Will US, EU turn into a big duty-free zone via TTIP?

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TARIFFS are the low-hanging fruit in the complex free trade negotiations between the US and the EU. Ending the tariffs would end a type of gender discrimination, as duties on women’s shoes are higher.

Also American shoe importers could invest and create more jobs without the $2.3 billion (R24.2bn) annual duties, although retailers and distributors would have to decide if the reduction in cost would be reflected in the sales price.

But turning the US and EU into one big duty-free zone will take away some of the fun of trans-atlantic travelling.

Another negotiating round on the presumed road to the Transatlantic Trade and Investment Partnership (TTIP) is upon us. Already low on both sides of the Atlantic, the planned elimination of tariffs does not promise huge gains in economic growth. But they could make quite a difference for brand-conscious fashionistas.

Europeans living on the other side of the Atlantic are used to friends arriving with empty bags to buy American Apparel shirts or Red Wing work boots, a brand that boasts of handcrafting its products in Minnesota or Missouri. And then there are the stories of Europeans ordering what seemed like a good deal from the US – only to be asked to pay ridiculous amounts to customs when the parcel is delivered.

Many Americans spend their European vacations scouting for leather footwear and designer suits, not just because of the bigger selection but because of the cheaper prices. You don’t have to start with Prada or Ferragamo, you can even look at Birkenstocks. The model “Boston” in suede costs e74.95 (R1 057.23) in the German online shop, but is sold for $130 in the US.

Made in China or Vietnam

While average tariffs in trans-atlantic trade are low (3.5 percent on average on the US side, 5.2 percent in the EU), shoes and textiles are an exception. According to the European textile federation, Euratex, the EU imposes maximum duties of 12 percent for American-made apparel and bed linen. In the US, the rates go higher: up to 19.7 percent for wool sweaters for women.

Not that anyone would import the latter from Europe these days. In fact, most apparel sold in the US or in Europe today is made in places like China or Vietnam.

And a staggering 99 percent of shoes sold in the US are produced overseas, according to the Footwear Distributors and Retailers of America. So it is no wonder that Vietnam’s participation in the Transpacific Partnership (TPP) negotiations with the US TTIP has raised hopes of Vietnamese exporters and US importers alike.

Yet, the prospect of phasing out trans-atlantic tariffs gets more than a shrug from the industry.

“Only 3 percent of garment imports come from Europe,” Julia Hughes of the US Association of Importers of Textiles and Apparel said. “So, of course, the TPP is more important, but quite a few of our members are also getting rather excited about Europe.”

Tariff gender discrimination

And so should female consumers – since the end of tariffs would also end a type of gender discrimination. How is it that the US imposes 8.5 percent duties on men’s leather loafers, but 10.1 percent on women’s?

“We source a lot more women’s shoes from high-cost places,” Matt Priest, the spokesman for the Footwear Distributors and Retailers of America, said.

It sounds as if lowering those tariffs would remove a lot of grief and inequality. Priest said American shoe importers could invest more and create more jobs if the $54bn industry were relieved of $2.3bn duties a year. “And we are also anxious to lower the burden for our consumers.”

But what the consumer would really get out of all this seems less clear. After all, “it is up to the retailers and distributors to decide if that reduction in cost will be reflected or not in the sales price”, writes Luisa Santos, the spokeswoman for Euratex. Neither Red Wing nor Birkenstock could be reached to comment.

But what if Red Wing lowered the prices for its boots in its stores in Hamburg and Berlin? For some of us, this might be the worst. After all, turning the US and the EU into a big duty-free zone would take away some of the fun of trans-atlantic travelling.

Sabine Muscat reports about US politics, macro-economic and social trends for several German media organisations. Follow theGlobalist on Twitter: @theGlobalist


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