With end-of-year legislation to fund the government and provide pandemic relief under debate in Congress, it is important that legislation to renew the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB) not get lost in the shuffle. In both instances, failure to act before these programs expire at the end of the year will result in lost sales and lost jobs for Americans at a time when we can’t afford it.
First, the MTB temporarily suspends tariffs on a carefully vetted list of imported goods, most of which are inputs used by U.S. manufacturers. Fundamentally, it helps U.S. companies maintain their competitive edge. As several hundred companies and associations wrote to Congress recently:
The MTB corrects, on a temporary basis, historical distortions in the U.S. tariff code by eliminating border tariffs on imported products for which there is no or insufficient domestic production and availability. Without the MTB, these distortions would undermine jobs and the competitiveness of manufacturers in the United States…
If the MTB is not passed this year, manufacturers and other businesses will pay more than $1.3 million per day starting in January in out-of-date, distortive and anticompetitive import tariffs on products not made in the United States or not available in domestic markets.
The MTB should not be controversial. The last MTB (in 2018) passed Congress without a single vote in opposition. This is a bill that should absolutely be included in the expected end-of-year legislative package.
GSP is also in play. For nearly five decades, GSP has promoted economic growth in developing countries by providing duty-free access to the U.S. market for nearly 5,000 products from about 120 developing countries. This helps spur economic growth and job creation in developing countries, and products imported under GSP generally do not compete with U.S.-made goods.
American businesses also benefit from GSP. Those doing so tend to be small but dynamic, according to the Coalition for GSP. These firms typically employ about 20 people, and GSP saves them between $100,000 and $200,000 in duties—big money for many small businesses.
The Coalition for GSP recently made a number of good points about the state of talks over the renewal legislation this week. The first point — an obvious one — is that letting GSP lapse is a terrible option: Jobs are at stake in both developing countries and in the United States.
But at this late hour, Congress should take a pragmatic approach to GSP renewal. It’s not clear effecting substantial changes to the program’s eligibility criteria makes sense in the context of a proposed extension of just six months. A few of the proposed changes are not controversial (e.g., triennial reviews), but other proposals recently issued would entail the biggest changes to the program in a generation; such matters deserve hearings, stakeholder consultation, and deliberation. Further, if a short-term extension is agreed, it shouldn’t be too short: The new administration and Congress deserve time to consider next steps, particularly as officials are in the confirmation process.
The challenge now is to strike a balance that preserves the jobs that depend on GSP by extending the program and setting an appropriate timeline for consideration of possible additional changes.
The Chamber continues to urge the Congress to include legislation to renew GSP and the MTB in an end-of-year package.
