In a development with implications for the RV industry, federal legislation that took effect on July 29 retroactively renewing the Generalized System of Preferences (GSP) has also triggered an automatic review by the Unites States Trade Representative (USTR) of the inclusion of lauan in the trade program.
According to a report in RVIA Today Express, GSP provides duty-free treatment for selected goods imported from developing countries for use by U.S. companies in manufacturing goods in the United States for domestic consumption or for export. Lauan (or meranti) imported from Indonesia is currently included in the GSP program under a Competitive Needs Limitations (CNL) waiver that was issued in 2005. If the CNL waiver, which allows Indonesian lauan to come in duty-free under GSP, is revoked, RV manufacturers will find the costs of lauan rising by at least 8%, which could cost the industry in excess of $1 million per month going forward.
Given this potential economic impact on the RV industry, which is the largest end user of lauan in the United States, RVIA is working with the association’s manufacturer members, the Government of Indonesia, the International Wood Products Association and other interested stakeholders to urge the USTR to keep the CNL waiver for lauan in place, including filing comments with the agency on July 31. The applicable deadline for the review and possible revocation will be October 1, 2015.
“The consensus among the stakeholder groups we are working with and the trade lawyers involved on this issue is that there is a decent chance that the waiver will be retained and that lauan will continue under GSP due to the lack of a viable U.S.-produced alternative and as a way to reward Indonesia for its forest sustainability efforts,” said RVIA’s Vice President of Government Affairs Dianne Farrell.
Under the 1974 GSP Act, a CNL waiver remains in effect until the president determines that it is no longer warranted due to changed circumstances. That Act also provides that, not later than July 1 of each year, the President should revoke any waiver that has then been in effect with respect to an article for five years or more if the beneficiary developing country has exported to the United States (directly or indirectly) during the preceding calendar year a quantity of the article that has an appraised value in excess of 1 1/2 times the applicable amount set for that calendar year ($165 million in 2014) or that exceeds 75% of the appraised value of the total imports of that article into the United States during that calendar year.
Lauan from Indonesia triggers the second type of waiver revocation as approximately 82% of all lauan imported into the United States in 2014 came from Indonesia. Indonesia exceeded the 75% of imports threshold simply because there are very few countries where this product can be produced.
RVIA lobbied extensively over the past years for the renewal of the GSP program that occurred earlier this summer. The renewal of the program is expected to allow the RV industry to recover more than $22 million in tariffs paid on lauan wood since the program expired in July 2013 while also saving approximately $30 million in tariffs over the next 2½ years, if the waiver is continued.