Some of us in the trade community have felt the U.S. trade agenda had been neglected for the last five to eight years by a Congress that is focused more on domestic issues. While it sometimes wasn’t pretty, over the last 10 days, trade was suddenly the only topic in Congress and it resulted in some significant legislation. While the final version is still being published and we are continuing to review it, here is a summary of what has passed and the alphabet soup of acronyms:
Trade Promotion Authority (TPA)
TPA will allow the President to negotiate free trade agreements and then allow Congress a thumbs up or thumbs down vote. Congress will not be allowed to amend any deal negotiated by the U.S. Trade Representative’s office. This authority will be in place for six years. Another important detail is that any trade deal put before Congress will have a 60-day public review period. This sets the stage for two critically important trade deals in the works:
- Trans-Pacific Partnership (TPP) – The negotiating countries are: U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. This is likely to be a traditional trade deal that lowers tariffs and barriers, however the scope is massive. This could potentially come before Congress within the next two to three years.
- Transatlantic Trade and Investment Partnership (TTIP) – The negotiating countries are: U.S. and the European Union. This agreement will seek to sync regulatory standards such as food safety and medical standards. It is also likely to include more standards around professional services and intellectual property.
In order to secure votes for TPA, congressional leaders also promised votes on related trade issues and many of those votes were quickly taken the last few days. The most important of these for importers may be the inclusion of the General System of Preferences (GSP) language.
General System of Preferences (GSP)
GSP will be retroactively renewed to July 31, 2013, (when it originally expired) allowing importers to obtain refunds for duty paid throughout that period. This is MILLIONS of dollars of duty. Yet to be defined is how importers will obtain refunds. Previously, the U.S. Customs and Border Protection agency (CBP) was instructed by Congress to automatically refund GSP duties to importers based on the GSP entry indicator that was transmitted at time of entry. This is expected to happen again.
GSP’s new expiration date is December 31, 2017.
GSP renewal and retroactivity will allow U.S. companies to once again afford the importation of a wide variety of products at an affordable cost. Much of this product includes “parts and accessories” or “raw materials” that are used to make product here in the U.S., and much of that product is later exported from the U.S. to be sold overseas.
Tied to this bill, Congress also extended duty preferences subject to the African Growth Opportunity Act (AGOA) and the Haiti HOPE and HELP acts through September 30, 2025, and Trade Adjustment Authority (TAA) that assists workers adversely impacted as a result of trade agreements.
While this flurry of legislative action on trade has been sorely needed, there are still a number of trade issues remaining, including renewal of the Miscellaneous Tariff Bill (MTB), Custom Re-Authorization and Reform (also known as the Trade Enforcement and Facilitation Act) and re-authorization of the Export-Import Bank.
But now that TPA is in place, those in the trade community can look forward to a robust discussions of actual trade deals!