We’ve heard, both in the past and more recently, that letting GSP expire does not cause harm – and is therefore somehow acceptable – because tariffs paid are eventually refunded. While past “retroactive renewals” have refunded tariffs paid, GSP expiration does lasting damage that should be avoided at all costs.
A willingness to accept harm to American companies and workers in an effort to seek changes to GSP is a policy choice. The GSP Coalition thinks it’s a bad choice, but reasonable people can disagree. But the irreparable damages of that choice are not debatable based on lots and lots of research into the impacts of past GSP expirations.
Take the worker that loses their job. They don’t get rehired retroactively. All the pain and hardship, by the worker and those who depend on them, is real and never can be undone. A survey of 240 GSP importers found that 10% had laid off workers in the 7 months after GSP expired in July 2013.
Or the worker that doesn’t get hired in the first place. The US economy is obviously in a bad place. It needs every job it can create. That same survey found that 31% had delayed new hires. By the time GSP was expired for a year, 44% of GSP importers reported delaying new hires.
Or the worker that loses healthcare in the middle of a pandemic. Restored healthcare a year from now does nothing if they need to go to the doctor today. In the September 2014 report, 22% of GSP importers reported reduced benefits, with healthcare cuts among the most-often cited.
Or the business owner that takes on lots of PERSONAL debt to stay afloat. On account of paying $2 million in tariffs due the 2013-2015 lapse, the owners of one small business paid $250,000 in interest on loans to keep the lights on. The tariffs were refunded, but the interest was not. Tough luck.
Or the companies that simply can’t survive until Congress renews GSP. One couple spent 10 years of building a business, but tariffs from GSP expiration forced it to sell the rights to their name and products. It “did not net anything on the sale.” Congress can never give that family its business, or those 10 years, back.
Or all the lost business opportunities along the way. Retroactive GSP renewals can’t make companies whole for all the business lost. One company in March 2014: “Our sales plummeted from over $1 million a year to zero. We had to let people go due to the loss of sales and revenue.” If sales fall to $0, a retroactive renewal results in a $0 refund.
There is no guarantee that GSP renewal or refunds will be quick. According to a late 2016 survey, about 1 in 6 GSP importers reported they were still waiting for refunds of tariffs paid due to GSP’s expiration in July 2013. It took Congress 2 years to renew GSP and then more than 1 year for companies to receive all refunds. Companies can’t operate “as is” indefinitely, and past experience shows that some pessimism is warranted.
AT BEST, a retroactive renewal would result in significant hardships when the U.S. economy and workers need the most help (early 2021) and provide some compensation when the economy is (hopefully) recovering. But the “at worst” could be much worse. That is something that policymakers who may view expiration is a viable option must be willing to own.