Sens. Rob Portman, R-Ohio, and Chris Coons, D-Del, laid out parameters of a trade package they hope to get passed in the next three weeks in Congress.
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.
More than 250 importers, large and small, and 27 trade associations asked Congress to renew the Generalized System of Preferences benefits program this month, and if that can't be done, to pass a bill that would refund tariffs paid on GSP-eligible imports that entered between Jan. 1, 2021, and Aug. 31, 2022. The letter, sent Nov. 30, notes that tariffs that have been paid while the program has been expired is the highest amount ever, at more than $2 billion, and if GSP is not renewed, it will be the first time it was gone for a full two years. The last time GSP expired, at the end of 2017, it was less than four months before it returned; when it expired in 2013, it was gone almost two years (see 13080110).
The U.S. Chamber of Commerce says "it’s critical that legislation to renew the Miscellaneous Tariff Bill (MTB) and the Generalized System of Preferences (GSP) not get lost in the shuffle" during the lame duck session, as Congress tries to find a way to pass funding for the federal government.
House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., whose party is all but certain to lose the majority in January, is still firm that what's holding up the renewal of two small tariff-cutting bills is Republican refusal to renew Trade Adjustment Assistance. The program, which offers retraining and extended unemployment for workers whose jobs were eliminated due to foreign competition, can no longer accept new applicants since it expired in July.
Senate Finance Committee Chairman Ron Wyden, D-Ore., told reporters there is bipartisan support for renewing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill, but he elided the primary issue that has held up the two programs all year -- House Democrats' insistence Trade Adjustment Assistance be renewed at the same time. House Republicans oppose renewing TAA, saying there is no tariff-lowering agenda for U.S. exports at the Office of the U.S. Trade Representative (see 2209200068). Wyden spoke on a phone call Nov. 15.
Of all the outstanding trade policy options -- new trade promotion authority, requiring Section 301 exclusions, revisions to antidumping law and a customs modernization law -- the head of government relations at Flexport said he thinks customs modernization is the most likely to pass. "I think we are coming on the cusp of something," Darien Flowers said, and said he thinks a bill will be enacted before 2025. Flowers once worked for Sen. Bill Cassidy, the Louisiana Republican who is leading the bill, though more recently he served on the minority staff of the Senate Commerce Committee.
NEW YORK -- At the U.S. Fashion Industry Association trade conference, the group's Washington counsel said that he believes there's a high likelihood that the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill will be passed before Congress goes home in December. USFIA President Julia Hughes added that because some of the members who are retiring are pro-trade, and they recognize that sentiment is waning in Congress, "that's gonna be an impetus to do something during the lame duck. Whether they're successful or not, that's not clear yet."
Although President Joe Biden criticized the Trump administration tariffs on Chinese imports during his campaign, and although his treasury secretary repeatedly said they contribute to inflation and some of them are harmful, trade lobbyists for UPS and the U.S. Chamber of Commerce said the tariffs are largely here to stay.
Sen. Rob Portman, R-Ohio, who is retiring from Congress at year's end, told an audience at the Center for Strategic and International Studies that he was disappointed there were no trade items in the Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act. "But I’m ready to negotiate a grand bargain on trade in this lame-duck session," he said in a video address Oct. 17. Portman was scheduled to participate in a roundtable of former U.S. trade representatives but was traveling overseas on an official congressional trip.
The Office of the U.S. Trade Representative wants Congress to bring back the Generalized System of Preferences benefits program, it announced Sept. 29, and it wants Congress to consider designating countries in the Pacific Islands Forum that are developing countries as a regional association.