Over the last week, we’ve highlighted the ways that GSP supports American jobs, lowers costs for families, helps domestic producers compete, and promotes economic development abroad. Yet that is only true when GSP is in effect, and GSP has been expired for 9 months and counting. So our policy recommendation should come as no surprise: Congress should renew GSP immediately. Not “this year” or “this month.” Now. Even that would be about a year too late, for all the reasons we stated during the last Imports Work week. But at least the bleeding will stop:
- American importers have been forced to pay an estimated $510 million in higher import taxes;
- Higher costs and reduced sales have forced companies to lay off workers, delay new hires, and put major investments on hold while waiting to see if Congress will renew GSP retroactively, and
- The number of American organizations calling on Congress to renew GSP has grown from 160 to 550, on average more than 1 new company or association per day.
Simply renewing GSP going forward is not enough – any renewal must refund the half a billion in tariffs already paid by U.S. companies. This would allow companies to reverse some of the damages caused by expiration. But it’s not just about the money. It’s also about importers’ faith in Congress to do the right thing when it comes to GSP.
As noted yesterday, GSP has expired 9 (!) times in its history, with expirations ranging from a few weeks to 15 months. Each of the first 8 times, importers were refunded tariffs paid. Congress’ track record – to at least make amends when it could not avoid expiration in the first place – provides importers with a reason to continue importing under GSP as the expiration date approaches (or sails on by). If this trust is broken even once, that could not be undone.
If you’re a congressional staffer or even a Member of Congress…try to put yourself in an importing company’s position. How would you react to the following hypothetical – but possibly very real – scenario?
- It takes 4 months between placing an order from a GSP country and delivery in the United States;
- GSP is scheduled to expire in 3 months;
- the last two times GSP was up for reauthorization, Congress failed to renew it despite strong bipartisan support in the House and the support of 99 of 100 Senators;
- those two expirations each lasted at least 10 months, and
- tariffs paid during the last expiration were not refunded.
Would you feel comfortable signing a major contract where the only difference between profitability and losses is a Congressional vote? Would you trust Congress to get the job done when your money is on the line?
To a certain extent, companies are already in that position. But Congress’ track record of always refunding tariffs paid alleviates some concerns about continued sourcing under GSP. Congress can remove all doubt by passing an immediate, retroactive GSP renewal.
Imports, including those under the GSP program, can do wonders for the American economy. But policymakers must first recognize their benefits and take concrete steps to encourage them. That might be harder than claiming to be “pro-export,” but it is no less important, as the impacts of GSP expiration have shown. Voting immediately to renew GSP and refund tariffs paid to date is one concrete step that Congress can take to show it recognizes the benefits of trade – both exports and imports – for the American economy.