Trade Subcommittee Chair Says MTB, Customs Modernization Unlikely in 2024

House Ways and Means Committee Trade Subcommittee Chairman Adrian Smith, R-Neb., said he thinks the chances are good for renewing the Generalized System of Preferences benefits program in 2024, due to bipartisan interest in the legislation. "A lot of members have examples from their district of why we need GSP." He added that a three-year lapse of the benefit program is "inexcusable."

While there is some momentum for a tax deal in the committee, which would provide a potential vehicle for GSP renewal, Smith said that's not necessary, because GSP could have enough bipartisan support to pass under suspension rules.

Smith also said he thinks a reauthorization of the African Growth and Opportunity Act is achievable in 2024. That program does not expire until Sept. 30, 2025, but AGOA stakeholders have been pushing for early renewal after seeing what happened to GSP. He said he expects AGOA won't be renewed exactly as it currently exists. He said Congress wants to see if there's something it needs to do to get more countries to take advantage of the tariff benefits under the program.

The long expiration of GSP, and anxiety that AGOA also will expire "is chilling to investment and undermines the whole purpose" of these programs, he said during an interview Jan. 10 at his office on Capitol Hill. Apparel companies that take advantage of AGOA have been saying they won't invest more in Africa until they know what rules of origin will be in the new AGOA, and that its renewal is assured (see 2310300051).

But while the Miscellaneous Tariff Bill has traveled with GSP renewal in the past, Smith thinks it won't happen this time. "I think it's more complex," he said of MTB. While he said he's optimistic GSP will pass this year, he said he "would hope" MTB passes. "There are reasons to do that," he said.

He also doesn't expect a vote in 2024 for a customs modernization package. The House hasn't introduced a customs modernization bill, as was done in the Senate (see 2312110048), and Smith said members are still at an early stage of learning about the technical issues. He said he's only looked at Sen. Bill Cassidy's bill "a little."

The House Select Committee on China has recommended that the Ways and Means Committee end China's eligibility for Column 1 tariffs applied to most countries around the globe, but Smith didn't endorse that approach. He said Congress needs to be judicious when considering changing tariffs on China. He said that given the concerns about China's economic practices, "to me, the best way forward is to look at other alternatives for our supply chains. This is where I think the administration has really missed an opportunity on the trade front. The three-year lapse of GSP is the most glaring example. Granted, this is a legislative thing too, but the administration just doesn't seem to mind that it's lapsed."

He said the U.S. should consider opening free trade agreement negotiations with countries that are strong in clothing manufacturing, such as Vietnam or Bangladesh, given that 98% of clothing is imported, and high tariffs on those goods fall most heavily on those who can afford it least. By reaching an FTA, rather than unilaterally lowering tariffs, China's dominance as a supplier for U.S. consumers can be lessened, and the U.S. can use the leverage of lowering its tariffs to get that trading partner to improve its labor and environmental standards. "Republicans have concerns about leveling that playing field as well," he said. "It's not just Democrats."

In addition to the administration's unwillingness to negotiate tariff liberalizing trade deals -- important for agricultural exporters -- Smith also criticized other examples of trade policy paralysis, such as leaving the Section 301 tariffs unchanged, and missing a deadline to find a new managed trade regime for EU steel and aluminum to replace temporary tariff rate quotas.

"For all the criticism of the previous administration by Democrats ... there's been such little to no action on so many things. Especially now, they promised a [Section 301] report in the fall -- that wasn't exactly a short timeline -- now even that's delayed."

Smith said he hears "a little bit" from constituents about Section 301 tariffs, and hears from both those who want the tariffs rolled back and those who want them to remain.

"It's okay if the report says that, too," he said. "Just tell us what you're willing to stand behind, in terms of thorough analysis, and a way forward."

Smith said he's worried that due to the political sensitivity of the steel industry, the U.S. will never end tariff rate quotas on European steel. While 85% of steel exports are covered either by an exclusion or a quota, importers do pay the 25% tariff on about 600,000 metric tons annually from the EU. "It speaks to the inaction from the current administration. The action of the previous administration, while there were some policies that caused some heartburn for many ... really leaning into the trade agenda, led to more positive results."

He pointed to the previous Section 301 exclusion process, which he called very robust, and the renegotiation of NAFTA as some of those more positive results. He said that the revised NAFTA, now called USMCA, "became a productive instrument, especially when looking at what Mexico's trying to do with our corn right now."