GSP Expiration Losses Near $200 Million, Says Coalition

“The most important thing is that, when Congress renews this, it’s retroactive,” said Anthony. “Most of the companies have held off on raising costs or trying to change anything about their business while GSP remains expired. What they’re trying to do is just get by until Congress passes this and pass a retroactive renewal.” GSP renewal legislation has invariably included retroactivity provisions in expiration instances since the program’s 1976 inception, said Anthony. Industry officials over recent months have debated the possibility that retroactivity will not be included in GSP renewal legislation (see 13110801).

The program renewal remains a “changing story,” said Anthony. Following periods of expiration in the 1990s, GSP renewal legislation included retroactivity provisions with interest, while renewal legislation in the wake of the 2010-2011 expiration did not include interest. The expirations are cutting profits for importers of GSP eligible products, said Felipe Chaluppe, President of In3gredients at the NFTC roundtable. The expiration will hike up U.S. domestic market prices for wide-ranging basic commodities, said Chaluppe, while also impacting the U.S. security environment. “All those ingredients in our industry that are coming in under the benefit of the GSP, they will continue to be produced internationally. But they will get redirected to other markets that are more attractive,” said Chaluppe. “So we start importing more finished products from China. We start importing more finished products from other countries…which brings different and indirect issues, like traceability, like bioterrorism…of course, off-shoring those jobs.”

The Senate and the House introduced identical pieces of GSP renewal legislation in July, but passage failed after Senator Tom Coburn, R-Okla., refused to relent on his opposition toward a funding, “pay-for” mechanism in the Senate legislation (see 13073016). There are no viable funding alternatives “on the horizon,” said Bill Reinsch, NFTC President at the roundtable. “The circumstances of this particular expiration make it a little bit more complicated to unwind,” said Reinsch. “Part of the problem is that they have not been able to come up with an alternative that is collectively acceptable. There are things apparently that Coburn has proposed to do that nobody else has agreed to. And there are things that other people have proposed to do that he won’t agree to.” The highest likelihood of renewal legislation continues to rests in an omnibus vehicle, said Anthony, echoing industry statements (see 13081212). Despite the chatter, GSP renewal will not necessarily be passed with a Trade Promotion Authority (TPA) package, said Anthony. Senate and House leadership are pushing TPA passage in the coming weeks or months (see 13111516).

Some industry officials have argued the likelihood of retroactivity inclusion decreases as expiration endures, because Congress must approve retroactive funds in a combative budgetary environment (see 13110801). That stance is an in accurate, political “talking point” but still a “challenge,” said Anthony. The CBO evaluated the legislation based on a specific extension period, from the July expiration to September 2015. Therefore, according to Anthony, retroactivity, regardless of the extent of the expiration lapse, does not increase federal funding allocation for the legislation. “It would make a difference if they wanted to change the end date of the current bills, if they wanted to extend it beyond Sept. 30,” said Anthony. “At the end of the day a 26 month extension is a 26 month extension.” The Sept. 30, 2015 extensions do not include product amendments to the program.