Lawmakers and private-sector witnesses called for the renewal of two programs that lower import duties at a recent hearing before the Senate Finance Committee. The House Ways and Means Trade Subcommittee is planning a similar hearing this week, its second in the past year.
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GSP
The Generalized System of Preferences provides duty-free treatment for imports of thousands of products from 119 developing nations. It expired Dec. 31, 2020, meaning GSP-eligible goods have been subject to U.S. tariffs since then. Congress must act for the program to be reauthorized, but lawmakers have failed to do so despite traditional bipartisan support for GSP due to disagreements over whether and how much it should be reformed.
At the Senate Finance hearing commenters pointed out that GSP renewal would lower costs for U.S. manufacturers, which Ranking Member Mike Crapo, R-Idaho, said have shouldered “an extra $3 billion in tariffs” since the program’s expiration. However, reauthorizing GSP would also increase incentives to move sourcing out of China.
Scott Lincicome, a senior trade policy official with the Cato Institute, noted that “new tariffs imposed since GSP expired do not seem to have encouraged U.S. importers to Buy American;” instead “there is mounting evidence that U.S. importers and multinational manufacturers have shifted from GSP countries to other foreign suppliers, most notably China,” even though many of the Chinese products at issue are subject to Section 301 tariffs. As a result, Senate Finance Chair Ron Wyden, D-Ore., said, “if the United States is serious about moving away from Chinese manufactured goods and creating good-paying red, white, and blue jobs, renewing GSP is a good place to start.”
Moreover, said Allison Gill, legal director for Global Labor Justice, GSP renewal would be good for not just businesses but workers as well. While the program has been dormant “workers and their advocates have not been able to leverage the program to incentivize labor rights compliance or impose accountability for violations,” she noted. Renewing GSP would restore that leverage and could also be an opportunity for “updating GSP’s labor rights framework, aligning labor and environmental standards to modern trade agreements, and imposing a minimal level of compliance to improve GSP as an accountability tool.”
Wyden noted that in 2021 the Senate passed legislation to renew and improve GSP but that it stalled in the House. Earlier this year the House Ways and Means Committee approved a bill to retroactively renew GSP through Dec. 31, 2030, and make a number of changes. Wyden made no mention of that bill but said he plans to continue working with Crapo to get GSP reauthorization “across the finish line as soon as possible.” For his part, Crapo urged lawmakers to advance a legislative package renewing GSP, AGOA, and “potentially other preference programs … by the time of the AGOA summit” anticipated in July and to reject efforts to tie such a package to reauthorization of the Trade Adjustment Assistance program, which is instead typically linked with trade promotion authority.
AGOA
The African Growth and Opportunity Act – first enacted in 2000 and currently in effect through Sept. 30, 2025 – grants duty-free access to products imported from qualifying sub-Saharan Africa countries. About 85 percent of all tariff lines are eligible for duty-free access to the U.S. if imported from any AGOA beneficiary, a figure that increases to about 97 percent for beneficiaries with full textile and apparel product benefits. At least 35 percent of a product’s value must be grown, produced, or manufactured in the AGOA-eligible country, and exports must be directly shipped to the U.S. Different rules of origin apply concerning the sourcing of inputs for textile and apparel products.
Wyden said he favors extending AGOA but added that Congress needs to consider how to further encourage use of existing program preferences as well as how to modernize the program to “meet the needs of advancing digital trade and innovation.”
Florie Liser, president and CEO of the Corporate Council on Africa, urged lawmakers to renew AGOA “as soon as possible this year” and for at least a decade, noting that the current uncertainty about renewal “is already causing orders to be cancelled.” At the same time, she expressed support for updating AGOA with “non-controversial changes” like expanding eligibility to North African countries, modifying graduation criteria to avoid punishing countries that have made good use of AGOA to achieve middle income status, eliminating the textile visa requirement for Africa to harmonize with customs procedures used for most other apparel exporters, and extending the review period to once every three years rather than annually. A draft bill reflecting many of these suggestions was announced last fall by Sen. Chris Coons, D-Del.
Melissa Nelson, general counsel of SanMar Corporation, added that AGOA’s current rules of origin should be maintained because while “a mature, vertically-integrated apparel manufacturing sector in sub-Saharan Africa is possible … we’re not there yet” because the “synthetic-heavy fabrics used in products manufactured in AGOA countries are still produced outside of the region.”
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