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House Vote on Tariff Preferences May Help Advance Trade Accords

Sept. 8 (Bloomberg) -- Stalled free-trade agreements with South Korea, Colombia and Panama may advance after the U.S. House of Representatives voted to renew tariff preferences on goods from developing nations that expired last year.

The legislation would exclude duties on imports such as silver jewelry, radial tires and raw materials from 129 nations through July 2013. The bill, approved yesterday by voice vote, also provides refunds of tariffs paid this year on imports that were duty-free until the preferences lapsed in December. The measure moves to the Senate.

House action on the Generalized System of Preferences sets in motion efforts to end a stalemate between Congress and President Barack Obama over the trade deals. Obama wants Republicans to back extending aid to workers who lose their jobs to overseas competitors before he sends Congress the trade accords. The Senate will use the preferences bill as a vehicle to renew the aid, known as Trade Adjustment Assistance.

“It’s going to start a chain reaction that will lead to some very important things happening,” William Reinsch, president of the National Foreign Trade Council and a former Commerce Department official under President Bill Clinton, said in an interview. “It’s phase one of this elaborate kabuki that they’ve developed” to get the trade deals considered.

The plan will let the Senate have the first vote on the worker-benefits program, which would otherwise need to originate in the House because all revenue bills start in that chamber.

Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters yesterday he would add the worker aid to legislation that renews the tariff preferences.

“I think we have a way forward,” Reid said. “We’re going to get Trade Adjustment Assistance done before we do the trade bills. Otherwise, we won’t do the trade bills.”

Trade, Aid

The administration signaled in July that it planned to combine renewing worker aid and the South Korea trade deal into a single bill. Republicans objected, demanding a chance to vote separately on each component.

U.S. companies have used the trade-preferences program to buy lower-cost equipment, raw materials and consumer goods from overseas. Since Jan. 1, those companies have had to pay duties on about 4,800 items. Caterpillar Inc., Wal-Mart Stores Inc. and General Electric Co. are among the companies that sought an extension of the program.

More than $22.6 billion in goods entered the U.S. duty-free under the preferences in 2010, according to the U.S. International Trade Commission. The program’s lapse was costing U.S. companies about $1.8 million each day in added tariffs, said Daniel Anthony, director of government relations for the Coalition for GSP.

‘Renewed Quickly’

“Although we know this is the first step in a process, it’s important to get this step out of the way so that people can move ahead with their business knowing this will be renewed and renewed quickly,” Anthony said in an interview.

Republican lawmakers including Senator Charles Grassley, an Iowa Republican, yesterday urged Obama to send the trade bills for a vote. The U.S. Chamber of Commerce has said the trade agreements would prevent the loss of 380,000 jobs.

“Nothing has been done and the United States is losing its leadership in what we’ve done for 60 years in world trade, leading the rest of the world,” Grassley said yesterday at a news conference. “The status quo has to end.”

The bill is H.R. 2832.

To contact the reporter on this story: Eric Martin in Washington at

To contact the editor responsible for this story: Larry Liebert at

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