US Apparel Importers Not Making Good Use of FTAs

Apparel, Footwear, Fashion

US Apparel Importers Not Making Good Use of FTAs

Just under 17% of textile and apparel imports come under the umbrella of free trade agreements, according to Mary Jo Muoio, senior vice president of Geodis USA. And textile importers pay the highest average rate of duty of 16%, compared to average of 2% for non-textile imports.

For those imports that do enter under FTAs and are examined by CBP, the passing rate in 2016 was 34%. Some of the provisions of these agreements are not necessarily advantageous to US importers, says Muoio.

Examples include drawback-the possibility of receiving a duty refund if the imported products are ultimately exported, where current agreement restrict that practice. Another is the possibility of duty refunds after the fact, if the importer realises that the shipments could have enjoyed the benefits of an FTA. "The way the agreements are written they can't do that," said Muoio.

Another opportunity to save money is to pay duty on a first-sale basis rather than on transaction value. Transaction value refers to the price actually paid by the importer. CBP rules allow importers, under certain specific circumstances, to declare the customs value as the first price paid by a middleman in a series of transactions. Ninety percent of apparel and textile imports into the US come in under transaction value.