By Patrick Costello
As 2009 comes to a close, Congress is poised to pass a one-year extension for the Generalized System of Preferences (GSP) and the Andean Trade Preference Act (ATPA), both of which are set to expire on December 31, 2009. Despite rhetoric calling for reform from Senate Finance Committee Republican leadership, a full-day Congressional hearing on the issue, and the introduction of legislation harmonizing preference programs and extending benefits to non-African LDCs, Congress has decided to pitch the reform discussion to next year.
In this debate, the stakes are incredibly high; Bangladesh and Cambodia are highly competitive apparel producers and capture over 6% of the US apparel market already. Extending duty-free preferences to their apparel could mean the loss of thousands of jobs in Africa. This one-year extension of the GSP & ATPA programs is a positive outcome insofar as benefits were not extended to other nations, but the discussion on reform will certainly continue once Congress returns in 2010.
In remarks before the Ways and Means Trade Subcommittee hearing on preference programs and possible reforms on November 17th, Subcommittee Chairman Sander Levin (D-MI) stated that he wanted to extend the preference programs before they expired at the end of the year and that he would like to see a two year extension of these programs (a Senate Finance hearing on the same topic, scheduled for November 19, was postponed). In addition, Chairman Levin stated in early December that he intends to undertake a broader overhaul of preference programs next year.
The one-year extension is likely the result of push-back on the Senate side to a lengthier GSP/ATPA extension. While the Finance Committee Majority is supportive of a longer-term extension, Senate Finance Committee Ranking Member Charles Grassley (R-IA) continues to push for Congress to consider reforms of trade preference programs, most significantly to limit benefits for countries such as Brazil and India, and 2010 will be his last year as ranking member of the Senate Finance Committee.
Legislation seeking to extend trade preferences to non-African LDCs clearly misses the mark. In Africa, textiles are a flagship industry. If duty-free/quota-free benefits were extended to other LDCs, nations such as Bangladesh and Cambodia would be able to export much more than they do currently, which is already five times as much as the amount Sub-Saharan Africa exports to the U.S. Additionally, the legislation uses a more restrictive definition of least-developed countries, meaning that nations like Ghana and Kenya could possibly lose their benefits.
As the preference reform debate heats up in 2010, it is essential that Congress stay true to the Congressional intent of trade preference programs and ensure that benefits are not extended to hyper-competitive industry sectors in regions like Southeast Asia to the detriment of the world’s poorest and least developed nations.
