After much delay, Congress has acted on two much anticipated trade preference programs: the African Growth and Opportunity Act (AGOA) and the Generalized System of Preferences (GSP). But, unfortunately, the preference bills have been caught up in the controversies surrounding President Obama’s trade agenda. At the last minute, House leaders attached language to the renewal to help offset a failed worker-training program, Trade Adjustment Assistance (TAA). That action now threatens the whole reauthorization process. Other reported plans indicate that a new preferences bill could be brought up with the whole TAA reauthorization attached.
Reauthorization of AGOA and GSP should have happened months ago. The lapsed programs deserve to be renewed on their own merits without further delay and separate from other trade programs. As recently pointed out in a letter by four Members of the House Representatives, “AGOA is too important to be used as a bargaining chip to pass unrelated trade legislation.”
If acted on alone, there would be little opposition to the preference programs; support has traditionally been strongly bipartisan. The last times AGOA and GSP legislation came up for reauthorization, in 2011 and 2004, respectively, the House and Senate passed reauthorization by super majorities, voice votes, or unanimous consent.
For AGOA especially, any further delay could have crippling consequences. Though the program doesn’t expire until the end of the year, importers have already started making purchasing and investment decisions based on whether they believe it will be reauthorized. In the case of GSP, which has already expired, it is estimated that American importers lost $60 million in April 2015 alone as a result.
Failure to renew these proven programs is further undermining America’s already dwindling credibility in advancing trade freedom around the world. Over the past decade, both programs have served as the centerpiece of U.S. trade and investment engagement with the developing world?the world’s fastest growing economies. Since 2004, AGOA and GSP countries have grown at an average rate of 4.3 percent. By contrast, countries of the pending Trans-Pacific Partnership Agreement have grown at just 1.3 percent, while the European Union has expanded at less than 1 percent.
AGOA and GSP should be judged on their own merits—not conflated and weighed down by other controversial pieces of trade legislation. Each additional day Congress waits to renew them is another day that commercial ties with our economic partners in Africa and other parts of the world suffer.
