L.E.A.D. Educates Congress On Promo’s Global Supply Chain Role And Challenges
PPAI’s Legislative Education and Action Day (L.E.A.D.) has returned this week with dozens of virtual meetings between promotional products industry professionals and members of Congress and their staffs. The conversations are an opportunity to educate legislators on the issues and challenges important to the industry and its community, one of the standouts among them being the global value chain.
The promotional products industry relies on global supply chains. Although most promotional products are manufactured overseas, once in the U.S., these products are decorated by U.S. workers. They are sold by U.S. workers. They are used to promote U.S. goods and services.
Think Globally, Contribute Locally
Global value chains encompass the full range of activities that firms and workers are involved in to bring a product or service from its conception to its end use and beyond. The various components of a global value chain include a variety of domestic participants, for example U.S. workers who are hired to manage production abroad, U.S. carriers who handle international transport, and professionals in the U.S. who are hired to address compliance issues and customs clearance.
Finished promotional products cannot be pigeon-holed into either “imported” or “grouped into one of two categories, consisting of products which are either imported or made in the United States.” All the diverse elements in a global value chain generate an added value through the variety of inputs that contribute to each product throughout the product life cycle, from its conception to the consumer.
The Talking Points
The promotional products industry relies on the global supply chain, but domestic links in the process contribute the majority of the industry’s value. Highlights of the L.E.A.D. conversations surrounding the global value chain include:
- At least half of the value of promotional products is added in the U.S. by American workers. Most products’ value is added domestically in pre‐production and post‐production.
- A recent study commissioned by the U.S. Global Value Chain Coalition found that the U.S. adds as much as 75% of the value to the final retail price for apparel made overseas.
- Although some promotional products are manufactured overseas, once in the U.S., these products are decorated and sold by American workers, and used to promote American goods and services.
- Tariffs and trade restrictions are bad for the promotional products business. Customers buy fewer products and less expensive products, and customers also shift their budgets to an advertising medium not subject to tariffs.
“Too often people assume everything is a finished product from China or Vietnam,” says Chris Babiash, MAS, president of Circle Pines, Minnesota, distributor Booshie, Inc. and L.E.A.D. participant. “When you get people to understand that much of the global supply chain is pieces or components of a final product it makes more sense.”
During their conversations with legislators and their staff, L.E.A.D. participants asked them to oppose the Country Of Origin Labeling (COOL) Online Act. The COOL Online Act requires a single country of origin to be identified online and was passed as part of the Innovation & Competition Act, which is currently in conference committee on H.R. 4521, the COMPETES Act of 2022. Its provisions, however, are very problematic for companies in the promotional products industry.
- The COOL Act’s requirements are an issue for the industry due to practices such as dual sourcing, diversifying supply chains because of the tariffs, and fluctuating supply chains. Identical products are often sourced in different countries based on the various times of the year or even the month they are ordered. The various components of a single product don’t always come from the same country as the finished product.
- Due to dual sourcing and changing sourcing locations throughout the year, it is extremely difficult and sometimes impossible for a company to know which country a product will be sourced from before an order is placed by a client. This can be especially problematic for distributors in the promotional products industry who don’t have immediate access to suppliers’ sourcing information.
- The requirement to identify a single country of origin for a product that likely has components or raw materials from one country, but is assembled in another country, then decorated in a third country, presents significant compliance challenges for companies in our industry.
- There are also some concerns over the bill’s lacking definitions of what a distributor is, the difference between a retailer and a seller, and how the Federal Trade Commission would determine when a manufacturer has not provided a required label.
Lend Your Voice
Industry professionals across the country can add a voice to the conversations held with the leadership in Washington, D.C.
PPAI has made it easy to support industry colleagues by calling or emailing members of Congress in support of the same issues addressed during L.E.A.D.’s virtual meetings.
- To participate, click here to send editable, pre-written emails or call members of Congress, and forward PPAI emails to colleagues and team members and encourage them to participate as well