[CTC] Ways & Means panel advances GSP, de minimis reform bills; Democrats blast process

Thu Apr 18 07:59:51 PDT 2024

Ways & Means panel advances GSP, de minimis reform bills; Democrats blast process
Inside US Trade, April 17, 2024 at 8:34 PM

The House Ways & Means Committee on Wednesday advanced a slew of trade bills including proposals to renew and reform the Generalized System of Preferences and limit the range of shipments that qualify for de minimis treatment, completing a lengthy markup session in which panel Democrats assailed the majority’s legislating process.   

The committee approved the “Generalized System of Preferences Reform Act” and the “End China’s De Minimis Abuse Act” via 25-17 and 24-18 party-line votes, respectively. But Democrats expressed discontent over the way the GSP bill’s architect, trade subcommittee Chair Adrian Smith (R-NE), crafted the legislation, as well as the time afforded to scrutinize the bill.  

“Sadly, this is another, I think, rushed partisan markup,” Ways & Means ranking member Richard Neal (D-MA) said in his opening remarks, saying the GSP bill “could have been bipartisan in nature.” 

Several Democratic lawmakers and staffers told Inside U.S. Trade they saw the GSP legislation for the first time on Monday night, when Smith introduced it. On Tuesday morning, during a hearing <https://waysandmeans.house.gov/event/hearing-on-the-biden-administrations-2024-trade-policy-agenda-with-united-states-trade-representative-katherine-tai/> on President Biden’s trade policy agenda with U.S. Trade Representative Katherine Tai, Smith told lawmakers he had introduced an amendment adding new environmental and labor protections to the bill – what one Democratic staffer called a “last-ditch effort <https://insidetrade.com/node/179783>” to secure bipartisan buy-in. 

“We didn't even know two days prior what bills would be on the markup today,” Rep. Linda Sánchez (D-CA) said during the hearing. “It makes it really hard to work together when we’re given less than 24-hour notice.”  
Democrats also argued that the bill could have received bipartisan support <https://insidetrade.com/node/179784> if it had been packaged with provisions to reinstate the Trade Adjustment Assistance program, which provides federal aid to workers who lose their jobs because of foreign trade.  

“We want a trade-off – Trade Adjustment Assistance,” Neal said. “You can’t take somebody who’s just leaving a job in a manufacturing plant perhaps on the East Coast and say to them, ‘The opportunities are coming in artificial intelligence on the West Coast,’ and there’s not going to have to be some interlude of retraining. That’s the only argument we’re making here today.”  

Smith’s GSP bill would reauthorize the program for 10 years, lift the competitive need threshold that caps countries’ exports under GSP from $215 million to $500 million and raise the rule-of-origin threshold from 35 percent to 50 percent. The bill also would exclude from the program countries that are deepening economic and military ties to China or not providing fair access for U.S. agriculture exports.  

This legislation, Smith said, “represents the most substantial reform of the Generalized System of Preferences since the program was created all the way back in 1974.” 

Smith’s amendment, which added U.S.-Mexico-Canada Agreement-like labor and environment provisions, was approved by the committee as well, but several Democrats argued that the measures did not go far enough. An amendment from Rep. Lloyd Doggett (D-TX) to strengthen the environmental provisions and another from Sánchez to bolster the labor provisions – including by adding a mention of gender-based violence – failed.  

Smith stressed that the labor and environmental provisions were “pulled directly” from a GSP compromise bill agreed to by Senate Finance Committee Chair Ron Wyden (D-OR) and ranking member Mike Crapo (R-ID) in 2021, but Democrats were not placated. 

“The only way that it actually becomes law,” committee member Jimmy Gomez (D-CA) told Inside U.S. Trade, is if the bill receives bipartisan support.  

“It has to address [Trade Adjustment Assistance]. It has to address some of the concerns that Democrats have been talking about for a long time,” Gomez said, adding that the legislation in its current form “has no chance of becoming law.” 

Similar partisan disagreement was on display when the committee considered a de minimis reform bill proposed by Rep. Greg Murphy (R-NC). The legislation would adjust de minimis eligibility – under which packages worth less than $800 can enter the U.S. duty-free – to exclude shipments containing products that are subject to tariffs under Section 301 of the Trade Act of 1974, as well as other U.S. trade remedies – including antidumping and countervailing duties, safeguard tariffs and national security-based duties under Section 232 of the Trade Expansion Act of 1962. The bill would eliminate de minimis for more than half of all shipments from China now being imported under the threshold, according to a summary.

An amendment put forward by Ways & Means trade subcommittee ranking member Earl Blumenauer (D-OR) would end de minimis treatment for all shipments from China, mirroring proposals in his and Rep. Neal Dunn’s (R-FL) “Import Security and Fairness Act.” It also did not pass. 

The House passed identical legislation as part of the “America COMPETES Act” in 2022, but the provision was dropped from the final Chips and Science Act.  

Ways & Means Chair Jason Smith (R-MO) told Blumenauer he was “trying to find progress” on de minimis reform, arguing he needed a bill that could get “past the House floor … through the Senate, or in a huge package at some point.”  

“Your bill that passed, the Senate wouldn’t take it up,” Smith said, “and so we’re trying to figure out what we can get done.”  

Blumenauer responded that he had spoken to Wyden and said the Senate Finance Committee chair had been “very interested in this.” 

Ultimately, Blumenauer’s amendment was defeated 24-18, along party lines, on Wednesday.  

Blumenauer and Dunn, along with several other lawmakers, have been working with the “Coalition to Close the De Minimis Loophole,” a group of labor unions, domestic manufacturing groups, law enforcement and addiction support organizations to draw attention to what they describe as Chinese exporters’ abuse of de minimis. The coalition members, which include United Steelworkers, the AFL-CIO, the Alliance for American Manufacturing and Rethink Trade, supported Blumenauer and Dunn’s legislation. 

Roy Houseman, legislative director at United Steelworkers, one of the coalition members, told Inside U.S. Trade after Wednesday’s markup that “a lot of effort will go now to see where the Senate is going to go.” 
The Ways & Means Committee also advanced legislation to clarify what deals should be considered free trade agreements and set clear limits on which trade partners can benefit from Inflation Reduction Act electric vehicle tax credits.  

The IRA requires that critical minerals in electric vehicle batteries be sourced domestically or from free trade agreement partners to qualify for tax credits. A recent critical mineral agreement to allow Japanese minerals to meet the sourcing requirements, and ongoing negotiations for similar arrangements with the European Union and United Kingdom, have irked some lawmakers and triggered accusations of presidential overreach.   

“The Biden administration has bypassed Congress in administering the electric vehicle tax credit,” Rep. Michelle Fischbach (R-MN), who introduced the legislation, said during Wednesday’s markup, accusing the administration of usurping Congress in its negotiation of the minerals deal with Japan.  

Fischbach’s bill would define an FTA as an international agreement that is both approved by Congress and eliminates restrictions on substantially all trade with the partner, according to a summary of the bill, ensuring batteries made with Japanese minerals do not qualify for IRA tax credits. The bill advanced 25-16. 

Further, the committee advanced a bill from Rep. Carol Miller (R-WV) that would tighten foreign entity of concern rules under the IRA by ensuring Treasury follows the FEOC definition used by the Commerce Department and preventing China from providing “upstream” materials, parts and intellectual property in products eligible for EV tax credits.  

Another bill to investigate forced labor in the cobalt mining industry in the Democratic Republic of the Congo advanced 30-12, with a handful of Democratic supporters. -- Oliver Ward (oward at iwpnews.com <mailto:oward at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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