On May 3, a broad range of American companies and associations sent a letter to Congressional leaders outlining priorities for GSP renewal as part of conference negotiations on a compromise measure to align the U.S. Innovation and Competition Act and the America COMPETES Act (also know as the Bipartisan Innovation Act). Letter signers ranged from single-person companies to Fortune 50 corporations as well as regional and national associations.
“Despite strong bipartisan support, GSP has been expired for 16 months and American companies have paid at least $1.4 billion in extra tariffs at a time of surging inflation” said Dan Anthony, Executive Director of the Coalition for GSP. “Many Members of Congress want to see changes to GSP, and this letter shows strong industry support for updates too. We look forward to working with Congress on commonsense changes to GSP that help raise standards and maintain GSP’s long-term viability.”
The letter focuses on four main areas of difference, ambiguity, or omission between the House COMPETES and Senate USICA bills that should be resolved during the conference process:
- Congress should extend GSP through 2027, as proposed in the Senate bill, or beyond. The current GSP is already more than one-third through the House’s proposed four-year extension. American companies are working to diversify suppliers and build more resilient supply chains. It requires significant time and financial investments. GSP can help spur these changes – but only if companies have confidence that tariff benefits will remain in place.
- Congress should proceed cautiously with eligibility criteria changes that could have unintended consequences. Businesses don’t oppose new criteria but they must be attainable. A recent Progressive Policy Institute (PPI) report raised concerns with proposed language requiring countries to “effectively afford” or “effectively enforce” certain criteria. Countries without resources could lose GSP despite making good-faith and/or be dis-incentivized from passing ambitious laws. That would undermine GSP’s goals of raising standards in developing countries/LDCs.
- Congress should ensure that GSP enforcement actions do not cause undue harm to the people that eligibility criteria are meant to help. The PPI report included a number of areas where enforcement actions actually harmed the groups they were meant to help. This can be achieved through basic guidance that USTR try to minimize collateral damage if/when revoking GSP benefits as part of a review (e.g., preserve GSP for companies meeting high labor or environmental standards), such as the “Sense of Congress” language included in the bipartisan CNL Update Act (H.R. 6171).
- Congress should update GSP’s Competitive Need Limitation (CNL) rules. GSP cannot meet its development goals – or provide USTR with leverage to incentivize a race-to-the-top – if too many products lose GSP due to arbitrary CNL import caps. Current rules eliminate about 1/3 of all potential GSP benefits. U.S. import surges put many more products at risk. H.R. 6171 proposed modest CNL changes to ensure thresholds grow at a sufficient rate and to encourage restored GSP for products whose imports fall below the CNL caps after GSP loss. CNL changes are particularly relevant in the China context, as current rules limit the amount of trade that can move from China to GSP countries and many alternatives to China are excluded by decisions from 5, 10, or even 25 years ago.
The full text of the letter is available here.