The fact that no one responded to comments during a recent field hearing about the expiration of the Generalized System of Preferences benefits program doesn't mean Republicans on the House Ways and Means Committee don't care about GSP, House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., said.
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 effect of benefits like Medicaid and child tax credits on worker supply were hotly debated at a field hearing convened by the House Ways and Means Committee in Peachtree City, Georgia, and there were many questions to business owner witnesses about the challenges of expiring tax provisions in the Trump tax cuts and about how inflation is affecting their profits and sales.
Rep. Richard Neal, the top Democrat on the House Ways and Means Committee, said "there could be" movement on the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill, now expired more than two years, "but I think it has to be part of a broader trade agreement."
In more than four hours of questioning during a hearing March 24 before the House Ways and Means Committee, no member of Congress advocated for lessening tariffs on Chinese goods under Section 301, or for reopening exclusions applications.
Almost five years after the first round of 25% tariffs were put on Chinese imports, it was trade irritants with Mexico and India, as well as concerns about tariff preference programs and the lack of a market-opening strategy, that senators dwelled on during the U.S. Trade Representative's appearance in front of the Finance Committee.
Senior U.S. officials and country representatives from the Pacific Islands Forum recently discussed the possibility of allowing eligible members of the PIF to be designated for a regional association for the Generalized System of Preferences benefits program, an Office of the U.S. Trade Representative readout of the meeting said. The regional designation “has the potential to further integrate regional supply chains and promote enhanced access to the U.S. market for the developing Pacific Islands states,” the readout said. The U.S. and the Pacific Islands agreed to “a number of follow-up items, which will shape further trade and investment discussions in preparation for the United States-Pacific Islands Trade and Investment Dialogue later this year,” it said.
An alliance of more than 25 GSP nations on Feb. 21 called on the U.S. Congress to renew the Generalized System of Preferences benefits program. The program authorization lapsed in December 2020 and has yet to be renewed. The Alliance of GSP Countries includes Pakistan, Egypt, Thailand and Argentina, among others.
The top Republican on the Senate Finance Committee said renewing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill didn't happen last year because Democrats pushed "social policy and environmental policy in MTB and GSP."
The head of the Ways and Means Committee's Trade Subcommittee said that the Generalized System of Preferences benefits program never should have lapsed for two years, and he believes there's interest among House Democrats and Republicans "to get this done in a direct fashion that is timely and useful."
Many members are asking the Senate Finance Committee chairman about renewing trade preferences programs, he told International Trade Today. Chairman Ron Wyden, D-Ore., said he recognizes the importance of renewing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill, but was evasive about whether he would support clean renewals, or would require that an extension of Trade Adjustment Assistance accompany the bills.