Congressional Hearings Cover Generalized System of Preferences

Congress allowed the Generalized System of Preferences (GSP), the longest running U.S. trade preference program, to expire at the end of 2020. This failure to act has resulted in substantial tariff costs for U.S. companies—including RV manufacturers and suppliers—during a time when businesses are facing inflation and price increases.

RV Industry Association members understand the value of GSP. In 2019, the RV Industry Association successfully petitioned the Office of the United States Trade Representative to redesignate certain lauan plywood from Indonesia falling within tariff line 4412.31.4155, which we created for this purpose in 2018. We could not have achieved this momentous victory without help from RV Industry Association members and our tireless Congressional champions who supported our petition. That decision saved the RV industry nearly $1.5 million a month, as that plywood was no longer subject to the previous eight percent tariff.

Unfortunately, since GSP expired, the industry has been forced to pay the eight percent duty on lauan plywood and will continue to do so until the program is renewed.

Late last month, both the House Ways and Means Committee and Senate Finance Committee held hearings with US Trade Representative Katherine Tai. At the urging of the Association’s Government Affairs staff and other industries affected by the program, several members of Congress raised the issue of GSP. Ambassador Tai expressed her support for reauthorization of the program and willingness to work with members of Congress to achieve reauthorization this year.

In the Senate hearing, Senator Bob Menendez (D-NJ) emphasized one of the key reasons GSP should be renewed—it reduces reliance on China. “It’s not just important for cost savings, it also helps reduce reliance on China by making it more cost effective to import from low- and middle-income countries. Do you agree that GSP renewal is also a way to incentivize to diversify imports away from China?”

Ambassador Tai acknowledged that what Menendez said made sense and that they are looking to take GSP back to its roots, as a fundamental part of our trade and development program. “A main part of its objectives is to stimulate and foster economic development with our developing country partners,” Ambassador Tai continued. “I hope that renewal and retroactive relief can be one of the priorities for the committee.”

In the Ways and Means hearing, several members asked about GSP renewal and emphasized its importance to American businesses, including Representatives Vern Buchanan (R-FL-16), Lloyd Smucker (R-PA-11), Carol Miller (R-WV-1), Blake Moore (R-UT-1), and Jimmy Panetta (D-CA-19).

When asked by Representative Buchanan why reauthorization had been so delayed despite being an “easy lay-up,” Ambassador Tai reiterated her support for reauthorization and willingness to work with staff to get it across the finish line.

Representative Moore also emphasized GSP’s importance in reducing reliance on China. “GSP is a huge interest. Refunding and reauthorization is hugely important for many reasons.”

We are optimistic to hear Ambassador Tai go on the record supporting a timely renewal of the program and pleased that so many members of Congress took this opportunity to raise the issue directly with the Ambassador. We are continuing to engage with Congressional champions to push for reauthorization this year.

For more information, contact Samantha Rocci at srocci@rvia.org.