Background

U.S. Trade Representative Robert Lighthizer told members of Congress recently that the Trump administration has not decided whether to renew the Generalized System of Preferences, which provides duty-free or reduced duty treatment for imports of thousands of products from dozens of developing countries. The program is currently scheduled to expire Dec. 31.

House Ways and Means Committee Ranking Member Kevin Brady, R-Texas, said the U.S. should “move to immediately renew” GSP, as well as the preference programs for Haiti and the Caribbean Basin, “to reduce costs here at home, strengthen our relationships with developing countries, and establish incentives for those countries to work with us.” In a June 16 letter, more than 200 companies and trade associations also urged a reauthorization of GSP, which they said saved U.S. companies more than $1 billion in import duties in 2019. With the ongoing economic challenges associated with the COVID-19 pandemic, the letter said, “further uncertainty about whether companies will have to pay millions of dollars a day in new taxes in January 2021 is the last thing the American business community needs.” The letter also called on the administration to renew GSP benefits that have been removed from India, Turkey, and Thailand in recent years.

However, Lighthizer said the White House “has not formally taken a position” on renewing GSP or reinstating eligibility. He also indicated that even if the program is extended it “needs changes.” For example, he pointed out that “there are countries that get GSP” from the U.S. that “have free trade agreements with, for example, Europe and give Europe better trade benefits.” This situation is “completely crazy,” Lighthizer said, and “something that I'm going to look at to see … what the law prevents now or how the law should be changed.”

For more information on GSP, please contact trade consultant David Olave at (202) 730-4960.

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