Representatives Blake Moore and Suzan DelBene introduced the CNL Update Act of 2023 on Dec. 1 to modernize U.S. trade policy tools, benefit American businesses and drive global supply chains out of China.
For almost 50 years, the Generalized System of Preferences (GSP) program has allowed the United States to foster better trade relationships with the world’s most developing countries and reduce their reliance on foreign aid. More recently, the GSP has been a critical tool to move production out of China and into more secure environments. However, the current, outdated rules limit the GSP’s potential and create roadblocks for our trade and foreign policy goals.
The RV industry relies on GSP to import key product inputs duty-free. Since the program lapsed at the end of 2020, the RV industry has paid an estimated $1.5 million in duties each month. The most important of these lapsed duty-free goods is Indonesian lauan, a type of thin, strong and moisture-resistant plywood. Lauan is not domestically grown, and no domestic substitute exists.
Competitive Need Limitations (CNLs) are built-in import ceilings under the GSP program that eliminate duty-free access to the US market for products that exceed them, even if there is no domestic alternative or concerns that imports harm a U.S. industry. GSP benefits terminate when imports of a certain product from a certain country either account for 50% or more of the value of total U.S. imports of that product, or exceed a certain dollar value, which increases by $5 million annually. The 2023 cap is $210 million. These limits hurt products like lauan, which are mainly imported from one beneficiary country due to the type of product.
The CNL Update Act of 2023 will modernize the GSP program by increasing the topline threshold levels for businesses to $600 million. In addition, the bill introduces a 5% annual growth provision for the GSP program, offering a structured and predictable growth trajectory. These changes will make it easier for companies to access key products, strategically shift global value chains outside China, enhance U.S. national security and protect domestic industries.
The House Ways and Means Committee held a September hearing on GSP modernization after which the RV Industry Association (RVIA) submitted comments on the needed reforms for the RV industry.
“Several economic sectors in Utah, including the outdoor recreation industry, rely on an effective and modernized Generalized System of Preferences program to do business,” said Congressman Blake Moore. “But Congress has not considered a significant overhaul of CNLs in the GSP program since 1996, which has led to outdated trade policies that impede production, limit growth and harm U.S. economic and national security interests. This legislation will give Utah companies the flexibility they need to diversify their supply chains away from China and towards more reliable trade partners around the world.”
“Trade is a foundational part of Washington’s economy and supports over 40% of jobs in our state,” said Congresswoman Suzan DelBene. “The GSP program supports many American industries and helps spread our values abroad. However, aspects of the program are outdated. The legislation we’re introducing today would modernize the program, helping create more jobs at home, strengthen American leadership abroad and reduce our dependency on China.”
“The RV industry applauds Representatives Moore and DelBene for introducing commonsense reforms that will not only help domestic manufacturers continue to utilize the program to obtain products unavailable in the US, but also further the goals of the program in supporting beneficiary countries.,” said RVIA President and CEO Craig Kirby. “These reforms would ensure that the RV industry can continue our partnership with Indonesia, where we source lauan plywood – a key component used in many RVs – duty free. Removing and reforming the arbitrary Competitive Need Limitations will reduce costs and regulatory burdens on the American RV industry and other domestic industries that rely on the Generalized System of Preferences.”