The Generalized System of Preferences (GSP) program was created to encourage economic development for emerging economies in qualifying countries by reducing tariff burdens on U.S. companies to encourage investment and partnerships in those places. The program has been regularly renewed but lapsed in 2021 and Congress has not been able to reach an agreement on renewal for a variety of reasons unrelated to the program itself. This has led to the longest-ever suspension of the program and the imposition of hundreds of millions in unexpected duties on companies across America, threatening beneficial trade arrangements decades in the making.
Though comprising a small portion of total U.S. imports, the GSP is critical for a wide range of domestic industries. Businesses that are most affected by the GSP are those that rely on products from countries such as Indonesia, Thailand, Cambodia and Brazil. For example, 15 percent of Crayola LLC’s annual sales are from colored pencils produced in Brazil, but a two-and-a-half year lapse in the GSP program has caused substantial challenges for them and similarly positioned companies.
Small businesses across the country, as well as larger companies such as Target, Home Depot and Samsonite, are continuing to fight for GSP renewal in this Congress. Without the program, domestic industries face tariffs as high as 17.5 percent. Advocacy efforts to renew the GSP also include a request for refunds of duties collected since the GSP lapsed, which now are close to $3 billion in the aggregate.
Congress Must Act
Renew GSP – Bipartisan legislation to renew GSP languished in the last Congress for more than a year. Leaders in the House and Senate must prioritize GSP renewal and put forward a bill to renew the program based on the consensus approach that earned the support of 91 senators last year.
Refund Collected Duties – While Congress debates the full renewal package, any legislation must refund duties collected to date. If nothing else, refund legislation should be quickly introduced and passed. Neither U.S. companies nor the beneficiaries of the program around the world, for whom it was created, are responsible for the inability of Congress to resolve differences outside the scope of the program. If Congress needs more time to develop a long-term deal, it should ensure the stability of the program in the meantime.
During a CHESS presentation on Oct. 4 concerning the need to renew the GSP, attendees were given the opportunity to let their voices be heard in Congress though an IHA digital advocacy campaign. All IHA members are able to utilize this by clicking here to send personal messages to your U.S. Representative and Senators. It only takes a few minutes, and it will have a big impact.
For more information contact Craig Brightup at 202-658-6448 or Rafe Morrissey at 202-438-6821.
