The next few months present the perfect opportunity for the revival of the Generalized System of Preferences (GSP) trade program – and ACD is urging Congress to finally get the decision over the line.
Since the GSP program expired on December 31, 2020, some of the world’s poorest countries have been unable to benefit from advantaged tariff rates and access to the American market. GSP was first introduced in the Trade Act of 1974 and is the largest – and oldest – U.S. trade preference program.
GSP impacts ACD’s entire membership but has far broader reach than just the chemical industry, affecting a diverse range of markets and products.
When active, it removes duties on thousands of products that are imported from a hundred plus list of beneficiary countries and territories. These products are either not produced at all in the U.S., or are produced in insufficient volumes to meet demand, meaning the program does not undermine domestic producers.
Without GSP, essential products become far more expensive to import. Since January 2021, the expiry of this specific trade program has cost American businesses more than $2 billion in extra tariffs and impacted businesses in all 50 states.
The repercussions for ACD members if nothing changes? Higher costs for chemicals arriving from GSP countries and businesses having to pass costs on to their customers and ultimately, the consumer.
Most people appear to support GSP and want it renewed, but the bottleneck in Congress continues to cause delays. A bill was recently introduced and passed by the U.S. House Ways and Means Committee, although it only has Republican support right now with the Democrats asking for other measures to be included.
Everyone is now waiting with bated breath to see what happens in the months ahead. It's been almost four years since the lapse of the program and the consensus is that businesses can’t wait any longer.
The continued delays are damaging, affecting decision making when trying to source product and adding pressure to a sector already mired in economic uncertainty and having to navigate fluctuating costs and ongoing supply chain issues.
Our hope is there may be some movement on this soon after the election, particularly in the Lame Duck period before the next Congress comes in January 2025. It could easily get attached to some larger legislative end-of-year package and get approved. Congress has historically been particularly active in that session with almost two full months to sign off decisions.
If nothing is done then, it will go into the next Congress and may be passed sometime in 2025. A lot will depend on who's in control of the White House, Congress, and the Senate.
ACD is monitoring the situation closely and will continue to push for approval of this essential legislation. You can find out more about GSP and the latest legislative issues affecting the chemical sector, visit the trade issue page on our website.
Any questions? Reach out to Brian Callahan directly on (703) 527-6223 x3062 or by emailing him at bcallahan@acd-chem.com.
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