GSP Expiration: How to Help Chinese Exporters While Raising Costs for Americans

Fittings, such as those seen to the right, are used in a variety of industries to connect pipes and tubes.  Last year, the US imported nearly $300 million worth of copper alloy fittings.  Most of these imports came from non-GSP countries like China (nearly 40%) and Taiwan (10%), but about $33 million entered duty free under GSP, saving American companies $1 million.

For example, Lee Brass in Anniston, Alabama imports copper fittings from Thailand, the leading supplier under GSP.  Founded in 1917, Lee Brass has grown from an 1,800 square foot shop to a 435,000 square-foot, fully integrated manufacturing facility.  Other importers of copper fittings from Thailand include Merit Brass in Cleveland, Ohio; Matco-Norca in Brewster, New York; and Raven Products in Westborough, Massachusetts.

GSP expiration hurts not only American importers, but also developing countries like Thailand and Indonesia.  At the same time, it greatly helps manufacturers in China by increasing costs from its major competitors.  Here are the average prices ($/kg) for imports of copper fittings in 2010 (after paying all shipping costs and import tariffs):

  • Thailand: $10.56
  • China: $10.70
  • Indonesia:  $10.71

Here’s what they would’ve been if GSP hadn’t been in place last year:

  • China: $10.70
  • Thailand: $10.88
  • Indonesia:  $11.01

As you can see, China goes from being more expensive than Thailand – and about the same as Indonesia – to being the cheapest supplier.  This change in the relative competitiveness of exporters is likely happening across a broad range of products.

While likely not its intent, inaction by the 111th Congress on GSP not only increased costs in the United States and hurt developing countries, it also helped Chinese manufacturers become more competitive exporters to the U.S. market.

This entry was posted in Alabama, GSP, Indonesia, Massachusetts, New York, Ohio, Thailand. Bookmark the permalink.

One Response to GSP Expiration: How to Help Chinese Exporters While Raising Costs for Americans

  1. Pingback: GSP Imports Help Provide Oklahoma City Manufacturer a “Competitive Edge” | Renew GSP Today

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