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RILA has worked closely with a coalition of trade associations and retailers in support of AFA legislation. AFA legislation (S.1069) was introduced in the Senate by Senator Maria Cantwell (D-WA) in May 2011, and has nine bipartisan cosponsors. Representative Lynn Jenkins (R-KS) and 48 cosponsors introduced a companion bill in the House of Representatives in July 2011.
The most difficult hurdle to advancing the AFA through Congress is the cost of the bill. Because Congress operates under pay-as-you-go rules, the cost of the duty savings would have to be offset. Any provision to offset the duty costs or waive pay-go would likely be controversial. Given increased concern over budget deficits, this hurdle is significant.
Enacted in the 1930s for the protection of U.S. industry under the Smoot-Hawley Tariff Act, American businesses and consumers are still paying these high duties even though 99 percent of footwear sold in the United States is imported. Current U.S. tariffs on footwear are also regressive: the lowest earners pay the highest percentage of their income to fund these taxes.
Each year, American families pay the U.S. Government an estimated $2 billion in regressive duties. U.S. duties on footwear are the second highest of any product category (second to apparel).
Tariffs on certain low-cost shoes can run as high as 67.5 percent of the import price. The highest tariffs apply to the types of shoes that people of modest means tend to buy, while lower duties are imposed on similar products that are more often purchased by upper-income individuals. For example, tariffs on low-end sneakers range between 48 and 67 percent, while tariffs on higher-end sneakers are about 20 percent. In the case of leather dress shoes, the tariff is 8.5 percent. This tariff structure forces consumers with limited means to pay a greater percentage of their disposable income for life’s necessities.
The AFA would eliminate roughly $800 million in footwear duties annually, primarily in three categories: children’s footwear, footwear with excessively high duties, and uncontroversial product categories that have been incorporated into previous Miscellaneous Tariff Bills.