Senate Finance Committee Chairman Ron Wyden, D-Ore., is sharing draft text with the trade of a bill that would remove goods subject to Section 301 tariffs from the de minimis entry lane, along with any categories deemed "import sensitive" in the Generalized System of Preferences benefits program legislation.
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.
The top Republican on the Senate Finance Committee said that while Democrats' insistence that Trade Adjustment Assistance be paired with a renewal of the Generalized System of Preferences benefits program has stalled it so far, he's not convinced that the impasse means GSP has no chance in 2024.
An apparel factory owner and a trade policy professional from the apparel industry said it's critical to renew Haitian trade preferences this year, even though they don't expire for 14 months.
Importers have paid more than $160 million in tariffs that would not have existed if the Generalized System of Preferences benefits program were in place just since the House passed its version of GSP renewal in April, according to the Renew GSP Coalition. The group, joined by more than 30 trade groups and nearly 300 firms that import goods subject to GSP, said the House bill and the Senate GSP renewal that was part of a trade package that didn't make it into the Chips Act "are a strong starting point for negotiations."
A joint statement of the Office of the U.S. Trade Representative and Kazakhstan's president, released almost a week after USTR Katherine Tai's visit to Kazakhstan, noted that Kazakhstan values the Generalized System of Preferences benefits program as a way to diversify the destinations of its exports. The GSP has been expired for more than three years, but Tai said she generally supports Congress' efforts to "revitalize and renew the Generalize System of Preferences program." The statement also noted that Kazakhstan would like permanent normal trading relations with the U.S.; it's still subject to the Jackson-Vanik amendment, as are other former Soviet Union republics Azerbaijan, Tajikistan, Turkmenistan and Uzbekistan. The U.S. Chamber of Commerce supports PNTR for Kazakhstan (see 2001090055).
There was no disagreement at a June 12 hearing on the need to renew the African Growth and Opportunity Act before it expires about 15 months from now, and Democrats and Republicans on the House Ways and Means Subcommittee on Trade also talked about changing the terms of "graduation" from AGOA. Democrats on the committee were more vocal than members of the Republican majority about the need to change AGOA before renewing it.
Although Sen. John Cornyn, R-Texas, happily described a trade preferences hearing as a "pro-trade love fest," comments from the panel's top Republican and its chair revealed why the Generalized System of Preferences benefits program, which has broad support, has spent years stalled in Congress.
The Senate Finance Committee will hold a hearing on renewing and revitalizing the Generalized System of Preferences benefits program, the African Growth and Opportunity Act and other trade preference programs on June 5 at 10 a.m.
The restriction that products that owe Section 301 tariffs will not be able to avoid Column 1 tariffs through the Miscellaneous Tariff Bill could greatly reduce how much money is saved by importers.
Rep. Adrian Smith, R-Neb., said that despite Democratic opposition in the House Ways and Means Committee to a package of bills renewing and altering the Generalized System of Preferences benefits program, he expects there will be enough support for the bill to pass under suspension of the rules, which requires two-thirds of the House. Most bills this year have passed under suspension of the rules, rather than with a rule fashioned by the very narrow Republican majority. Smith said GSP works well to get its beneficiary countries to treat U.S. exports more favorably.