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Trade Subcommittee Chairman Says GSP Renewal Might Not Be Fully Retroactive

House Ways and Means Trade Subcommittee Chairman Rep. Adrian Smith, R-Neb., said both retroactivity and the length of renewal are being debated as lawmakers try to reach consensus on re-authorizing the Generalized System of Preferences benefits program.

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Smith, who spoke earlier this week at a University of Nebraska annual lecture named for a former U.S. trade representative from Nebraska, said some are saying that by not making the GSP renewal retroactive, it would make it easier to cover the cost of the tax breaks to the Treasury. Others are arguing for partial retroactivity.

But Smith said GSP renewals have always been 100% retroactive, and if those who imported goods that used to be covered by GSP are not refunded the tariffs they paid over the last three years, they "would take a big hit." Smith, who noted many of those importers are small businesses, said he wants full retroactivity. "I believe that we will honor that," he said.

If refunds of tariffs are included, he said, "the question is, then, how far forward can we get?" He said because it has been so difficult to renew this time, he hopes the next term will be as many years as possible. He said the fact that GSP has usually been retroactive seems to remove urgency among lawmakers for renewing it.

Smith also spoke favorably of the Miscellaneous Tariff Bill, saying that many small businesses are looking for affordable inputs. "Why would we have a tariff on something a domestic producer needs ... that we can't get here domestically?"

Smith said that the discussions on how long the next GSP term can be are in the final stages, and he plans to introduce GSP renewal legislation "in the next few weeks."

He said the domestic impact of both MTB and GSP is significant to those who import under the tariff benefits programs. "It is absolutely vital that we pay attention to this and not dismiss it," he said.

Smith also addressed the controversy over de minimis, and as he did in an earlier interview with International Trade Today (see 2402130072), cautioned that changes could bring unintended consequences.

"Some would say let's just get rid of de minimis altogether," he said. He criticized the Canadian de minimis policy, saying that while it was set to protect Canadian retailers, "I do know that it hits consumers, and we need to be mindful of that."

Smith opened his lecture by complaining that Mexico is not honoring its obligation to base agriculture import regulation on science. "I cannot emphasize enough that we [should] engage this [USMCA] enforcement mechanism," he said. "If we can't hold our trading partners to what we agreed upon, we should expect other countries to take advantage, break the rules."