Today we heard from Fast-Pak Trading, one of the nearly 400 GSP supporter list organizations advocating for swift, retroactive GSP renewal. (Use these links to see the full list or add your organization.)

Based in Secaucus, New Jersey, Fast-Pak has 11 employees and imports food products from Macedonia under GSP. Its products are sold in over 1,000 US grocery stores, including Whole Foods and Fairway Markets. However, Fast-Pak has paid $50,000 in extra tariffs in the 5 weeks since GSP expired. According to Fast-Pak’s president:

We deal with food products from Macedonia. These items were hit hard with the expiration of GSP. Customers are not accepting price increases, sales are going down and inventory is not what it should be for this this time of year. Plans to expand the company into other US territories are now on hold until this situation is reversed.

Fast-Pak knows all too well the potential damage of GSP expiration to business operations. Before GSP expired in 2013, the company was growing and planned to hire both new sales people and warehouse staff. Instead, Fast-Pak had to lay off 3 workers and cut salaries by 20% across the board.

GSP renewal, even one that refunds tariffs paid, cannot undo all of the damage caused during the expiration. People that skip buying roasted red peppers today because prices went up are unlikely to buy twice as much in the future because prices returned to normal. Those sales – and the jobs they could support – are gone forever.

Is GSP expiration similarly impacting your company? If so, let us know how by completing this form. As always, no company-specific information will be published without explicit permission.

New tariffs from GSP expiration in 2013 put Summit’s products at a disadvantage to doors imported from non-GSP countries. In total, Summit Specialty paid just a hair under $200,000 in extra taxes because of GSP expiration. As a result, Summit Specialty delayed both hiring additional workers and new capital equipment purchases, thereby halting its growth.

When GSP expired in 2013, Golden Country raised prices to reflect the new tariffs and saw sales drop as a result. It froze hiring – and couldn’t replace employees that left – and help off on updates to its Chicago facilities. Ultimately, the small business paid over $1 million in unnecessary tariffs while waiting for Congress to renew GSP.

GSP renewal allowed Golden Country to invest in both its people and facilities: Golden Country was able to give its employees raises and purchase new warehouse equipment and trucks. GSP eliminated about $400,000 in tariffs on Golden Country’s imports in the first year after renewal – savings that could be passed along to consumers.

(If you have not done so already, please answer the GSP renewal impacts survey here.)

Yet other companies, such as Novita in Monrovia, California, are still working to overcome the deep losses caused by GSP expiration. Novita imports jewelry from Indonesia that it sells to manufacturers, wholesalers, and retailers in the United States, Canada, Mexico, and South Africa.

While GSP was expired, Novita was forced to lay off 3 of its 17 workers. For the remaining 14, overtime was cut and salaries were reduced (or promised raises not given). Officers used personal loans and credit lines to loan the company funds so that it could continue paying bills. According to Vice President George Nazarian, Novita contemplated shutting down completely on account of GSP expiration.

Saying that GSP is crucial for Novita is a major understatement, but even a year after the retroactive renewal the company is not “whole” again:

• the $2 million in tariffs paid during expiration were refunded, but the $250,000 in interest payments to banks to keep the lights on are gone forever;
• the 14 remaining employees have received raised, but the 3 positions lost have not been refilled, and
• sales of GSP-eligible goods have increased over the past year, but they cannot “undo” the lost sales over a 2-year period.

And that is the reality of GSP expiration: at best it is a speed bump that slows the growth of small businesses like Summit and Sophia Foods. The other end of the spectrum is much worse. Novita was able to avoid the worst of potential outcomes, but the lingering negative effects of GSP expiration show why it is so important for Congress to renew GSP well before its scheduled expiration at the end of 2017.

Novita provided the above information in response to our GSP renewal impacts survey. If you have not done so already, please take a minute to answer these questions today. As always, all data will be kept confidential and no company-specific answers will be attributed unless permission is explicitly granted. You can find another company responses here, here, and here and some preliminary survey response data here and here.