H.R. 2832: 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

Sponsor
Rep. Dave Camp

Date
September 7, 2011 (112th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

On Wednesday, September 7, 2011, the House is scheduled to consider H.R. 2832 under a suspension of the rules requiring a two-thirds majority vote for passage.  H.R. 2832 was introduced by Rep. Dave Camp (R-MI) on September 2, 2011, and was referred to the House Committee on Ways and Means, which took no official action.

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.

Background

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.”

Cost

A CBO estimate for H.R. 2832 was not available as of press time.