US Senate Tries To Push Pending FTA Approval

The United States Senate has voted, on a bipartisan basis, to renew the Generalized System of Preferences (GSP) and Trade Adjustment Assistance (TAA), in the hope that it will prompt action from President Barack Obama to present the pending free trade agreements (FTAs) to Congress.

Instituted at the beginning of 1976, GSP is a programme designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. US imports under GSP in 2010 amounted to approximately USD23bn.

Authorization from Congress for the GSP programme ended on December 31, 2010. In addition to its assistance for some of the poorest economies in the world, it had benefited US businesses and consumers through cost savings on imports. Nearly three quarters of all GSP eligible imports are raw materials, components, parts, or machinery and equipment used by American workers to manufacture goods in the United States both for consumption at home and for export.

The legislation passed by the Senate extends GSP until July 31, 2013 and provides for the retroactive application of duty-free treatment for eligible goods that entered after expiration of the programme at end-December.

While the Republican-led House of Representatives had passed a similar GSP-renewal bill earlier this month, the Democrat-led Senate bill has now also attached a reauthorization of TAA, which provides benefits to US workers who lose their jobs as a result of freer trade, from February 12, 2011 until December 31, 2013.

Renewal of TAA has been insisted upon by President Obama as a condition for introducing the pending FTAs with South Korea, Panama and Colombia to Congress. The Republican Party had originally proposed to take the FTAs through Congress first, to be followed by TAA, but the President has insisted that all the bills should be introduced and passed together.

It is, therefore, now hoped that a way will be found to move the FTA legislation forward as soon as possible. Senate Finance Committee Chairman, Democrat Max Baucus, said that the “vote is a major victory for American workers and a key step forward in our efforts to approve the job-creating free trade agreements.”

The House of Representatives Ways and Means Committee Chairman, Republican Dave Camp added that the “long-awaited Senate action should clear the path for consideration of our pending trade agreements. The next step is for the President to promptly submit the pending FTAs with Colombia, Panama and South Korea, which also enjoy bipartisan, bicameral support, to the House and bring us one step closer to passage. Congress has in good faith shown a clear path forward on the pending trade agreements, GSP and TAA.”

However, while the United States Trade Representative Ron Kirk applauded the Senate’s passage of GSP and TAA legislation, he pointed out that “discussions continue with congressional leadership on how (the pending FTA) bills will move through the legislative process.” The Administration still appears to remain concerned at the ability of the Republican Party to deliver a TAA renewal in the House of Representatives.

September 27, 2011

Source: Tax News