Senate Drops Key Trade Provisions from CHIPS Bill

These are the trade related provisions retailers need Congress to address:

GSP

Generalized System of Preferences (GSP) expired at the end of 2020, more than 18 months ago. Leading retailers rely on important programs like the GSP to provide duty benefits, create sourcing alternatives to China, and build reliable and resilient supply chains. Countries participating in the GSP program rely on it to grow investment, provide jobs, and raise standards. These benefits are unavailable to retailers until the GSP program is renewed.  

Renewal has been frustrated largely by discussions regarding new criteria on labor and environment standards and the length of renewal. Balancing new criteria with a longer program extension is essential. If new criteria are too onerous and not accompanied by an appropriately long program extension, beneficiary countries may not be incentivized to do the important work of raising standards. A longer extension would also demonstrate the program is strongly supported by the U.S. government and create certainty it will exist long enough for both beneficiary countries and users of the program to realize the benefits.  

MTB

The Miscellaneous Tariff Bill (MTB) also provides important duty savings benefits, temporarily, on goods imported to the U.S. The MTB process enacted by Congress several years ago requires a rigorous review by the U.S. International Trade Commission (USITC) to ensure goods produced domestically are not included where a domestic producer objects. The process includes a further safeguard to ensure controversial products are not included: any Member of Congress can object to the inclusion of a product for any reason, and in such instances, the product is stripped from the bill. But MTB has become hostage to an unnecessary debate over the inclusion of “finished goods” despite the multiple safeguards already enshrined in the process. Like GSP, the last MTB expired at the end of 2020.

The prolonged expiration of the GSP and MTB programs adds to the uncertainty retailers face in today’s challenging economic environment and undermines U.S. competitiveness.

Section 301 Exclusions Process

In addition to GSP and MTB renewal, the trade title in USICA included important language requiring the Office of the U.S. Trade Representative (USTR) to restart a fair, transparent, and comprehensive product exclusion process for goods subject to the Section 301 China tariffs.

Lawmakers on both sides of the aisle have been urging USTR to restart this process for some time, but USTR has resisted offering a broader process. Meanwhile, leading retailers continue to pay the Section 301 China tariffs on more than $350 billion worth of goods. In an economic environment plagued by runaway inflation, soaring transportation and energy costs, and persistent supply chain challenges, tariffs create further economic burdens on American companies and hinder U.S. competitiveness. A targeted exclusions process would help ease this burden and is absolutely essential as long as harmful tariffs remain in place.

Congress Must Act

The decision to move forward on China competition legislation without the inclusion of fundamental trade pieces is a missed opportunity for lawmakers to provide certainty and create economic benefits for American companies, as well as enhance U.S. competitiveness – especially vis-à-vis China.

Leading retailers urge lawmakers to stay at the negotiating table on these important trade provisions and  pass legislation that reflects the bipartisan Trade Act of 2021 without delay.
 

Tags

• International Trade
• Public Policy
• Supply Chain
• Supporting Free Markets and Fostering Innovation