109th Congress wraps up trade bill before heading out
In the early morning hours on Saturday, the 109th Congress concluded with the approval of a comprehensive trade bill that contains tax break extensions and improvements for both U.S. and overseas shippers.
The legislation, which heads to the president for signature, grants permanent normal trade relations to Vietnam. This status allows U.S. companies to take part in the benefits of Vietnam's status as a World Trade Organization member. Vietnam is set to join the WTO in January.
The legislation also extends the Generalized System of Preferences (GSP), a program that provides duty-free treatment to 3,400 products from 133 developing countries. Congress developed GSP in 1974 and must periodically re-authorize the program.
In 2005, the United States imported $26.7 billion of products under the GSP program. From January to September 2006, the country imported $24.1 billion in GSP-eligible products, showing a 26.7 percent increase over GSP imports during the same period last year, according to the Office of the U.S. Trade Representative.
The legislation contains a third-country fabric provision for countries participating in the African Growth and Opportunity Act (AGOA). Congress passed AGOA in 2000 to reduce trade barriers and increase exports from sub-Saharan Africa to the United States. The USTR noted in 2005 that more than 98 percent of imports from AGOA-eligible countries entered the United States duty free. U.S. imports from sub-Saharan Africa under AGOA increased to $38.1 billion in 2005, a 44 percent increase over 2004.
Congress extended the Andean Trade Preference Act (ATPA) in the legislation. ATPA, which was enacted in 1991, allows eligible products from four Andean countries — Bolivia, Colombia, Ecuador and Peru — to enter the United States duty free. The main purpose of ATPA is to promote economic alternatives to the production of illegal drugs. Total two-way goods trade between the United States and the four ATPA countries in 2005 was $29.9 billion, the USTR noted.
Lastly, the new legislation contains the 2006 Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act. Under the current law, apparel imports from Haiti could qualify for duty-free treatment only if they were made from U.S. or Haitian fabric. The HOPE Act will also allow apparel imports from Haiti to enter the United States duty free if at least 50 percent of the value of inputs and/or costs of processing are from any combination of U.S. free trade agreement and regional preference program countries.
In addition, the HOPE Act removes duties for three years on a specified quantity of woven apparel imports from Haiti made from fabric produced anywhere in the world and will grant duty-free status to automotive wire harnesses imported from Haiti that contain at least 50 percent value of materials produced in Haiti, U.S. free trade or regional preference program countries.
The White House praised Congress for passing the trade legislation. 'I believe this can also lay the groundwork for bipartisan action on trade issues in the next Congress, including passage of the Peru and Colombia trade promotion agreements,' said U.S. Trade Representative Susan Schwab in a statement.