This week, House Ways and Means Trade Subcommittee Chair Adrian Smith introduced the Generalized System of Preferences (GSP) Reform Act.
On Wednesday, April 17, the committee voted 25-17 to move the act out and send it to the full House of Representatives for a vote. The act proposes significant changes to the GSP program, a trade preference initiative designed to promote economic development, which the RV industry relies on to source lauan plywood from Indonesia duty-free.
The act makes several long overdue changes to the program, to ensure it remains an attractive option for both U.S. manufacturing and beneficiary countries in the program.
Retroactive renewal: Critically, the act retroactively renews the program until Dec. 31, 2030. The certainty of the longer renewal allows American businesses to better plan and forecast, and retroactivity means that moneys paid to Customs and Border Patrol will finally be returned. American businesses will be able to rededicate these dollars to innovation, workforce development and other ways of enhancing and growing their businesses.
Holding China accountable: The act permanently bans China from participation in the program and establishes new country eligibility for participation to ensure that countries choosing to grow their military and economic ties with China face consequences.
Modernizing Competitive Need Limitations: Competitive Need Limitations (CNLs) are built in thresholds which trigger removal of a product. This act updates the dollar threshold from $215 million to $500 million and includes a 2.5% yearly increase. The RV Industry Association advocated on behalf of this type of change during last year’s Advocacy Day and throughout the year. This will not only help ensure that lauan, which cannot be sourced elsewhere, does not surpass the threshold, it improves the usefulness of the program to incentivize permanent supply chain shifts out of China.
Adjusting “Super CNL” language: Currently, any product exceeding 75% of total imports automatically has its Not Produced in the United States (NPUS) waiver revoked. The Act stipulates that this trigger will not apply to products with NPUS waivers, ensuring that Indonesian lauan is not automatically at risk every five years despite still having no viable domestic substitutes.
Aside from the above, the act also includes provisions targeting important areas such as labor rights, environmental protection and intellectual property rights to ensure fair and sustainable trade practices, along with gradually increasing rules of origin requirements.
The full House vote has not been scheduled but we will continue to provide updates as the bill moves forward.
For more detailed information on the GSP Reform Act, you can access the committee’s full one-pager here. If you would like additional information or have any questions, please contact Samantha Rocci, director of federal affairs, at srocci@rvia.org.
