Ways and Means Member Says GSP, AGOA Renewal Likely Before June 2025

Rep. Don Beyer, D-Va., a free-trade advocate, said at the Capitol: "I think we're a lot closer than we've been. I think there's been a lot of behind-the-scenes stuff, staff-to-staff. I feel really good about both AGOA and GSP first quarter, [or] second quarter next year."

He referred to China's announcement it will eliminate tariffs on imports from 33 African countries, the Solomon Islands and Kiribati in the South Pacific, Yemen, Afghanistan, Bangladesh, Cambodia, Laos, Myanmar, Nepal, and East Timor in Asia.

When GSP was in force, it no longer covered Bangladesh since the Rana Plaza disaster; Myanmar is expected to be out of GSP when it comes back because of its military coup. Moreover, for countries that are not part of the African Growth and Opportunity Act, or AGOA, apparel and other "import sensitive" products are not covered by GSP. Bangladesh said the end of GSP had a "minimal impact" on its exports to the U.S. since apparel is not covered. China is lifting tariffs on all items from these countries.

"Brilliant on their part, devastating in terms of our leadership in Africa, and it makes it all the reason to [renew] AGOA and GSP," Byer said.

House Ways and Means Trade Subcommittee Chairman Adrian Smith, R-Neb., avoided answering directly a question about whether the Trump administration discouraged renewal back in 2019, but put forward an argument for GSP that could be attractive to politicians who want to make deals that favor the U.S. in trade. He referred to the fact that during hearings, witnesses have said that when GSP is in force, advocates for market opening or higher working standards are able to point to eligibility requirements for GSP to try to get changes in GSP beneficiary countries.

"So I think it can be very useful, and I've seen indicators it can get a lot of support," Smith said in a hallway interview. He said it wouldn't surprise him if the new administration pushes for a higher rule-of-origin than the last version's 35%, however.

As he always does, Smith said getting GSP done is possible in the near future. "I'm hoping there's a strong chance for these trade policies, such as GSP, MTB, and a few others to get done yet this year. De minimis, AGOA -- be nice to just wrap that up this year. I appreciate the support from many colleagues in this direction," he said.

Smith pooh-poohed the idea of using tariffs as a pay-for in next year's tax cut bill. "A successful tariff is one that would lead to a diminishing revenue source, so on that premise, I think it's hard to build a budget off of a declining source of revenue. I would rather focus on pro-growth policies ... ."

Beyer expressed hope that Ways and Means Democrats could have some voice in shaping the tax bill, given how narrow the margin will be in the House of Representatives. "They had a 27-vote margin when they passed [the Tax Cuts and Jobs Act, or TCJA], and it passed by three votes," he said.

The final count in the House is not yet known, but it's expected to be 219-215 with one vacancy, or 220-214, depending on how the last two seats in California go.

"People take better jobs, they resign, they die. At any given time, there's five or six people missing for cancer or whatever, strokes," Beyer said. He said he wants to preserve the higher standard deduction, he'd like to restore immediate depreciation, and he thinks there has to be an extension of the pass-through tax cut. The TCJA made a cut of the corporate tax rate permanent from 35% to 21%; it made a cut in income taxes filed by partners in companies, so that pass-through income from those businesses that don't incorporate as C corporations could be taxed at 20%.

If Democrats were able to just block any tax law, that pass-through income would return to a marginal rate of 39.7% while C-corporations were taxed at 21%.

"That's pretty penalizing," he said, though he acknowledged the S-corporations could convert into C-corporations to avoid the tax bite.