The Coalition for a Prosperous America is asking the House Ways and Means Committee to move Democratic bills to curtail the use of de minimis and the Miscellaneous Tariff Bill and to pass the Democratic version of a Generalized System of Preferences benefits program bill. Whatever the committee recommends will be subject to a cross-Capitol compromise, as part of a larger China package called the U.S. Innovation and Competition Act. The Senate’s Trade Act of 2021, part of that package, also included requirements to reopen a broad exclusion process for Section 301 tariffs on China.
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.
Both the bipartisan Senate and the Democratic versions of a Generalized System of Preferences benefits program renewal try to make the program do too much, says a think tank author who helped to administer GSP when he was assistant U.S. trade representative for trade policy and economics. GSP covers 3,500 of 6,900 tariff lines that are above 0, he noted, but it still covers only 11% of exports to the U.S. from GSP countries because of the categories that are excluded.
House Ways and Means Trade Subcommittee Chairman Rep. Earl Blumenauer said Congress would never have raised the minimis level to $800 if it had known how many products would be sold through e-commerce channels from China and shipped directly to customers. "It was never intended to be anything like this, and not only are they evading payment of duty, but they are escaping any sort of meaningful oversight," he said in a phone interview from Oregon with International Trade Today. "And as you know, we're deeply concerned about forced labor."
House Ways and Means Committee Chairman Richard Neal, D-Mass., said that he and Trade Subcommittee Chairman Earl Blumenauer, D-Ore., talked Jan. 12 about how to move on a renewal for the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill. Neal, who spoke with International Trade Today in a hallway interview at the Capitol Jan. 13, said that he talked with U.S. Trade Representative Katherine Tai about the legislation this week, as well. Both the GSP and MTB lapsed more than a year ago.
No conference committee members for the Senate China package have been appointed, even though House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., said a month ago the package would go to conference "immediately" with House bills (see 2111180009).
The Generalized System of Preferences benefits program has been expired for almost a year, but Rep. Jackie Walorski, R-Ind., and Rep. Stephanie Murphy, D-Fla., are suggesting that reauthorization include changes to how Competitive Need Limitations are calculated so that fewer products are removed from the tariff benefit, and so that products may be more easily restored if the import levels no longer qualify.
The leader of the House Ways and Means Trade Subcommittee focused on making it easier for domestic industry to win antidumping and countervailing duty cases and said that the de minimis statute needs to be altered, in a hearing designed to talk about how Chinese practices damage workers, businesses and the environment.
The Trump administration's tariffs caused "a lot of damage to American consumers and business" and "we are no better off" after the phase one deal with China, House Ways and Means Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said during a Dec. 2 roundtable with reporters. While not arguing that the Section 301 tariffs should be rolled back, he did say there should be an effort to "take them one by one and make some adjustments." He said there could be some Section 301 tariffs that could be changed without it being "politically toxic."
The author of the Trade Act of 2021, which was part of the Senate's China package, said that while the Senate and House "aren't even close to a conference yet," he hopes he will be on the conference committee, and that his legislation will be part of the compromise worked out between the two chambers.
U.S. Trade Representative Katherine Tai and Indian Trade Minister Piyush Goyal agreed to continue working to resolve outstanding trade issues "to reach convergence in the near future," according to a joint statement released Nov. 23 at the conclusion of the India-U.S. Trade Policy Forum (TPF) in New Delhi. Both countries discussed wanting better treatment of their exports. "India highlighted its interest in restoration of its beneficiary status under the U.S. Generalized System of Preferences program; the United States noted that this could be considered, as warranted, in relation to the eligibility criteria determined by the U.S. Congress."