House Passes GSP and ATPA/ATPDEA Extensions, D.R. "2 for 1" Apparel Benefit, AGOA 'Abundant Supply' Repeal, Etc.

The legislation now moves to the U.S. Senate; however, it is uncertain whether the Senate will consider it.

(A bill containing similar or identical provisions, except for the extension of the Andean Trade Preferences Act/ Andean Trade Promotion and Drug Eradication Act, passed the House on July 29, 2008. See ITT's Online Archives or 08073105), for BP summary.)

A House Ways and Means press release states that H.R. 7222 would:

One Year Extension of GSP and ATPA/ATPDEA

The GSP program (A, A*, A), which provides duty-free treatment for certain products from beneficiary countries other than those listed as African Growth and Opportunity Act beneficiary countries, is set to expire on December 31, 2008. H.R. 7222 would extend this program for another year, through December 31, 2009.

(For AGOA beneficiary countries, both the GSP program (i.e., A, A*, A) and the AGOA-GSP program (i.e., D) remain in effect through September 30, 2015.)

The ATPA/ATPDEA, which provides duty-free treatment to certain exports from Colombia, Peru, Ecuador and Bolivia, currently expires on December 31, 2008. H.R. 7222 would extend this program another year, through December 31, 2009.

(President Bush has recently proposed to suspend ATPA/ATPDEA benefits for Bolivia. See ITT's Online Archives or 09/29/08 news, 08092915, for BP summary.)

Changes to the African Growth and Opportunity Act for Apparel

H.R. 7222 would amend AGOA as follows:

Abundant Supply. H.R. 7222 would repeal an "abundant supply" requirement that restricts least-developed AGOA countries' ability to use AGOA's flexible "third country fabric" rule (which provides duty-free treatment to apparel assembled in a least-developed AGOA country regardless of the source of the fabric).

The "abundant supply" provision was originally intended to encourage vertical integration in Africa. However, in practice, the denim restriction and the potential for additional restrictions have created uncertainty for AGOA apparel producers and U.S. retailers, resulting in lost jobs, trade and investment in AGOA countries.

Mauritius. H.R. 7222 would reinstate Mauritius' eligibility to use the program's "third-country fabric" provisions. Mauritius' designation lapsed in September 2005, leading to a dramatic decline in apparel exports to the U.S. from Mauritius, as many garment factories shut down operations in Mauritius and moved to Asia.

Dominican Republic "2 for 1" Apparel Program

H.R. 7222 would establish a "2 for 1" textile and apparel allowance program to be developed and administered by the Commerce Department. Under the program, when producers purchase a certain quantity of qualifying U.S. fabric (2 square meter equivalents or "SMEs") for apparel production in the Dominican Republic, they will receive a credit (equivalent to 1 SME). This credit can then be used to ship a corresponding quantity of eligible apparel (pants and other bottoms) from the Dominican Republic to the U.S. duty-free regardless of the origin of the fabric from which the apparel product is made.

AGOA and Haitian HOPE Technical Corrections

The bill also would make several non-controversial, technical corrections to AGOA and the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008.

(The bill's total cost is $1.088 billion. These costs would be paid for by shifting corporate estimated taxes, extending Customs' user fees and repealing the Customs' user fee prepayment provisions in the 2008 Farm Bill.)

(See ITT's Online Archives or 07/08/08 news, 08070810, for BP summary on GSP's scheduled December 31, 2008 expiration for most countries.

Ways and Means Committee press release (dated 09/29/08) available at http://waysandmeans.house.gov/News.asp?FormMode=release&ID=700