Russian GSP Removal Gives Momentum to Renewal, Though Path Still Unclear, Says Analyst
Russian graduation from the Generalized System of Preferences (GSP) may give some momentum for renewal of the program in general, though Congressional action remains uncertain, said Scott Miller, Scholl chair in international business at the Center for Strategic and International Studies. The change will not significantly impact bilateral trade or the value of the GSP program, said Miller. U.S. importers could have only saved between $7-8 million on duty-free Russian imports since GSP expiration on July 31, 2013, said Miller.
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President Barack Obama announced on May 7 his intent to remove Russian preferential status in GSP (see 14050805). “I do think that helps with the reauthorization in general, but nearly a year has passed since negotiations collapsed over GSP renewal. They couldn’t figure out how to pay for it. The Russian removal is a step in the right direction but it’s not a huge help,” said Miller of a renewed GSP. “I don’t see it moving in a free standing way. Agreements made with Sen. Baucus need to be redone. So I’m not holding my breath. But tax extenders, for instance, could be a vehicle.” Sen. Tom Coburn, R-Okla., opposed a funding mechanism in renewal legislation (see 13073016). Coburn will not run for re-election this year.
Russia's involvement is "a trivial part of the program," he said. "What Russia imports is largely inorganic chemicals, which already enter the U.S. with very low tariffs,” said Miller in an interview. “Economies like India that export light manufacturing goods take advantage of the program more significantly. Russia is not a big beneficiary because of the composition of its economy.” Russian exported $296 million worth of goods to the U.S. using the program, while India exported $2.5 billion, according to the Office of the U.S. Trade Representative (here). U.S. importers saved $16.6 million dollars on Russian products in 2012 through use of the program, said the Coalition for GSP (here). -- Brian Dabbs