As Imports Work for America Week draws to a close, it’s time to look ahead: what should policymakers do to ensure that our trade agenda includes initiatives that enable American workers, families and producers to fully benefit from imports. There are many, but the Coalition for GSP suggests Congressional passage of a long-term renewal of the Generalized System of Preferences (GSP) program.
The current GSP authorization runs through July 31, 2013. While an expiration of next summer may seem a long way off and something Congress can put on the “back burner” for now, there are two main problems with waiting until the last moment. First, the closer we get to the expiration date, the more uncertainty companies face about whether their imports will face tariffs. Second, renewal legislation is often postponed from a packed late-session Congressional calendar until GSP expires altogether and importers have to start paying duties. The cost of expiration is not insignificant: when GSP expired at the end of 2010 despite strong bipartisan support for its renewal in both the House and Senate, American companies had to find $500 million to pay tariffs before Congress finally renewed GSP.
Beginning conversations sooner rather than later is even more important if Congress intends to consider changes to the GSP program. Several years ago, the Coalition worked with industry associations, companies, labor unions, and NGOs to develop consensus recommendations on potential changes to the GSP program. It was an intensive undertaking that lasted two years, and not something Congress can finish in a couple of months.
If instead Congress decides to extend the current program, it should renew the program for at least five years. Unfortunately, past short-term renewals (and expirations) have discouraged use of the GSP program, as the uncertainty created by the need for Congressional action can outweigh the potential tariff savings.
Keep this fact in mind: GSP duty-free treatment supports American jobs and U.S. competitiveness, and putting it at the tail end of the Congressional “to-do” list has adverse consequences. The message of Imports Work for America week is simply this: imports work, and programs like GSP that support imports should be a priority for American policy makers.
This post is part of the Imports Work for America Week initiative, an effort by a number of organizations and individuals in the trade policy community to start talking about the benefits of imports for the U.S. economy. You can see our earlier blog post about the initiative here, visit the Imports Work website here, or read earlier posts on how GSP works for American jobs, families, manufacturing, and economic development.