No date has been scheduled yet for a vote on the China package championed by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Todd Young, R-Ind., but lengthy amendments from senators are continuing to flow in, many with trade implications.
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.
House Ways and Means Committee Chairman Richard Neal, D-Mass., said he's "conceptionally comfortable" with changes to the Generalized System of Preferences benefits program proposed by Senate Finance Committee Chairman Ron Wyden, D-Ore. (see 2105180075), and that "once the staff gives us a green light on it, we'll try to get it done." Neal, who spoke with an International Trade Today reporter in a brief interview at the Capitol May 19, said the renewal of GSP and the Miscellaneous Tariff Bill may be able to move expeditiously. He said he and Wyden are closely aligned on their views on trade.
Sen. Ron Wyden, D-Ore., the chairman of the Senate Finance Committee, announced that he's introducing a bill that would renew the Generalized System of Preferences benefits program through Jan. 1, 2027, and renew the Miscellaneous Tariff Bill through the end of 2023.
U.S. Trade Representative Katherine Tai, in her second day of testimony on Capitol Hill, heard again and again from members of Congress who are hearing from companies in their districts that they want Section 301 tariff exclusions back. She heard repeatedly that the 9% countervailing duties on Canadian lumber are making a bad situation worse. And she heard that the Miscellaneous Tariff Bill and Generalized System of Preferences benefits program should be renewed. On each topic, both Democrats and Republicans shared concerns, though on GSP, Republicans only spoke of the cost to importers, while Democrats worried about the effects of GSP on the eligible countries. Tai testified for more than four hours in front of the House Ways and Means Committee on May 13.
Rep. Darin LaHood, R-Ill., introduced legislation that would “incorporate digital trade as a statutory consideration in designating beneficiary developing countries (BDCs) under” the Generalized System of Preferences, he said in a May 7 new release. The bill would allow the U.S. trade representative to “prevent countries from receiving BCD status if, for example, they restrict digital trade to the detriment of U.S. strategic interests through predatory industrial policies that target technology sectors,” it said. Some developing countries seem to be following China's lead in implementing problematic digital trade measures, LaHood's office said. “These countries benefit from duty-free access to American markets under the GSP while employing digital policies that undermine American values, jobs, and exports. Updating and reforming the GSP to support sound digital trade policies will advance American strategic interests around the world and promote sound economic development in the developing world.”
The top Republican on the House Ways and Means Committee said he doesn't have a good sense of when the renewal of the Generalized System of Preferences benefits program or the Miscellaneous Tariff Bill could come up for a vote in the House, where the bills must originate. Rep. Kevin Brady, R-Texas, told International Trade Today during a May 6 press call that Senate Finance Committee ranking member Mike Crapo, R-Idaho, and Chairman Ron Wyden, D-Ore., are engaging about both programs, in the context of a China bill that committee is working on. “I think any discussion at this point is helpful,” he said. Brady said he thinks the two bills could move sooner if they were made a priority in the House, since they have both stood on their own in the past, and have passed under suspension rules or unanimous consent, which means they don't take up significant time on the legislative calendar.
PricewaterhouseCoopers has been cautioning its clients not to get their hopes up about a reversal of sections 232 and 301 tariffs with the new administration, and Scott McCandless, a principal in the firm's tax policy services group, also sought to manage expectations for trade policy action in Congress in 2021. McCandless, speaking to a webinar audience April 27, said that while forced labor is a hot issue right now, and CBP “is on a more active footing” on forced labor, he doesn't believe that legislation that would create a rebuttable presumption of forced labor in Xinjiang is going to pass this year. “I doubt that moves forward,” he said.
Sen. Chuck Grassley, R-Iowa, said that Senate Finance Committee members have been seeking a path to renew the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill, but have not been able to yet. “There was some talk a week ago about some sort of a deal that might include some extension of that, but there was nothing conclusive on it,” he said. He didn't specify whether he was speaking about MTB, GSP or both, and a trade staffer for the committee and one of his communication staffers did not respond to follow-up questions April 20.
The top Republican on the House Ways and Means Committee said the delay in extending the Generalized System of Preferences benefits program and passing a new Miscellaneous Tariff Bill “has real consequences for our businesses and families, especially right now.”
Senate Finance Committee Chairman Ron Wyden, D-Ore., said through a spokesperson that he will continue working with House and Senate colleagues “to reauthorize GSP and pass the new MTB bill as soon as possible.” The bills must originate in the House, since they are revenue bills.