On the evening of February 13, the U.S. House of Representatives passed bipartisan legislation to renew the Generalized System of Preferences (GSP) by a vote of 400-2. The trade preference program, which last expired on December 31, 2017, will provide a three-year retroactive renewal through to December 31, 2020. This recent legislation will impact all our SOCMA members in the pharmaceutical, agricultural and performance chemicals sectors.
GSP stimulates two-way trade by eliminating import taxes on certain products from 120 developing territories and countries. Among those products eligible for duty-free treatment are many types of chemicals. Thus, GSP is an important tool for reducing chemical production costs.
The last time GSP expired in July 2013, it was not reauthorized until June 2015. During that two years, companies reportedly paid roughly $1.3 billion in tariffs. Despite widespread, bipartisan support in 2017, GSP renewal did not receive a vote. Today, while awaiting potential reauthorization, companies pay an estimated $2-3 million in extra taxes per day. Therefore, stakeholders urge swift retroactive renewal as the Senate is expected to address the issue in March.
Regarding retroactivity, the retroactive benefits apply to goods normally GSP-eligible that entered U.S. commerce during the current lapse in coverage. Renewal would activate 30 days after enactment and allow filings for retroactive liquidation, which would have to be filed with the U.S. Customs and Boarder Protection (CPB) within 180 days of enactment.