The Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill are unlikely to get a vote in the House for months, as an infrastructure bill and the taxes to pay for those projects is shaped by committees, a top lawmaker said during a press call April 1. The top Republican on the House Ways and Means Committee said that while “all the oxygen is being sucked up” by the infrastructure bill, “my sense of Chairman [Richard] Neal is that he, too, believes they are crucial to America's economic leadership and wants to find consensus on how to end the delay on both of the programs.”
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.
As the U.S. Fashion Industry Association's representatives in Washington try to find out timing for a renewal of the Generalized System of Preferences benefits program, Senate Finance Committee staff members are telling them “there’s a lack of urgency with respect to this” among senators. David Spooner, Washington counsel for USFIA, told an online audience March 30 that Congress seems to think that since importers will get refunds for goods that should have qualified for GSP during this period once it's renewed, it's no big deal. “But we know what a pain in the rear the retroactive renewals are,” he said.
The Office of the U.S. Trade Representative will consider how the coup in Myanmar (formerly Burma) might affect that country's eligibility for the Generalized System of Preferences benefits program, which is currently on hiatus. The USTR made the announcement March 29, and also said that there will be no trade engagement under the Trade and Investment Framework Agreement until the return of a democratically elected government. “Reports that the military has targeted Burma’s trade unions and workers for their role in the pro-democracy protests raise serious concerns about worker rights protections,” the notice said. According to USTR data, about 45% of exports from Myanmar, formerly known as Burma, to the U.S. could be covered by GSP, but the country is not a large user of the program, only exporting $284 million worth of goods under GSP in 2019, according to USTR.
A readout of U.S. Trade Representative Katherine Tai's call with India's Commerce and Industry Minister Piyush Goyal made no mention of the Generalized System of Preferences benefits program, where India was the largest beneficiary before it was barred over U.S. medical device and dairy exporters' complaints. The Indian government did not release a press release summarizing its view of the call. Tai's office said that they “agreed to work constructively to resolve key outstanding bilateral trade issues and to take a comprehensive look at ways to expand the trade relationship.”
The top Republican on the House Ways and Means Committee said he and the committee chairman have not discussed whether renewing the Miscellaneous Tariff Bill is going to have to wait for an infrastructure package to move. “I know [Generalized System of Preferences (GSP)] and MTB are very much on the radar,” Rep. Kevin Brady, R-Texas, told reporters on a March 12 conference call. “We just haven’t gotten a signal about the timing there. Really the COVID stimulus has sucked up all the oxygen at this point.”
The Biden administration is emphasizing the need to fight forced labor and exploitative labor conditions, as well as using trade to fight climate change, in the first Trade Agenda published since President Joe Biden took office.
Across dozens of pages of written answers to Senate Finance Committee members, U.S. trade representative nominee Katherine Tai often avoided directly answering questions, instead pledging to work with senators on their priorities. One of the most common questions posed to Tai was whether she would renew Section 301 exclusions that expired last year; as well, whether she would allow companies that were denied exclusions another chance at a request; and whether she would reopen the exclusion process.
U.S. trade representative nominee Katherine Tai said that despite the president's prioritizing of the domestic economy, “I don't expect, if confirmed, to be put on the back burner at all.” Tai, a veteran of the House Ways and Means Committee trade staff, faced largely friendly questioning over a more-than-three-hour hearing in the Senate Finance Committee on Feb. 25.
The U.S. Chamber of Commerce has warmly endorsed Katherine Tai to be U.S. trade representative. In a letter sent Feb. 23, Executive Vice President Myron Brilliant said her experience at the Office of the U.S. Trade Representative and as chief trade counsel for the House Ways and Means Committee, is invaluable. “She combines policy acumen, negotiating experience, and political savvy,” he wrote. “While one important aspect of USTR’s mission is to address unfair trading practices, the previous Administration’s dramatic expansion in the application of tariffs contributed directly to a manufacturing and agriculture recession well in advance of the [COVID-19] pandemic, and this experience illustrates the perils of an excessive reliance on tariffs. The next USTR must avoid the use of tariffs as a blunt instrument, and must avoid inaction on trade agreements as well,” he said, adding that Tai understands that.
The Coalition for GSP, which argues for renewal of the Generalized System of Preferences benefits program, recently published an estimate that importers saved $879 million utilizing the GSP program in 2020. That covered $17 billion in imports. The group said that imports and savings were down from 2019 due to participating country terminations and the COVID-19 pandemic.