A Republican Ways and Means Committee member said renewing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill would require his committee and the Senate Finance Committee to come to an agreement on what they can support before the House moves a bill.
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 ranking Republican on the Senate Finance Committee said he was disappointed that renewing the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill didn't make it into year-end legislation in December. Sen. Mike Crapo, R-Idaho, said in a hallway interview at the Capitol that "for me, it's a very, very high priority. We really need to get it done."
A study sponsored by five trade groups said that while tariffs of 7.5% to 25% on Chinese consumer goods imports have caused some trade diversion out of China, the primary result has been higher prices for customers.
U.S. Trade Representative Katherine Tai and Indian Commerce Minister Piyush Goyal did not announce any breakthroughs after their Jan. 11 meeting, but their joint statement pointed to some trade irritants that might be resolved in the future.
The omnibus spending bill, the last legislative vehicle of this Congress, did not include a renewal of the Generalized System of Preferences benefits program or the Miscellaneous Tariff Bill. The tariff relief will have been gone for more than two years, as a result.
The American Action Forum said it is disappointed that the Democrats are using the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill as bargaining chips to get Trade Adjustment Assistance restored. The lobbying group called TAA controversial, and wrote, "In short, members trade new free trade agreements and new markets for this contested aid program, not common-sense tariff elimination." The AAF said it seems unlikely that the "grand bargain" sought by Sen. Rob Portman, R-Ohio, that would wrap all four of those issues and antidumping reform into one package, can get on the omnibus, which could be passed next week. "It’s time for Congress to stop holding GSP and MTB hostage to its usual bartering and allow these programs to get back to saving Americans money," the group wrote Dec. 13.
Although the House Ways and Means Trade Subcommittee hearing was ostensibly about using trade agreements to promote environmental causes, Republicans on the dais mostly focused on their frustration that the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill have not been renewed, even though they have been lapsed for nearly two years.
A U.S. readout of a trade meeting with Bangladesh said that Bangladesh would like to return to the Generalized System of Preferences benefits program -- which has been expired for two years. Bangladesh was cut from the program in 2013, after the disastrous Rana Plaza apparel factory collapse that killed more than 1,000 workers. In the last year it participated, Bangladesh exported almost $35 million worth of goods covered by GSP; it was not in the top 20 countries, as the bulk of Bangladesh's exports to the U.S. are textiles, apparel and footwear, none of which are covered by GSP.
The top Republican on the House Ways and Means Committee said Republican and Democratic staff on the committee "haven’t had extensive discussions on GSP and MTB, and won't, my sense is, as long as there’s an insistence on [linking them to renewing] Trade Adjustment Assistance."
While it's not yet clear if Democrats and Republicans can agree on whether the Generalized System of Preferences benefits program and Miscellaneous Tariff Bill will advance this month, House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., says he's not for the proposal to offer a partial refund while importers wait for GSP renewal. The preferences program will have been expired for two years if it does not get renewed this month. He said, "We had a nice conversation with [U.S. Trade Representative] Katherine Tai this morning. We know [renewal] should happen, and we hope it does."