US businesses demand return of GSP benefit
Hundreds of small and big business enterprises in the US urged the Obama administration to restore the GSP (generalised system of preferences) status in the American market by 2014 to keep their businesses afloat.
The US companies have been losing $2 million a day -- over $850 million so far -- due to the suspension of the scheme since July 31 last year.
The current GSP expiration, now in its 16th month, is the longest in GSP's 40-year history.
Business units have not only been losing money, many faced closure as they failed to remain competitive, according to a letter sent to John Boehner, speaker of the US House of Representative, last week.
First enacted in 1974, GSP eliminates import duties for American firms on certain products from nearly 130 developing countries.
The suspension of the scheme is having a severe impact on companies and workers, according to the letter.
“We represent single-person, sole proprietorships as well as some of the largest corporations in the world. The vast majority of us are small businesses that can least afford the nearly $2 million per day cost of GSP expiration.”
“To compensate for higher taxes, some of us have been forced to lay off workers, delay new hires, cut worker benefits, and cancel job-creating investments while awaiting congressional action,” the businesses said.
“Multiple companies who would otherwise have joined us in signing this letter could not because they have gone out of business as a result of the higher costs associated with the GSP expiration.”
If GSP is not renewed during the 113th session of congress, the tax hike on American companies will exceed $1 billion by the end of the year, they said.
The signatory firms of the letter are headquartered in 45 states and 282 congressional districts.
The letter was also sent to Harry Reid, majority leader of US Senate; Nancy Pelosi, minority leader of US House of Representative; and Mitch McConnell, minority leader of US Senate.
Once the GSP scheme is renewed, the reinstatement of GSP for Bangladesh will also be reviewed by the United States Trade Representative (USTR), the chief trade negotiation body of the US government.
After the Rana Plaza collapse, the USTR suspended the GSP status for Bangladesh citing serious shortcomings in workplace safety and labour rights on June 27 last year.
The USTR also wanted Bangladesh to fulfil 16 conditions to renew the benefit. Bangladesh has already submitted progress reports to the USTR to regain the trade benefit.
Bangladesh used to export a limited number of products under the GSP scheme, but its continuation is important for the country's image.
Every year, around 0.54 percent -- equivalent to $26 million -- of Bangladesh's exports to the US used to enjoy a duty-free benefit under the scheme.
Ninety seven percent of Bangladesh's products enjoy duty-free access to the US market, but garment items have not been included in the list.
In 2013-14, Bangladesh exported goods worth over $5.58 billion to the US; 95 percent of the items were garment products, for which, Bangladesh pays 15.61 percent duty.
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