Differences over GSP Reform Persist


Members of the House Ways and Means Committee are united in their desire to renew the expired Generalized System of Preferences program, but differences over reforms continue to stand in the way of action. Trade subcommittee chairman Adrian Smith (R-Neb) said at a hearing lat week he wants to see GSP updated and renewed, along with authorization for a new miscellaneous tariff bill. The GSP program expired in 2020.

Ranking Democrat Earl Blumenauer (Ore) called for action on GSP reform and renewal legislation proposed by Democrats in the previous Congress, saying that since there is strong bipartisan report for renewal, the committee should report out that measure.

But Rep. Smith indicated that he sees some language in that bill as being ambiguous and hard to enforce and includes standards for beneficiary countries that go beyond what is required in the US- Mexico-Canada Agreement. He expressed hope that with “open minds” members can come together on a GSP/MTB package.

Rep. Smith said he does believe GSP needs to be updated, mentioning a possible new criterion for digital trade and better aligning the program to US supply chain goals. Democrats believe an updated GSP should include worker rights and environmental protections requirements for beneficiary countries, Rep. Blumenauer said.

The rules of origin in the GSP program need to be changed, he continued, because currently a product largely made with inputs from non-GSP countries are allowed to qualify for duty-free status.

Rep. Blumenauer also said Trade Adjustment Assistance reauthorization and reform should be part of the GSP renewal package.

Full committee chairman Jason Smith (R-Mo) suggested he would like to see language to discourage GSP beneficiaries from doing business with China.

The U.S. Generalized System of Preferences (GSP) is a trade program designed to promote economic growth in developing countries. It allows for duty-free imports of certain products from designated beneficiary developing countries (BDCs) into the United States.

First established in 1974, the GSP program has undergone various extensions, the most recent being under the Consolidated Appropriations Act, 2018. As of 2020, the program has lapsed, pending reauthorization by Congress.

The law prohibits (with certain exceptions) the President from extending GSP treatment to certain countries, including  communist countries, unless they are a WTO member, a member of the International Monetary Fund, and receive Normal Trade Relations (NTR) treatment from the United States; must also not be “dominated or controlled by international communism”.  


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