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Trade Subcommittee Chairman A. Smith Opening Statement – Hearing on Reforming the Generalized System of Preferences

September 20, 2023

As prepared for delivery.

“Thank you Ranking Member Blumenauer, Subcommittee Members, and our witnesses for being here today. Today’s hearing is an important step as Congress considers the renewal of the Generalized System of Preferences Program, or GSP.

“When Congress created the GSP program in 1974, it recognized then, as we do now, U.S. leadership on international trade and global economic development is vital. We may have had different global adversaries in 1974, but this still holds true as we contend with the strategic and economic threat presented by the Chinese Communist Party.

“There’s no question the GSP program has a proven track record. However, I do not believe we should forgo the opportunity to examine ways to improve it. GSP is meant to foster economic growth in developing countries by providing duty-free access to the U.S. market while increasing standards in these countries through strict eligibility criteria set by Congress. Today, we will focus on how well the program has achieved these goals and explore ways it can be improved.

“As we will hear today, GSP also helps create and support American jobs, many of which are in our districts. Amid high inflation exacerbated by the administration’s so-called “Bidenomics”, lowering tariffs ultimately brings savings to those who need it most. At the same time, GSP preserves American production by excluding import-sensitive products from the program. USTR maintains a robust process to periodically update this list, and we must carefully consider whether this process works as intended.

“We will hear from witnesses today about a range of potential reforms that could make the program more effective in its strategic and economic goals, and I look forward to this thoughtful discussion.

“For example, we have seen GSP be a successful enforcement tool for USTR, including helping open markets for U.S. agriculture. This is especially important given the Biden Administration’s very limited engagement to reduce tariffs or otherwise increase market access for American farmers and ranchers.

“I am also interested in hearing more about a potential new criterion for digital trade. I am very concerned by the range of discriminatory policies, including taxes, which seek to undermine the leadership of U.S. companies when it comes to digital trade. I appreciate the leadership of Congressman LaHood in this regard.

“Additionally, I look forward to hearing about how GSP can be reformed to better align our domestic supply chain goals. If done strategically, GSP can help shift key supply chains out of adversarial nations like China. GSP alone won’t be the answer to our supply chain challenges, but it certainly can be a helpful tool.

“Lastly, while the focus of this hearing is on GSP, I would be remiss if I did not mention another key trade preference program in our arsenal which has expired. The Miscellaneous Tariff Bill, or MTB, is another important tool many job creators and consumers rely on, and I look forward to conversations about how to get both these programs on a pathway to swift renewal.

“I hope we can come together on a bipartisan basis and break the log jam that has held back GSP renewal since it expired at the end of 2020. I am confident we can do the hard work necessary to reform and renew GSP.”