Order Code RS22541
Updated November 29, 2006
CRS Report for Congress
Received through the CRS Web10, 2008
Generalized System of Preferences Renewal:
Agricultural Imports
Renée Johnson
AnalystSpecialist in Agricultural EconomicsPolicy
Resources, Science, and Industry Division
Summary
The Generalized System of Preferences (GSP) provides duty-free tariff treatment
for certain products from designated developing countries. Legislation authorizing the
current GSP program expires December 31, 2006. Agricultural imports under
the GSP
totaled $1.92.1 billion in 20052007, about 7% of all U.S. GSP imports. Leading agricultural
agricultural imports include sugar, confectionery, cocoa, olive oil, processed meats,
drinking waters,
and miscellaneous food preparations and inputs for further processing.
The majority of
these imports are from Thailand, Argentina, Brazil, India, and the
Philippines. Some in Congress have called for changes to the program that could limit
GSP benefits to certain countries, among other changes. Opinion within the U.S.
Argentina, Brazil, India, the Philippines, Thailand, and Turkey.
These countries are among those identified by some in Congress and in a recent Bush
Administration proposal as countries whose GSP benefits may be limited or curtailed.
Opinion within the U.S. agriculture industry is mixed, reflecting both support for and
opposition to the current program. This report will be updated as conditions warrant.
Background
The U.S. Generalized System of Preferences (GSP) provides preferential duty-free
entry to more than 4,650 agricultural and non-agricultural products from 144 designated
beneficiary countries and territories.1 Agricultural products account for only about 7% of
annual GSP imports; however, duty-free access for agricultural imports under the program
is an important issue for many in the U.S. agriculture industry who either support or
oppose the program. The ongoing debate over GSP renewal has led some in Congress to
consider whether the GSP statute should be amended by limiting benefits for certain more
advanced beneficiary developing countries (BDCs). The Bush Administration also is
considering a proposal to limit GSP benefits or to graduate certain BDCs from the
program. Among the identified countries that may be affected by these changes are
Argentina, Brazil, India, the Philippines, Thailand, and Turkey. These countries account
1
Office of the U.S. Trade Representative (USTR), Generalized System of Preferences, at
[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html]. GSP
was established by Title V of the Trade Act of 1974 and was last reauthorized through 2006 in
Section 4101 of the Trade Act of 2002 (P.L. 107-210). See also CRS Report RL33663,
Generalized System of Preferences: Background and Renewal Debate, by Vivian C. Jones.
Congressional Research Service ˜ The Library of Congress
CRS-2
for the majority of U.S. agriculture products imported duty-free under the program.
Legislation authorizing the GSP expires December 31, 2006.
GSP Agricultural Imports
In 2005, U.S. imports under the GSP program totaled $26.7 billion, accounting for
about
program. Congress made changes to the program in 2006, tightening its requirements
on imports under certain circumstances. The 110th Congress extended GSP through
2009, likely making the GSP a legislative issue in the 111th Congress. Also, the
leadership of the Senate Finance Committee and the House Ways and Means Committee
continue to express an interest in evaluating the effectiveness of U.S. trade preference
programs, including the GSP.
Background
The U.S. Generalized System of Preferences (GSP) was established by the Trade Act
of 1974 (19 U.S.C. 2465; Sec. 505) and now provides preferential duty-free entry to more
than 4,650 agricultural and non-agricultural products from 131 designated beneficiary
countries and territories.1 Agricultural products account for about 7% of the total value
of annual GSP imports. Duty-free access for agricultural imports under the program is
an important issue for many in the U.S. agriculture industry who either support or oppose
1
Office of the U.S. Trade Representative (USTR), Generalized System of Preferences, at
[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html].
CRS-2
the program. However, some in Congress have called for changes to the program that
could limit or curtail GSP benefits to certain countries, among other changes. The GSP
is currently reauthorized through December 31, 2009 (P.L. 110-436).
GSP Agricultural Imports
In 2007, U.S. imports under the GSP program totaled $30.8 billion, accounting for
less than 2% of all commodity imports. Leading U.S. imports under the GSP are
manufactured products and parts, chemicals, plastics, minerals, and forestry products.
More than 25%Roughly one-fourth of all GSP imports consist of jewelry, electrical, and transportation
equipment, both finished products and parts.2
Agricultural products accounted for 7% of
all imports under the GSP, totaling $1.9 2.1
billion in 20052007. Compared to 2000, the value of
agricultural imports under the program has more than doubled. Of all agricultural imports,
has nearly doubled. In 2007, imports under the GSP accountaccounted for about a 3% share.
4% of total U.S.
agricultural imports.3 Table 1 shows the leading agricultural products (ranked by value)
imported into the
United States under the GSP program in 2005. Leading imports include sugar and
confectionery products, processed fruit and vegetable preparations, processed food inputs
for further processing, olive oil, waters and other beverages, processed meats and fish
products, non-tropical fruits and vegetables, and cocoa and cocoa-containing products.
Table 1. U.S. Agricultural Imports under GSP Import Program, 2005
HTS Chapter(s)
Subsection
17
20, 14
19, 21, 13
1509
22
8 (part), 7
16
18
23, 3501-3505,
3301, 38 (part)
9
24
8 (part)
4
12, 15 (part)
6
10, 11
2905 (part)
8 (part)
5, 4301, 41 (part)
1, 2
50-53 (part)
2005
Percent
GSP Share
Import Categories
($millions)
Share All Ag Imports
Sugars and sugar confectionery
443
24%
19%
Processed fruits & vegetables, inputs
241
13%
6%
Processed foods & food processing inputs
237
13%
6%
Olive oil
116
6%
<1%
Beverages, water, spirits, and vinegar
115
6%
1%
Other fresh fruits and vegetables
113
6%
1%
Processed meat & fish products
105
6%
3%
Cocoa & cocoa-containing products
105
6%
4%
Other ag-based chemicals, residues, &
78
4%
2%
byproducts
Coffee, tea, & spices
65
4%
2%
Tobacco products
58
3%
5%
Fresh tropical fruits
48
3%
2%
Dairy products
36
2%
2%
Oilseeds & processed oils/fats
36
2%
5%
Plants and cut flowers
23
1%
2%
Grain-based products
17
1%
1%
Ag-based organic chemicals (e.g. sorbitol)
15
1%
15%
Nuts
7
<1%
2%
Misc. animal products, incl. hides
3
<1%
<1%
Meat products, incl. live animals
2
<1%
<1%
Ag-based textile inputs (cotton, wool, etc.)
1
<1%
<1%
1,864
100%
3%
Total
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.
usitc.gov]. Imports for consumption, actual U.S. dollars. Select GSP countries ranked in terms of value of
imports in 2005. Agriculture commodities as defined by the WTO Agreement on Agriculture. Includes U.S.
Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and fish products, except
processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53.
2
U.S. Chamber of Commerce, Estimated Impacts of the U.S. Generalized System of Preferences
to U.S. Industry and Consumers, at [http://www.uschamber.com/publications/reports/default].
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Most GSP agricultural imports are supplied by beneficiary countries that have been
identified for possible graduation from the program. In 2005, the top six BDCs ranked by
import value — Thailand, Brazil, Argentina, India, the Philippines, and Turkey —
accounted for 56% of agricultural imports under the GSP (see Table 2). Brazil and India
accounted for nearly one-fifth of agricultural imports under the program. These countries
are among those identified by critics of the current program as countries whose GSP
benefits should be limited or curtailed.
Table 2. U.S. Agriculture Imports, under GSP Import Program,
by Country, 2005
Country
of Origin
2005
%Change
($mill) %Share 2000-2005
Thailand
288
15%
68%
Brazil
209
11%
125%
Argentina
195
10%
252%
124
7%
104%
Philippines
116
6%
83%
Turkey
114
6%
263%
Indonesia
49
3%
-3%
South Africa
31
2%
18%
Venezuela
11
1%
-70%
Croatia
9
<1%
70%
Russia
Kazakhstan
6
<1%
-42%
3
<1%
-59%
India
Major import product categories
misc. food preparations, beverages, misc. preserved fruits
and vegetables, confectionery, pasta
chocolate, confectionery, gelatin & gelatin derivatives,
tropical fruits, cocoa powder
prepared meats, confectionery, cheese, olive oil, gelatin &
gelatin derivatives
ground/crushed peppers, vegetable extracts, preserved
cucumbers, essential oils (peppermint),
miscellaneous food preparations
cane/beet sugar, fresh/processed tropical fruit, industrial
fatty oils, misc. food preparations
olive oil, prepared/preserved vegetables, ground/crushed
peppers, confectionery, fruit juices
organic chemicals, tobacco products, seafood products,
misc. food preparations, confectionery
cane/beet sugar, wine, crushed/ground peppers, plant
bulbs/roots, essential oils (citrus), nuts
waters, cereal flour, soups/broths, chocolate, preserved
fruits and vegetables
sauces/condiments, soups/broth, preserved meat products,
drinking waters, yeasts, chocolate/cocoa
cocoa preparations, chocolate, vegetable extracts, prepared
seafood, confectionery, fruit juice
caviar, wheat gluten
caviar, drinking waters, fish-based fats/oils, carbonated
beverages, nuts/seeds
1
<1%
39%
Romania
1,157
62%
89%
Subtotal
707
38%
127%
Other BDCs
1,864
100%
101%
Total
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.
usitc.gov]. Imports for consumption, actual U.S. dollars. Includes U.S. Harmonized Tariff Schedule (HTS)
chapters 1-24, excluding chapter 3 (fish and fish products, except processed), and parts of HTS chapters
29, 33, 35, 48, 41, 43, and 50-53. Select GSP countries ranked in terms of value of imports in 2005 (10-digit
HTS level). Agriculture commodities as defined by the WTO Agreement on Agriculture.
More than 30% of GSP agricultural imports consist of sugar and sugar-based
products, and cocoa and cocoa-containing products. Sugar and confectionery product
imports accounted for 24% of the value of agriculture imports under the GSP program
(see Table 1). Major GSP suppliers of cane and beet sugar imports were the Philippines,
Thailand, and Brazil, as well as other Latin American countries. Major suppliers of sugar
confectionery were Brazil, Argentina, and Thailand. Cocoa and cocoa-containing products
accounted for 6% of GSP agricultural imports, and were supplied mainly by Brazil,
Argentina, and Thailand, as well as by various African and other Latin American
countries. Indonesia, the Philippines, Brazil, and Turkey were major suppliers of imports
of sugar alcohols and other agriculture-based organic chemicals (including sorbitol),
which accounted for about 1% of GSP agricultural imports in 2005.
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Another nearly 30% of agricultural imports under the GSP program include
processed meat and fish products, olive oil, fresh fruits and vegetables, and drinking
waters. Another one-quarter of imports comprise miscellaneous processed foods and
inputs and fruit and vegetable preparations. Leading suppliers of processed meat under
the GSP include Argentina, Uruguay, Croatia, and Brazil; suppliers of processed fish and
seafood include Thailand, Indonesia, and Kazakhstan. Imports of fresh non-tropical fruits
and vegetables include mostly dried beans, tubers, and onions from India, Peru, Thailand,
and Argentina, and melons from Central American countries, Brazil, and Thailand.
Suppliers of other provisionally preserved, prepared, or frozen fruit and vegetable
products include Thailand, Argentina, and Brazil. Major suppliers of water and beverages
are Thailand, the Philippines, Venezuela, Brazil, Egypt, and India. Suppliers of olive oil
include Turkey and Argentina, among other Middle Eastern countries.
Proposed Changes to the GSP
Legislation authorizing the current GSP program expires December 31, 2006.
Renewal of the current program is a topic of debate, in part because some in Congress
question the inclusion of certain more advanced BDCs under the GSP program. Some in
Congress also believe that certain BDCs have contributed to the ongoing impasse in
multilateral trade talks in the WTO Doha Development Agenda. To date, legislation
seeking to amend the GSP statute has focused on restricting the President’s ability to grant
“competitive need limits” (CNL) waivers3 that allow BDCs to exceed GSP statutory
thresholds for some products. In part due to these congressional concerns, the Trade
Policy Staff Committee (TPSC), an advisory committee chaired by USTR, is investigating
whether some BDCs should be graduated from the program.4
In the 109th Congress, House Ways and Means Committee Chairman Bill Thomas
introduced H.R. 6142, which would renew the GSP program for two years but also seeks
to amend the GSP statute. The proposed changes would limit CNL waivers for any
eligible imported product from a BDC if (1) the eligible product’s aggregated appraised
value exceeded $1.5 billion during any calendar year or (2) the BDC’s per capita gross
national income (GNI) exceeded $3,400 in the preceding calendar year. This would limit
CNL waivers to certain BDCs for some imports, including agricultural products.
Historically, there have been few CNL waivers to GSP for agricultural products. Current
waivers for agricultural products include sugar and preserved bananas from the
Philippines, nuts from Argentina, and caviar from Russia.5 Under the legislation, CNL
waivers would be limited for BDCs classified as “upper middle income” countries and for
some BDCs classified as “lower middle income” countries, based on per capita GNI
groupings reported by the World Bank.6 This could affect existing CNL waivers for
agricultural products from Argentina and Russia, but not from the Philippines.
3
The law stipulates a CNL which requires that countries export no more than 50% of total U.S.
imports of each product or no more than a specified dollar amount of the imports for a given year.
4
BDCs under the GSP, as of 2006, are listed in the General Notes section of the U.S. Harmonized
Tariff Schedule, at [http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0612gn.pdf#page=11].
5
USTR, CNL Waivers, at [http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/
Section_Index.html].
6
GNI per capita income categories: $3,466-$10,725 (upper middle); $876-$3,465 (lower middle).
India, Indonesia, Philippines, and Thailand have reported GNI per capita under $3,400.
CRS-5
Senate Finance Committee Chairman Charles Grassley also commented that he
would “likely oppose the extension of the GSP program” and that “any extension of GSP
would likely not be a continuation of the status quo.”7 His comments identified Brazil and
India as countries that benefit under the current GSP program but also as two of the
countries he thought most responsible for holding up the Doha negotiations, suggesting
that these countries might become ineligible under the GSP program.
Others in Congress favor a short-term extension of the GSP while Congress
continues to deliberate and hold hearings on possible amendments to the GSP and other
trade preference programs. In September 2006, the 110th Congress’s likely incoming
chairmen of the House Ways and Means Committee, Charles Rangel, and Senate Finance
Committee, Max Baucus, introduced identical bills seeking to extend the current GSP and
other trade preference programs. Both the House bill (H.R. 6076) and the Senate bill (S.
3904) would extend the GSP program for two years through 2008. Another Rangel bill
introduced in March 2006 (H.R. 5070) would renew the current GSP program for one
year. These bills do not propose any programmatic changes to the GSP statute. When the
bills were introduced, the primary reason cited for renewing GSP was the need for U.S.
trade preference programs that promote economic growth and stability in developing
countries by stimulating exports.8
The Bush Administration also has indicated that it may consider changes to the
current GSP program. On August 6, 2006, the USTR requested review and public
comment on changes to the eligibility requirements for certain GSP beneficiaries and
existing CNL waivers, which could affect the eligibility status of 13 countries.9 The
identified countries are Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, the
Philippines, Romania, Russia, South Africa, Thailand, Turkey, and Venezuela. Under the
current GSP program, mandatory country graduation occurs when a BDC is determined
to be a “high income” country or following a review of the BDC’s advances in economic
development and trade competitiveness.10 The last time beneficiary countries were
graduated from the GSP program was 2004.11
Possible Implications of Changes to the GSP
The proposed legislative changes, if enacted, could restrict the President’s ability to
grant CNL waivers allowing BDCs to exceed statutory thresholds for some products.
7
U.S. Senate, Committee on Finance, Opening Statement of Senator Chuck Grassley, Hearing
on the Nomination of Susan C. Schwab to be U.S. Trade Representative, May 16, 2006.
8
U.S. House of Representatives, “Rangel Urges Passage of Expiring Trade Benefits,” press
release of Representative Charles Rangel, Sept. 25, 2006; House of Representatives, “Rangel Bill
Would Extend Trade Benefits for Developing Countries,” press release of Representative Charles
Rangel, Mar. 30, 2006; and U.S. Senate, “Baucus Bill Would Extend Expiring Trade Programs,”
press release of U.S. Senator Max Baucus, Sept. 15, 2006.
9
71 Federal Register 45079, August 8, 2006.
10
GATT, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of
Developing Countries; Decision of 28 November 1979, L/4903 (Dec. 3, 1979) (footnotes
omitted), at [http://www.wto.org/gatt_docs/English/SULPDF/90970166.pdf].
11
69 Federal Register 10131, March 4, 2004. Graduation was effective January 1, 2006.
CRS-6
Based on current CNL waivers to GSP, this could deny waivers for nuts from Argentina
and caviar from Russia, and possibly products from some other BDCs. If the
administrative changes being evaluated by the TPSC are implemented by USTR, certain
beneficiary countries, including Thailand, Brazil, Argentina, India, the Philippines, and
Turkey, might be graduated from the program and no longer be eligible to receive benefits
under the GSP. These countries account for the majority of U.S. agriculture products
imported duty-free under program.
Comments on the Administration’s proposal submitted to USTR from the U.S.
agriculture industry groups are mixed.12 The American Farm Bureau Federation (AFBF)
expressed its general opposition to the GSP program, stating that products imported dutyfree under the program compete with U.S.-produced goods without granting a
commensurate level of opportunity for U.S. producers in foreign markets. AFBF further
supports withdrawal of CNL waivers for the Philippines, Argentina, and Colombia. The
Grocery Manufacturers Association (GMA) expressed support for the current GSP
program and identified certain agricultural products of importance to GMA under the
program, including sugar confections, spices, and certain processed foods and inputs from
Brazil, India, and Argentina. GMA’s position was generally supported by comments from
the
and confectionery products, processed fruit and vegetable preparations, olive oil, waters
and other beverages, processed food inputs for further processing, processed meats and
fish products, tropical and non-tropical fruits and vegetables, and cocoa and cocoacontaining products.
Most GSP agricultural imports are supplied by beneficiary countries that have been
identified for possible graduation from the program. In 2007, the top six beneficiary
countries ranked by import value — Thailand, Argentina, Brazil, India, the Philippines,
and Turkey — accounted for the majority of agricultural imports under the GSP (see
Table 2). Brazil and India accounted for nearly one-fifth of agricultural imports under
the program. These countries are among those identified by critics of GSP as countries
whose benefits under the program should be limited or curtailed.
More than 20% of GSP agricultural imports consist of sugar and sugar-based
products, and cocoa and cocoa-containing products. Sugar and confectionery imports
accounted for 17% of the value of agricultural imports under the GSP program (Table 1).
Major GSP suppliers of cane and beet sugar imports were the Philippines, Paraguay, Peru,
Panama, and South Africa. Major suppliers of confectionery were Brazil, Argentina,
Colombia, Thailand, and Turkey. Cocoa and cocoa-containing products accounted for 4%
of GSP agricultural imports, and were supplied mainly by Brazil, the Côte d’Ivoire, and
Indonesia. Indonesia, among other countries, is a supplier of imports of sugar alcohols
and other agriculture-based organic chemicals, such as sorbitol.
Another nearly 40% of agricultural imports under the GSP program include food
processing inputs, such as miscellaneous processed foods, processed oils and fats, fruit
and vegetable preparations, and ag-based chemicals and byproducts. Other product
2
U.S. Chamber of Commerce, Estimated Impacts of the U.S. Generalized System of Preferences
to U.S. Industry and Consumers, October, 2006, at [http://www.uschamber.com/publications/
reports/0610gsp].
3
USDA reports U.S. agricultural imports totaled $47.7 billion in 2007 [http://www.ers.usda.gov/
Data/FATUS/MonthlySummary.htm].
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categories and suppliers are as follows. Olive oil accounted for 7% of GSP agricultural
imports in 2007, supplied by Tunisia, Turkey, and Argentina. Mineral waters and other
types of nonalcoholic beverages (another 6%) were supplied by Fiji and Thailand, among
others. Imports of fresh and prepared fruits and vegetables (about 10%) include bananas
and other tropical produce, and dried beans, tubers, onions, and melons from most Latin
American countries and India, the Philippines, and Thailand. Argentina is a leading
supplier of processed meat under the GSP; Indonesia supplies processed fish and seafood.
Table 1. U.S. Agricultural Imports under GSP, 2007
HTS Chapter(s)
Subsection
17
19, 21, 13
20, 14
22
23, 3501-3505,
3301, 38 (part)
1509
16
8 (part), 7
18
12, 15 (part)
8 (part)
24
9
4
10, 11
2905 (part)
6
8 (part)
5, 4301, 41 (part)
1, 2
50-53 (part)
Import Categories
Sugars and sugar confectionery
Processed foods & food processing inputs
Processed fruits & vegetables, inputs
Beverages, water, spirits, and vinegar
Other ag-based chemicals, residues, & byproducts
Olive oil
Processed meat & fish products
Other fresh fruits and vegetables
Cocoa & cocoa-containing products
Oilseeds & processed oils/fats
Fresh tropical fruits
Tobacco products
Coffee, tea, & spices
Dairy products
Grain-based products
Ag-based organic chemicals (e.g. sorbitol)
Plants and cut flowers
Nuts
Misc. animal products, incl. hides
Meat products, incl. live animals
Ag-based textile inputs (cotton, wool, etc.)
Total
2007
GSP Share
($ millions) % Share All Ag Imports
353.8
17%
14%
316.1
15%
4%
293.3
14%
6%
156.3
8%
1%
154.0
7%
3%
142.3
116.2
110.0
91.1
70.1
46.9
45.0
40.8
31.8
29.9
19.1
18.0
17.3
6.9
0.4
0.3
2059.7
7%
6%
5%
4%
3%
2%
2%
2%
2%
1%
1%
1%
1%
<1%
<1%
<1%
100%
15%
3%
1%
3%
2%
2%
3%
1%
2%
1%
19%
2%
2%
1%
0%
0%
3%
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.usitc.gov]. Imports for
consumption, actual U.S. dollars. Select GSP countries ranked in terms of value of imports. Agriculture commodities as defined by
the WTO Agreement on Agriculture. Includes U.S. Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and
fish products, except processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53 (for information, see USDA, Profiles
of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
Legislative and Administrative Changes to GSP
The 110th Congress extended the GSP for one year through December 31, 2009 (P.L.
110-436). Given this one-year extension, the GSP will continue to be a legislative issue
in the 111th Congress. In addition, the leadership of the Senate Finance Committee and
the House Ways and Means Committee continue to express the need to evaluate the
effectiveness of the GSP, as well as other U.S. trade preference programs. Chairman
Baucus of the Senate Finance Committee has said he hopes to review all U.S. trade
preference programs in the 111th Congress, and to evaluate which countries are benefitting
CRS-4
under the program.4 This follows an oversight hearing by the committee, which was
conducted in June 2008 and focused on ways to reform trade preference programs,
including the GSP. According to committee staff, that hearing was considered a first step
toward a possible bill seeking to reform trade preference programs.5
Amendments to the GSP in 2006 followed extensive debate about the program
during the 109th Congress. Specifically, some in Congress questioned the inclusion of
certain more advanced developing countries (BDCs)6 as beneficiaries under the GSP and
also commented that certain BDCs had contributed to the ongoing impasse in multilateral
trade talks in the WTO Doha Development Agenda.7 In response to these concerns,
Congress amended the program in 2006 by tightening the rules on “competitive need
limits” (CNL)8 waivers that allow imports from beneficiary countries in excess of GSP
statutory thresholds for some products (P.L. 109-432). Historically, there have been few
CNL waivers to the GSP for agricultural products and it is unlikely that these program
changes will greatly affect U.S. agricultural imports under the program. In 2006,
Congress had also renewed the GSP for two years through 2008.
In addition, the Trade Policy Staff Committee (TPSC), an advisory committee
chaired by the U.S. Trade Representative, has instituted a series of investigations to
evaluate possible changes to the GSP.9 In its 2006 review the TPSC announced that the
more than 80 previously granted CNL waivers would be individually evaluated, in
addition to the standard practice of examining petitions for new CNL waivers. The TPSC
said that it would also examine the eligibility status of several “middle income”
economies.10 Among the countries identified for possible removal as beneficiaries under
the program were Argentina, Brazil, India, the Philippines, Thailand, and Turkey. These
countries account for over 60% of the value of U.S. agricultural products imported
duty-free under the program. Although none of the countries cited lost their overall GSP
eligibility as a result of these reviews, several previously granted CNL waivers from these
countries were revoked. For agricultural imports under the GSP, the Côte d’Ivoire lost
4
See, e.g., “Senate Moves on APTA,” Washington Trade Daily, October 3, 2008.
5
“Senate Finance Mulls Preference Overhaul, May Focus on Poorest,” Washington Trade Daily,
June 13, 2008.
6
BDCs under the GSP, as of 2008, are listed in the General Notes section of the U.S. Harmonized
Tariff Schedule, at [http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0800htsa.pdf].
7
See, e.g., U.S. Senate, Committee on Finance, Opening Statement of Senator Charles Grassley,
Hearing on the Nomination of Susan C. Schwab to be U.S. Trade Representative, May 16, 2006.
8
The previous law stipulated a CNL requiring that countries export no more than 50% of total
U.S. imports of each product or no more than a specified dollar amount of the imports for a given
year. The amended law further tightened these requirements.
9
72 Federal Register 35895, June 28, 2007 (2006 Review); and 73 Federal Register 38297, June
3, 2008 (2007 Review). Regulations for implementing the GSP are at 15 C.F.R. Part 2007.
10
Countries may “graduate” or be removed as a beneficiary developing country if the country
is determined to be sufficiently competitive or developed (19 U.S.C. 2462(e)). For example, in
2008, the Republic of Trinidad and Tobago graduated from the GSP program when it was
determined to have become a ‘’high income’‘ country. Also, countries that formally enter into
a bilateral trading relationship with another developed country may also become ineligible, as
happened in 2007 for Bulgaria and Romania when they joined the European Union.
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CNL waivers for fresh or dried, shelled kola nuts (HTS 0802.90.94), as part of the 2006
review. Argentina lost CNL waivers for cooked, shelled, fresh or dried peanuts (HTS
1202.20.40), as part of the 2007 review. These waivers had allowed for these products
to be imported from the Côte d’Ivoire and Argentina duty-free under GSP despite the
statutory import thresholds. Other countries lost CNL waivers for some non-agricultural
products, but not for agricultural products. The 2006 review included decisions on other
country and product petitions involving agricultural products, but these changes are
unlikely to greatly affect U.S. agricultural imports under the program.
For more information and for a discussion of possible legislative options, see CRS
Report RL33663, Generalized System of Preferences: Background and Renewal Debate,
by Vivian C. Jones.
Table 2. U.S. Agricultural Imports under GSP, by Country, 2007
Country
of Origin
2007
% % Change
($ mill) Share 2003-2007
Thailand
Argentina
Brazil
360
242
240
17.5%
11.8%
11.6%
India
179
8.7%
Philippines
136
6.6%
Turkey
134
6.5%
Peru
94
4.6%
Indonesia
Fiji
Tunisia
Colombia
87
69
69
50
4.2%
3.4%
3.4%
2.4%
Ecuador
39
1.9%
South Africa
Subtotal
Other BDCs
Total
35
1.7%
1,734 84.0%
325 15.8%
2,060 100.0%
Major import product categories
nonalcoholic beverages, misc. food preparations, misc. preserved fruits and
61%
vegetables, confectionery, pasta
88%
prepared meat, sugar confectionery, cheese, olive oil, gelatin derivatives
15%
gelatin derivatives, chocolate and cocoa products, confectionery, mangoes
vegetable saps/extracts, gelatin derivatives, preserved cucumbers, essential oils
108%
(peppermint), ground/crushed peppers, miscellaneous food preparations
cane/beet sugar, coconut oil and coconuts, banana products, fresh/processed
22%
tropical fruits, nonalcoholic beverages, misc. food preparations
fruit juice, olive oil, prepared/preserved vegetables, ground/crushed peppers,
103%
preserved bell peppers, confectionery
ground/crushed peppers, mangoes, artichokes, onions, artificial margarine
143%
products and other edible fats/oils, melons, misc. prepared vegetables
tobacco products, edible animal products, confectionery, organic chemicals,
50%
cocoa powder, misc. food preparations, seafood products
115% mineral waters, sugar cane, molasses, tropical fruits/vegetables, snack foods
1459%
olive oil/oil products, dates, pasta, misc. food preparations, sauces, capers
3% sugar, chewing gum, confectionery, processed fruits/nuts, grains/preparations
preserved/frozen fruit products, sugar, floriculture/plants, seeds, bulbs, tuber
131%
vegetables
cane/beet sugar, misc. food preparations, wine, plant bulbs/roots and plants,
57%
active yeasts, spices, essential oils (citrus), fruit juices
66%
-41%
29%
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.usitc.gov]. Imports for
consumption, actual U.S. dollars. Includes U.S. Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and fish
products, except processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53. Select GSP countries ranked in terms of
value of imports in 2007 (10-digit HTS level). Agriculture commodities as defined by the WTO Agreement on Agriculture (for
information, see USDA, Profiles of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
Possible Implications of Changes to the GSP
The 2006 statutory changes to the GSP tightening rules for CNL waivers are unlikely
to greatly affect U.S. agricultural imports under the program. Historically, there have
been few CNL waivers for agricultural products imported duty-free under the GSP.
Current waivers include sugar and preserved bananas (Philippines), sugar, carnations,
figs, yams, and gelatin derivatives (Colombia), certain nuts (Argentina), animal hides
CRS-6
(Argentina, South Africa, and Thailand), and caviar (Russia).11 Other types of program
changes, however, could affect U.S. agricultural imports under the GSP, including
additional limits on CNL waivers from certain countries or graduation of some
beneficiary countries. Countries that account for the majority of U.S. agricultural imports
under the GSP are Thailand, Brazil, Argentina, India, the Philippines, and Turkey.
Comments submitted to USTR on its 2006 proposal from U.S. agricultural industry
groups are mixed.12 The American Farm Bureau Federation (AFBF) expressed its general
opposition to the GSP program, stating that products imported duty-free under the
program compete with U.S.-produced goods without granting a commensurate level of
opportunity for U.S. producers in foreign markets. AFBF further supported withdrawal
of CNL waivers for the Philippines, Argentina, and Colombia. The Grocery
Manufacturers Association (GMA) expressed support for the current GSP program and
identified certain agricultural products of importance to GMA under the program,
including sugar confections, spices, and certain processed foods and inputs from Brazil,
India, and Argentina. GMA’s position was generally supported by comments from the
American Spice Trade Association, the National Confectioners Association, and the
Chocolate Manufacturers Association.
What remains unclear is whether duty-free access for most agricultural imports under
the GSP greatly influences a country’s willingness to export these products to the United
States. In most cases, costs associated with import tariffs are borne by the importer. These
costs may be passed on to the BDCs in terms of lower import prices. However, import
tariffs to the United States for most of these products tend to be low. As calculated by
CRS, ad valorem equivalent tariffs range from 3%-4% for sugar, 2%-10% for cocoacontaining products, 5%-12% for confectionery, 1%-2% for most processed meats, about
2% for olive oil, less than 1% for mineral water, and about 5% for agriculture-based
organic chemicals.13 In general, any additional costs that might be incurred by the BDCs
as a result of the proposed changes could be more than offset by the generally higher U.S.
prices for most products compared to prices in other world markets. Nevertheless, the
imposition of even relatively low import tariffs could represent an increase in input costs
to some U.S. food processors and industrial users. These costs could be passed on to
consumers through higher prices for these and other finished agricultural or manufactured
products. As shown in Table 1, about one-half of GSP agricultural imports are
intermediate goods and inputs, such as raw sugar, miscellaneous processed foods,
preparations, and byproducts, and agriculture-based organic chemicals. These and other
stakeholder concerns likely will be raised during the debate on GSP renewal and
deliberations regarding possible amendments to the program.
12
USTR, Public Comments Received in the Review on the Eligibility of Certain GSP
Beneficiaries and Existing
11
USTR, CNL Waivers, General, at [http://www.ustr.gov/Trade_Development/
Preference_Programs/
GSP/CNL_Waivers_Current_Waivers_to_GSP_Competitive_Need_Limitations_(CNLs).html].
12
13
Public comments are posted at USTR’s website, at [http://www.ustr.gov/].GSP/Section_Index.html].
13
Calculated tariffs based on the in-quota rate. Under the GSP, agricultural products subject to
a TRQ exceeding the in-quota quantity is ineligible for duty-free import (19 U.S.C. 2463(b)(3)).