NAFTA was utilized for only 1.1 percent of all pairs of shoes imported into the U.S. market. Greater flexibility in NAFTA’s rules of origin as they relate to footwear would allow companies to have access to important materials, build greater production capacity, and increase footwear manufacturing in North America. In addition, the agreement, negotiated more than a quarter century ago, should be modernized to reflect 21st Century trade, environment, intellectual property, and labor standards.

Footwear Tariff Simplification & Classification Clarity

With so many different ways to classify footwear as its imported into the U.S. (436 ways in case you were curious), FDRA is working with its membership to develop a more simplified approach to this arcane system.  The U.S. tariff code for footwear is a complex and complicated construct of codes and descriptions based on materials used for production, cost of imported goods, understood potential consumer use, and gender…sometimes.  Over time, the classification system has created a subjective standard applied by U.S. Customs & Border Patrol (CBP).  FDRA wants to change that – both through simplification and convincing customs to create more objective standards that can be used to classify shoes that are actually used for athletic purposes and not the pair of athleisure kicks you and your friends sport to Sunday brunch.

GENERALIZED SYSTEM OF PREFERENCES (GSP)

FDRA has long advocated for expanding the current Generalized System of Preferences (GSP)  to include footwear, so that companies that produce shoes in Cambodia, India, Indonesia and a number of other developing nations can utilize this important trade preference program. Created in the 1970s, GSP provides duty-free access for certain goods produced in more than 120 countries, with a strong focus on least developed countries. It benefits American families and individuals with greater choice and value on many basic consumer goods and remains key to helping lift individuals in developing nations out of poverty. Although the program does not include the two largest footwear-producing countries, China and Vietnam, expanding GSP to include footwear would increase opportunities for companies looking to diversify sourcing and  generate significant duty savings for the industry. FDRA is currently working on both a tailored GSP footwear bill and a broader initiative dedicated to expanding GSP to cover footwear while providing meaningful reforms and greater certainty to the program.

MISCELLANEOUS TARIFF BILL (MTB)

FDRA has worked hard to file a number of Miscellaneous Tariff Bill (MTB) requests for temporary footwear duty relief, and Congress is now reviewing each of these requests. For decades, Congress has used the MTB as an important tool for providing temporary and limited duty relief on hundreds of products critical to manufacturers and consumers, including certain footwear. The American Manufacturing Competitiveness Act, the law that establishes the new MTB process, states that imposing duties where there is no domestic availability or insufficient domestic availability negatively impacts both U.S. manufacturers and consumers. Footwear duties are some of the highest in the U.S. Tariff Code and are even higher on lower priced footwear. Temporarily reducing these duties through MTBs greatly benefits U.S. consumers with lower prices and increases the competitiveness of American footwear businesses. FDRA will continue to work with Congress to ensure that much-needed MTB legislation is enacted as soon as possible.