The programme lapsed on December 31, 2020, and that has hindered US firms’ effort to diversify suppliers and build more resilient supply chains.
“Since the expiration of GSP in 2020, American companies have paid over $2 billion in extra taxes while also dealing with the effects of the COVID-19 pandemic, high freight costs, and supply chain disruptions in both the United States and beneficiary countries. All of these issues have contributed to high and persistent US inflation,” the letter said.
The American Apparel and Footwear Association along with nearly 300 US companies and associations recently urged Congressional leaders to prioritise legislative action on the generalised system of preferences programme before the year ends. The lapse of the programme has hindered US firms’ effort to diversify suppliers and build more resilient supply chains.
The letter called for passing a a long-term retroactive reauthorisation, including needed changes such as the CNL Update Act provisions. The competitive need limitation (CNL) rules, last updated by Congress in 1997, clearly undermine US policy objectives in 2022, it said.
“GSP cannot meet its development goals—or provide USTR [office of the US trade representative] with leverage to incentivise a race-to-the-top—if too many products lose benefits due to arbitrary and outdated caps. CNLs are particularly relevant in the China context, as current rules severely constrain the volume of new trade that can move to GSP countries,” the letter said.
“Similarly, many potential alternative suppliers to China in GSP countries face higher tariffs today due to CNL decisions from 5, 10, or even 25 years ago,” it said.
If Congress cannot pass comprehensive GSP reauthorisation this year, at a minimum it should pass H.R. 8906, which would refund GSP tariffs paid between January 1, 2021 and August 31, 2022, the letter added.
Fibre2Fashion News Desk (DS)
