RV Industry Association Submits Post-Hearing Comments On GSP Reforms

In a recent milestone for our industry, the Ways and Means Trade Subcommittee conducted a significant hearing on reforming the Generalized System of Preferences (GSP) to safeguard U.S. supply chains and address challenges associated with China. This hearing marked a vital opportunity for the RV Industry Association to contribute to the discourse on this important trade program.

Following the hearing, the RV Industry Association was pleased to be asked to provide post-hearing comments. This engagement underscores the success and recognition of our trade program and its significance, a testament to the prominence and impact of the Association and RV industry within the trade community.

Key Reforms Proposed by the RV Industry Association 

In our post-hearing comments, we presented several reform proposals the Association believes are crucial to protect U.S. supply chains and promote the program's underlying goals:

1. Modernizing Competitive Needs Limitations (CNLs): We support raising the CNL threshold rate at a set rate rather than a fixed amount, as it currently stands. We propose that the threshold rate rise at 6.5%, allowing it to better reflect market conditions and keep pace with inflation. Additionally, we argue that the 50% percentage threshold is problematic, especially for natural resource products like lauan plywood, which can only be sourced in particular geographic locations. We recommend eliminating this percentage threshold, particularly for products with geographical constraints.
    
2. Greater Certainty through Longer Renewal Period: We highlight that the GSP program has experienced multiple lapses since its inception, leading to uncertainty in the industry about when and if GSP will be renewed. We propose a longer renewal period, such as ten years, which aligns with other U.S. trade preference programs. This longer renewal period would reduce industry uncertainty and streamline trade processes.
    
3. Ensuring Reforms Align with Program Goals: Finally, we underscore that reforms to the GSP program should contribute to its goals while limiting harm to U.S. businesses and industries. Modernizing CNL limitations represents an opportunity to achieve this balance and foster the program's intended objectives.

Background

The Role of the GSP Program

Supply chains in the RV industry are complex, with crucial inputs sourced from overseas. The Generalized System of Preferences (GSP) plays a vital role in this industry, specifically through the importation of thin, lightweight lauan plywood from Indonesia. This unique wood variety, with its thin, lightweight, flexible, and smooth characteristics, is indispensable for RV manufacturing. Lauan plywood enters the U.S. duty-free under the GSP program, which is of paramount importance to the industry.

The Impact of GSP Expiration

The expiration of the GSP program in December 2020 has had significant ramifications for the RV industry. The absence of an alternative or sufficient substitute for lauan plywood in the United States means that the expiration of GSP results in additional tariffs of up to $1.5 million per month on this essential input. Therefore, retroactive renewal of the GSP program is a top priority for the RV industry.

The RV Industry Association's post-hearing comments emphasize the critical importance of the GSP program to the RV industry and its vision for necessary reforms. In the ever-changing landscape of global trade, safeguarding U.S. supply chains and promoting domestic manufacturing are paramount. As policymakers consider changes to the GSP program, the RVIA's insights are invaluable in ensuring that reforms align with the program's objectives and benefit a wide range of American industries and businesses.