H.R. 2832 Sen amdt: To extend the Generalized System of Preferences, and for other purposes

H.R. 2832

To extend the Generalized System of Preferences, and for other purposes

Rep. Dave Camp

October 12, 2011 (112th Congress, 1st Session)

Staff Contact

Floor Situation

On Tuesday, October 11, 2011, the House is scheduled to consider the Senate amendment to H.R. 2832 under a rule.  The rule provides for one hour of general debate equally divided and controlled by the chair and ranking minority member of the Committee on Ways and Means.  The bill was introduced by Rep. Dave Camp (R-MI) on September 2, 2011 and was approved by voice vote in the House on September 7, 2011 under a suspension of the rules.  The Senate approved the bill with an amendment on September 22, 2011 by a recorded vote of 70-27. 


Bill Summary

H.R. 2832 would extend the Generalized System of Preferences (GSP), which expired on December 31, 2010, through July 31, 2013. The bill would apply retroactively to the previous expiration date.  To offset the estimated cost of lost tariffs associated with extending the GSP benefits, H.R. 2832 would increase certain merchandise processing fees between October 1, 2011, and June 30, 2014.

The Senate amendment to H.R. 2832 would provide Trade Adjustment Assistance (TAA) benefits to workers affected by foreign trade.  The bill would reauthorize the program for workers, firms, and farmers through December 31, 2013.    


Program Reforms

TAA for Workers provides job training and extended unemployment benefits to qualified individuals.  Among other things, the bill would extend coverage to workers in the service industry.  Under current law, only manufacturing workers qualify for TAA benefits, though service workers were temporarily covered until February 2011.  The bill would extend that coverage through December 2013, after which time the program would return to the level at which it is currently authorized for one additional year, through 2014, but with a reduction to the maximum number of weeks an individual could receive benefits.

The bill would also remove the mandatory nature of the TAA for Farmers program in the 2002 and 2009 laws by making the programs discretionary.

The bill would also consolidate and reduce all non-income support expenditures of the program, such as case management and administrative expenses, under a single cap to manage at states’ discretion.

In addition to reducing wage insurance program to 2002 levels by requiring a lower income level for eligibility and reducing the level of benefits, H.R. 2832 would reduce spending on unemployment compensation by: (1) requiring states to assess penalties in cases where overpayments of benefits resulted from fraud; (2) requiring states to charge employers in cases where they failed to respond in a timely manner to a request for information and that lack of response led to an overpayment; and (3) clarifying that the definition of a “newly hired” employee includes individuals who had been previously employed by an employer, but who had been separated from such employment by at least 60 consecutive days.

The bill would also eliminate half of the allowable justifications for waivers from the program’s training requirements, which is expected to reduce the number of eligible beneficiaries and program costs below 2002 levels.


Program Cuts and Eliminations

H.R. 2832 would repeal TAA for communities—established by the Democrats’ original “stimulus” plan, the American Recovery and Reinvestment Act (ARRA) of 2009—as well as the Industry/Sector Partnership Grant sub-programs. 

The bill would also reduce the length of time that workers are eligible for income support from 156 weeks (authorized under ARRA) to 117 weeks and deny eligibility to public sector workers. 

 The bill would also eliminate the entitlement to relocation and job search expenses from the 2009 law and reduces the maximum benefit to 2002 levels. 

The bill would also reduce TAA for Firms to 2002 levels ($16 million) from $50 million under the 2009 law.

H.R. 2832 would also reduce the Health Coverage Tax Credit (HCTC) from 80 percent, under ARRA, to 72.5 percent, and eliminate it completely after 2013.  The bill would also make several changes to Quality Improvement Organizations (QIO’s) in Medicare.  Specifically, H.R. 2832 would expand the geographic scope of QIO contracts and lengthen the contract period, thereby reducing spending by $330 million over the 2012-2021 period, according to the Congressional Budget Office (CBO).  The bill is fully offset by spending cuts, reforms and programmatic eliminations.


Other matters

For most imported goods, Customs and Border Protection (CBP) currently collects a fee equal to 0.21 percent of the value of the item.  H.R. 2832 would raise the fee to 0.3464 percent for goods imported from October 1, 2011, through November 30, 2015, and would lower the fee to 0.174 percent for goods imported from October 1, 2016, through September 30, 2019. In addition, fees for merchandise entered during the period from October 1 to November 12 in 2012 would have to be paid by September 25, 2012, based on the amount of such fees paid during the same period in 2011.  The Committee on Ways and Means notes that this is necessary because the GSP program permits certain good to be imported duty-free, resulting in an estimated $1.6 billion loss of revenue.  Therefore, because the fee has not been increased since 1994, while CBP’s costs have continued to increase, this increase will help offset that revenue loss.

The bill would also modify the provisions under which the Centers for Medicare and Medicaid Services contracts with independent entities called Quality Improvement Organizations in Medicare. QIOs, generally staffed by health care professionals, review medical care, help beneficiaries with complaints about the quality of care, and implement care improvements. H.R. 2832 would make several changes to the composition and operation of QIOs, and would harmonize QIO contracts with requirements of the Federal Acquisition Regulation. Among those changes are a modification to expand the geographic scope of QIO contracts and a lengthening of the contract period.  These changes would reduce spending by $330 million over the next 10 years.


The Generalized System of Preferences (GSP) is the largest U.S. trade preference program and provides duty-free trade preferences to thousands of products imported from approximately 130 countries.  The GSP provides duty-free access to U.S. markets for developing countries and extends duty-free treatment to several thousand products imported into the U.S. from more than two-thirds of the world's countries.  Under the basic GSP structure, beneficiary countries are eligible to export approximately 3,400 types of products duty-free to the U.S.  The GSP program also provides additional benefits to the 42 GSP countries that are designated “least developed” under the program. These countries may export an additional 1,400 types of products.

Specific rules of the program place restrictions on the countries that can and cannot receive duty-free treatment under GSP.  First, a GSP beneficiary nation must be a developing country, which excludes developed countries like Britain, France or Canada as well as any country with a per capita income that meets the World Bank’s definition of “high income.”  In addition, the preference necessarily excludes countries with which the U.S. already has a free trade agreement in effect, such as Mexico and Chile.  Countries may also lose GSP benefits if they violate certain conditions such as being placed on the U.S. State Department's list of countries that support terrorism and failing to respect U.S. intellectual property laws.

Many U.S. companies source raw materials and other products from GSP countries, and the duty-free treatment of these imports reduces the production costs of these U.S. manufacturers, making them more competitive.  As a result of the expiration of the GSP, many U.S. companies face effective tariffs on goods and products imported from nations subject to the GSP.  According to the Coalition for GSP, a Washington, DC-based group of U.S. businesses, trade associations, and consumer organizations that seeks the renewal of the GSP program, Customs and Border Protection began collecting duties on imports from GSP countries in January 2011 and will continue to do so until Congress approves legislation renewing GSP.  The Coalition for GSP estimates that the average cost of tariffs paid by U.S. companies while the GSP has been lapsed is “close to $2 million per day.”

Trade Adjustment Assistance (TAA), created by Congress in 1962, provides government benefits to American workers who lose their jobs because of foreign trade.  TAA program authorizations are set to expire in early 2012.  According to the Congressional Research Service, TAA “still appears to serve what is now a historically pragmatic legislative function: it remains important for forging a compromise on national trade policy.”  House Republicans have successfully negotiated key spending cuts, consolidations, and other concessions to streamline the program from its expanded 2009 form.  Additionally, the program is now offset with other spending cuts—including cuts to other unemployment benefit programs.


According to the Congressional Budget Office (CBO), H.R. 2832 would have a discretionary cost of $171 million over the 2012-2021 period, subject to the appropriation of the amounts authorized for TAA.   Additionally, CBO estimates that H.R. 2832 would reduce revenues and direct spending by nearly identical amounts over the 2012-2021 period—by approximately $1.8 billion.  On balance, CBO estimates that this legislation would reduce deficits over the 2012-2021 period by $6 million.  Because enacting this legislation would affect direct spending and revenues, pay-as-you-go procedures apply.