2024 Quarter 1 Recap
While election-year politics hang over Congress, there is hope for tariff relief & health promotion policies. With the Presidential race getting the headlines, Congress navigates the choppy waters of an election year to find common ground. Divisions in Congress may get all the attention, but there are Members committed to finding bipartisan solutions, however, the path to success is narrow in a highly contentious election year.
If 2023 is any indication of what to expect in 2024 it will be a challenge, as only 27 bills were signed into law last year and 2024 will be more volatile due to the Presidential election. Despite the challenges presented by Presidential election year politics, SFIA policy priorities cut across party lines.
With the COVID-19 pandemic behind us, Congress has moved on to recovery. The economy remains sluggish and consumer prices continue to rise. SFIA advocacy has targeted policies to lower consumer costs, create more resilient supply chains, protect IPR, and increase participation in sports and fitness.
SFIA has focused much of its efforts on legislation to:
INCREASE PARTICIPATION
Capture the Economic Impact of Youth Sports
Participation in team sports continues to rise and the economic footprint of youth sports is large and growing. SFIA is working with Congress to launch an annual BEA study on the economic impact of youth sports to add to our messaging in promoting youth sports policies.
The gross economic output of Outdoor Recreation was $1.1 trillion in 2022, according to an annual study performed by the Bureau of Economic Analysis (BEA). Outdoor recreation is not in every community throughout the U.S., but youth sports are, and we want to capture that information.
Youth sports are far more than registration fees and field/court/rink rentals; referees and administrative staff at facilities and leagues, coaches, clinics, camps, and sports equipment sales all directly contribute to the youth sports economy – but so does development around sports facilities. Tournaments fill hotel rooms and generate revenue in the community. Fuel stations, grocery and convenience stores, fast food, and chain pharmacies pop up around facilities, and concessions and sports shops in the facility create jobs and contribute to the local economy.
The BEA Youth Sports Economic Impact study will not be available until 2026 at the earliest.
Promote Healthy Lifestyles Via Increased Activity and Access to Facilities
The pandemic highlighted the mental and physical health benefits of physical activity, and communities with children not able to participate on teams due to lack of sports facilities had worse outcomes. Ensuring greater access to facilities will lead to better health and lower future U.S. outlays to treat preventable chronic conditions and mental health problems.
SFIA is working with Congress to increase investments in youth sports infrastructure. Legislation to expand the use of Economic Development Assistance (EDA) funds to include youth sports infrastructure has bipartisan leadership in the House. SFIA is seeking a Republican to join our Democratic Senate lead.
Under the bill, urban and rural communities with a high incidence of substance abuse or violent crime, and lacking sports facilities, would be targeted for new investments in sports and recreation infrastructure. The Secretary of Education would award EDA grants; with 40 percent going to schools and the balance split between non-profits, cities/political subdivisions, and economic development districts.
SFIA has launched a state-of-the-art Sports & Recreation Project Database to give our members advanced notice of new investments in Sports & Recreation Infrastructure. The database uses AI to review up to 400,000 pages of minutes and agendas weekly from local government, council, committee, and board meetings. The database captures the information at the earliest stage of the project, often before the RFP is written, giving SFIA members a competitive advantage.
The Sports and Recreation Project database is searchable by sport, product, facility type, state, and date for customized reports that focus on projects with the most relevance to a business. Database users will receive daily e-mails on new investments to provide the latest info and keep users ahead of their competition.
New youth sports facilities will address the access barrier to youth sports, adult fitness and recreation, and the Personal Health Investment Today (PHIT) Act will lower the cost barrier. PHIT expands Health Savings Accounts (HSA), Flexible Spending Accounts (FSA), and other pre-tax medical accounts to cover activity expenses as a form of prevention. An independent commission reviewing the U.S. Olympic Committee publicly pressed Congress to pass PHIT earlier this month.
PHIT would lower family and consumer costs for youth sports, health clubs/fitness centers, and adult recreation by allowing payment using pre-tax dollars. Allowable expenses include registrations, membership dues, subscription fees, instruction, clinics, camps, tournaments, and equipment used exclusively to participate in sports, recreation, and fitness. Apparel and footwear that can be worn casually and travel and accommodations would not be eligible for PHIT savings.
PHIT has support from more than 80 Republicans and Democrats in Congress, including 15 from the tax-writing Ways & Means Committee which has jurisdiction for the bill. PHIT Champions are seeking an appropriate legislative vehicle to attach PHIT and move it through Congress.
TARIFF RELIEF
Renew Tariff Relief to Lower the Cost of Getting Products to Market
An estimated 100 million dollars in tariff relief on industry products awaits Congressional action, two years after the Miscellaneous Tariff Bill (MTB) and Generalized System of Preferences (GSP) lapsed at the end of 2020. SFIA has more than 80 MTB petitions on industry products fully vetted by the US International Trade Commission and recommended for inclusion in the MTB. MTB tariff relief is capped at $500,000 per petition for up to $40 million in tariff relief on industry products. Gloves, equipment bags, backpacks, and other sports equipment enter the U.S. duty-free if made in a GSP-eligible country, avoiding tariffs ranging from 3.0% to 17.6%.
Environmental issues are a sticking point, but the U.S. included provisions in the USMCA trade agreement that could be adopted for MTB and GSP to address those concerns. The bigger obstacle is Democrats desire to add Trade Adjustment Assistance (TAA) to help workers displaced by jobs moving overseas to MTB/GSP renewal legislation; Republicans counter with a demand to give the President Trade Promotion Authority (TPA) to negotiate free trade agreements without Congressional interference. TAA and TPA are policy differences that can be worked on outside of MTB/GSP, but to date, these have languished in Congress and impeded progress on tariff relief.
SFIA continues to press Congress for the renewal of these traditionally bipartisan, non-controversial tariff relief bills. A March advocacy day on Tariff Relief was well received – Congress is sympathetic and seeking a way to break the impasse to move legislation to renew GSP/MTB.
U.S. Trade Representative Katherine Tai has repeatedly indicated the Section 301 Tariffs on products made in China serve a purpose and give the U.S. leverage in future trade negotiations. Ambassador Tai points to the tariffs leading to increased sourcing outside of China, including back to the U.S., but there is little evidence to support that claim. China’s failure to meet all the terms of the Phase 1 trade deal provides justification for continuing tariffs of up to 25 percent on imports, although Section 301 tariffs on most consumer goods are 7.5 percent. The Section 301 tariffs are in addition to other tariffs on imported products and inputs, putting the total tariff on many Chinese imports above 10 percent.
While it is unlikely that Section 301 Tariffs will be dropped anytime soon, SFIA has pushed for a required U.S. Trade Representative four-year review of the Chinese tariffs. The review will report on the impact of the tariffs, China’s compliance with the terms of the Phase 1 agreement, and most importantly the Section 301 Tariff Exclusion process.
The initial USTR Exclusion process provided relief for roughly a third of requests on Lists 1 and 2, covering steel, aluminum, large consumer appliances, and industrial products, but, only five percent of Exclusion requests were approved for consumer products on Lists 3 and 4A. A General Accountability Office (GAO) report on the Exclusion process found it to be seriously flawed and unfair. GAO recommended re-opening the exclusion process with greater transparency to ensure fair consideration of requests for relief. The USTR review will provide insight into the government’s position on reopening a more transparent exclusion process that offers SFIA members an opportunity to seek relief from China tariffs.
Supply chains
Ensure Reliable Supply Chains to Ensure Timely Delivery of Products
The reliable movement of goods from factories into the stream of commerce is critical to meeting consumer demand and limiting spikes in costs to businesses and consumers. Following the supply chain crisis from the pandemic, Congress enacted the Ocean Shipping Reform Act of 2022 to address rising fees and challenges to the timely delivery of products.
The new laws have reduced fees and led to more reliable shipments of products, but recent global conflicts have disrupted the flow of goods. Shippers have opted to avoid the Suez Canal due to hostilities off the coast of Yemen targeting ships and the longer shipping routes have disrupted the flow of commerce. It is estimated that $80 billion in cargo has been diverted due to hostilities in Red Sea shipping lanes. New routes take ships around the Cape of Good Horn and create greater reliance on West Coast Ports. The new routes have driven up shipping costs due to increased traffic at certain ports that lack the equipment necessary to process the increased volume efficiently.
SFIA requested safe and secure maritime commerce in the Red Sea in a February letter encouraging countries to commit to a multinational security initiative. Twenty-three countries are currently participating in Operation Prosperity Guardian to keep Red Sea shipping lanes safe, and the Suez Canal a viable shipping option. SFIA and other concerned parties stress the need to protect the 30 percent of global trade flowing through the Red Sea and Suez Canal from interference and attacks.
The current labor contract for port workers from Maine to Texas expires on September 30. Negotiations are ongoing between the International Longshoreman’s Association (ILA) and the United States Maritime Alliance (USMA) on a new contract to avoid any disruptions in the flow of commerce to East Coast Ports. The ILA has set a May 17 deadline for local contracts to be agreed upon to allow for negotiations on an overall Master contract prior to the September deadline. To date, only the ports of New York/New Jersey and Baltimore have reached tentative local agreements.
ILA is seeking a more generous contract than West Coast Ports received and pointed to the 40 percent increase in wages and benefits in the Great Lakes District contract as a target. East Coast Port worker unions also object to increased automation and want exclusive port contracts for its workers. Historically, East Coast and Gulf Coast Ports have been less aggressive on strikes and slowdowns during contract negotiations due to the royalties longshoremen receive based on the tonnage of cargo processed. Any disruptions that divert cargo to the West Coast would be bad for East Coast port workers.
INTELLECTUAL PROPERTY
Combat the Theft of Intellectual Property
At the January PGA Show, the Deputy Director of the U.S. Patent & Trademark Office identified SFIA’s U.S. Golf Manufacturers Council anti-counterfeiting program as a model for U.S. businesses seeking to curb the flow of fake products from China. The USGMC program addresses the counterfeit product issue at the root of the problem, focusing its efforts on the ground in China. USGMC identifies fake products, determines the source, and then works with local law enforcement to take down the counterfeiters, seize fake products, and close the production facility. Listings of fake products are removed from online marketplaces and websites dedicated to the sale of fake golf equipment are shut down.
Companies engaged in the production and distribution of fake golf equipment are fined and required to pay damages. Individuals are sentenced to jail time and assessed fines for golf IPR violations. Since the inception of the USGMC anti-counterfeiting program, an estimated 2,000,000 pieces of equipment have been seized. The raids have resulted in over $118,000,000 in damages awarded, more than 100 convictions, and almost $3,000,000 in fines. Only fake products containing marks and branding of the golf manufacturers paying for the program can be seized; fake golf products from non-participating golf companies are left on the factory/warehouse/distribution center floor.
With the implementation of Section 301 Tariffs on Chinese imports, companies based in China have turned to direct shipments to consumers to avoid CBP inspections and applicable tariffs. ‘De Minimis’ shipments with a value of $800 or less enter the U.S. without CBP inspection for forced labor or counterfeit products and appropriate tariffs are not collected. More than two million packages a day enter the U.S. under the De Minimis exemption and the total value of de minimis shipments has increased from $40 million in 2012 to $67 billion in 2022. Counterfeiters in China have utilized the de minimis exemption to gain access to the U.S. market without CBP inspections.
SFIA applauds Senators Sherrod Brown’s (D-OH) and Rick Scott’s (R-FL) February 23rd letter to President Biden requesting he “utilize broad executive authorities to end duty-free treatment for Section 321 de minimis e-commerce shipments that are facilitating the import of illegal products, goods produced with forced labor, and other contraband to the detriment of U.S. manufacturers, workers, and communities.” SFIA supports the Import Security & Fairness Act to prohibit the use of de minimis for products shipped from non-market economies on the USTR’s priority watch list. CBP would be given additional authority to collect more information on De Minimis shipments and ban bad actors.
REGULATION
Ensure Reasonable Regulation and Compliance with Laws
SFIA supports efforts to stem the flow of products containing illegally harvested wood from entering the stream of commerce. The Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) enforces the Lacey Act to regulate the importation of plant products, including wood and other materials, to ensure compliance with U.S. policies on the source of wood in finished products.
Importers must provide scientific name, value, quantity, and country of harvest to certify products contain no illegally harvested wood. APHIS provides two options for filing declarations online: The Automated Commercial Environment (ACE) and the Lacey Act Web Governance System (LAWGS). More information and guidance on declarations can be found on the APHIS website.
Perfluoroalkyl and polyflouroakyl (PFAS) substances have been found to adversely affect health. Lower fertility, development delays, behavioral changes in children, and potentially an increased risk of certain cancers have all been linked to PFAS chemicals. PFAS substances are used in water and stain-resistant coatings found in athletic apparel and footwear, some swim products, and certain sports and fitness products.
The Environmental Protection Agency (EPA) published a new rule requiring any person that manufactures (including imports) or has manufactured (including imported) PFAS or products containing PFAS chemicals in any year since January 1, 2011, to electronically report information regarding PFAS uses, production volumes, disposal, exposures, and hazards.
Any entities, including small entities, that have manufactured or imported products containing PFAS will have 18 months to report PFAS data to EPA. Small manufacturers (as defined at 40 CFR 704.3) whose reporting obligations under this rule are exclusively from article imports will have 24 months to report PFAS data to EPA.
Non-compliant PFAS products warehoused in 2024 cannot be sold in the U.S. beginning January 1, 2025.
Ten States have PFAS restrictions, with California and New York being the most aggressive. California has announced an expansion of the PFAS list of banned substances in consumer products to include Perfluorooctanoic acid (PFOA), Perfluorooctanesulfonic acid (PFOS), and Perfluorononanioc acid (PFNA) to the list of banned chemicals. Proposition 65 mandates warning labels on consumer products containing certain chemicals. The new California PFAS restrictions go into effect on January 1, 2025. New York has banned apparel with intentionally added PFAS beginning January 1, 2025, and outdoor apparel for severe wet conditions starting January 1, 2028.
SFIA members making apparel & footwear have the highest industry exposure.
For more information or for questions on SFIA public policy, please contact Bill Sells.