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Relief May Be in Sight for Lauan Wood Importers

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October 26, 2017 by   Comments Off on Relief May Be in Sight for Lauan Wood Importers

Lauan is used in a variety of RV components

While there are still more hurdles to clear, two recent actions could spell relief for those RV companies whose operations depend on the import and use of lauan wood.

The actions, one legislative and the other deep within the minutiae of the federal government, look to reinstate lauan wood as part of the Generalized System of Preferences (GSP), a trade program that lowers tariffs on imports from nearly 120 developing countries. In 2015 the United States Trade Representative (USTR), which oversees the GSP, removed lauan wood imported from Indonesia – its primary source – from the program following what’s called a “Limited Product Review” conducted that summer as required by legislation.

Lauan was removed because in 2014 82% of all lauan imported to the United States came from Indonesia. That meant it exceeded the 75% threshold of imports from one country, so the USTR revoked the Competitive Needs Limitations (CNL) waiver for the wood, meaning it is no longer eligible for duty-free treatment. Since then, companies have had to pay an 8% duty on all imports of lauan from Indonesia, which by some estimates from the Recreation Vehicle Industry Association (RVIA) approaches $1.5 million every month.

Rep. Jackie Walorski

The legislative remedy is called the Competitive Needs Limitation Modernization Act (HR4608), and was introduced by Rep. Jackie Walorski (R-Ind.-2), Rep. Dennis Ross (R-Fla.-15), and Rep. Dina Titus (D-Nev.-1) – all co-chairs of the House RV Caucus. Essentially, it would update the CNL waiver process used by USTR in determining whether a potential GSP-eligible item is “like or directly competitive” to a domestic product. Specifically, the bill would change the test to look back at domestic production for the past three years instead of comparing it to products made on Jan. 1, 1995, as is the case under the current statute.

“Our bill would change that 1995 date to instead look back at the last three years to make that determination so that it’s keeping up with what the current situation is, rather than what the situation was on a certain date 22 years ago,” Jack Morrissey, communications director for Walorski’s office, told RVBUSINESS.com.

Additionally, the bill would change the date for USTR to make CNL determinations to Oct. 15 in order to use a full year’s worth of import data (which runs from July 1 of a year to June 30 of the following year). Currently, decisions must be made by July 1, meaning that USTR must estimate the last two-to-three months of import data.

Mike Ochs, RVIA’s director of government affairs, cautioned that passage of the bill would not automatically make lauan tariff-free. “We still have to go through the process of requesting a competitive needs limitation waiver, but we think that having this in place will make it much easier to make the case for the industry. If we could do that it would remove an 8% tariff and make the cost of the raw materials that go into the RV a little less, saving the industry somewhere on the order of $1 million to $1.5 million dollars a month,” he said.

The legislation is currently under review by the House Ways & Means Committee, and it’s expected to be part of an overall GSP reauthorization legislative action.

“Northern Indiana is known as the RV Capital of the World, so Hoosiers know just how vital manufacturing is to our nation’s economy,” said Walorski. “We should never let outdated laws get in the way of building American-made products. This common sense bill will make small but important fixes that allow our manufacturers to save time and money they can spend investing, growing, and hiring.”

The second remedy create to create narrower classification of the broader goods category in which lauan finds itself thereby giving the product a more favorable position when subjected to future Limited Product Reviews. RVIA is lobbying a sub-committee within the USTR to establish the new classification.

“We’re petitioning for a more narrowly defined tariff classification based on the thinness of the material,” Ochs explained. “Right now it comes in under a tariff category that can be up to six millimeters in thickness and we’re looking at doing one that’s 3.5 millimeters or less. It would more clearly differentiate the type of wood we’re looking at as to what other products could possibly be confused or directly competitive with it.”

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