GSP Renewal in Trouble due to CUTGO & Sleeping Bags, Businesses Must Act
According to sources in the trade, the Administration, and Congress, renewal of the Generalized System of Preferences program is more uncertain now than at any time in the last few decades. Advocates say businesses that depend on GSP should contact Congress daily if they want a chance at extension. Contact your Senators by clicking here. Contact your House Representative by clicking here.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Experts are stating that the two largest impediments to GSP extension legislation are the new House CUTGO funding requirements and the likelihood of holds in the Senate. They say that businesses and manufacturers1 hurt by GSP’s expiration must contact their Senators and Representative, as many may not know that constituents in their state or district benefit from the program. They suggest a daily phone call or email.
In addition, the Coalition for GSP’s “Renew GSP Today” effort can be contacted at (202) 347-1085 or by emailing Anthony@tradepartnership.com . Their website is available here.
(GSP for most beneficiary countries (A, A+, and A*), i.e. other than those listed as African Growth and Opportunity Act (AGOA) beneficiary countries, expired on December 31, 2010.)
House Would Subject a GSP Extension Bill to CUTGO Requirements
In early January 2011, the House adopted new rules to, among other things, replace its pay-as-you-go (PAYGO) funding rules with cut-as-you-go (CUTGO) funding rules2. Under CUTGO, taxes or fees can no longer be used to “pay for” GSP.
The House will instead follow its CUTGO rules, and extending GSP would only occur be at the expense of cutting other government spending (with some experts saying that cuts equal to the five-year cost of GSP would need to be made).
(GSP is determined to cost the government foregone duty collections, and in the past has been “paid for” under PAYGO by extending fees, such as Customs users fees, to a farther future date. Other trade legislation has been “paid for” in a similar manner.)
GSP Extension Bill Would Likely be Subject to One or More Senate Holds
Senator Sessions has repeatedly held up GSP extension legislation due to his opposition to its duty-free benefits for certain imported sleeping bags that compete with a manufacturer in his state. He has recently asked for a legislative carve-out for these sleeping bags (excluding them from GSP by legislation), which many are opposed to as that could open the door for other requested carve-outs.
In addition, sources state that Senator Kyle may also hold up a GSP extension measure if the Colombia Free Trade Agreement is not considered first.
Unknown if or When GSP Will Move this Year
Congress has also not been able, to date, to approve an extension of the Andean Trade Promotion and Drug Eradication Act (ATPDEA)/Andean Trade Promotion Act (ATPA) or Trade Adjustment Assistance (TAA). Moving a GSP measure, or providing for its retroactive reinstatement, may be even more difficult.
1Renew GSP Today states that the biggest users of GSP are U.S. manufacturers. They import 62.9% of total imports under the GSP program.
2There are procedures that would provide certain budget exemptions for measures that implement trade agreements.
(See ITT’s Online Archives or 02/08/11 news, 11020826, for prior BP summary on impediments to GSP renewal legislation.
See ITT’s Online Archives or 01/12/11 news, 11011216, for BP summary on CUTGO.
See ITT’s Online Archives or 02/15/11 news, 11021519, for BP summary of USTR’s statement encouraging Congress to extend GSP, ATPDEA/ATPA and TAA.)