Sen. Mike Crapo, R-Idaho, who will lead the Senate Finance Committee next year, said the Generalized System of Preferences benefits program is "a high priority for me," and he tried to get the trade preference program attached to the spending bill this week.
Generalized System of Preferences (GSP)
The Generalized System of Preferences (GSP) is a trade preference program established by the Trade Act of 1974, which promoted economic development by eliminating duties on many products when they were imported from one of the 119 countries and territories designated as developing. The program expired in December 2020 and is pending renewal in Congress. Should Congress renew the program with a retroactive refund clause, CBP will refund duties for entries eligible for GSP. Under the GSP, goods that are entirely produced or manufactured in a beneficiary developing country may qualify for duty-free entry under GSP; all third-party materials must undergo a substantial transformation defined as at least 35% of the good’s value having been added in the beneficiary country. The goods must also be “imported directly” from the GSP eligible country.
A five-year renewal of the Haiti HELP/HOPE trade preferences is the only tariff liberalization legislation that was attached to the federal spending bill that will keep the federal government open through mid-March.
Congress has not yet finished the text of the government spending bill that needs to pass this week, but House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., said in the early afternoon that several trade provisions he had hoped would hitch a ride weren't included. He said his understanding was that the African Growth and Opportunity Act wouldn't be attached, nor would the Generalized System of Preferences benefits program.
Congress will pass a spending bill before leaving next week, and while everyone wants to attach their legislation to it, the prospect for Haitian trade preferences to get a ride seems relatively strong.
House Ways and Means Committee member Rep. Darin LaHood, R-Ill., said that there will be a renewed bipartisan effort to extend the African Growth and Opportunity Act next year. He called AGOA "something that is very beneficial to our U.S. trade policy." But LaHood left the door open to phasing out or changing the third-party fabric provision of AGOA in the 2025 reauthorization.
More than 30 organizations, including the U.S. Chamber of Commerce and the National Customs Brokers & Forwarders Association of America, asked House and Senate leadership to hold a vote on the Generalized System of Preferences benefits program during the lame duck session next month.
Although some trade attorneys have been worrying that a Trump administration will discourage a Republican Congress from bringing back Generalized System of Preferences program tariff breaks for developing countries, members of the House Ways and Means Committee did not endorse that point of view.
With just 14 days in session scheduled for the House of Representatives before the end of the year, Ways and Means Committee members are not expressing optimism that a renewal of the Generalized System of Preferences benefits program will be one of the items that gets a vote this Congress.
DETROIT -- Cindy Allen, owner of consultancy firm Trade Force Multiplier, said she believes some of the initiatives in the 21st Century Customs Framework bills are useful -- such as simplifying CBP's process for seizures -- but that overall, the focus is too heavy on enforcement.
Trade attorneys continue to wait and wonder what kind of tariff changes will come next year, with one observer using a tariff slide that said "Tariff Armageddon."