U.S. House OKs Retroactive Renewal of Cost-Saving Trade Preference Program

This week, the U.S. House of Representatives approved bipartisan legislation providing a three-year retroactive renewal of the Generalized System of Preferences (GSP) program.

The 400-2 vote the evening of February 13 renews a longstanding U.S. trade preference program that delivers tariff relief and cost savings to U.S. businesses, workers, and consumers across the country. The issue now is expected to be addressed in the U.S. Senate in March.

“GSP expiration has already cost American companies approximately $100 million, a figure that grows by several million dollars every day,” Dan Anthony, executive director of the Coalition for GSP, said in statement. “A three-year extension will provide American businesses with the certainty needed to continue growing and investing in their workers and communities.”

Business Letter

On January 4, nearly 400 U.S. companies and associations (including the California Chamber of Commerce) sent a letter to House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, House Minority Leader Nancy Pelosi, and Senate Minority Leader Chuck Schumer urging swift, retroactive renewal of the GSP program.

GSP had expired on December 31, 2017, and companies now must pay $2 million–$3 million per day in extra taxes while awaiting a potential congressional reauthorization. The last time GSP expired, Congress did not renew it for nearly 2 years and companies paid about $1.3 billion in tariffs.

Despite broad, bipartisan support in both the House and Senate, GSP renewal did not get a vote in 2017. In January 2018, a White House official reported the Trump administration supports a three-year GSP extension and would like to see Congress act “this year.”

Boosting Growth

GSP is an important tool for boosting economic growth and job creation. Many U.S. companies source raw materials and other inputs from GSP countries, and the duty-free treatment of these imports reduces the production costs of these U.S. manufacturers, making them more competitive.

According to analysis by the Coalition for GSP, approximately 82,000 jobs are either directly or indirectly associated with the importation and use of GSP-eligible imports.

GSP saved U.S. companies $619 million in the first eight months of 2017, about $83 million more than in 2016. California has received the most savings—more than any other state. In 2016, GSP waived tariffs in California on $3.2 billion worth of imports and saved California companies $119 million. Of the $729 million saved by U.S. companies in 2016, more than 16.3% went to California.

Products eligible for duty-free treatment under GSP, according to the Office of the U.S. Trade Representative, include most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products.

Background

The GSP program eliminates import taxes on designated products from 120 developing countries around the world. It was instituted on January 1, 1976 by the Trade Act of 1974.

The U.S. program is one of 14 GSPs around the world.

The U.S. GSP was most recently reauthorized on June 29, 2015 (effective July 29, 2015) for a period of two and a half years. According to the Coalition for GSP, the renewal alone led to about $1.3 billion in refunds.

Coalition members represent businesses ranging in size from single-person sole proprietorships to some of the largest corporations in the world. Industries represented include apparel, footwear, food, consumer electronics, fashion jewelry and accessories, wood products, fisheries, retail, recreational vehicles, rug importers, sports and fitness, and travel goods. The businesses are headquartered in 46 states and 290 congressional districts, and the District of Columbia.

CalChamber Position

The California Chamber of Commerce, recognizing that the GSP has stimulated two-way trade with the United States and has contributed to the long-term economic development of some developing countries, supports annual extensions of the GSP.

In keeping with long-standing policy, the CalChamber enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.

For further information, see www.calchamber.com/GSP and renewgsptoday.com.

Staff Contact: Susanne T. Stirling

Previous articleCalChamber Seminar Explains How to Manage Leaves of Absence
Next articleImmigration Enforcement: State Officials Issue Guidance for Employers
Susanne T. Stirling
Susanne T. Stirling, vice president, international affairs, has headed the CalChamber international activities for nearly four decades. She is a gubernatorial appointee to the California Trade and Investment Advisory Council. She also serves on the District Export Council (appointed by the U.S. Secretary of Commerce), the National Export Council Steering Committee, the U.S. Chamber of Commerce International Committee, and the Chile-California Council. Originally from Denmark, she studied at the University of Copenhagen and holds a B.A. in international relations from the University of the Pacific, where she now serves as a regent. She earned an M.A. from the School of International Relations at the University of Southern California.