Congress should remove permanent normal trade relations status for China, but rather than move Chinese imports into Column 2, it should create a China-specific tariff schedule "that restores U.S. economic leverage to ensure that the [Chinese government] abides by its trade commitments and does not engage in coercive or other unfair trade practices and decreases U.S. reliance on [Chinese] imports in sectors important for national and economic security," the House Select Committee on China wrote as one of its dozens of legislative recommendations in its "Strategy to Win America's Economic Competition with the Chinese Communist Party." The report, released Dec. 12, also recommended:
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 bipartisan pair on the House Ways and Means Committee argue that offering more generous competitive needs limitations under the Generalized Systems of Preferences benefits program will help importers shift supply chains out of China, and they recently introduced a bill that would reform the CNL program.
House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., said in a hallway interview at the Capitol that he thinks there is momentum for an end-of-the-year tax bill to come together. He said he would like a renewal of the Generalized System of Preferences benefits program to get attached to such a bill. "I think there's bipartisan interest, and that's key," he said, but he said he's not predicting that it will happen.
Twenty of Florida's 28 representatives, led by Democrat Rep. Debbie Wasserman Schultz and Republican Mario Díaz-Balart, are calling on the House Ways and Means Committee to reinstate the Generalized System of Preferences benefits program, which expired almost three years ago.
Sen. Chris Coons, D-Del., who earlier said the priority should be renewing the African Growth and Opportunity Act "as soon as possible and for a lengthy period," rather than making reforms to the trade preference program, has now put out a "discussion draft" that lays out some reform proposals.
The Generalized System of Preferences benefits program has been gone for nearly three years, but two members of the House of Representatives want tires removed from the product list when the trade program returns.
House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., underscored the need to lower tariffs through the Generalized System of Preferences benefits program for American businesses during high inflation at a hearing on reforming GSP, and asked his colleagues to "move forward with open minds and the urge to get things done."
The House Ways and Means Trade Subcommittee will hold a hearing on "Reforming the Generalized System of Preferences to Safeguard U.S. Supply Chains and Combat China" on Sept. 20 at 2 p.m. EDT. Witnesses have not yet been announced.
Two members of the House of Representatives asked the House Ways and Means Committee to renew the Generalized System of Preferences benefits program, and several others also advocated for trade policies on the day that the committee welcomed other members to advocate for their priorities.
Vice President Kamala Harris talked about critical minerals with Indonesia's president and resilient supply chains with him and the president of the Philippines and prime minister of Japan during meetings in Jakarta this week on the sidelines of the biannual meeting of the Association of Southeast Asian Nations, or ASEAN Summit.