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June 7, 2019 the Honorable Robert June 7, 2019 The Honorable Robert Lighthizer United States Trade Representative 600 17th Street Northwest Washington, D.C. 20508 Re: Hearing on Section 301 Proposed Actions on China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation (Docket No. USTR-2019-0004) Dear Ambassador Lighthizer: The sportfishing industry requests that sportfishing equipment, including products under heading 9507 of the Harmonized Tariff Schedule of the United States and any other products subject to the federal excise tax on fishing equipment, be excluded from the Section 301 Tariff List. The tariff would not be practicable, and it would cause disproportionate economic harm to most of our industry. The American Sportfishing Association (ASA) represents the sportfishing industry and the entire recreational fishing community. This audience encompasses all the fishing tackle manufacturers and related business associated with recreational fishing, including the almost 50 million Americans that enjoy fishing each year. Since 1933, our association has represented not only the companies that make the rods, reels, lines and lures that anglers need to catch fish, but also the tackle boxes and fishing nets, waders and bobbers, sunglasses and boat shoes, marine electronics, boats and motors. As an industry we understand the position of President Trump regarding the current trade relations with China and we support realigning our trade agreements to correct the unfair trade practices, including the treatment of intellectual property. However, we are deeply concerned about the impacts of these proposed tariffs on all the manufacturers who attempt to provide a service to what the public calls its favorite pastime – fishing. Fishing isn’t just something people do on the weekend – its big business. Recreational fishing supports 800,000 American jobs and contributes $125 billion to the U.S. economy annually. A 25 percent tariff on fishing equipment won’t be paid by the Chinese companies. It will be paid by the small- to medium-size U.S. sportfishing companies where 80 percent of them record sales less than $1 million in revenue each year. Some, if not all, of the cost must be passed on to the consumer. Since the passing of the Dingell Johnson Act of 1950, manufacturers of recreational fishing equipment pay up to a 10 percent federal excise tax every year to the Sportfish Restoration and Boating Trust Fund (SFRBTF), which provides funds to the state fish and wildlife agencies for fishery conservation and management projects, boating access and aquatic education. The industry recognizes that the funds lead to improved fisheries conservation and fishing access provided by the program, which is good for fishing participation and therefore the industry. Combining this with the import duties they already pay, these fishing tackle manufacturers have provided more than $1.35 billion to state fish and wildlife agencies through SFRBTF in the last 10 years alone! Data from the U.S. Fish & Wildlife Service shows us that these funds have contributed to 4,460 fishing access areas being constructed and/or maintained, 1,640 fish hatcheries constructed and/or maintained and more than 2.2 billion hatchery- raised fish. There are approximately 2,000 companies that contribute to the fund each year. Each of these company’s year-end profit margin is regularly less than the 10 percent excise tax they pay each year! These companies will have to increase pricing, cut margins again and eliminate domestic jobs. The U.S. Fish and Wildlife Service administers the Wildlife and Sport Fish Restoration Programs and distributes funds to state fish and wildlife resource agencies. Through SFRBTF, more than $600 million annually is apportioned to various programs and projects to enhance fishing and boating across the country. When including hunting and archery, more than $20 billion have been collected, distributed and matched with funds from state agencies for fish and wildlife management, species and habitat restoration, habitat protection, land acquisition, scientific study, population monitoring, aquatic education and access for fishing and boating. SFRBTF is a cooperative program involving federal and state government agencies, the sportfishing industry, anglers and boaters. The program increases sportfishing and boating opportunities through wise investment of excise tax dollars in sport fishery development and management projects. The Wallop-Breaux Amendment of 1984 expanded the program by adding more tackle and sportfishing equipment under the excise tax and included the federal fuel taxes attributable to motor boats and small engines. The program has helped state wildlife agencies restore and better manage America’s fisheries resources. Unquestionably, the Sport Fish Restoration program is a cornerstone of excellence for anglers, boaters and fisheries resources and is a model for the world. No other single conservation effort in the United States can claim a greater contribution to fish and wildlife conservation than the industry-supported, excise tax-funded portion of the Wildlife and Sport Fish Restoration Program. The American public benefits from this program. Outdoor enthusiasts get more and better places to fish and recreate; the industry gets a growing base of anglers, boaters and other recreational users who purchase more supplies and equipment; and state and federal agencies get more funds to meet on-the-ground conservation needs. The public benefits from better stewardship of the nation’s natural resources. Products impacted that contribute to fisheries conservation, and which are subject to current or proposed Section 301 tariffs, include: • Fishing rods and rod parts, including handle, reel seat, blanks and ferrule • Fishing reels, including fly fishing and ice fishing • Fishing lines, including fly fishing • Terminal tackle, including leaders, swivels, snaps, bobbers and sinkers • Lures, including hooks, plugs, spoons, jigs, spinners, soft-plastics, artificial baits and artificial flies • Fishing supplies and accessories, including stringers, creels, tackle boxes, fly boxes, bags, baskets, portable bait containers, fishing vests, landing nets, gaffs, fishing hook removers and dressing for fishing lines • Fishing components including, spool on spindle, spring mount flag on ice fishing equipment, rod belts, rod holders, harnesses, fighting chairs, outriggers and downriggers 2 • Electric trolling motors In addition, import duties of 3.7 percent to 9.2 percent are collected on every fishing rod, fish hook, fishing line, landing net, artificial bait and fly, plastic tackle box, reel and reel part which pay into the SFRBTF. However, we understand that the new proposed tariffs would go into the general treasury, not SFRBTF. The proposed tariffs and associated increase on the cost of fishing equipment is expected to result in a substantial reduction in consumer spending. Fewer fishing equipment purchases means less revenue into SFRBTF, which ultimately means less funding for programs important to the Trump Administration's priorities to improve public access to the outdoors. Recreational anglers are historically a price-sensitive group. One analysis, for example, showed that a 15 percent increase in Tennessee's one-day fishing license price would result in a 28 percent decrease in the number of people buying this license annually (24,370 fewer people). See Appendix 1 for more details and examples. When prices go up, many anglers simply do not go fishing. Approximately 60 percent of fishing equipment in the U.S. is imported (see table 1 below). Two-thirds of these imports come from China. Therefore, the impacts of these proposed tariffs will be felt by nearly every recreational fisherman looking to make new fishing equipment purchases. For some product categories, China produces up to and including 100 percent of all equipment sold in the U.S. (see table 2 below). Today there is literally not enough capacity in the world outside of China (both in facilities and potential employees), let alone in the United States, to make the necessary fishing tackle to meet the demand of our anglers each year. Table 1: Value of Fishing Tackle & Equipment in the U.S., in total, and from China 2006 2016 2018 Value of tackle manufactured in the U.S.* $833,549,000 $520,825,000 $620,000,000 + Value of tackle imported into the U.S. $449,687,776 $634,680,278 $717,411,022 - Value of U.S.-made tackle exports $113,926,398 $112,758,973 $119,400,503 = Total wholesale value of tackle consumed in the U.S. $1,169,310,378 $1,042,746,305 $1,218,010,519 Value of tackle imported into the U.S. from China $230,969,543 $409,041,823 $468,117,905 % of tackle imports from China 51.4% 64.4% 65.3% % of U.S. tackle consumption originating from China: 19.8% 39.2% 38.4% *2018 value of tackle manufactured in the U.S. is an estimate based on the trend of the existing data. **Note: dollar figures do not account for inflation. 3 Table 2. Customs value of imported fishing equipment in total, and from China, in 2018 Category Total Imports into U.S. From China % from China Fishing rods $171,809,891 $155,084,790 90% Reels < $2.70 $11,286,392 $11,247,189 100% Reels $2.70 - $8.45 $47,054,965 $44,593,794 95% Reels > $8.45 $223,532,214 $131,880,159 59% Artificial baits $147,122,131 $68,509,556 47% Fish hooks $32,216,105 $16,713,783 52% Snelled hooks $5,566,205 $3,327,066 60% Fishing line $29,746,160 $8,690,792 29% Fishing nets $10,827,808 $9,741,306 90% Fishing leaders $5,086,664 $2,897,226 57% Reel parts & accessories $4,876,317 $2,850,638 58% Rod parts & accessories $28,286,170 $12,581,606 44% TOTAL $717,411,022 $468,117,905 65% Over the last 30 years the U.S. government gave incentives to move production to China. The World Trade Organization (WTO) lowered duty rates which provided China differential treatment and many in the U.S.
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