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Legislation to Lower Tariffs, Extend GSP Introduced in House

Friday, July 19, 2013
Sandler, Travis & Rosenberg Trade Report

Republican and Democratic leaders of the House Ways and Means Committee introduced July 17 legislation that would yield significant cost savings for U.S. importers and manufacturers. It remains to be seen whether Congress will enact either bill before its month-long recess begins in August.

MTB. The miscellaneous trade bill (H.R. 2708) would restore through the end of 2015 most of the hundreds of tariff suspensions and reductions that expired with the last MTB as of Jan. 1, 2013. While the bill does not currently provide for such restoration to be retroactive, meaning importers would not be able to seek refunds of duties paid on covered items this year, this issue is still under discussion. The MTB would also expand reduced duty treatment to a number of additional goods. All of these provisions would be reflected in heading 9902 of the Harmonized Tariff Schedule of the U.S.

In general, a product is eligible for inclusion in the MTB if the impact on U.S. government revenue of suspending or lowering its tariff is less than $500,000 per year and there is no domestic production of the same or a similar product. Each bill incorporated into the MTB must also be non-controversial, and those to which a domestic manufacturer or member of Congress objects are excluded.

Congress traditionally considers a new MTB during each two-year session, but that did not occur in 2012. Some lawmakers opposed the MTB on the grounds that this type of legislation is an earmark, a form of government spending that benefits only a few and is thus increasingly untenable in the current fiscal environment. Others want to reform GSP so that it excludes countries that have become sufficiently competitive or that have actively opposed U.S. interests.

The bill’s sponsors, however, emphasized that the MTB primarily benefits U.S. manufacturers. “Ensuring that our producers have access to materials that are needed to manufacture products they sell in the global marketplace makes our U.S.-based manufacturing sector more competitive,” said Committee Chairman Dave Camp. Ranking Member Sander Levin added that the bill “is written to provide complete transparency in order to be certain that imported inputs will support American products and jobs, not replace or displace them.”

GSP. The Generalized System of Preferences, which provides duty-free treatment to about 5,000 products imported from more than 100 beneficiary developing countries, is scheduled to expire July 31. A bill (H.R. 2709) introduced July 17 would extend GSP through September 2015.

Ways and Means Trade Subcommittee Chairman Devin Nunes noted that GSP “saved U.S. companies nearly $750 million in import duties” in 2012 “and supported tens of thousands of American jobs.” Committee Ranking Member Sander Levin added that most GSP imports are “used as inputs for products made here.” Camp therefore called on the Senate to “act quickly on a clean bill” of its own and to not get “bogged down by amendments.” A committee press release explains that the Senate has repeatedly used a procedure by which it passes legislation and holds it at the Senate desk. Upon House passage of identical legislation, the House bill is sent over to the Senate and is “deemed passed” without further action by the Senate.

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