May 15, 2015 - 11:00am

The Importance of Imports: The ‘To-Do’ List

Senior Vice President for International Policy

We’ve been celebrating “Imports Work for America” week. While the Chamber has long argued that boosting exports is vital to our economy, imports also play a critical role.

So how can we better ensure that imports work for America going forward? First, trading away U.S. import barriers to secure better access to foreign markets is a terrific deal — a true win-win.

But before we can clinch new trade pacts, Congress must renew Trade Promotion Authority (TPA). TPA is critical because growth and jobs at home depend on our ability to sell American goods and services to the 95 percent of the world’s customers living outside the United States.

With TPA in place, U.S. negotiators can advance with the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) negotiations. These aim to eliminate tariffs and other trade barriers between the United States and some of the largest economies in the world, including the European Union, Japan and a collection of other Asia-Pacific nations.

As U.S. Trade Representative Michael Froman has written, “With these agreements in place, the United States will be at the center of a free trade zone covering nearly two-thirds of the global economy.” The United States should vigorously pursue such trade agreements.

In addition, Congress should move quickly to renew the Generalized System of Preferences (GSP), which expired in mid-2013. Since 1976, GSP has promoted economic growth in developing countries by providing duty-free access to the U.S. market for thousands of selected products from 122 developing countries.

GSP helps keep U.S. manufacturers and their suppliers competitive. Approximately three-quarters of U.S. imports using GSP are raw materials, parts and components, or machinery and equipment used by U.S. companies to manufacture goods in the United States for domestic consumption or for export. The products coming in under GSP generally do not compete with U.S.-made goods in any significant way.

The benefits of GSP are tangible. U.S. importers enjoyed nearly $750 million in savings on import duties under the GSP program in 2012, the last full year the program was in effect. According to a 2006 U.S. Chamber of Commerce study, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers, manufacturers and retail shelves.

Also high on the list is the African Growth and Opportunity Act (AGOA). Since it was enacted in 2000, AGOA has become the cornerstone of U.S. trade and investment policy with regard to sub-Saharan Africa. However, absent congressional action, it will lapse on September 30, 2015.

Across Africa, U.S. companies of all sizes and sectors see a vast array of business opportunities. In the 2002-2014 period, the continent’s two-way merchandise trade with the United States rose by 47% to reach $72.5 billion. This increase in trade has led to the creation of thousands of American and African jobs and has fostered an impressive expansion of Africa’s middle class to nearly 350 million consumers.

Looking ahead, the focus should be on the area of Africa’s non-energy exports to the United States. Apparel remains the largest non-energy category, followed by automobiles and other manufactured goods. Enhancing and extending for a longer duration the AGOA third-country fabric provision is one step the Chamber supports to build on these gains.

However, AGOA’s looming expiration may already be undermining business and investor certainty. Companies operate with long planning horizons, and sourcing decisions are made many months or even years in advance. For this reason, swift renewal of AGOA has become imperative.

Finally, the Chamber strongly supports the Miscellaneous Tariff Bill (MTB). Over the past three decades, a succession of MTBs has provided temporary relief from select tariffs that only “protect” nonexistent domestic producers. These are taxes applied to imported materials and intermediate products that are essential to U.S. manufacturers but unavailable domestically.

In this fashion, the MTB helps U.S. companies maintain their competitive edge. The last MTB supported an estimated 90,000 American jobs; the next one promises benefits that could reach twice as many workers.

However, the MTB has become controversial in the view of some conservatives. In this view, these duty suspensions represent an earmark because they provide a “limited tariff benefit.” However, the MTB’s benefits are in no way limited: They are available to all importers of the product. Fundamentally, the MTB is a tax break, not an earmark.

Since the expiration of the last MTB on December 31, 2012, U.S. businesses both large and small have faced higher costs for imported inputs not available from domestic sources. It’s time legislators acted to renew the MTB and lift the burden of these pointless and damaging tariffs.

In the end, imports are important because they show that trade is a two-way street — with benefits on both sides.


About the Author

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.