On July 12, 66 Members of the House of Representatives sent a letter to House Ways and Means Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) supporting efforts to renew the Generalized System of Preferences (GSP) as a way to “help facilitate supply chain shifts out of China.” GSP, which provides duty-free treatment to qualifying imports from 119 developing countries — but not China — expired on December 31, 2020.

Led by Representatives Neal Dunn (R-FL) and Jake Auchincloss (D-MA), both members of the House Select Committee of the CCP, the letter’s large and diverse group of signers demonstrates strong support for a renewed (and improved) GSP program across the political spectrum. Letter signers include:

  • 34 Republicans and 32 Democrats from 30 different states
  • Nearly all members of the Select Committee on the CCP, including Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL)
  • The chair and/or ranking member from numerous other House committees

The letter highlights the critical role GSP can play in helping U.S. companies diversify supply chains by providing “tariff advantages as high as 45 percent for key products compared to China.” It also notes that “China is benefiting significantly from GSP expiration, which has led to over $2.5 billion in extra tariffs on $45 billion in imports from China’s developing country competitors.”

The letter states that “Legislation to renew GSP, including smart changes to make GSP countries more viable alternatives to China, would enjoy broad, bipartisan support.” For example, more than 50 House Members signed a bipartisan letter supporting updates to GSP’s “competitive need limit” (CNL) rules in the last Congress. CNLs can terminate duty free treatment for a specific product if imports from a GSP country increase too much, which in turn can disincentivize shifting too much trade outside of China.

What they are saying:

“With the Chinese Communist Party becoming more aggressive each day, reducing America’s reliance on China is more critical than ever,” said Congressman Neal Dunn. “China benefits from the expiration of the GSP program, and our companies pay the price. We know GSP works. We know that it has bipartisan support. Legislation to renew the program is long overdue.”

“GSP supports a strong middle class,” said Congressman Jake Auchincloss. “Renewal of the GSP program would facilitate supply chain shifts out of China, spur investments in partner and allied countries, and strengthen American businesses.”

“Congress clearly wants American companies to buy less from China, but imposing billions of dollars in extra tariffs on other countries due to GSP expiration makes that much harder” said Dan Anthony, Executive Director of the Coalition for GSP. “We thank Congressmen Dunn, Auchincloss and the other signers for demonstrating the bipartisan support an ambitious GSP renewal bill would enjoy. GSP is a proven means for helping American companies and workers remain competitive while building diverse, resilient supply chains.”   

“We had an advantage from no duties on Indonesian jewelry from GSP, but since it has not been renewed some customers are canceling purchase orders and buying direct from China,” said George Nazarian, owner of small business Novita in Monrovia, California. “We’ve taken on a huge debt to pay the tariffs, and if GSP is not renewed soon we have no choice but to close our 40-year old family business.”

“We moved production from China to the Philippines because GSP tariff savings more than offset the higher unit costs,” said Matthew Cagle, owner of Rig’Em Right Outdoors, a family-owned business in Morehead City, North Carolina. “Now we pay higher prices plus added duties, so our costs are MUCH higher. With rising costs of supplies, warehousing, shipping and labor in the US too, we simply have no choice but to consider moving production back to China.”

“We lost our two largest customers because funds needed to promote our product and maintain inventories were instead used to pay tariffs,” said Laurie Sebestyen, co-owner of Mike’s Curry Love in Boise, Idaho. “The ripple effect is overwhelming and we’re on the verge of throwing in the towel. “We never imagined that GSP renewal could take so long.”  

“GSP expiration’s added 10% tariff on our goods from Thailand has forced us to source more from China, which continues to lead the world in low-cost production of ceramic mugs,” said Jan Reid, CEO of small business Xpres LLC in Winston-Salem, North Carolina. “Congress says they want companies to buy less from China, but without GSP the numbers just don’t work.”

“There is no question that the expiration of GSP has caused us to rethink our production outside of China,” said Lawrence Mikuta, Vice President of Sourcing & Production at HOBO Bags in Annapolis Junction, Maryland. “The GSP tariff savings are critical to offset the challenges working in those countries, such as longer development and lead times and higher minimum purchases, compared to China.”