Industry News

GSP Renewal at Risk, Experts Urge Businesses to Act

March 2, 2011


Renewal of the Generalized System of Preferences (GSP) program, which expired for most beneficiary countries on December 31, 2010, currently faces major roadblocks.   According to government sources, passage of renewal legislation is highly uncertain in both the House and the Senate.   Experts are urging affected businesses to contact their Congressional representatives to improve the chances for GSP renewal.   Many businesses may not be aware that they are facing increased duty assessments because previous expirations were often renewed quickly and retroactively.  The chances of that happening are now diminishing.

In the House of Representatives, a GSP extension bill would be subject to the new house rules adopted in January 2011, which include cut-as-you-go (CUTGO) funding rules.   Under CUTGO, taxes and fees can no longer be used to fund GSP as they were under the former pay-as-you-go (PAYGO) system.   Under these new rules, the costs of foregone duty collections that would be caused by extending the GSP program must be offset by cutting other government spending.

In the Senate, Senator Sessions (R-AL) continues to pose a barrier to GSP passage.   Senator Sessions has repeatedly held GSP legislation due to his opposition to granting duty-free access to sleeping bags from Bangladesh, which he argues will harm a manufacturer in his home state of Alabama.   GSP also faces a further challenge in the Senate, as a number of Senators, including Senator Kyl (R-AZ), have linked the issue of GSP extension to consideration of the Columbia Free Trade Agreement.  Congress has also been unable to pass extensions for the Andean Trade Promotion and Drug Eradication Act/Andean Trade Promotion Act or for Trade Adjustment Assistance (ATPDEA/ATPA), partially because these two programs have also been linked to consideration of the outstanding Free Trade Agreements.

For more information or assistance in contacting your Congressional representative, contact a Barnes/Richardson attorney.