Welcome to Renew GSP Today

Thanks for stopping by to check out our website about the GSP trade program.  Despite a “long-term” renewal in 2011, the GSP program expired on July 31, 2013. As a result, American companies now face an estimated $2 million per day in new taxes.

If you’re one of those companies paying higher taxes, be sure to get engaged in GSP renewal by:

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$13 Million and Counting…

That’s the approximate taxes paid by American companies on GSP-eligible goods since the Senate voted 97-1 to renew GSP last week. With the House recessing for Memorial Day, that will increase to about $33 million by the time Congress returns to DC on June 1.

With benefits delayed 30 days between between enactment and implementation (i.e., $50-$60 million more in taxes), American companies likely will pay at least $100 million in extra taxes between the Senate vote and the removal of GSP taxes.

And what about tariffs refunds? Even in a best-case scenario, American companies may be waiting until mid-October to get back the $1.2 billion in taxes paid to date (plus those that keep accruing).

So what’s all this mean? It’s crucial that the House approve the Senate-passed renewal legislation immediately upon returning to DC to prevent minimize further taxes or refund delays.

It’s also crucial that GSP importers contact their Representatives while they’re at home next week to urge such action: call the local offices about possible meeting times, go to town halls, and otherwise let them know that further delay in GSP renewal is hurting constituents.

We’re already about 2 years past a “timely” GSP renewal. With Senate procedural issues out of the way, it’s time for the House to act.

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American Manufacturers Face Higher Costs Because of Continued GSP Expiration

Like the jobs debate, many people assume that if exports are goods for US manufacturers, imports must be bad. When it comes to GSP, nothing could further from the truth.

Raw materials, components, and parts have accounted for more than 70 percent of GSP imports since the program expired. Though industrial tariffs tend to be low, these products accounted for about 64 percent of the tariffs paid since GSP expired. Nationally, only a third of US tariffs collected during that period were on raw materials, components, and parts. Put differently, the burden of GSP expiration falls disproportionately on American producers.

Fortunately, policymakers get this. Before yesterday’s Senate vote on legislation that would renew GSP, Senate Finance Chairman Orrin Hatch noted that:

manufacturers and importers benefit by receiving inputs and raw materials at a lower cost. Approximately three-quarters of U.S. imports under GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods here at home. Unfortunately, because the program expired in 2013, these U.S. businesses have had to deal with high tariffs on these imports for the last two years.

If the national numbers sound impressive, then you’ll want to take a look at the chart below. In a few states, GSP importers use the program exclusively for raw materials and parts. In West Virginia, more than 99 percent of tariffs paid to date were on industrial supplies. In Louisiana and Alaska, it is more than 97 percent.

Manufacturing_Share_blog

In value terms, Texas ranks first (or last, since additional taxes are bad) in tariffs paid for raw materials and parts because of GSP expiration. This is despite having paid significantly less tariffs than California or New Jersey on imports of all products. From August 2013 to March 2015, Texas companies paid an estimated $76 million in extra tariffs on raw materials and parts alone.

Fortunately for American manufacturers, the Senate took an important first step yesterday by overwhelmingly passing legislation that would renew GSP through December 2017 and refund most tariffs paid to date. The House of Representatives must pass identical legislation before American producers can once again enjoy duty-free benefits for key components. For manufacturers in many states, House action cannot come soon enough.

This post is part of the 4th Annual “Imports Work for America Week. For more information visit the Imports Work website.

Posted in Alaska, Delaware, Imports Work, Indiana, Iowa, Louisiana, Michigan, Missouri, Nebraska, North Carolina, Ohio, South Carolina, Texas, Vermont, West Virginia, Wyoming | Leave a comment

GSP Renewal Legislation Passes Senate

Final Vote: 97-1
A little earlier this afternoon, the Senate voted 97-1 in favor of legislation (H.R. 1295, as amended with S. 1267) that would renew GSP through December 31, 2017 and refund most tariffs paid since GSP expired in July 2013. It would also extend certain preferences for imports from Africa and Haiti.

A big THANK YOU to everyone that made calls, sent emails, tweeted, etc. over the past 24 hours or so!!!!

GSP still needs to pass the House…and then it will take 30 days from enactment until Customs stops collecting tariffs on GSP-eligible products…and then another 90 days before refunds are guaranteed. So we’re not out of the woods yet.

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GSP Vote by Full Senate Tomorrow (May 14, 2015) at 12:00PM – CONTACTS NEEDED

Following a failed procedural vote yesterday on a TPA/TAA package, Senate leaders struck a new deal that calls for separate votes on preferences legislation (including GSP) and the Customs bill tomorrow at 12:00PM.

To pass, the legislation will need at least 60 votes in favor. So we need everyone to call their Senate offices this afternoon/tomorrow morning and urge support before the vote.

Here are the basic talking points:

  • GSP is good for American jobs and workers, but the ongoing expiration has had terrible impact
  • Companies in the state have paid an estimated $XX in extra taxes because of GSP expiration (see below table for state estimates)
  • GSP renewal is urgent: we’ve paid $XX in extra taxes over nearly 2 years and won’t be made whole for up to 4 months after program is renewed so every day matters
  • Please support S. 1267, Trade Preferences Extension Act of 2015 when it comes up for a vote by the full Senate on May 14 (please note the name and bill number change)

Phone numbers for all Senate offices are available here. Please share this as widely as possible (Twitter, email, LinkedIn, etc.) so we can generate as many call as possible. If you get any feedback from offices, particularly negative, please let us know.

GSP Tariffs Paid by State Through May 13, 2015

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Expanded GSP Product Coverage Could Save American Families Even More Money

Most Americans have not heard of GSP. Most do not realize that they save money from it. As part of Imports Work week, we have shown everyday products from the home of the GSP Coalition’s Dan Anthony that benefit from GSP – from his Indonesian dinnerware to his dog’s Indian dinnerware to Thai picture frames to an assortment of food products. You can read the full posts here and here.

GSP benefits can be found all around us – if you’re willing to check out the “Made in” labels. Of course, the ongoing GSP expiration has raised costs for importing all of those everyday products. Between August 2013 and March 2015, GSP expiration increased import taxes on consumer goods by about $256 million. Add in food products and the total climbs to about $400 million.

A new addition to the family means lots of new tags to examine – many of them from GSP countries – such as those pictured below.

BabyGSP

Left: Indonesian cotton shirt (19.7 percent import tax); Center: Indian Gerber Onesie, Indonesian plaid bodysuit (8.1 percent import tax each); Right: Cambodian crab tee shirt (14.9 percent import tax)

 

Unfortunately, while purchased from GSP countries, these products are excluded from GSP because of statutory exclusions for apparel. These exclusions are unlikely to change, as apparel is considered a sensitive product. And it is American families that pay the price, because clothes for very little people have very big (hidden) taxes baked into the price – up to almost 20 percent on the products shown above.

Over the same period that GSP-eligible everyday products faced $400 million in taxes because of expiration, taxes on (ineligible) baby clothes alone from GSP countries totaled another $128 million. The average tax was 11.1 percent. Other apparel products face similarly high tariffs. Even the baby is shocked (left) and disappointed (right) at the high taxes on clothes that he will outgrow after just a few wearings!

While GSP benefits for apparel may be a pipe dream, there is a glimmer of hope for American families and workers looking to save even more money from GSP.  The legislation passed by the Senate Finance Committee that would renew GSP also includes provisions known as GSP UPDATE, which would open the door to GSP benefits for travel goods such as backpacks, luggage, and phone cases. The House version of the bill does not include the GSP UPDATE provisions, so it remains to be seen whether they are enacted into law.

Of course, all of these savings are hypothetical so long as GSP itself remains expired. Let’s hope Congress can act soon to renew GSP and expand its coverage. American families will benefits, even if they don’t take the time to read all the “Made In…” labels.

This post is part of the 4th Annual “Imports Work for America Week. For more information visit the Imports Work website.

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GSP Expiration – A Hard Lesson About Imports and Jobs

May is World Trade Month. For those intrepid trade souls who like to buck conventional wisdom and speak about the unspeakable – the benefits of imports – today also marks the start of the 4th annual “Imports Work for America” week. This is not to discount the positive contribution of exports, but for many companies, especially users of the Generalized System of Preferences (GSP) program, imports are the key to creating and sustaining good jobs in the United States.

Nothing has made the importance of GSP for American jobs more apparent than its continued expiration. As we noted around this time last year, a March 2014 survey showed that 10 percent of companies had laid off workers, while 31 percent had delayed hires. By September 2014, the number of companies reporting lay offs increased to 13 percent, while the number reporting a hiring freeze climbed to 44 percent.

Take Sophia Foods, a small business in New York. According to owner Candace Abitbul:

“We planned to purchase a property and double our size, but due to waning sales directly related to GSP we have put that idea on hold. Furthermore, until we know where we stand on the [GSP] issue, we have not only implemented a hiring freeze, but have had to lay off two employees.”

This situation was not just avoidable, but predictable. Kona Bicycle in Washington is another small business for which GSP expiration has impacted its ability to create American jobs. According to Chairman Jacob Heilbron:

“We’re unable to raise prices during our model year so the loss of profit is absorbed into our bottom line. We would like to hire new U.S. based personnel for our R&D/Product Development team but are waiting until GSP is renewed.”

After nearly 2 years, Kona Bicycle is still waiting. Higher prices for imports doesn’t just impact the quantity of jobs – it impacts the quality as well. Between March 2014 and September 2014, the share of companies reporting worker benefits cuts because of GSP expiration doubled from 11 percent to 22 percent. Stackhouse Athletic in Oregon and HiBlow USA in Michigan both cut health benefits for workers, while Fast-Pak Trading in New Jersey cut salaries by 20 percent across the board (in addition to laying off workers).

More recently in an April 2105 survey, 22 percent of companies reported layoffs (+9 percentage points from September 2014); 43 percent reported hiring freezes (-1 percentage point), and 26 percent reported benefits cuts (+4 percentage points). Since different companies responded to each survey, these are not quite apples-to-apples comparisons, but the trends certainly are not positive.

What is positive? Congressional focus on a robust trade agenda that includes legislation to renew GSP through December 2017 and refund (most) tariffs paid to date. As Congress seeks to advance bipartisan trade legislation during World Trade Month, it should remember that American jobs depend not just on access to foreign export markets, but also on access to low-cost imports. GSP expiration has taught that lesson the hard way.

This post is part of the 4th Annual “Imports Work for America Week. For more information visit the Imports Work website.

 

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Small Businesses Are Hurt Most by GSP Expiration

National Small Business Week kicked off today. According to the SBA, more than half of Americans either own or work for a small business. These companies are also some of the biggest users of the GSP program: more than 530 small businesses with 100 or fewer employees are on our GSP supporter list. That’s about 80 percent of the companies on the list.

Small businesses also have been the hardest hit from GSP expiration. A survey conducted last fall of nearly 250 GSP importers made that clear. In the survey, we asked companies to select from six possible negative impacts – from lost sales to layoffs – that they had experienced as a direct result of GSP expiration. In every case, small businesses were most likely to report hardships, as shown in the table below.

GSPExpirationSurvey-SmallBizResults
The survey report, available here, includes a more-detailed breakdown for small businesses and company-specific examples.

For example, Stackhouse Athletic Equipment in Salem, Oregon has 9 employees. When it tried to raise prices to cover the GSP taxes, sales of those products dropped by 10 percent. As a result, Stackhouse had to cut health benefits for current workers and put off hiring another full-time employee. The report includes many similar examples of small businesses that were growing and hiring new workers – or planned to do so – until GSP expired.

If Members of Congress want to help small businesses, they should renew the GSP program immediately. Indeed, if they want to pass legislation that disproportionately helps small business, GSP should be at the top of the list. Rep. Charles Boustany (R-LA) clearly gets it – as do the rest of the Members of the Senate Finance and House Ways and Means Committees. So what’s the hold up?

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