Recent Trade & Tariff Perspectives

June 30, 2021 | Kevin Koch Product Development Manager

A Tale of Two Trade Bills: The GSP and MTB

Legislation introduced to renew and reform key U.S. trade programs

On June 17, 2021, the U.S. House of Representatives Ways and Means Committee issued a press release to introduce the Generalized System of Preferences and Miscellaneous Tariff Bill Modernization Act of 2021, to reform and renew a series of key U.S. trade programs. Included in the bill are the Generalized System of Preferences (GSP), the Miscellaneous Tariff Bill (MTB), and the American Manufacturing Competitiveness Act of 2016 (AMCA).

The proposed measures would renew the GSP, which exempts certain developing countries from tariffs, and the MTB, which waives duties on raw materials and intermediate goods. Both programs expired at the end of 2020. It would also renew Trade Adjustment Assistance (TAA), a program that provides aid to workers whose jobs are outsourced.

What about the Senate package to renew GSP and MTB?

The U.S. Senate also introduced a package to renew GSP and MTB as part of the U.S. Innovation and Competition Act (USICA). The Senate bill did not, however, cover TAA.

While there are some similarities between the Senate and House bills covering GSP and MTB, House lawmakers argue that the Senate didn’t go far enough to update eligibility criteria. For that reason, and the fact that the House Ways and Means Committee believes these revenue bills should have started in the House, the House decided to draft their own version.

What would change with the House version?

The Generalized System of Preferences and Miscellaneous Tariff Bill Modernization Act of 2021 extends the GSP through December 31, 2024, providing retroactive benefits.

The aim of the legislation is to modernize the program’s eligibility criteria by adding an environmental criterion and updating the labor criteria with new standards on human rights, rule of law, anti-corruption, and equitable economic development.

The bill adds annual country eligibility reviews, transparency requirements, and enhanced public access and participation in the program, all while suspending and reducing duties on certain eligible imports based on recommendations from the U.S. International Trade Commission (USITC) through December 31, 2023, retroactive for four months.

The bill also reauthorizes the American Manufacturing Competitiveness Act of 2016 (AMCA) for two cycles and makes administrative improvements to the AMCA process, such as granting the USITC sufficient time to assess the effects of the MTB on the U.S. economy. The legislation aims to support domestic manufacturers and limit benefits for imports from China by excluding finished products from future MTB cycles.

Check out the fact sheet provided by the U.S. House Ways and Means Committee, and view the full text of the bill to learn more.

The future remains unclear

With the upcoming recess in Congress and the House and Senate clearly divided over how to proceed, we don’t expect any sudden changes regarding these critical, yet currently expired, trade programs. As the debate over the two bills plays out, our team at C.H. Robinson will be sure to keep you informed as developments occur.