As Congress works to wrap up business for the year, the heat is on to pass lapsed tariff relief programs – the Miscellaneous Tariff Bill (MTB) and the Generalized System of Preferences (GSP). These popular programs provide manufacturers tariff relief on products no longer made in the U.S. GSP allows for duty free import of eligible products from 120 countries with developing economies. Both programs expired at the end of 2020.
The Senate passed the U.S. Innovation and Competitiveness Act to renew the programs in July, but the House has failed to act. There is reason for optimism on action as Congressman Earl Blumenauer (D-OR), Chairman of the House Ways & Means Subcommittee on Trade, raised renewal of the programs during a December 2 hearing on China Trade. Chairman Blumenauer said the programs need to be renewed with changes while Congressman Vern Buchanan (R-FL), the Subcommittee’s top republican, made renewal of the tariff programs an “urgent priority” in the effort to compete with China. Combined, MTB and GSP offer 100s of millions in potential tariff relief for SFIA member products.
The U.S. Chamber of Commerce followed up a letter sent to Congressional leaders pushing for renewal of the MTB and reauthorization of the GSP in year-end legislation. The Chamber noted that failure to act on these tariff relief programs will lead toa loss of sales and jobs for Americans as we struggle to recover from the pandemic.
The Chamber pointed out that companies pay an additional $1.3 million per day due to the out-of-date and anticompetitive import tariffs on products and inputs no longer made in the U.S. They also highlighted that the MTB is not controversial, it was unanimously renewed in 2018. The U.S. International Trade Commission recommended 88 SFIA petitions for approval and the Senate included all of them in in the Senate-passed legislation to renew the MTB. SFIA members could receive up to $44 million in tariff relief annually via the MTB program.
The GSP offers duty free access to the U.S. market for more than 5,000 products produced in qualified countries with developing economies to spur economic growth and job creation. GSP products typically do not compete with domestic manufacturers. U.S. companies are paying an additional $1.3 million per day due to the out-of-date and anticompetitive import tariffs on products and inputs no longer made in the U.S.
The National Association of Manufacturers added that many GSP beneficiaries are small businesses, employing fewer than 20 employees, and GSP offers them significant savings to help their competitiveness. A majority of GSP imports are raw materials, parts. and components relied upon by U.S. companies to produce goods domestically, and increased costs harm their competitiveness. It is estimated that the lapsed GSP program is costing U.S. companies more than a $1 billion annually.
The easiest solution is for the House to approve Senate-passed legislation, which provides for limited retroactive relief. The current discussion is related to changes in the GSP eligibility, which could complicate issues and require a House-Senate Conference to reconcile any differences in the bills. Regardless of the process to get these programs renewed, there is general agreement on the need to act on these popular tariff relief programs.
Congress has a full agenda before adjourning for the year, but there will be multiple opportunities to renew MTB and reauthorize the GSP before Congress leaves town. If they fail to act, MTB and GSP will be a top priority early in 2022.
For more information on MTB and GSP please contact Bill Sells, SFIA SVP of Government & Public Affairs [email protected].
***
US Chamber of Commerce
Letter (note it is from Dec 2020) but last industry letter on subject) https://www.uschamber.com/international/trade-agreements/u-s-chamber-letter-on-trade-legislation