trans-pacific partnership (tpp) footwear & travel...

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Trans-Pacific Partnership (TPP)Footwear & Travel Goods

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Agenda


Implementation

Interaction with other FTAs

Rules of origin

Market Access

Documentation

TPP Countries


Implementation1. Within 2 years of signing, if all countries have completed domestic

procedures; or

2. At least 6 countries are ready if those 6 account for at least 85% of original countries’ GDP

Last 5 US free trade agreements took an average of 4 years to be implemented after signing.

February 4, 2016: Anticipated date of signing

March 14, 2016: Earliest date implement bill goes to US Congress

House must vote on bill within 60 legislative days, Senate within 15 after House

Accumulation – staggered implementation


Interaction with other FTAs

Other free trade agreements remain in effect

Other FTAs primarily at duty-free rate for travel goods but not footwear

Best FTA to use depends on:

• Specific goods

• Applicable rule of origin

• Sources for materials

• Duty phase out


Footwear Rules of Origin


Two Options for All Footwear

Both options require uppers to be formed within TPP

1) A change from any other chapter; or

2) A change from any other heading, except from heading 64.01 through 64.05, subheading 6406.10 or assemblies of uppers of subheading 6406.90, provided there is a regional value content of not less than: (a) 45 per cent under the build-up method; or (b) 55 per cent under the build-down method.



Option 2 permits foreign:

• Outer soles and heels, of rubber or plastics

• Footwear parts other than uppers, parts of uppers, assemblies of uppers



Built up method = add up value of originating materials

Build down method = subtract value of non-originating materials

Travel Goods


• Luggage

•Briefcases

•Backpacks

•Handbags

• Tote bags

• Sports bags

•Wallets

• Etc.

Travel Goods Rules of Origin


Substantial Transformation

•Non-textile Travel Goods – A change from any other chapter

• Textile Travel Goods – cutting & assembly

Rules of Origin

Direct Shipment – customs custody in non-TPP Parties

Permits outside TPP Parties: unloading; reloading; separation from a bulk shipment; storing; labelling or marking required by the importing Party; or any other operation necessary to preserve it in good condition or to transport the good to the territory of the importing Party


US Market Access Baskets for Footwear


US Phase Out Basket

Tariff Elimination Day 1

Intermediate Elimination

Free

EIF Free NA NA

B5 20% off20% off January 1

each yearJanuary 1 year 5

B7 14.29% off14.29% off January

1 each yearJanuary 1 year 7

US1 40% off5% off in years 4

and 5January 1 year 12

US2 50% off NA January 1 year 12

US3 55% off NA January 1 year 12

US4 None25% off in years 9

through 12January 1 year 12

US Market Access


If duty phase out is not identical for all TPP countries for a product• First assess if goods qualify for TPP using the product specific

rules of origin• Second use the “tariff differential” rules to determine which

country’s duty rate applies• Similar concept as NAFTA marking rules• Various options

US Market Access


Tariff Differential Country Options Include:• Wholly obtained• Entirely produced• Tariff differential tariff shift rule• Highest rate

Value of Footwear Potentially Immediately Free into US From New FTA Partners*


2014 Value When Free Percent Trade

$1,381,723,254 Immediately 38.87%

$58,607,206 January 1 Year 5 1.65%

$59,716,931 January 1 Year 7 1.68%

$2,054,434,006 January 1 Year 12 57.8%

*Assuming all footwear would qualify

Rank by Value

2014 Value HTSUS Description MFNRate

5 $390,937,541 64041190athletic footwear outer sole rubber/plastics,

textile upper, > $12/pair20%

7 $254,908,291 64029931outer soles & uppers rubber/plastics, below

ankle, > 90% external surface upperrubber/plastics

6%

9 $117,934,500 64041181athletic footwear outer soles rubber/plastics,

veg fiber upper, $6.51 to $12/pair90¢ + 20%

10 $111,784,695 64041189athletic footwear outer soles rubber/plastics,

man-made fiber upper, $6.51 to $12/pair90¢ + 20%

11 $81,511,012 64021990Sports footwear outer soles & uppers

rubber/plastics, > $12/pair9%

High Volume Footwear Immediately Free Into US From New FTA Partners*


*Assuming footwear would qualify

Footwear Market Access Into All TPP Countries


Australia – up to Jan 1 year 4

Brunei – up to Jan 1 year 7

Canada – up to Jan 1 year 12

Chile - up to Jan 1 year 4

Japan – up to April 1 year 16

Malaysia – day 1

Footwear Market Access Into All TPP Countries


Mexico – up to Jan 1 year 13

New Zealand – up to Jan 1 year 5

Peru – up to Jan 1 year 16

Singapore – day 1

United States – up to Jan 1 year 12

Vietnam – day 1

US Market Access Baskets for Travel Goods


US Phase Out Basket

Tariff Elimination Day 1

Intermediate Elimination

Free

EIF Free NA NA

B5 (JP, MX non-textile)

20% off20% off January 1

each yearJanuary 1 year 5

B6 (PE non-textile)

16.67%16.67% off January

1 each yearJanuary 1 year 6

All textile travel goods are duty free on day 1

Value of Travel Goods Potentially Immediately Free into US From New FTA Partners*


2014 Value When Free Percent Trade

$893,554,316 Immediately 99.99%

$62,240 January 1 Year 5 0.01%

*Assuming all travel goods would qualify

High Volume Travel goods Immediately Free Into US From New FTA Partners*


Rank by Value

2014 Value HTSUS Description MFNRate

1 $ 248,539,616 42029230 mmf tote and sports bags and backpacks 17.6%

2 $ 180,856,233 42029100 Leather sport and golf bags 4.5%

3 $ 93,093,055 42022190 Leather handbags valued over $20 9%

4 $ 71,052,498 42029245 Plastic tote and sports bags 20%

5 $ 59,851,140 42022215 Plastic handbags 16%

*Assuming travel goods would qualify

Travel Goods Market Access Into All TPP Countries


Australia – day 1

Brunei – day 1

Canada – day 1

Chile - day 1

Japan – up to April 1 year 11

Malaysia – day 1

Travel Goods Market Access Into All TPP Countries


Mexico – up to Jan 1 year 10

New Zealand – day 1

Peru – up to Jan 1 year 6

Singapore – day 1

United States – up to Jan 1 year 6

Vietnam – up to Jan 1 year 4

Leather Footwear into Japan


• Japan to eliminate its quota for TPP originating leather footwear

• Tariff elimination will eventually go to zero

Goods HTS When Free

Footwear with leather uppers

6403* April 1, year 11

Footwear with leather sole and textile uppers

6404* April 1, year 11

Other footwear 6405* April 1, year 11

*Some goods within these headings, not subject to the Japan TRQ, have different market access schedules.

Additional Savings

• US ad valorem Merchandise Processing Fees waived for

qualifying goods

• Effective 3 years after implementation

• All other US FTAs exempt MPF except Jordan and Morocco


Documentation

Self certification Importer, exporter, producerBrunei, Malaysia, Mexico, Peru & Vietnam have 5 year

transition period to allow importer certificationFree form

Recordkeeping – 5 years

Post entry claims 1 yearLonger if domestic law permits


Questions?


Elise [email protected]

mailto:[email protected]

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