Congress moved a step closer to providing overdue tariff relief to manufacturers via three popular programs when the Senate passed legislation to renew the Miscellaneous Tariff Bill (MTB), reauthorize the Generalized System of Preferences (GSP) and re-open the Section 301 Exclusion process for products imported from China. All three programs lapsed at the end of 2020 despite pressure from industry to renew.
The United States Innovation and Competition Act of 2021 (S.1260) now awaits action in the House of Representatives before going to the President for his signature. Any House changes to the bill will require a favorable Senate vote before going to the President. Congress has been consumed with COVID, Infrastructure and Reconciliation, but will look to move tariff relief as they move forward.
The Miscellaneous Tariff Bill (MTB) provides tariff relief on products not made domestically. SFIA filed petitions requesting relief on behalf of the industry and the U.S. International Trade Commission (USITC) included 86 SFIA petitions in their August 2020 recommendations to Congress. 66 petitions sought renewal of previous MTB relief and 20 seek new tariff relief. Petitions are capped at $500,000 in annual relief for a potential $43 million in industry tariff relief per year.
The Generalized System of Preferences (GSP) program offers duty-free entry for products made in 102 countries with developing economies. Gloves and bags are the industry’s biggest beneficiaries of GSP to avoid tariffs as high as 17 percent. The U.S. is expected to add stronger human rights and environmental requirements for country eligibility going forward. The GSP was last renewed in 2018 and the Senate bill would renew the GSP through 2027.
77 percent of more than 53,000 Section 301 Exclusion requests were denied with an even higher rejection rate for consumer goods on List 3 & List 4A. Businesses requested help from Congress and the Government Accountability Office (GAO) launched an investigation that found numerous irregularities. USTR routinely gave no explanations for denying requests, failed to properly document its procedures when making exclusion decisions and was hesitant to provide additional information to justify decisions. The Trade act of 2021 would reinstate the China Exclusion process and require the USTR to implement a new, more transparent exclusion process to ensure a consistent granting of exclusions.
The U.S. Senate overwhelmingly passed the Trade Act of 2021 as part of the U.S. Innovation and Competition Act (S.1260) in June to reopen China Exclusion process, renew the MTB and reauthorize the GSP but the House has yet to bring up the bill. SFIA continues to press Congress to renew this lapsed tariff relief.
Please contact Bill Sells, SFIA SVP for Government and Public Affairs at [email protected] for additional information.