Long-Term GSP Renewal Far More Important Than Retroactivity, Says Think Tank
Lawmakers on Capitol Hill should extend the Generalized System of Preferences for 10 years, far more than the roughly two-and-a-half year extension approved by committees in both chambers, said a researcher with the conservative Heritage Foundation in a recent blog post (here). In fact, a long-term extension for the Generalized System of Preferences outweighs the importance of retroactivity, said research associate Ryan Olson on April 27.
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The GSP renewal bill, which moved through committee as part of a broader preference package in recent days, would extend the GSP program through 2017. The legislation would also retroactively cover all imports since the program's expiration in mid-2013 (see 1504200052).
Retroactivity aims to preserve participation in the program for those who already use it, but recent lapses and habitual short-term renewals are preventing new companies from importing eligible products, said Olson. “Retroactive renewal has generally not featured long extensions,” said Olson in a review of the recent history of GSP renewals. “Since retroactive renewal requires that importers be refunded for duties paid during the program lapse, this generally limits the revenue flexibility that Congress has to renew the program for a longer period of time.”
Congress has not given GSP a ten-year renewal since the program’s inception in 1974, and the vast majority of renewals extended the program for five or less years, said Olson. “This uncertainty, along with faults in other parts of the program’s design, has led to stagnation of GSP imports over the past few decades, particularly if excluding mineral oil products, which have been one of the largest components of imports,” he said. “The ideal situation would be for both a retroactive renewal and a long-term renewal. If both are not possible, Congress should opt to renew GSP for the long term.”