Congress Moving On Preferential Trade Programs

As the House of Representatives approved a one-year extension of two preferential trade programs —
and the Senate is expected to do the same later this week — Congress has postponed action on some
of the controversial issues surrounding the programs.

The House-approved legislation is a simple one-year extension of the current General System
of Preferences (GSP) and the Andean Trade Preference Act. US textile and apparel manufacturers and
importers had sought a longer extension that they believe would facilitate longer-term sourcing and
remove some of the uncertainties from the marketplace.

Textile manufacturers were concerned about an effort to grant zero-tariffs to textiles and
apparel from Cambodia and Bangladesh and the possibility that textiles and apparel would for the
first time be subject to GSP duty-free treatment. Importers were recommending a single rule of
origin for all products that would undercut the textile industry’s hard-won yarn forward rule of
origin that is part of key bilateral and regional free trade agreements.

While neither textile manufacturers nor importers are entirely pleased with the one-year
extension, they say it is better than letting the preference programs expire December 31 as
scheduled. They expect the larger issues to be addressed next year as part of a more comprehensive
legislative package dealing with a wide range of trade issues.

December 15, 2009