January 18, 2017
U.S. Trade Representative Michael Froman is punting the decision to extend duty-free, quota-free preferences for exports of travel goods to the U.S. for all Generalized System of Preferences beneficiaries to the incoming Trump administration, according to multiple sources.
Sources said that Froman will also issue a non-public recommendation to President-elect Trump’s incoming trade team that it should extend those preferences to all GSP beneficiaries, as opposed to GSP countries that are not members of the African Growth and Opportunity Act and countries that are not considered least-developed countries.
The Office of the U.S. Trade Representative briefed members of both parties from the House Ways & Means and Senate Finance Committees on Jan. 18, as well as the private sector, regarding the decision. According to an informed source, USTR on the call said the private sector had made “a good case” for why all GSP beneficiaries should receive preferences for travel goods, but regardless, Froman would not recommend to President Obama that he issue a Presidential Proclamation to that effect.
The American Apparel & Footwear Association blasted the decision in a statement. “AAFA has worked on securing duty-free eligibility for travel goods under the Generalized System of Preferences program for all eligible countries for several years, including numerous testimonies and more than a thousand meetings,” the organization said.
“Today’s decision is disappointing, especially considering the Obama Administration agreed with our conclusion that this would be a successful addition to the GSP program that would support U.S. jobs. We look forward to holding discussions with the incoming Administration regarding this issue, as well as pushing for the renewal of the GSP program overall prior to its December 31 expiration.”
One informed source said USTR’s decision not to make public and formal its recommendation to the next administration was “cowardly” because it gives the incoming Trump team “complete discretion” on how to proceed on the issue.
That source said Froman will write a private memo to Trump’s pick for U.S. Trade Representative Robert Lighthizer, making the case for fully extending the benefits.
The source lamented that because the Obama administration was not putting out anything official, the incoming Trump administration could take a range of actions, including scheduling another hearing and further review or ignoring the issue altogether.
USTR has been repeatedly slammed by U.S. travel goods importers and retailers as well both parties in both committees for its initial decision last June to only extend GSP benefits for travel goods to non-LDC and non-AGOA countries and defer on extending preferences to those two categories.
Proponents of expanding the GSP benefits have argued that the administration’s decision not to do so ignores congressional intent as laid out in the Trade Preferences Extension Act of 2015; fails to provide economic benefits to developing and least-developed beneficiaries of the GSP program; and undermines business certainty, which in turn harms companies in the U.S. and abroad, as well as U.S. consumers.
In response to that backlash, USTR held a hearing in October on the issue and said it would conclude its review of extending travel goods benefits to all GSP members by January 2017. The decision to draft a private memo to the incoming Trump team is the end-result of that review, multiple sources said.
Adrian Smith’s statement:
After several months of review, I am disappointed to learn USTR will be taking no action on the extension of preference for travel goods to all GSP beneficiaries. This decision harms U.S. businesses and ensures China’s continued dominance of the industry. It is frustrating to see the administration move forward with so many concerning decisions in its waning hours, including opting not to fully implement a policy which it signed into law with strong bipartisan support. It is my belief that the Obama Administration should act immediately to extend preference to all GSP beneficiaries