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U.S. Congress Weighing Tariff-Cutting Program for Ukraine

A pro-Russian militant guards a barricade in front of the Donetsk regional administration building on April 8, 2014. Photographer: Alexander Khudoteply/AFP via Getty Images
A pro-Russian militant guards a barricade in front of the Donetsk regional administration building on April 8, 2014. Photographer: Alexander Khudoteply/AFP via Getty Images

April 8 (Bloomberg) -- Key U.S. lawmakers and the Obama administration are exploring the revival of a lapsed tariff-reduction program to aid Ukraine as well as other nations.

The Senate Finance Committee, which deals with trade issues, is discussing renewal of the program known as the Generalized System of Preferences, according to Senator Sherrod Brown, an Ohio Democrat on the panel.

“It might make the most sense, that would be the best thing we can do,” Brown, a prominent figure on trade issues in the Senate, said today during a breakfast meeting with Bloomberg editors and reporters in Washington. He said the Senate should look at it seriously.

U.S. Trade Representative Michael Froman last week endorsed renewal of the program as a way to provide further assistance to Ukraine, after Russia annexed the nation’s Crimea region in late March. President Barack Obama on April 3 signed into law a bill providing $1 billion in loan guarantees and $150 million in direct assistance to the government in Kiev.

A delegation from Ukraine will be in Washington this week to participate in semi-annual meetings of the World Bank and International Monetary Fund, which run from April 11-13.

Lawmakers let the trade-preference program, commonly known as GSP, expire at the end of July after failing to find a way to pay for its extension. The program grants zero or reduced tariffs to some goods from developing nations, including Ukraine and Russia.

Important Symbol

Renewal of the benefits “could be an important symbol” in showing U.S. support for Ukraine, Claude Barfield, a resident scholar who focus on trade at the American Enterprise Institute in Washington, said by phone. Reinstatement of expired benefits “would certainly help Ukraine,” he said.

U.S. imports from Ukraine declined 23 percent from $1.3 billion in 2012, the last full year the GSP program was in effect, to about $1 billion 2013, according to Commerce Department data. Total U.S. trade in merchandise with Ukraine last year was $3 billion, less than 1 percent of the U.S. total with the rest of the world.

Senate Finance Committee Chairman Ron Wyden “agrees that renewing GSP can be helpful to Ukraine,” Keith Chu, a spokesman for the senator, said by phone.

Brown, who said he hasn’t spoken directly to Wyden about the issue, said Congress should also address Russia’s participation. Brown said extending the program should not be allowed to benefit Russia.

Renewal of the GSP program “would benefit Ukraine immediately,” Froman said April 3 during a House Ways and Means Committee hearing in Washington.

“We’re exploring all options to assist Ukraine, GSP is on the menu,” USTR spokesman Trevor Kincaid said in an April 3 e-mail. The administration “would like to see GSP renewed, but it is largely an issue for Congress to work through,” he said.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Steven Komarow

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