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U.S. Customs Brokers, Business Coalition Call for Quick GSP Renewal

Posted November 16, 2017

In letters to lawmakers earlier this week, the National Customs Brokers and Forwarders Association of America, Inc. urged Congress to renew the Generalized System of Preferences program before its scheduled year-end expiration, warning that not doing so could seriously harm importers, especially small and medium-sized companies operating on slim profit margins

NCBFAA President Geoffrey Powell pointed out that GSP lowers the cost of raw materials, which helps to keep U.S. companies competitive in foreign markets, and it lowers the cost of finished products to U.S. consumers; products, he added, for which there is no U.S. production.

Despite strong support among lawmakers for the program, he noted Congress’ inability to extend the GSP has caused it to lapse on repeated occasions. “Even though GSP renewal eventually occurred and was applied retroactively to the date of expiration,” he argued, “the economic damage and disruption to businesses – especially the many small businesses that depend on the program to remain competitive – was significant.”

Without renewal, companies face the prospect of incurring $75 million in duties each month from GSP countries. Even with a retroactive renewal and refunded duties, Powell pointed out that small and medium-sized companies operating on slim profit margins could incur severe cash flow burdens.

The uncertainty is another factor, especially for companies placing orders for 2018 delivery. Finding alternative sources may not be feasible nor is waiting to see if GSP will be renewed on time realistic. “The ensuing chaos creates ripple effects as new hiring is delayed and new investment is put on hold,” Powell wrote.

Also pressing the case for quick renewal of the GSP, a coalition of more than 350 U.S. companies and industry associations is likewise urging lawmakers to take prompt action, warning that the program’s expiration would “have an immediate and negative impact on American employers, who would be forced to pay over $2 million a day in new taxes.”

The GSP program, which is set to expire Dec. 31 without congressional action, allows certain non-sensitive products from 120 developing countries to enter the U.S. duty-free. When it was last allowed to expire, from August 2013 to July 2015, it cost U.S. companies $1.3 billion in extra taxes, the coalition said.

“GSP renewal fits squarely on a congressional agenda to pass tax and trade legislation that benefits American families, workers and companies,” said the coalition, which includes the American Apparel & Footwear Association, the National Foreign Trade Council and the U.S. Chamber of Commerce. “The sooner it happens, the sooner we return our focus to making competitive American products, providing consumers with goods at affordable prices, and growing the U.S. economy.”