Ways and Means Committee Republicans Introduce GSP, MTB Bill That Echoes Senate Trade Amendment
The Republicans on the House Ways and Means Committee expressed disappointment at the Generalized System of Preferences bill introduced by the Trade Subcommittee chairman, so they introduced their own version, which is identical to the amendment that passed the Senate with 91 votes. The bill, introduced June 22 by the top Republicans on the committee and the subcommittee, also renews the Miscellaneous Tariff Bill, but with a few more products removed from the list after additional objections in the House. According to an analysis by Crowell and Moring, the Senate MTB covers 1,423 products, and the House Democrats' version covers 1,363 products. A spokesperson for Rep. Vern Buchanan, R-Fla., said the Republican bill covers the same MTB list as the Democrats' bill.
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At a virtual roundtable on June 23 hosted by Rep. Kevin Brady, R-Texas, and Buchanan, U.S. manufacturers told the members that they save millions of dollars annually through MTB; a jewelry distributor said she saves more than $100,000 annually through the GSP benefits program.
Scott Warren, director of compliance at RV component manufacturer Patrick Industry, told the Republicans that his company, which employs more than 8,000 in the U.S., is paying $1.5 million a month in duties on a specialty plywood from Indonesia since GSP expired. "The length of the lapse means my industry is essentially giving an interest-free loan to the government until it is renewed," he said, and given the additional shipping costs and the need for wage hikes in this economy, it's poor timing. He asked Congress to pass the bills "as quickly as possible."
Rep. Jodey Arrington, R-Texas, told the company officials testifying, "I want to apologize on behalf of your government for having something so straightforward and common sense for American competitiveness to expire."
Ed Sinda, vice president of ASO, told the members that ASO imports polyester fabric that is now subject to a 37.5% tariff without MTB, and finished adhesive bandages face no duty. ASO, a private-label manufacturer that competes with Johnson & Johnson Band-Aids, also imports finished product; Sinda said J&J has no domestic production and is wholly reliant on imports.
ASO employs about 400 employees in the U.S., and also has operations in Mexico, the Philippines and Japan. When ASO makes bandages in the U.S., the other components are sourced from Illinois, Delaware, Texas, Wisconsin and Florida -- 90% of the material is domestic, Sinda said.
Buchanan, who is Trade Subcommittee ranking member, said that he and co-sponsor Brady "are certainly open to further discussion with our Democratic colleagues" on how to write the GSP and MTB bills. He noted that in the last renewal, not one Democrat voted against the programs.
David Baer, chief operating officer of Element Electronics, said that with the expiration of MTB and the company's Section 301 exclusion at the end of 2020, the glass LCD panels that his television assembly company imports went from no tariff to 12%. As a result, he said, the company cut production by 20%, laying off more than 120 workers. Baer said that when the 7.5% tariff on the LCD panels was first levied, Baer found another LCD producer outside of China, but that producer has since left the market, because it could not compete with China's producers on price.
Baer said his company also faces a tariff inversion, as finished TVs from countries other than China face a 3.9% tariff; Mexican TVs are duty free. He asked Congress to require the return of former Section 301 tariff exclusions if the Office of the U.S. Trade Representative does not restore them, and to quickly renew MTB. He said the tariffs are costing Element millions of dollars, and even waiting weeks for renewal is a burden.
While MTB primarily covers inputs for manufacturers, GSP covers both those and consumer goods. Nina Cooper, owner of a jewelry design and distribution company, said that the expiration of GSP means the imports of silver clasps, earring hooks, beads and jewelry that she buys from artisans in Indonesia and Thailand can face tariffs as high as 13.5%. Since January, her small California firm has paid $30,000 in tariffs that it didn't have to pay under GSP.
Cooper said that even though renewal is usually retroactive, so those tariffs are refunded, "You never know." She complained that importers who benefit from GSP "face this uncertainty over and over again." She said that the amount of inventory she can hold, raises for her U.S. staff and microloans for the foreign artisans are all affected.
The bill the Republicans introduced provides a longer renewal for GSP -- two more years -- than Oregon Democratic Rep. Earl Blumenauer's bill, which would only extend the program until the end of 2024 (see 2106170040).