American businesses: “By lowering tariffs for American companies that import under GSP, it supports jobs and investments in the United States.”

(WASHINGTON) – Over 430 American businesses and associations from across the country that currently use the Generalized Systems of Preferences (GSP) program to help sustain and grow their businesses today wrote to Congressional leaders asking their help in delaying a recent decision to terminate the program for India and Turkey. In their letter, the American businesses pointed out that just last year, Congress voted nearly unanimously to renew the GSP program for all eligible countries and that their help is needed in ensuring that the recent termination decisions reflect Congressional intent in overwhelmingly agreeing to continue the program.

“As representatives of American companies that would pay higher tariffs as a result of these decisions – and similar ones that could come in the future – we urge you to request a delay beyond May. This would provide Congress time to work with the Administration and ensure the decisions match both the letter and the spirit of the GSP law.” the letter states. By lowering tariffs for American companies that import under GSP, it supports jobs and investments in the United States, particularly at U.S. small businesses. Congress showed the strong bipartisan support for GSP when it reauthorized the program for three years in 2018.”

The GSP programs was established in 1974 to both promote economic development and provide duty-free imports to help American small businesses compete. As the U.S Trade Representative’s office website states, GSP: “Supports tens of thousands of jobs in the United States.  GSP also boosts American competitiveness by reducing costs of imported inputs used by U.S. companies to manufacture goods in the United States.  GSP is especially important to U.S. small businesses, many of which rely on the programs’ duty savings to stay competitive.” India and Turkey currently provide roughly a third of total GSP imports.

The businesses that sent the letter to Congress represent the profile of the average American business that benefits from the program which tend to have 20 or fewer employees and depend greatly on duty-free imports to support those employees and their overall business. The Coalition for GSP, a group of American companies, small businesses and trade associations organized to educate policy makers and others about the important benefits to American companies, workers, and consumers of the Generalized System of Preferences (GSP) program helped organize today’s letter.

The full text of the letter:

Dear Chairmen Grassley and Neal and Ranking Members Wyden and Brady:

We are writing to express our grave concerns with the Administration’s recent announcement of intent to terminate Generalized System of Preferences (GSP) program for India and Turkey. The decisions could take effect as soon as May 4, 2019. As representatives of American companies that would pay higher tariffs as a result of these decisions – and similar ones that could come in the future – we urge you to request a delay beyond May. This would provide Congress time to work with the Administration and ensure the decisions match both the letter and the spirit of the GSP law.

GSP is a 45-year old program created to promote economic development. By lowering tariffs for American companies that import under GSP, it also supports jobs and investments in the United States. Congress showed strong bipartisan support for GSP when it reauthorized the program for three years in 2018. The House of Representatives voted 400-2 in favor of GSP renewal legislation, which was then enacted into law as part of the Consolidated Appropriations Act, 2018. Congress has not just reauthorized the program in recent years but expanded it significantly in 2015 by removing the statutory prohibition on eligibility for travel goods.

Multi-year reauthorizations and expansions have had a positive impact on American companies and workers, which saved a record $1.03 billion in eliminated tariffs in 2018. Yet the Administration’s use of country practice reviews threatens to undermine Congress’ intent in reauthorizing GSP and the benefits to program users like us. About one-third of GSP savings for American importers result from the inclusion of India and Turkey in the program. Another third result from eligibility for other countries under review, such as Indonesia and Thailand.

The India decision was based on failure to resolve market access issues. The GSP statute does not require a perfect trading relationship, just assurances of reasonable and equitable treatment. There are reports that India offered significant proposals that would improve US market access for a range of products and industries. By terminating GSP, the Administration has chosen higher barriers for US imports and exports instead of more-open markets for two-way trade. This does not match the intent of the GSP program or its eligibility criteria.

The Turkey decision was based on sufficient economic development, including “rising Gross National Income (GNI) per capita.” Yet the facts do not support this decision. While Turkey has made significant strides to diversify its exports and reduce levels of poverty, according to the World Bank, Turkey’s GNI per capita declined each year from 2014 to 2017. Further declines are expected as Turkey entered recession in 2018 for the first time since the global financial crisis. This action is diametrically opposed to GSP’s original intent. Preference programs were created to promote development by giving countries a hand up, not imposing new barriers when they are down.

The decisions even are worrying to GSP program users that do not import from India or Turkey. Eight other countries are subject to pending country practice reviews, and those decisions could be announced at any time. USTR also will announce soon whether any new country practice reviews will be self-initiated for GSP beneficiaries in Europe and the Western Hemisphere soon. If the Administration chooses to terminate GSP benefits despite efforts from beneficiary countries to address U.S. concerns, and can graduate countries based on positive economic development when data suggest otherwise, what countries’ benefits are not at risk?

It is not an exaggeration to suggest that when GSP comes up for reauthorization in next year, it could be a shell of the program that so many Members of Congress supported just a year ago. The India and Turkey announcements raise serious questions about whether the Administration is enforcing congressional intent, or misusing its discretion to eliminate tariff benefits that Congress has expressly granted.

We urge you to ensure that GSP decisions follow both the letter and the spirit of the law. Jobs at our companies depend on it.

Sincerely,

VIEW ALL 438 LETTER SIGNERS HERE

The letter comes at a critical time. GSP expires in just 2 months many companies are already placing orders for delivery in 2018 – at which point GSP could be expired. As noted by the letter, two-thirds of GSP imports are “raw materials, components, and machinery, where lower tariffs helped American manufacturers and workers compete in a tough global economy by ensuring U.S. companies have access to the inputs they need.”

Norman and Himes released the following statements accompanying the letter:

• Congressman Ralph Norman: “It is my sincerest hope that Chairman Brady and Ranking Member Neal make the reauthorization of GSP a priority. As a member of the House Small Business Committee and a small businessman myself, I understand just how important GSP is for a level playing field for companies to compete and the creation of jobs here at home.”
• Congressman Jim Himes: “Extending GSP before it expires at the end of the year is very important for our workers and companies. The program smooths the path so that Americans, who can outcompete anyone on a level playing field, have access to the materials they need to win in an increasingly crowded global marketplace. I sincerely hope that Chairman Brady will make GSP renewal a priority before the end of the year.”

Also signing the letter were Representatives Bonamici (OR-1), Brownley (CA-26), Bucshon (IN-1), Chabot (OH-1), Comstock (VA-10), Correa (CA-46), Courtney (CT-2), Ferguson (GA-3), Fitzpatrick (PA-8), Gottheimer (NJ-5), Handel (GA-6), Kennedy (MA-4), Lance (NJ-7), Lieu (CA-33), Maloney (NY-12), McGovern (MA-2), Moulton (MA-6), Pallone (NJ-6), Payne (NJ-10), Price (NC-4), Rokita (IN-1), Rothfus (PA-12), Ruppersberger (MD-2), Sanford (SC-1), Sensenbrenner (WI-5), Shea-Porter (NH-1), Speier (CA-14), Stivers (OH-15), Suozzi (NY-3), Swalwell (CA-15), Titus (NV-1), Walberg (MI-7), Walz (MN-1), Wilson (SC-2), Womack (AR-3), and Woodall (GA-7).

We’ve highlighted constituent GSP benefits for a number of House Members that signed the letter:

• MS International is based in California’s 46th District, represented by Congressman Lou Correa. The last GSP renewal allowed MSI to hire hundreds of workers across the United States, with the single largest increase at its headquarters in Orange.
• Summit Specialty International is a small business based in Georgia’s 7th District, represented by Congressman Rob Woodall. The last GSP renewal allowed Summit to hire 2 workers, give everyone raises, and start providing health insurance.
• Royal Chain Group is based in New York’s 12 District, represented by Congresswoman Carolyn Maloney. The last GSP renewal allowed Royal Chain to hire 12 new workers. Royal Chain is one of nine companies in New York’s 12 District  on the GSP supporter list.

A copy of the letter can be downloaded here.

On Friday, the National Retail Federation sent a letter to every Member of Congress urging support for immediate Congressional consideration and passage. The letter stated that GSP is “critical to American employers and families that this important trade program is renewed in advance of its expiration.”

Given GSP’s broad bipartisan support, it also noted: “scheduling GSP for a vote before the August recess should be a straight-forward and immediate way to save American companies and workers, and American families from an unnecessary and significant tax hike.” Here’s a copy of the letter sent to Speaker Boehner.

This followed a similar letter sent last week by the U.S. Chamber of Commerce, and both organizations were among the more than 230 American companies and associations to sign a similar letter urging GSP renewal several weeks back.

And just like we said on Friday, calls for GSP renewal continue to grow: since Friday, six more companies joined the GSP Supporter List, including:

• 3V Inc. in Georgetown, SC
• Double 7 Products in Fairfield, CA
• J & W Marketing in Seattle, WA
• Jaipur Rugs in Norcross, GA
• MJW International in Newark, DE
• Stone Capitol Group in Colleyville, TX

You can see all 278 Supporter List organizations here. If you’re not yet on the list – be sure to fill out this form to join yourself!

With expiration just a few weeks away, all GSP importers should follow the lead of the Chamber and NRF by contacting your representatives directly about the importance of renewing GSP before July 31.

The GSP program saved American companies nearly $750 million in import duties in 2012.  When GSP expired at the end of 2010, U.S. companies faced higher import taxes for more than 10 months.  To compensate for these unexpected costs, some employers were forced to freeze salaries, eliminate benefits, delay capital investments, and even lay off workers.  American businesses – particularly small businesses — cannot afford for GSP expire again.

As noted in the accompanying press release, the 234 letter signatories are based in 38 states plus the District of Columbia and include:

• Twenty-one business and trade associations
• Numerous members of the Fortune 500 such as General Electric, Home Depot, Coca-Cola, Caterpillar, Dow Chemical, and Cummins
• Over 100 very small businesses with less than 20 employees
• Companies importing from 30 different GSP beneficiary countries

If you’re on the letter, make sure to forward the final version to your Senators and Representatives to show your support.  Even if you’re not on the letter, send it anyways as proof that you’re not alone in wanting Congress to renew GSP!

Then, add your name to our free GSP supporter list so we know to contact you about the next one! Four companies already have today, and we’ll continue adding names until Congress renews GSP.

The GSP’s importance to its beneficiary countries cannot be underestimated. The import program benefits more than 3.8 billion people living in two-thirds of the world’s economies. They rely on GSP duty-free exports to the United States to create tangible economic development.

The letter also noted that when GSP was allowed to expire for 10 months back in 2011:

U.S. imports of GSP-eligible items during that period decreased by over 17 percent, while overall U.S. imports increased by 15 percent.

We’re in the process of collecting company/association signatures for a similar U.S. business letter.  If you’d like your organization to be on that letter, just add your name (if you haven’t already) to our GSP Supporter List.  But act quick, as our letter will be going out VERY soon!