We heard yesterday from someone that used to import under GSP. Sadly, he and his wife no longer own the business they started together more than 10 years ago. Why? GSP expiration caused a major hit on cash flow and made it difficult to fulfill orders. By the time we surveyed companies in September 2014 about the impacts of one year of GSP expiration, their small business had paid over $180,000 in taxes. According to our old contact, GSP expiration was a “major factor in the loss of margin in our products, which led to the bank calling our loan.”
With no other options, the couple sold the rights to its name and products to a large development company, which folded them into existing businesses. After years of building the business, “we did not net anything on the sale.”
So where are they today? His wife continues to work for the new owners. That’s better than being unemployed, but a far cry from running the company you founded. He has started a new business, but it’s off to a slow start. He noted: “It took us four years to grow [the old company] to the point where I was able to quit my day job. I don’t have 4 years this time around, so hopefully we’ll get some traction soon.”
As the (former) owner said back in September when first informing us of his company’s sale, “timely GSP renewal would have enabled us to avoid this unfortunate event.”
After 18 months, and about a billion dollars in taxes paid, it’s impossible to know how many companies face similar situations. But they certainly exist. One company emailed us the following in December: “customers wont allow increase, I’m in over my ears in debt, bank recalled our credit line due to a loss in our financials, don’t know how much longer I can survive…if this isn’t passed in the first quarter, I’ll be out of funds and will have to hope the factories we work with will give some sort of terms.“
Examples like these show why it is critical for the 114th Congress to pass an immediate, retroactive GSP renewal. Arcane congressional procedural rules should not delay action any further: people’s livelihoods are at stake. If a long-term renewal is not an option, then a short-term renewal that refunds tariffs paid to date should be pursued.
The 114th Congress cannot undo the damage done by the last Congress’ failure to renew GSP, but it can try to minimize it by passing an immediate, retroactive renewal.