GSP Renewal Could Be for Longer Than Typical 2-3 Years

House Ways and Means Committee members, in hallway interviews at the Capitol, said they're concerned that the Senate's unwillingness to take up a tax package that passed the House with more than 350 votes will delay movement on bringing back the Generalized System of Preferences trade benefits program.

However, Rep. Blake Moore, R-Utah, one of the strongest advocates for GSP on the committee, said, "I was under the impression we would be ready to kind of roll on it, on our side, when we got back in April. I don't have any information that says that's not the case. I'm still being bullish with my folks back in Utah that we're moving forward with this, and we're going to have the retroactivity, with several years out in advance."

Trade Subcommittee Chairman Rep. Adrian Smith, R-Neb., had said a month ago that he would introduce a GSP bill "in the next few weeks." His spokesman didn't respond to a request for comment, by our deadline, on timing and how long a renewal he will propose.

While Smith had said there was some talk of limiting retroactivity in order to shrink the cost of the package, Moore said the bill is shaping up to include full retroactivity.

As Moore talked about a GSP renewal, which he said will include importer-friendly changes to the competitive needs limits, he mentioned it could be a seven-year renewal. Typically, GSP has been renewed for two, between two and three, or three years over the last 20 years, though the first GSP bill lasted 10 years, until 1985. GSP also has frequently expired for a year or two, though this current expiration has now been more than three years.

When asked by International Trade Today if the renewal is going to cover seven years, he back-pedaled. "That's not been clear," he said, though there has been "talk" of making it a seven-year renewal. (The Senate, in its last GSP bill, proposed five-and-a-half years). "That has to come together. No one's seen the text."

Moore said he would like a seven-year renewal, so businesses can make longer-term plans on where to source their goods.

Rep. Nicole Malliotakis, R-N.Y., said she thinks the committee taking up GSP will have to wait until the Senate acts on the tax package that passed the House. Due to opposition from Senate Finance Committee ranking member Rep. Mike Crapo of Idaho, that bill has stalled, and doesn't appear to have 60 votes in the Senate.

Rep. Beth Van Duyne, R-Texas, said, "We're fairly frustrated that the Senate hasn't been able to act" on taxes. "The lack of continuity for our businesses moving forward is stifling and generally unnecessary." She said she doesn't know if the stalled tax bill also will hurt the chances of GSP getting a vote, but said it's possible.

However, Rep. Vern Buchanan, R-Fla., a committee member of long tenure, said he thinks a GSP renewal bill will be introduced in April.

Malliotakis said she and fellow committee member Rep. Carol Miller, R-W.Va., are focused on expanding products eligible for GSP.

"We've got to get apparel somehow added to that equation. So we can import from friendlier nations. So many of our sweaters, for example, come from Communist China. Making some adjustments there is important," she said. "I think there's a lot of companies right now that are proactively trying to move ther supply chain out of China, and if we can address GSP in the right way, we can actually help that continue. So I think that's an important thing to be looking at. GSP can help accomplish that."

Some of the biggest apparel exporters -- Vietnam, India and Bangladesh -- are not covered by GSP. Bangladesh was removed after the Rana Plaza collapse that killed more than 1,000 garment workers, and India was removed during the Trump administration.

Malliotakis said she would like to help Central and South American apparel factories and those in Cambodia, and said maybe Bangladesh and India could return to GSP.

Moore said he wouldn't mind adding apparel to GSP. "As long as it meets a deficiency that we can't do, I think the policy's good," he said, but said he doesn't expect it will happen in this cycle. "We need to embrace as many networks as possible that can help us not solely rely on China."

Moore said that if wool were included, however, he knows of sheep ranchers who would be opposed.

Rep. Don Beyer, D-Va., said that while his instinct is to say yes to adding apparel to GSP -- "In general, I'm for more things at lower barriers to trade" -- he'd want to hear arguments for and against the expansion.

"What does it do to CAFTA [the U.S.-Central America Free Trade Agreement]? Because apparel's a huge part of El Salvador, Guatemala, Honduras...," he said. "The last time I was in Central America, 13 months ago, we visited a number of textile places, and they were all arguing for tightening up rules of origin. They wanted a lot more yarn made in Central America, not just made in Southeast Asia and then shipped to them."

Still, Beyer said that tariffs on clothing, especially women's clothing, are much higher than on a lot of other products, and that is inequitable.

A Congressional Research Service report from 2023 noted that if textiles and apparel were covered by GSP, that could hurt Haiti and the African Growth and Opportunity Act countries, which are given the right to export apparel duty free.

Before GSP lapsed, it provided duty-free entry for more than 3,500 products from some countries and an additional 1,500 products from least developed beneficiary countries. In 2020, the last year it was in effect, imports worth $16.9 billion were covered by GSP, less than 1% of all imports.

Rep Greg Stuebe, D-Fla., said he thinks the idea of adding apparel to GSP is a non-starter. "If they pass a GSP bill, it's going to have to be something that the Democrats support as well," he said.

Rep. Lloyd Doggett, D-Texas, said a renewal that is similar to the last GSP version is not good enough to garner his support. "I don't support adding or renewing it unless it has the environmental provisions that I've offered for about a half dozen years -- strong provisions the Republicans have resisted." Democrats would like to put more conditions on eligible countries for the privilege of participating in the preference program.