Ways and Means Explores Options for Reform of U.S. Trade Preferences; Renewal of GSP and ATPDEA Likely before December 31st

November 19, 2009

On November 17, 2009, the House Ways and Means Committee held a hearing to evaluate the operation and impact of U.S. trade preference programs, as well as options for reform moving forward. These programs include the Generalized System of Preferences (GSP), Andean Trade Promotion and Drug Eradication Act (ATPDEA), the he African Growth and Opportunity Act and other programs that provide unilateral market access to developing countries. Many of these programs, including GSP and ATPDEA, are set to expire at the end of 2009.  

Although congressional interest in reform has been building, the likelihood of achieving reform this year is low. Instead, Congress will likely pass an extension, the length of which is under debate, and then pursue reform next year.

Nevertheless, the Committee’s hearing featured many public and private sector witnesses who discussed possible changes to U.S. preference programs. Some suggestions included changing the rules of origin, moving toward a unified set of preferences, decreasing the uncertainty of renewal, extending product coverage to benefit the world’s poorest countries, reforming investor provisions, and linking preference programs to foreign assistance. Specifically for GSP, U.S. Trade Representative General Counsel Tim Reif testified that the Administration favored an extension at this time that is consistent with the sound, efficient and predictable operation of the program.

Representative Engel (D-NY) testified that ATPDEA has too often been extended for short time periods, creating uncertainty and an unstable investment climate in the beneficiary countries. Representative Engel states that to make a real impact, the U.S. must immediately extend ATPDEA for at least two years. Representative Engel also urged the addition of Paraguay as an ATPDEA beneficiary, noting that he has introduced a bill (H.R. 1837) to accomplish that.

Separately, the Senate Finance Committee was scheduled to hold its own hearing on options for reforming U.S. trade preferences on November 19, 2009, but cancelled the hearing on short notice. In a November 10, 2009 speech, Finance Committee Chairman Max Baucus (D-MT) noted that he expect to see all programs extended for a short period, but longer than six months, before they expire this year.