Order Code RL33663
Generalized System of Preferences:
Background and Renewal Debate
Updated January 24May 22, 2007
Vivian C. Jones
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Generalized System of Preferences:
Background and
Renewal Debate
Summary
The Generalized System of Preferences (GSP) provides duty-free tariff
treatment to certain products imported from designated developing countries. The
United States, the European Union, and other developed countries implemented such
programs in the in the 1970s in order to promote economic growth in developing
countries by stimulating their exports. The U.S. program (as established by Title V
of the Trade Act of 1974) was extended until December 31, 2008, in section 8002 of
P.L. 109-432 for all GSP beneficiary countries not covered by the African Growth
and Opportunity Acceleration Act of 2004 (P.L.108-274, extended GSP benefits for
AGOA beneficiary countries through September 30, 2015).
Other bills introduced in the 109th Congress to renew the preference include
H.R. 6346 and H.R. 6142 (Thomas), H.R. 6076 (Rangel), H.R. 5070 (Rangel), S.
3933 (Inhofe), and S. 3904 (Baucus). S. 191 (Smith) sought to extend AGOA-type
benefits to certain Asian and Pacific least-developed countries, including an
extension of GSP for these countries alone.
SinceIn the 109th Congress, renewal of the preference was somewhat controversial,
owing, in part, to concerns of some that some of the more advanced beneficiary
developing countries (such as India and Brazil) were contributing to the impasse in
multilateral trade talks in the World Trade Organization (WTO) Doha Development
Agenda (DDA). Compromise language worked out between the House and Senate
extended the GSP for two years for all countries, while directing that the President
“should” revoke “competitive need limitation” waivers for products from certain
countries, based on the criteria specified.
Because Congress extended the GSP until December 2008, its further extension
will continue to be a legislative issue in the 110th Congress. In addition, the Trade
Subcommittee of the House Ways and Means Committee has included an evaluation
of trade preference programs, including the GSP, as part of its oversight plan for the
110th Congress. In the 109th Congress, renewal of the preference was controversial,
due, in part, to the impasse in multilateral trade talks in the World Trade
Organization Doha Development Agenda (DDA) and the concerns of some
regarding the inclusion of certain more advanced developing countries such as India
and Brazil in the programHouse
Ways and Means Committee and the Senate Finance Committee have each expressed
interest in examining the effectiveness of the GSP and other trade preference
programs.
The Bush Administration favored GSP renewal, but also appears willing to
continue to review and modify the program in order to respond to congressional
concerns. To that end, the USTR and other administration officials are examining
whether to limit, suspend, or withdraw the eligibility of 13 major GSP beneficiaries
based on certain criteria. The USTR As recommended in the GSP renewal language, the USTR
is also reviewing all 83 current waivers of
automatic competitive need limits
(triggered by import volumes) to see if any waivers
should be withdrawn. In
addition, petitions for new waivers are being considered as
part of the annual 2006
review of the GSP program.
This report presents, first, a brief history, economic rationale, and legal
background leading to the establishment of the Generalized System of Preferences.
A brief comparison of GSP programs worldwide, especially as they compare to the
U.S. system, is also presented. Second, the U.S. implementation of the GSP is
discussed, along with the present debate surrounding its renewal and legislative
developments to date. Third, an analysis of the U.S. program’s effectiveness and the
positions of various stakeholders are presented. Fourth, possible implications of the
expiration of the U.S. program and other possible options for Congress are discussed.
This report will be updated as events warrant.
Contents
History and Rationale of the GSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Economic Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
International Legal Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparison of International GSP Programs . . . . . . . . . . . . . . . . . . . . . . . . . 87
U.S. Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Beneficiary Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 9
Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Least-Developed Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Competitive Need Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Rules of Origin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Annual Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Graduation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
109th Congress Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Effectiveness of GSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Effects on Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Economic Effects on the U.S. Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2120
Stakeholders’ Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2221
“Special and Differential Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Erosion of Preferential Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2322
Under-Utilization of GSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Trade as Foreign Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2423
Lower Costs of Imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2524
Conclusion and Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Allow GSP To Expire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Scrap GSP in Favor of Free-Trade Agreements or Regional
Regional Trading Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2827
Authorize GSP Only for Least-Developed Countries . . . . . . . . . . . . . . . . . 28
Modify GSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2928
Restrict Application of Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2928
Expand Application of GSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3029
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
List of Figures
Figure 1. U.S. Imports from GSP Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
19
List of Tables
Table 1. GSP Product Imports from Leading BDCs, 20052006 . . . . . . . . . . . . . . . . . 31
Table 2. Leading GSP Beneficiaries and Total, 20052006 . . . . . . . . . . . . . . . . . . . . . 32
Table 3. Leading GSP Products in Terms of Value, 2005 . . . . . . . . . . . . . . . . . . 33
Table 4. GSP Least-Developed Beneficiary Developing Countries Not
Covered by AGOA Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table 5. GSP Implementation and Extensions, 1975-2006 . . . . . . . . . . . . . . . . . 3533
Table 64. Beneficiary Developing Countries and Regions for Purposes
of of
the Generalized System of Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Table 7. Top Five Imports of Leading GSP Beneficiary Countries . . . . . . . . . . . 38. . 34
Generalized System of Preferences:
Background and Renewal Debate
The Generalized System of Preferences (GSP) provides preferential tariff
treatment to certain products imported from designated developing countries. The
United States, the European Union, and other developed countries implemented such
programs in the 1970s in order to promote economic growth in developing countries
by stimulating their exports.
The U.S. program (as established by Title V of the Trade Act of 1974) was
extended through December 31, 2008, in section 8002 of P.L. 109-432. The African
Growth and Opportunity Acceleration Act of 2004 (P.L.108-274) had previously
extended GSP preferences for all beneficiary developing sub-Saharan African
countries under the African Growth and Opportunity Act (AGOA) through
September 30, 2015.1
Since Congress extended the GSP until the end of December 2008, its extension
beyond that date will likely be a legislative issue in the second session of the 110th
Congress. In addition, the Trade Subcommittee of the House Ways and Means
Committee has included an evaluation of trade preference programs, including the
GSP, in its oversight plan for the 110th Congressboth the House Ways and Means Committee and the Senate
Finance Committee have expressed interest in examining the effectiveness of the
GSP and other trade preference programs. The Senate Finance Committee held a
hearing on the effectiveness of all trade preference programs, including GSP, on
May 16, 2007.
The recently enacted GSP extension, along with renewal of certain other
preferential programs, was included in H.R. 6406 (Thomas, introduced on December
7, 2006), a tariff and trade bill introduced in the post-election session of the 109th
Congress. The bill, as approved by the House, was appended to the engrossment of
the House amendment of the Senate amendment to H.R. 6111 (see Title VIII). The
House House
and Senate compromise legislation extended the GSP for two years for all
countries,
while directing that the President “should” revoke “competitive need
limitation” waivers for certain countries and products.
In the 109th Congress, other bills seeking to renew the preference included H.R.
6346 and H.R. 6142 (Thomas, introduced December 5, 2006, and September 19,
2006, respectively) which would extend the preference with similar conditions as
those specified in H.R. 6406.
Two bills, H.R. 6076 (Rangel, introduced September 15, 2006) and its
companion bill S. 3904 (Baucus, introduced on the same day) sought to renew the
GSP for two years without additional amendments, as did H.R. 5070 (Rangel,
introduced March 30, 2006) which sought a one-year extension. S. 3933 (Inhofe),
1
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
CRS-2
sought a three-year GSP extension. S. 191 (Smith, introduced January 31, 2005) and
its companion bill H.R. 886 (Kolbe, introduced February 17, 2005) sought to extend
AGOA-type benefits, including the GSP extension, to certain Asian and Pacific leastdeveloped countries
waivers that have been in effect for five years or more if imports under the waiver
reached certain thresholds during the preceding calendar year.
This report presents, first, a brief history, economic rationale, and legal
framework behind establishment of the Generalized System of Preferences, and a
brief comparison of GSP programs worldwide. Second, a description of U.S.
implementation of the GSP program is presented, along with recent legislative
developments and the debate surrounding its renewal. Third, an analysis of the U.S.
program’s effectiveness and the positions of various stakeholders are discussed.
1
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
CRS-2
Fourth, possible implications of GSP expiration and other options for Congress are
mentioned.
History and Rationale of the GSP
The basic principle behind the GSP is to provide certain goods originating in
developing countries with preferential market access (usually in the form of lower
tariff rates or duty-free status) to developed country markets in order to spur
economic growth. The program was first adopted internationally in 1968 by the
United Nations Conference on Trade and Development (UNCTAD) at the UNCTAD
II Conference.2
Economic Basis
The GSP was established based on an economic theory that preferential tariff
rates in developed country markets could promote export-driven industry growth in
developing countries. It was believed that this, in turn, would help to free
beneficiaries from heavy dependence on trade in primary products, whose slow longterm growth and price instability contributed to chronic trade deficits.3 It was
thought that only the larger markets of industrialized trading partners were large
enough to provide enough economic stimulus to attain these goals.4
Some economists also mention that the Generalized System of Preferences was
established, in part, as a means of reconciling two widely divergent economic
perspectives of trade equity that arose during early negotiations on the General
Agreement on Tariffs and Trade (GATT).5 Industrialized, developed nations argued
that the most-favored-nation principle6 should be the fundamental principle
governing multilateral trade, while lesser-developed countries believed that equal
treatment of unequal trading partners did not constitute equity and called for “special
2
U.N. Conference on Trade and Development, “About GSP,” at [http://www.unctad.org].
In addition to the United States, the European Union and 11 other industrialized countries
— Australia, Belarus, Bulgaria, Canada, Japan, New Zealand, Norway, Switzerland, and
the Russian Federation — currently have GSP programs.
3
OECD Secretary-General. The Generalized System of Preferences: Review of the First
Decade. Organization of Economic Cooperation and Development, 1983, p. 9 (hereinafter
OECD GSP Review).
4
Ibid.
CRS-3
Agreement on Tariffs and Trade (GATT).5 Industrialized, developed nations argued
that the most-favored-nation principle6 should be the fundamental principle
governing multilateral trade, while lesser-developed countries believed that equal
treatment of unequal trading partners did not constitute equity and called for “special
5
Sapir, A. and L. Lundberg, “The U.S. Generalized System of Preferences and its Impacts,”
in R. Baldwin and A. Krueger (eds.) The Structure and Evolution of Recent U.S. Trade
Policy, Chicago: The University of Chicago Press, 1984.
6
The most-favored-nation principle means that countries must treat imports from other
trading partners on the same basis as that given to the most favored other nation. Therefore,
with certain exceptions (including GSP, regional trading arrangements, and free trade
agreements), every country gets the lowest tariff that any country gets, and reductions in
tariffs to one country are provided also to others. The term “most-favored-nation” has been
changed in U.S. law to “normal trade relations.”
CRS-3
and differential treatment” for developing countries. GSP schemes thus became one
of the means of offering a form of special treatment that developing nations sought
while allaying the fears of developed countries that tariff “disarmament” might
create serious disruptions in their domestic markets.7
Due to differences in developed countries’ economic structures and tariff
programs — as well as different domestic industries and products each wanted to
shield from such competition — it proved difficult to create one unified system of
identical tariff concessions. Therefore, the GSP became a system of individual
national schemes based on common goals and principles — each with a view toward
providing developing countries with generally equivalent opportunities for export
growth.8 As a result, the preference-granting countries implemented various
individual schemes of temporary, generalized, non-reciprocal, non-discriminatory
preferences under which tariffs were lowered or eliminated on certain imports from
developing countries.
As a condition for providing such tariff preferences, GSP preference-granting
countries reserved the right to (1) exclude certain countries; (2) determine product
coverage; (3) determine rules of origin governing the preference; (4) determine the
duration of the scheme; (5) reduce any preferential margins accruing to developing
countries by continuing to lower or remove tariffs as a result of multilateral
negotiations; (6) prevent the concentration of benefits among a few countries; and (7)
include safeguard mechanisms or “escape” clauses.9
Although GSP programs were intended to be temporary, an international legal
framework under the GATT (as discussed below) was developed to allow these
programs to continue. Additionally, many developed countries have also decided to
grant additional market access, through GSP or other preferential programs, to
products of countries they designate as least-developed countries (LDCs). At the
sixth World Trade Organization (WTO) Ministerial Conference in Hong Kong in
5
Sapir, A. and L. Lundberg, “The U.S. Generalized System of Preferences and its Impacts,”
in R. Baldwin and A. Krueger (eds.) The Structure and Evolution of Recent U.S. Trade
Policy, Chicago: The University of Chicago Press, 1984.
6
The most-favored-nation principle means that countries must treat imports from other
trading partners on the same basis as that given to the most favored other nation. Therefore,
with certain exceptions (including GSP, regional trading arrangements, and free trade
agreements), every country gets the lowest tariff that any country gets, and reductions in
tariffs to one country are provided also to others. The term “most-favored-nation” has been
changed in U.S. law to “normal trade relations.”
7
OECD GSP Review, p. 11.
8
Ibid., p. 10.
9
Wall, David. “Problems with Preferences.” International Affairs, vol. 47, October 1971,
p. 95.
CRS-4
December 2005, developed country WTO members and “developing country
members declaring themselves in a position to do so” agreed to deepen this
commitment by providing “duty-free and quota-free market [DFQF] access on a
lasting basis, for all products originating from all least developed countries by 2008
or no later than the start of the implementation period in a manner that ensures
stability, security and predictability.”10 Members “facing difficulties” with providing
such access would be permitted to exempt 3 percent of all tariff lines, provided they
take steps to achieve the goal of total duty- and quota-free access by incrementally
building on the list of covered products.11 Since DDA talks have been suspended,
this duty-free/quota-free offer is in jeopardy.
7
OECD GSP Review, p. 11.
8
Ibid., p. 10.
9
Wall, David. “Problems with Preferences.” International Affairs, vol. 47, October 1971,
p. 95.
10
World Trade Organization. Ministerial Declaration, Annex F. December 18, 2005,
WT/MIN(05)/DEC.
11
Ibid.
CRS-4
International Legal Framework12
Because it is a preference program, by its very nature, the GSP posed a problem
under the GATT in that the granting of preferences would be facially inconsistent
with the fundamental obligation placed on GATT Parties in GATT Article I:1 to
grant most-favored-nation (MFN) tariff treatment to the products of all other GATT
Parties. As noted, however, preference programs were viewed as vehicles of trade
liberalization and economic development for developing countries. Thus, GATT
Parties accommodated them in a series of joint actions.
In 1965, the GATT Parties added Part IV to the General Agreement, an
amendment that recognizes the special economic needs of developing countries and
asserts the principle of non-reciprocity. Under this principle, developed countries
forego the receipt of reciprocal benefits for their negotiated commitments to reduce
or eliminate tariffs and restrictions on the trade of less developed contracting
parties.13 Because of the underlying MFN issue, GATT Parties in 1971 adopted a
waiver of Article I for GSP programs, which allowed developed contracting parties
to accord more favorable tariff treatment to the products of developing countries for
ten years.14 The GSP was described in the decision as a “system of generalized, nonreciprocal and non-discriminatory preferences beneficial to the developing
countries.”
10
World Trade Organization. Ministerial Declaration, Annex F. December 18, 2005,
WT/MIN(05)/DEC.
11
Ibid.
At the end of the Tokyo Round of Multilateral Trade Negotiations in 1979,
developing countries secured adoption of the Enabling Clause, a permanent deviation
from MFN by joint decision of the GATT Contracting Parties.15 The Clause states
that notwithstanding GATT Article I, “contracting parties may accord differential and
more favourable treatment to developing countries, without according such treatment
to other contracting parties” (¶1) and applies this exception to:
(a) Preferential tariff treatment accorded by developed contracting parties to
products originating in developing countries in accordance with the Generalized
System of Preferences;
12
This section was written by Jeanne Grimmett, Legislative Attorney, American Law
Division. For further discussion of trade preference programs in light of obligations under
the General Agreement on Tariffs and Trade (GATT), see CRS Report RS22183, Trade
Preferences for Developing Countries and the WTO, by Jeanne J. Grimmett [hereinafter
CRS Report RS22183].
13
Edmond McGovern, International Trade Regulation ¶ 9.212 (updated 1999)[hereinafter
McGovern]. Part IV is generally viewed as non-binding, though some have argued
otherwise with regard to certain of its provisions. Id.; John H. Jackson, William J. Davey
& Alan O. Sykes, Jr., Legal Problems of International Economic Relations 1171 (4th ed.
2002).
14
GATT, Generalized System of Preferences; Decision of 25 June 1971, L/3545 (June 28,
1971), available at [http://www.wto.org/gatt_docs/English/SULPDF/90840258.pdf].
CRS-5
At the end of the Tokyo Round of Multilateral Trade Negotiations in 1979,
developing countries secured adoption of the Enabling Clause, a permanent deviation
from MFN by joint decision of the GATT Contracting Parties.15 The Clause states
that notwithstanding GATT Article I, “contracting parties may accord differential and
more favourable treatment to developing countries, without according such treatment
to other contracting parties” (¶1) and applies this exception to:
(a) Preferential tariff treatment accorded by developed contracting parties to
products originating in developing countries in accordance with the Generalized
System of Preferences;
15
GATT, Differential and More Favourable Treatment, Reciprocity and Fuller Participation
of Developing Countries; Decision of 28 November 1979, L/4903 (December 3,
1979)(footnotes omitted), available at [http://www.wto.org/gatt_docs/English/SULPDF/
90970166.pdf] [hereinafter Enabling Clause].
CRS-5
(b) Differential and more favorable treatment with respect to the provisions of
the General Agreement concerning non-tariff measures governed by the
provisions of instruments multilaterally negotiated under the auspices of the
GATT;
(c) Regional or global arrangements entered into amongst less-developed
contracting parties for the mutual reductions or elimination of tariffs and, in
accordance with criteria or conditions which may be prescribed by the
CONTRACTING PARTIES for the mutual reduction or elimination of non-tariff
measures, on products imported from one another;
(d) Special treatment on the least developed among the developing countries in
the context of any general or specific measures in favour of developing countries
(¶ 2).
To describe the GSP, the Clause refers to the above-quoted description in the 1971
waiver, i.e., a “system of generalized, non-reciprocal and non-discriminatory
preferences beneficial to the developing countries.”16 Among other things, the
Clause further provides, at ¶ 3(c), that any differential and more favorable treatment
provided under the Clause “shall in the case of such treatment accorded by developed
contracting parties to developing countries be designed and, if necessary, modified,
to respond positively to the development, financial and trade needs of developing
countries.”
In addition, if a GATT Party (now WTO Member) who has instituted a GSP
program subsequently takes action “to introduce modification or withdrawal of the
differential treatment so provided,” the Member is required to notify and consult with
other WTO Members. Specifically, ¶ 4(a) requires the acting Member to notify
WTO Members as a whole and to “furnish them with all the information they may
deem appropriate relating to such action.” Further, under ¶ 4(b), the Member must
“afford adequate opportunity for prompt consultations at the request of any interested
contracting party with respect to any difficulty or matter that may arise.” If requested
by any such interested party, WTO Members must as a whole consult with all WTO
15
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), available at [http://www.wto.org/gatt_docs/English/SULPDF/90970166.pdf]
[hereinafter Enabling Clause].
16
Id. at ¶ 2, note 3.
CRS-6
Members concerned over the issue at hand with the aim of reaching a solution that
is satisfactory to all such Members. This requirement does not affect any Member’s
rights under the GATT.17
Paragraph 7 of the Clause provides that the less-developed WTO Members
“expect that their capacity to make contributions or negotiated concessions or take
other mutually agreed action under the provisions and procedures of the General
Agreement would improve with their progressive development of their economies
and improvement in their trade situation and they would accordingly expect to
participate more fully in the framework of rights and obligations under the General
Agreement.” This paragraph is generally considered to support the “graduation”of
a beneficiary country out of a grantor’s GSP program by the grantor, either entirely
or with respect to particular products, once the beneficiary country has attained a
16
Id. at ¶ 2, note 3.
17
Id. at ¶ 4, note 1.
CRS-6
certain level of economic development.18 The Enabling Clause does not contain
express criteria or procedures for graduation, however, leaving grantor countries to
establish criteria on a unilateral basis.
The Enabling Clause also states that it “would remain open for the
CONTRACTING PARTIES to consider on an ad hoc basis under the GATT provisions
for joint action any proposals for differential and more favourable treatment not
falling within the scope of this paragraph,” that is, a program that does not fit within
one of the four categories described above.19 This provision suggests the use of
GATT waivers for more ambitious programs; in practice, waivers have been adopted
for a variety of such programs, including several U.S. non-GSP tariff preferences.20
17
Id. at ¶ 4, note 1.
The Enabling Clause was incorporated into the GATT 1994 upon the entry into
force of the Uruguay Round agreements on January 1, 1995.21 In 1999, the WTO
General Council adopted a decision, captioned “Preferential Tariff Treatment for
Least-Developed Countries,” which waived GATT Article I:1 until June 30, 2009,
“to the extent necessary to allow developing country Members to provide preferential
tariff treatment to products of least-developed countries, designated as such by the
United Nations, without being required to extend the same tariff rates to like products
of any other Member.”22 Along with setting out various standards and notification
18
Note also ¶ 4 of the Enabling Clause requiring grantors to notify GATT parties in the
event of modification or withdrawal of GSP benefits. See generally Simon Lester, The
Asian Newly Industrialized Countries to Graduate from Europe’s GSP Tariffs, 36 Harv. Int’l
L. J. 220 (1995); Gregory O. Lunt, Graduation and the GATT: The Problem of the NICs, 31
Colum. J. Transnat’l L. 611 (1994); Robert E. Hudec, GATT and the Developing Countries,
1992 Colum. Bus. L. Rev. 67.
19
20
19
Enabling Clause, supra note 15, at ¶ 2, note 2.
20
CRS Report RS22183, supra note 12, at 3-4. The United States has pending waiver
requests for the Caribbean Basin Economic Recovery Act, as amended by the United StatesCaribbean Trade Partnership Act (through September 30, 2008), the Andean Trade
Preference Act, as amended by the Andean Trade Promotion and Drug Eradication Act
(through December 31, 2006), and the African Growth and Opportunity Act (through
September 30, 2015). Some WTO Members, e.g., China and Pakistan, have expressed
concerns regarding U.S. treatment of textiles in these programs, while Paraguay has objected
to the U.S. request in part because of its exclusion from the Andean preference scheme. See
Goods Council approves waiver for EC’s trade preference scheme for the Western Balkans,
WTO News Item, July 18, 2006, at [http://www.wto.org/english/news_e/news06_e/
gc_july06_e.htm]; Minutes of the Meeting of the Council for Trade in Goods, May 9, 2006,
at 3-11, G/C/M/84 (June 29, 2006); Minutes of the Meeting of the Council for Trade in
Goods, March 10, 2006, at 3-13, G/C/M/83 (May 1, 2006).
CRS-7
The Enabling Clause was incorporated into the GATT 1994 upon the entry into
force of the Uruguay Round agreements on January 1, 1995.21 In 1999, the WTO
General Council adopted a decision, captioned “Preferential Tariff Treatment for
Least-Developed Countries,” which waived GATT Article I:1 until June 30, 2009,
“to the extent necessary to allow developing country Members to provide preferential
tariff treatment to products of least-developed countries, designated as such by the
United Nations, without being required to extend the same tariff rates to like products
of any other Member.”22 Along with setting out various standards and notification
21
Agreement Establishing the World Trade Organization, Annex 1A, General Agreement
on Tariffs and Trade 1994, ¶ 1(b)(iv); see Appellate Body Report, European Communities
— Conditions for the Granting of Tariff Preferences to Developing Countries, ¶ 90.3,
WT/DS246/AB/R (April 7, 2004)[hereinafter EC Preferences Appellate Body Report].
22
Preferential Tariff Treatment for Least-Developed Countries; Decision on Waiver,
WT/L/304 (June 17, 1999) (adopted June 15, 1999), at [http://docsonline.wto.org/ DDF
Documents/t/WT/L/304.DOC][hereinafter 1999 LDC Waiver]; see also discussion in WTO
Committee on Trade and Development, Note on the Meeting of 2 March 1999, at 2-6,
(continued...)
CRS-7
and procedural requirements, the waiver also provides that it “does not affect in any
way and is without prejudice to rights of Members in their actions pursuant to” the
Enabling Clause.”23
In addition, in a WTO dispute proceeding brought by India challenging special
GSP benefits maintained by the European Communities (EC), European
Communities — Conditions for the Granting of Tariff Preferences to Developing
Countries (WT/DS246), the WTO Appellate Body addressed the issue of the extent
to which a granting country may accord such benefits within a GSP program to
countries meeting a separate set of criteria. The dispute stemmed from an EC
Regulation which awarded tariff preferences to a closed group of 12 beneficiary
countries on the condition that they combat illicit drug production (Drug
Arrangements). India claimed that the Drug Arrangements were inconsistent with
GATT Article I:1 and could not be justified by the Enabling Clause. In its 2004
report, the Appellate Body ruled that developed countries may grant preferences
beyond those provided in their GSP to countries with particular needs, but only if
identical treatment is available to all similarly situated GSP beneficiaries.24 Among
other things, the Appellate Body cited ¶ 3(c) of the Enabling Clause, providing that
any differential and more favorable treatment provided under the Clause “shall ... be
designed and, if necessary modified to respond positively to the development,
financial and trade needs of developing countries.”25
21
Agreement Establishing the World Trade Organization, Annex 1A, General Agreement
on Tariffs and Trade 1994, ¶ 1(b)(iv); see Appellate Body Report, European Communities
— Conditions for the Granting of Tariff Preferences to Developing Countries, ¶ 90.3,
WT/DS246/AB/R (Apr. 7, 2004)[hereinafter EC Preferences Appellate Body Report].
22
Preferential Tariff Treatment for Least-Developed Countries; Decision on Waiver,
WT/L/304 (June 17, 1999)(adopted June 15, 1999), at [http://docsonline.wto.org/
DDFDocuments/t/WT/L/304.DOC][hereinafter 1999 LDC Waiver]; see also discussion in
WTO Committee on Trade and Development, Note on the Meeting of 2 March 1999, at 2-6,
WT/COMTD/M/24 (Apr.Comparison of International GSP Programs
One economist has referred to the Generalized System of Preferences as a nonhomogeneous set of national schemes sharing certain common characteristics.26
Generally, each preference-granting country extends to qualifying beneficiary
developing countries (as determined by each benefactor) an exemption from duties
(either reduced tariffs or duty-free access) on most manufactured products and certain
“non-sensitive” agricultural products, although product coverage and preferential
treatment vary widely.27
Although most GSP schemes (including the U.S. program) admit eligible
products duty-free, some countries provide tariff reductions, rather than complete
exemption from duties.28 The Australian system, for example, is based on a five
22
(...continued)
WT/COMTD/M/24 (April 27, 1999).
23
1999 LDC Waiver, supra note 22, at ¶ 6.
24
EC Preferences Appellate Body Report, supra note 21. For further discussion of the
Appellate Body report, see CRS Report RS22183, supra note 12, at 4-6.
25
EC Preferences Appellate Body Report, supra note 21, at ¶¶ 162-165.
CRS-8
Comparison of International GSP Programs
One economist has referred to the Generalized System of Preferences as a nonhomogeneous set of national schemes sharing certain common characteristics.26
Generally, each preference-granting country extends to qualifying beneficiary
developing countries (as determined by each benefactor) an exemption from duties
(either reduced tariffs or duty-free access) on most manufactured products and certain
“non-sensitive” agricultural products, although product coverage and preferential
treatment vary widely.27
Although most GSP schemes (including the U.S. program) admit eligible
products duty-free, some countries provide tariff reductions, rather than complete
exemption from duties.28 The Australian system, for example, is based on a five
26
Sanchez Arnau, Juan C. The Generalized System of Preferences and the World Trade
Organization. London: Cameron May, Ltd., 2002, p. 187.
27
Ibid.
28
World Trade Organization. Committee on Trade and Development. The Generalized
(continued...)
CRS-8
percentage point margin of preference. When the Australian General Tariff (GT) is
5 percent or higher, the amount of the tariff is reduced by 5 percent for products of
beneficiary countries. When the GT rate is 5 percent or less, the preferential rate is
zero.29
In the WTO, developing country status is generally based on self-determination.
However, with regard to GSP, each preference-granting country establishes particular
criteria and conditions for defining and identifying developing country beneficiaries.
Consequently, the list of beneficiaries and exceptions may vary greatly between
countries. If political changes have taken place in a beneficiary country, the country
might be excluded from GSP programs in some countries (such as the United States)
but not in others. Most countries exclude countries if they have entered into another
kind of commercial arrangement (e.g. a free trade agreement) with any other GSPgranting developed country.
In terms of additional GSP product coverage for LDCs, the European
Community program, which offers duty-free access or reduced tariffs for “everything
but arms,”30 is currently perhaps the most inclusive. GSP-granting countries may
also have incentive-based programs that provide enhanced benefits for beneficiary
countries that meet certain additional criteria. For example, the European
Community recently implemented a preference that grants additional GSP benefits
26
Sanchez Arnau, Juan C. The Generalized System of Preferences and the World Trade
Organization. London: Cameron May, Ltd., 2002, p. 187.
27
Ibid.
28
World Trade Organization. Committee on Trade and Development. The Generalized
to those countries that have demonstrated their commitment to sustainable
development and internationally recognized worker rights.31
Each preference-granting nation also has safeguards in place to ensure that any
significant increases in imports of a certain product do not adversely affect the
receiving country’s domestic market. Generally, these restrictions take the form of
quantitative limits on goods entering under GSP. Under Japan’s system, for
example, imports of certain products under the preference are limited by quantity or
value (whichever is applicable) on a first-come, first-served basis as administered on
a monthly (or daily, as indicated) basis. For other products, import ceilings and
maximum country amounts are set by prior allotment.32
28
(...continued)
System of Preferences: A Preliminary Analysis of the GSP Schemes in the Quad. WTO
Document WT/COMTD/W/93, October 5, 2001.
29
United Nations Conference on Trade and Development. Generalized System of
Preferences on the Scheme of Australia. UNCTAD Technical Cooperation Project on
Market Access, Trade Laws and Preferences, June 2000 (INT/97/A06), p. 5.
[http://www.unctad.org/en/docs/itcdtsbmisc56_en.pdf].
30
European Communities. See Council Regulation (EC) N°/ 980/2005 of 27 June 2005
applying a scheme of generalized tariff preferences (published in Official Journal of the
European Communities (OJ) L 169, 30.6.2005, p. 1.
CRS-9
to those countries that have demonstrated their commitment to sustainable
development and internationally recognized worker rights.31
Each preference-granting nation also has safeguards in place to ensure that any
significant increases in imports of a certain product do not adversely affect the
receiving country’s domestic market. Generally, these restrictions take the form of
quantitative limits on goods entering under GSP. Under Japan’s system, for
example, imports of certain products under the preference are limited by quantity or
value (whichever is applicable) on a first-come, first-served basis as administered on
a monthly (or daily, as indicated) basis. For other products, import ceilings and
maximum country amounts are set by prior allotment.32
30
31
32
Ibid.
World Trade Organization. Committee on Trade and Development. Notification by Japan
June 21, 2000, WT/COMTD/N/2/Add.9.
CRS-9
Each GSP benefactor also has criteria for graduation — the point at which
beneficiaries no longer qualify for benefits because they have reached a certain level
of development. Most preference-granting countries require mandatory graduation
based on a certain level of income per capita based on World Bank calculations.
Some programs also “graduate” certain GSP recipients with respect to individual
products or sectors of the economy.
U.S. Implementation
Congress authorized the U.S. Generalized System of Preferences scheme in
Title V of the Trade Act of 1974 (P.L. 93-618), as amended.33 It authorizes the
President to grant duty-free treatment under the GSP for any eligible product from
any beneficiary developing country (BDC) or least-developed beneficiary developing
country, provides the President with economic criteria in deciding whether to take
any such action,34 and also specifies certain criteria for designating eligible countries
and products.
Based on the statutory requirements which countries must meet — and continue
to practice — while participating in the program, the U.S. GSP program might be
characterized as a foreign policy tool as well as an international trade device.
Although GSP benefits are non-reciprocal, certain criteria speak to important U.S.
commercial interests, such as ensuring “equitable and reasonable” access in the
beneficiaries’ market to U.S. products, protecting intellectual property rights, and
preventing the seizure of property belonging to U.S. citizens or businesses. In
addition, since certain “import sensitive” products are excluded from eligibility and
31
Ibid.
32
World Trade Organization. Committee on Trade and Development. Notification by Japan
June 21, 2000, WT/COMTD/N/2/Add.9.
quantitative/value limitations apply to any eligible imports, the economic costs of the
preference are quite small.
Beneficiary Countries
When designating beneficiary developing countries, the President is directed to
take into account certain mandatory and discretionary criteria. The law prohibits
(with certain exceptions) the President from extending GSP treatment to certain
countries, as follows:
!
other industrial countries;
!
Communist countries, unless they are a WTO member, a member of
the International Monetary Fund and receive Normal Trade
Relations (NTR) treatment;
33
Trade Act of 1974, P.L. 93-618, Title V, as amended, 19 U.S.C. 2461-2467. The GSP
Program was reauthorized and amended by the Trade and Tariff Act of 1984 (P.L. 98-573),
and again by Subtitle J (the GSP Renewal Act of 1996) of Public LawP.L. 104-188. Six laws
have have
authorized GSP with relatively minor modifications, most recently through December
31,
2006 (PL. 107-210). See Table 43, “GSP Implementation and Extension, 1975-2002.”
34
19 U.S.C. 2461.
CRS-10
quantitative/value limitations apply to any eligible imports, the economic costs of the
preference are quite small.
Beneficiary Countries
When designating beneficiary developing countries, the President is directed to
take into account certain mandatory and discretionary criteria. The law prohibits
(with certain exceptions) the President from extending GSP treatment to certain
countries, as follows:
!
other industrial countries;
!
Communist countries, unless they are a WTO member, a member of
the International Monetary Fund and receive Normal Trade
Relations (NTR) treatment;
!
countries that collude with other countries to withhold supplies or
resources from international trade or raise the price of goods in a
way that could cause serious disruption to the world economy;
!
countries that provide preferential treatment to the products of
another developed country in a manner likely to have an adverse
impact on U.S. commerce;
!
countries that nationalize or expropriate the property of U.S.
citizens, or otherwise infringe on U.S. citizens’ property rights
(including failure to recognize or enforce arbitral awards in favor of
U.S. citizens or corporations);
!
countries that grant sanctuary from prosecution to any individual or
group that has committed an act of international terrorism, or has not
taken steps to support U.S. efforts against terrorism;
Mandatory criteria also require that beneficiary countries:
35
!
have taken or be taking steps to grant internationally recognized
worker rights (including collective bargaining, freedom from
compulsory labor), minimum age for employment of children, and
acceptable working conditions with respect to minimum wages,
hours of work, occupational safety and health); and
!
implement any commitments they make to eliminate the worst forms
of child labor.35
19 U.S.C. 2462(b). The most recent amendments required the support of U.S. efforts
against terrorism and expanded the definition of internationally recognized worker rights
(sec. 4102 of P.L. 107-210). See also United States Trade Representative. U.S. Generalized
System of Preferences Guidebook, January 2006, p. 19. (Hereinafter, USTR Guidebook.)
CRS-11
The President is also directed to consider certain discretionary criteria, such as
the following:
35
!
the country’s desire to be designated a beneficiary developing
country for purposes of the U.S. program;
!
the level of economic development of the country;
!
whether or not other developed countries are extending similar
preferential tariff treatment;
!
its commitment to a liberal trade policy;
!
the extent to which it provides adequate protection of intellectual
property rights;
19 U.S.C. 2462(b). The most recent amendments required the support of U.S. efforts
against terrorism and expanded the definition of internationally recognized worker rights
(sec. 4102 of P.L. 107-210). See also United States Trade Representative. U.S. Generalized
System of Preferences Guidebook, January 2006, p. 19. (Hereinafter, USTR Guidebook.)
CRS-11
!
the extent to which it has taken action to reduce trade-distorting
investment policies and practices; and
!
whether or not it has taken steps to grant internationally recognized
worker rights.36
The law authorizes the President, based on the required and discretionary factors
mentioned above, to withdraw, suspend or limit GSP treatment for any beneficiary
developing country at any time.37
Reporting Requirements. The President must advise Congress of any
changes in beneficiary developing country status, as necessary.38 The President must
also submit an annual report to Congress on the status of internationally recognized
worker rights within each BDC, including findings of the Secretary of Labor with
respect to the beneficiary country’s implementation of its international commitments
to eliminate the worst forms of child labor.39
Least-Developed Beneficiaries. The President is also authorized by statute
to designate any BDC as a least-developed beneficiary, based on an assessment of the
conditions and factors previously mentioned.40 Therefore, although factors such as
per capita income level, economic stability, and quality of life indicators (on which
the United Nations-designated list of LDCs is based) are taken into account,41 the
U.S. administration also assesses the level of compliance with other GSP statutory
36
19 U.S.C. 2462(c). Ibid., p. 20.
37
19 U.S.C. 2462(d).
38
19 U.S.C. 2462(d)(3).
39
19 U.S.C. 2464.
40
19 U.S.C. 2462(a)(2).
41
19 U.S.C. 2462(c)(2).
CRS-12
requirements and comments from the public before identifying a country as “leastdeveloped” for purposes of the GSP.42
As requested by the WTO, the Bush Administration has formally notified its
trading partners of all the domestic legislative and regulatory steps necessary in order
to comply with the duty-free/quota-free access (DFQF) provision agreed to at the
Hong Kong Ministerial. However, the United States also advised other WTO
members that implementation of the initiative is contingent on successful completion
of negotiations in the Doha Development Agenda.43
36
19 U.S.C. 2462(c). Ibid., p. 20.
37
19 U.S.C. 2462(d).
38
19 U.S.C. 2462(d)(3).
39
19 U.S.C. 2464.
40
19 U.S.C. 2462(a)(2).
41
19 U.S.C. 2462(c)(2).
42
See 71 F.R. 43543.
43
World Trade Organization. Committee on Trade and Development. “Duty-Free, QuotaFree Access for Least-Developed Countries.” Communication from the United States, May
16, 2006. WT/COMTD/W/149.
CRS-12
Products
The Trade Act of 1974 authorizes the President to designate articles (except
those specifically designated “import sensitive” in the statute) as eligible for duty-free
treatment under the GSP after receiving advice from the International Trade
Commission.44 “Import sensitive” products excluded from preferential treatment
include
Products
The Trade Act of 1974 restricts the President’s discretion in designating eligible
products. Certain “import sensitive” articles, including textiles and apparel; certain
watches; footwear and other accessories; certain
electronics, steel, and glass
products; and certain agricultural products subject to
tariff-rate quotas, are
automatically excluded from GSP treatment.44.45 The lists of eligible products and
beneficiary the list of beneficiary
developing countries are reviewed and revised annually by the GSP
Subcommittee.45 46
Any modifications to these lists usually take effect on July 1 of the following
calendar year.4647
In terms of product coverage, more than 3,400 products are currently eligible for
duty-free treatment, and 1,400 additional articles from least-developed BDCs may
receive similar treatment.4748 Leading imports in 2005 (see Table 1) included
included petroleum products,
especially crude oil ($5.7 billion); jewelry and jewelry parts
($3.4 billion);
automobile and other passenger vehicle parts ($1.43 billion);
ferroalloys ($669.0
million); and rubber tires ($629.3 million).
Competitive Need Limits. The law establishes “competitive need limits”
(CNL) whichCNLs) that require the President to automatically suspend GSP treatment if imports
of a product from a single country reach a specified threshold value ($120130 million in
2005),2007) or if 50% or more of total U.S. imports of a product entering the preference
come from a single
country.48
42
See 71 F.R. 43543.
43
World Trade Organization. Committee on Trade and Development. “Duty-Free, QuotaFree Access for Least-Developed Countries.” Communication from the United States, May
16, 2006. WT/COMTD/W/149.
44
19 U.S.C. 2463(b).
45
country.49
CNL waivers for products imported from BDCs may be granted on the basis of
certain criteria. In deciding whether to grant a waiver, the President must (1) receive
advice from the International Trade Commission as to whether a U.S. domestic
industry could be adversely affected by the waiver, (2) determine that the waiver is
in the U.S. economic interest, and (3) publish the determination in the Federal
Register.50 The President is also required to give “great weight” to the extent to
which the BDC opens its markets and resources the United States, provides
internationally recognized worker rights, and protects intellectual property rights.51
44
19 U.S.C. 2463(a)(1).
45
19 U.S.C. 2463(b).
46
The GSP Subcommittee is a sub-group of the Trade Policy Staff Committee, given
jurisdiction over designating beneficiary countries and covered products in the GSP program
in Executive Order 11846, 40 F.R. 14291, as amended.
46
47
USTR Guidebook, p. 8.
4748
USTR Guidebook, p. 6.
48
19 U.S.C. 2463(c)(2)(A). USTR Guidebook, p. 10.
CRS-13
The President may grant a CNL waiver for a product imported from a BDC. In
deciding whether to grant a waiver, the President must (1) receive advice from the
International Trade Commission as to whether a U.S. domestic industry could be
adversely affected by the waiver, and (2) determine that the waiver is in the U.S.
economic interest, and (3) publish the determination in the Federal Register.49 The
President is also required to give “great weight” to the extent to which the BDC
opens its markets and resources the United States, provides internationally
recognized worker rights, and protects intellectual property rights.50
All competitive need limitations49
19 U.S.C. 2463(c)(2)(A). USTR Guidebook, p. 10.
50
19 U.S.C. 2463(d).
51
19 U.S.C. 2463(d)(2).
CRS-13
All competitive need limits are automatically waived for least-developed
and and
sub-Saharan African beneficiaries.51 A waiver52 Waivers may also be provided (in some
cases cases
automatically) if total U.S. imports of a product from all countries is small or
“de
minimis” ($17.5 million in 2005),5253 or if the GSP-eligible article was not
produced produced
in the United States on January 1, 1995.5354
Rules of Origin. Eligible goods must also meet certain domestic content or
“rules of origin” requirements in order to qualify for GSP status. According to the
statute, duty-free entry is only allowed if the article is imported directly from the
beneficiary country into the United States. In addition, at least 35% of the appraised
value of an eligible product must be the “growth, product or manufacture” of a
beneficiary developing country, as defined by the sum of (1) the cost or value of
materials produced in the beneficiary developing country (or any two or more
beneficiary countries that are members of the same association or countries and are
treated as one country for purposes of the U.S. law) plus (2) the direct costs of
processing in the country.5455 Any inputs from third countries must be “substantially
transformed” into new and different constituent materials if they are to be considered
part of the 35 percent domestic content rule.5556
Annual Review
The U.S. GSP program is subject to annual review by the GSP Subcommittee
of the Trade Policy Staff Committee (TPSC), a body chaired by the Office of the U.S.
Trade Representative (USTR), and including representatives from the Departments
of Agriculture, Commerce, Interior, Labor, State, and the Treasury.56 The GSP
49
19 U.S.C. 2463(d).
50
19 U.S.C. 2463(d)(2).
51
19 U.S.C. 2462(c)(2)(D). USTR Guidebook, p. 11.
52
19 U.S.C. 2463(c)(2)(F).
53
19 U.S.C. 2463(c)(2)(E).
54
19 U.S.C. 2463(a).
55
19 U.S.C. 2463(a)(2) and (3).
5657 The GSP
Subcommittee (also responsible for making initial country eligibility
recommendations) considers and makes recommendations to the President
concerning the continued eligibility of countries to receive benefits. The GSP
subcommittee also resolves questions regarding BDC’s observance of country
practices (such as worker rights, or protection of intellectual property rights);
investigates petitions to add or remove items from the list of eligible products; and
considers which products should be removed on the basis that they are “sufficiently
competitive” or “import sensitive.” In preparation for the annual review, the USTR
52
19 U.S.C. 2462(c)(2)(D). USTR Guidebook, p. 11.
53
19 U.S.C. 2463(c)(2)(F).
54
19 U.S.C. 2463(c)(2)(E).
55
19 U.S.C. 2463(a).
56
19 U.S.C. 2463(a)(2) and (3).
57
Regulations for implementation of the GSP program were issued by the Office of the
United States Trade Representatives at 15 C.F.R. Part 2007. Provisions for the GSP Annual
Review are set out at 15 C.F.R. § 2007.2(c)-(h). Results of the most recent (2005) annual
(continued...)
CRS-14
Subcommittee considers and makes recommendations to the President concerning
the eligibility of countries to receive, or continue to receive, benefits; resolves
questions regarding BDC’s observance of country practices (such as worker rights,
or protection of intellectual property rights); investigates petitions to add or remove
items from the list of eligible products; and considers which products should be
removed on the basis that they are “sufficiently competitive” or “import sensitive.”
In preparation for the annual review, the USTR may also seek an investigation by the
International Trade Commission (ITC) for the purpose of providing advice
concerning any possible modifications to the GSP.57 The TPSC initiated the 2006
Annual Review on October 6, 2005, and announced a second phase on August 8,
2006.58 On January 17, 2007, the USTR announced that the GSP Subcommittee had
received petitions for CNL waivers in connection with the 2006 review, and
requested public comment.59review of products entering under GSP were announced on July 5, 2006 (71 F.R. 38190).
Results of the 2005 annual review are available on the USTR website at [http://www.ustr.
gov/Trade_Development/Preference_Programs/GSP/Section_Index.html].
CRS-14
may also seek an investigation by the International Trade Commission (ITC) for the
purpose of providing advice concerning any possible modifications to the GSP.58
The TPSC initiated the 2006 Annual Review on October 6, 2005, and
announced a second phase on August 8, 2006.59 On January 17, 2007, the USTR
announced that the GSP Subcommittee had received petitions for CNL waivers in
connection with the 2006 review, and requested public comment.60 The 2006 Annual
review, still ongoing as of this writing, is somewhat unique, because the TPSC is also
evaluating whether GSP benefits for certain countries (or their CNL waivers) should
be revoked because their receipt of benefits no longer seems to meet the goals of the
GSP program. This additional evaluation is owing, in part, to concerns expressed by
some in Congress, as well as competitiveness guidance provided by Congress in the
December 2006 GSP extension language.61
Graduation
The President may remove a beneficiary developing country from GSP
eligibility because the country is determined to be sufficiently competitive or
developed that it no longer requires GSP benefits. The President may graduate a BDC
completely, or may do so with respect to the country’s individual products or
industries. Mandatory country graduation occurs when (1) the BDC is determined
to be a “high income country” (as defined by official International Bank for
Reconstruction and Development statistics), or (2) as a result of a review of the
BDC’s advances in economic development and trade competitiveness.6062 The last
beneficiaries to graduate from the GSP program were Bulgaria and Romania,
“effective for each of the countries when it becomes a European Member State” as
of January 1, 2007 (Presidential Proclamation 8098, December 29, 2007).61
109th Congress Developments
In previous years that the GSP was set to expire, its subsequent renewal was
generally considered non-controversial. Even when the preference was allowed to
lapse, it was widely expected that Congress would retroactively renew the preference
56
(...continued)
review of products entering under GSP were announced on July 5, 2006 (71 F.R. 38190).
Results of the 2005 annual review are available on the USTR home page at
[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html].
57
19 U.S.C. 1332(g), 19 U.S.C. 2463
58
70 F.R. 58502 and 71 F.R. 45079, respectively.
59
72 F.R. 2033. The list of petitions is posted at [http://www.ustr.gov/assets/
Trade_Development/Preference_Programs/GSP/asset_upload_file19_10292.pdf].
60
61
19 U.S.C. 2462(e).
Antigua and Barbuda, Bahrain,
and Barbados because the President determined that they had become “high income”
countries.63
Countries also become ineligible for GSP benefits if they formally enter into a
bilateral trading relationship with the United States or other developed country.
Bulgaria and Romania were the last countries to become ineligible for this reason,
“effective for each of the countries when it becomes a European Member State” as
of January 1, 2007 (Presidential Proclamation 8098, December 29, 2007).64
58
19 U.S.C. 1332(g), 19 U.S.C. 2463
59
70 F.R. 58502 and 71 F.R. 45079, respectively.
60
72 F.R. 2033. The list of petitions is posted on the USTR website at [http://www.ustr.gov/
assets/Trade_Development/Preference_Programs/GSP/asset_upload_file19_10292.pdf].
61
U.S. Congress. Senate. Committee on Finance. Hearing. U.S. Preference Programs: Do
They Work?, Statement of Meredith Broadbent, Assistant USTR for Industry, Market
Access, and Communications, May 16, 2007.
62
19 U.S.C. 2462(e).
63
69 F.R. 10131.
64
72 F.R. 459. USTR officially announced the graduation of Bulgaria and Romania on
January 22, 2007 (72 F.R. 2717).
CRS-15
109th Congress Developments
In previous years that the GSP was set to expire, its subsequent renewal was
generally considered non-controversial. Even when the preference was allowed to
lapse, it was widely expected that Congress would retroactively renew the preference
as it did in the Trade Act of 2002.65
as it did in the Trade Act of 2002.62 In 2006, however, renewal of the program was
a matter of some debate and speculation.
As early as January 2006, then-Senate Finance Committee Chairman Chuck
Grassley commented that renewal of GSP was “not a foregone conclusion” and that
its extension was likely to be tied to the United States receiving certain reciprocal
benefits as part of a successful conclusion of the Doha Round of trade talks.6366 In his
opening statement at the hearing for USTR nominee Susan Schwab in May 2006,
Senator Grassley repeated these concerns, mentioning especially India and Brazil,
two major beneficiaries of the GSP that he perceived as “two of the countries most
responsible for holding up the Doha negotiations.”6467 On that basis, he warned that
he might oppose GSP renewal as a result of their obstruction, or make sure that
eligibility requirements are tightened so that more advanced developing countries,
such as India and Brazil, are removed from the program.6568 Finance Committee staff
mentioned that the chairman might be in favor of renewing the program for leastdeveloped beneficiaries, however.6669 On September 19, 2006, Then-Senate
Agriculture Committee Chairman Saxby Chambliss also called for USTR Schwab
to consider revising the GSP program to exclude advanced developing countries such
as Brazil and India.6770
Then-House Ways and Means Committee Chairman Bill Thomas introduced a
bill (H.R. 6406) on December 7, 2006, seeking to renew the GSP program for two
years.6871 The bill language, reached in compromise with the Senate, amended the
statute to direct that not later than July 1 of each year, the President “should” revoke
any existing CNL waiver that has been in effect for five years or more, if a
beneficiary country has exported a quantity of the article that (1) has an appraised
value in the previous calendar year that exceeds 150% of an annually-set trade cap,
or (2) exceeds 75% of the value of total U.S. imports of that product.69
62
65
In each instance since 1993 (the last that the program has expired, it has been allowed to
lapse and has been extended retroactively from the expiration date to the date of enactment.
P.L. 107-210 applied the preference to any goods entering between September 30, 2001, and
August 6, 2002. See Table 43, “GSP Implementation and Extension, 1975-2002.”
6366
“Sen. Grassley Warns of Expiration of Unilateral Trade Preference Programs,”
International Trade Daily, January 26, 2006.
6467
Senate. Committee on Finance. Hearing on the Nomination of Susan C. Schwab to be
United States Trade Representative. Opening Statement of Senator Chuck Grassley. May
16, 2006.
6568
Ibid.
6669
Conversation with Senate Finance staff, April 26, 2006.
6770
Senate. Committee on Agriculture. Letter from Chairman Saxby Chambliss to U.S. Trade
Representative Susan Schwab, September 19, 2006.
6871
House. Committee on Ways and
[http://www.waysandmeans/house/gov].
69
Section 8001 of P.L. 109-432.
Means.
Summary
of
H.R.
6406.
CRS-16 Means. Summary of H.R. 6406, on the committee’s
website at [http://www.waysandmeans/house/gov].
CRS-16
value in the previous calendar year that exceeds 150% of an annually-set trade cap,
or (2) exceeds 75% of the value of total U.S. imports of that product.72
Ways and Means Committee staff indicated that these limitations were based
on ensuring that (1) all BDCs are given an equitable portion of trade preferences
accruing from the United States and (2) BDCs share similar goals with regard to
trade liberalization.7073 Passage of the measure was delayed, largely because certain
Members in support of the U.S. textile industry were concerned about a provision
also included in the bill that would allow Haiti, as well as African countries, to
import yarn from third countries and then sell duty-free apparel made with this yarn
to the United States.7174
Others in Congress, including then-House Ways and Means Ranking Member
Charles Rangel and then-Senate Finance Committee Ranking Member Max Baucus
introduced legislation to extend the GSP and other preferential programs for a shortterm extension of the GSP while Congress continued to deliberate and hold hearings
on possible amendments on it and other preferential tariff programs.
USTR Schwab publicly called for GSP renewal, but also signaled that the Bush
Administration was willing to make modifications to the program to address
congressional concerns. In early August, the USTR requested public comments
“relating to whether the Administration’s operation of the program should be
changed so that benefits are not focused on a few countries and that developing
countries that have not been major traders under the program receive benefits.”7275 To
that end, the TPSC announced its plan to review whether to limit, suspend, or
withdraw the eligibility of some major beneficiaries, including Argentina, Brazil,
Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa,
Thailand, Turkey, and Venezuela on the grounds that in 2005 (1) the total value of
U.S. imports under GSP for each of these countries exceeded $100 million or (2) is
classified by the World Bank as an upper-middle-income economy or accounted for
more than 0.25% of world goods exports.7376 The committee is also reviewing all 83
existing competitive need limitation waivers to see if any of them should be
withdrawn due to changed circumstances.7477
According to the GSP statute, the President has the authority to revise country
eligibility criteria and allowable tariff lines (except for statutorily excluded products)
without congressional action. The administration stated that its favored approach
was to graduate individual industry sectors within countries (as opposed to entire
countries) from receiving GSP benefits.75 However, when announcing the second
70
72
Section 8001 of P.L. 109-432.
73
Comments at meeting of International Section of the District of Columbia Bar
Association, September 21, 2006.
71
74
Van Dongen, Rachael, “Rankled by Trade Measure, North Carolina Lawmakers Delay
House Action,” CQ Today, September 25, 2006.
7275
71 F.R. 45079.
7376
71 F.R. 45079.
74
Ibid.
75
“Schwab Calls for GSP Extension, Signals Openness to Some Changes,” Inside U.S.
Trade, August 4, 2006. The USTR probably referred to a larger number of countries, rather
than India and Brazil alone because, in order to be compliant with U.S. obligations under
(continued...)
CRS-1777
Ibid.
CRS-17
countries) from receiving GSP benefits.78 However, when announcing the second
phase of the review in early August 2006, USTR Schwab’s remarks indicated that the
administration was responding to congressional concern by stating “one of the
concerns that Congress has raised is that GSP benefits go largely to a few countries,
while many developing countries are not trading much under the program. We want
to ensure that we are operating the program as Congress intended.”7679 Some industry
officials reportedly saw this review as the USTR’s way of “controlling the situation”
by showing Congress that it already had the ability to make radical changes to the
program, thus attempting to forestall additional reform legislation.77
With regard to the competitive need limitation provisions included in P.L. 109432, the USTR indicated that it “expects to issue a Federal Register notice in late
February 2007, when full-year 2006 data are available, that will identify those
waivers that meet either of the new thresholds and thus subject to potential
revocation.” As of October 2006 (latest trade data available), a preliminary
assessment of the CNL waivers meeting the new statutory thresholds are: Brazil —
brakes and brake parts ($242 million) and ferrozirconium ($ 0.7 million); Cote
d’Ivoire — kola nuts ($4 million); India — gold jewelry ($1.6 billion) and brass
lamps ($20 million); Philippines — wiring harnesses ($329 million); Thailand —
gold jewelry ($611 million); and Venezuela — methanol ($242 million).78
The USTR is also in the process of considering, as part of its 2006 GSP Annual
Review, petitions for additional CNL waivers, modifications to the list of products
eligible, and the status of certain GSP beneficiaries because of country practices.7980
Legislation
H.R. 6406 (Thomas, introduced December 7, 2006) sought to renew the GSP
program for two years. The bill also sought to amend the GSP statute by giving the
President discretion, after a six-month period, to revoke CNL waivers under certain
conditions. H.R. 6406, as approved by the House by a vote of 212-184, was
appended to the engrossment of the House amendment of the Senate amendment to
H.R. 6111 (see Title VIII).8081 H.R. 6111 was passed in the Senate by unanimous
consent on December 7, 2006, and signed by the President on December 20, 2006
(became P.L.109-432).
75
(...continued)
the GATT, the same criteria for graduating countries from the GSP preference must be
applied to all countries.
76
U.S. Trade Representative. “Administration to Review Whether to Continue Trade
Benefits under the GSP Program,” Press Release, August 7, 2006 [http://www.ustr.gov].
77
“Schwab Calls for GSP Extension, Signals Openness to Some Changes,” Inside U.S.
Trade, August 4, 2006.
78
U.S. Trade Representative. “Ambassador Schwab Announces Process to Respond to
Congressional Changes to GSP Program.” Press Release, December 20, 2006.
79
72 F.R. 2033.
80
Pursuant to section 2 of H.Res. 1100, the rule providing for its consideration.
CRS-18
H.R. 6346 (Thomas, introduced December 5, 2006) sought to renew the GSP
program for two years. The bill also sought amend the GSP statute by limiting the
application of CNL waivers as of January 1, 2007, for certain countries and products.
S. 3933 (Inhofe, introduced September 25, 2006), sought to renew the GSP for
three years. The measure also sought to amend the factors affecting country
designation to include “the country’s position and level of cooperation with the
United States in multilateral trade negotiations.”
H.R. 6142, Title II (Thomas, introduced September 20, 2006), sought to renew
the GSP program for two years. The bill would also have prohibited the application
of CNL waivers as of January 1, 2007 for certain products and countries. The bill
also sought to extend for two years a fabric provision in AGOA that allows subSaharan beneficiaries to use fabric from third countries in their duty-free exports to
the United States, as well as extend similar benefits to Haiti.
78
“Schwab Calls for GSP Extension, Signals Openness to Some Changes,” Inside U.S.
Trade, August 4, 2006. The USTR probably referred to a larger number of countries, rather
than India and Brazil alone because, in order to be compliant with U.S. obligations under
the GATT, the same criteria for graduating countries from the GSP preference must be
applied to all countries.
79
U.S. Trade Representative. “Administration to Review Whether to Continue Trade
Benefits under the GSP Program,” Press Release, August 7, 2006, [http://www.ustr.gov].
80
“Schwab Calls for GSP Extension, Signals Openness to Some Changes,” Inside U.S.
Trade, August 4, 2006.
81
Pursuant to section 2 of H.Res. 1100, the rule providing for its consideration.
CRS-18
H.R. 6076 (Rangel, introduced September 15, 2006), the Emergency Trade
Program Extension Act of 2006, and its companion bill, S. 3904 (Baucus, introduced
the same day) seek to extend the GSP program, the Andean Trade preference, and
preferential treatment of apparel articles from AGOA countries for two years. The
bills also would require hearings in the relevant House and Senate committees on the
future and efficacy of trade preference programs, as well as their compatibility with
U.S. WTO obligations.
H.R. 5070 (Rangel, introduced March 30, 2006), the Trade Preference
Extension and Expansion Act of 2006, sought to renew the GSP program for one year
(until December 31, 2007) and implement the duty-free quota-free initiative with
respect to certain textiles, apparel, and agricultural products.
S. 191 (Smith, introduced January 31, 2005), the Tariff Relief Assistance for
Developing Economies (TRADE) Act, and its companion bill H.R. 886 (Kolbe,
introduced February 17, 2005) sought to extend AGOA-type benefits to Asian and
Pacific least-developed countries. It would have, subject to an import sensitivity test
by the ITC, include as eligible for duty-free access watches, import-sensitive
electronic, steel, and glass articles; footwear; handbags; and luggage. It would also
have provided duty-free and quota-free benefits for textiles and apparel similar to the
benefits provided by AGOA. The 15 countries designated to receive benefits were
Afghanistan, Bhutan, Bangladesh, Cambodia, East Timor, Samoa, Solomon Islands,
Sri Lanka, Tuvalu, Vanuatu, Yemen, Kiribati, Laos, Maldives, and Nepal.
Effectiveness of GSP
The statutory goals of the GSP are, in part, to (1) promote the development of
developing countries, (2) promote trade, rather than aid, as a more efficient way of
promoting economic development, (3) stimulate U.S. exports in developing country
CRS-19
markets, and (4) promote trade liberalization in developing countries.8182 It is difficult
to assess whether or not the program has achieved these goals, however, because the
GSP is only one of many such foreign aid initiatives employed by the United States
to assist poorer countries. Economic success within countries is also related to
internal factors, such as stability, wise policy decisions, availability of infrastructure
to foster industry, and legal/financial frameworks that encourage foreign investment.
What follows, therefore, are general comments, rather than hard data, about the
impact of GSP on developing countries, and possible economic effects on the U.S.
market. The positions of various stakeholders regarding the value of the program are
also discussed.
82
P.L. 98-573, section 501(b), 19 U.S.C. 2461 note. Additional factors are to allow for
differences in developing countries; help developing countries generate foreign exchange
reserves, further integrate developing countries into the international trading system; and
encourage developing countries to eliminate trade barriers, guard intellectual property rights,
provide worker rights; and address concerns of the United States with regard to adverse
affects on U.S. producers and workers and compliance with GATT obligations.
CRS-19
Effects on Developing Countries
In the last ten years, total U.S. imports from BDCs have increased dramatically,
from $107.8 billion in 1996 to $278.0 billion in 2005 (see Figure 1). This may
indicate, in very general terms, that the GSP and other preferential programs have
helped create some export-driven growth in developing countries. Total exports
entering under the preference have also increased markedly, from $11.6 billion in
1996 to $26.732.6 billion in 20052006. However, the percentage of goods entering the United
States under the GSP program, relative to total U.S. imports from BDCs, has
remained relatively flat — at around 10%. This may be due, in part, to the presence of
of the automatic competitive need limits (absent a CNL waiverCNL waivers) on GSP-eligible
products,
and mandatory graduation of countries from the program.
Another indicator of the GSP’s impact on developing countries is the utilization
rate of the preference. At first glance, it seems that only a few beneficiary developing
countries use GSP to a great extent. For example, in 2005, only 21 of the 135 GSPeligible countries actually exported more than $100 million worth of goods to the
United States under the preference (see Table 6, below). However, as one study
pointsHowever, as one study pointed out, the apparent
lack of utilization masks the fact that many GSP-eligible
goods may also be imported
duty-free under other U.S. preference schemes, such as
AGOA. The study also
illustrated that, for certain industries in BDCs, the positive
impact of GSP is quite
significant. For example, for all agricultural commodities
eligible for GSP treatment,
the GSP utilization rate was approximately 58 percent.82
83 Therefore, for individual
industries in developing countries, the positive impact of
the GSP might be seen as quite significant.
81
Public Law 98-573, section 501(b), 19 U.S.C. 2461 note. Additional factors are to allow
for differences in developing countries; help developing countries generate foreign exchange
reserves, further integrate developing countries into the international trading system; and
encourage developing countries to eliminate trade barriers, guard intellectual property rights,
provide worker rights; and address concerns of the United States with regard to adverse
affects on U.S. producers and workers and compliance with GATT obligations.
82
quite significant.
Figure 1. U.S. Imports from GSP Countries
300
Source: ITC Trade Dataweb
250
200
Total U.S. Imports from
GSP Countries
150
100
50
Total U.S. Imports Entering
under GSP
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
83
Organization for Economic Cooperation and Development (OECD). Agriculture and
Food. Preferential Trading Arrangements in Agricultural and Food Markets The Case of the
European Union and the United States: United States Preference Schemes. Volume 2005,
No. 1, p. 81.
CRS-20
Figure 1. U.S. Imports from GSP Countries
300
Source: ITC Trade Dataweb
250
200
Total U.S. Imports from
GSP Countries
150
100
50
Total U.S. Imports Entering
under GSP
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Many developing countries with a natural competitive advantage in certain
products use trade preferences such as the GSP to gain a foothold in the international
market. For example, India and Thailand have well-established jewelry industries,
and Argentina enjoys an advantage in certain leather goods that are imported under
the preference. Exporters in these industries have been able to expand their
international reach through GSP programs. On the other hand, some countries may
be encouraged by preferential programs to develop industry sectors where they will
never be able to compete, thus diverting resources from other industries that might
actually become competitive over time (trade diversion).8384 Although the costs of
trade diversion are real, empirical evidence suggests that the overall effects of GSP
are relatively small.8485
The lack of reciprocity in the GSP program could also result in long-term costs
for beneficiary countries. In multilateral trade negotiations, such as the DDA,
countries may engage in reciprocal tariff reductions, meaning that all parties agree
to reduce their tariffs. By avoiding such reciprocal concessions, some developing
countries may have tended to keep in place protectionist trade policies that may, in
fact, impede their long-term growth. Moreover, these preferences can become an
impediment to negotiations as developing countries seek ways of maintaining their
preferences from eroding.
83
OECD. “Making Open Markets Work for Development.” Policy Brief, October 2005, p.
2.
84
Laird, Samuel and Andre Sapir. Tariff Preferences. In Finger, J. Michael and Andrzej
Olechowski, eds. The Uruguay Round: A Handbook on the Multilateral Trade Negotiations.
Washington, World Bank, 1987, p. 105.
CRS-21
For this reason, many economists prefer multilateral, nondiscriminatory tariff
cuts because preferential tariff programs, such as the GSP, can lead to inefficient
production and trade patterns. When tariffs are reduced across-the-board, rather than
in a preferential manner, countries tend to produce and export on the basis of their
comparative advantage — thus exporting products that they produce relatively
efficiently and importing products that others produce relatively efficiently.
However, while some developing country producers (especially those whose products
do not qualify under GSP) may benefit from multilateral tariff reductions, other
industries may be hurt because their margin of preference under GSP is reduced.
Economic Effects on the U.S. Market
Overall effects of the GSP on the U.S. economy are relatively small. Imports
under the program in 20052006 represented about $26.732.6 billion, in comparison to total
U.S. imports of $1.6 trillion — or about 1.6 percent9 trillion. In addition, the rate of increase
of imports entering
under GSP in the past ten years is relatively flat (see Figure 1),
indicating that there
may be little impact on the U.S. market as a whole by extending
the preference. In
federal budgetary terms, the Congressional Budget Office (CBO)
estimates that estimated that
84
OECD. “Making Open Markets Work for Development.” Policy Brief, October 2005, p.
2.
85
Laird, Samuel and Andre Sapir. Tariff Preferences. In Finger, J. Michael and Andrzej
Olechowski, eds. The Uruguay Round: A Handbook on the Multilateral Trade Negotiations.
Washington, World Bank, 1987, p. 105.
CRS-21
revenue losses through forgone tariff receipts would amount to about
$3.1 billion if
GSP were extended from 2007 to 2011.8586
U.S. producers of import-competing products are largely protected from severe
economic impact. First, certain products, such as textiles and apparel, are designated
“import sensitive” and therefore ineligible for duty-free treatment. Second,
“competitive need limits” (discussed in more detail above) are triggered when
imports of a product from a single country reach a specified threshold value or when
50% of total U.S. imports of a product come from a single country.8687 Third, U.S.
producers may petition the USTR that GSP treatment granted to eligible articles be
withdrawn.8788 The fact that, as illustrated in Figure 1, the dollar amount of imports
entering under GSP has remained fairly level for at least the past 10 years may also
indicate that the GSP has little impact on most domestic producers.
Many U.S. manufacturers and importers benefit from the lower cost of
consumer goods and raw materials imported under the GSP program. U.S. demand
for certain individual products, such as jewelry, leather, and aluminum, is quite
significant.88 However, it is difficult to gauge, other than anecdotally, the overall
85
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2007 to
2016, Table 4.10., “Effects of Extending Tax Provisions Scheduled to Expire Before 2016.”
CBO estimates that revenue losses would be %0.3 billion in FY2006, $0.6 billion in FY2007
and 0.7 billion in 2008 and 2009. Estimates are based on the assumption that the quantity
of imports under the preference will increase over the term, but do not take into account any
possible lowering of tariffs or reductions in value of imports.
86
19 U.S.C. 2463(c).
87
15 C.F.R. 2007.0(b).
88
In some product categories, imports under GSP account for 25 percent or more of total
U.S. imports, including leather (45 percent of all U.S. leather imports), jewelry and jewelry
(continued...)
CRS-2289 However, it is difficult to gauge, other than anecdotally, the overall
impact of the GSP program on the U.S. market when compared to similar imports
from other countries that do not receive the preference. It is possible that some
merchandise entering under the GSP could be competitive even without the
preference, but it is also possible that the duty-free status is the primary factor that
makes imports from these countries more attractive.
Stakeholders’ Concerns
Supporters of the GSP include beneficiary developing country governments and
exporters, U.S. importers, and some U.S. manufacturers who use inputs entering
under GSP in downstream products. Some policymakers favor GSP renewal
because they believe it is an important development and foreign policy tool. Those
who oppose the program include U.S. producers who manufacture competing
products, and some in Congress who favor more reciprocal approaches to trade
policy. What follows is a thematic approach to the major topics of discussion in the
GSP renewal debate.
86
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2007 to
2016, Table 4.10., “Effects of Extending Tax Provisions Scheduled to Expire Before 2016.”
CBO estimates that revenue losses would be %0.3 billion in FY2006, $0.6 billion in FY2007
and 0.7 billion in 2008 and 2009. Estimates are based on the assumption that the quantity
of imports under the preference will increase over the term, but do not take into account any
possible lowering of tariffs or reductions in value of imports.
87
19 U.S.C. 2463(c).
88
15 C.F.R. 2007.0(b).
89
In some product categories, imports under GSP account for 25 percent or more of total
U.S. imports, including leather (45 percent of all U.S. leather imports), jewelry and jewelry
parts (43 percent), ferroalloys (36 percent), copper wire (25 percent), and aluminum (25
percent).
CRS-22
“Special and Differential Treatment.” Developing countries have long
maintained that “special and differential treatment,” such as that provided by the
GSP, is an important assurance of access to U.S. and other developed country
markets in the midst of increasing globalization.8990 Many of these countries have built
industries (or segments of industries) based on receiving certain tariff preferences.
Those who oppose automatic renewal of GSP have expressed the desire to see
some “reciprocity” and “appreciation” on the part of BDCs — in the form of offers
of improved market access — in return for renewal of the program.9091 Some of these
policy makers favor continued progress in bilateral or multilateral negotiations in
lieu of extending automatic, nonreciprocal benefits such as the GSP. Others have
also charged some of the more advanced BDCs for obstructing multilateral trade
talks, especially in the WTO Doha Round.
Some observers have stated that many in Congress are becoming more skeptical
about the efficacy of any further trade concessions as they hear from constituents
about lost jobs and other domestic hardships attributed to global competition.91 Other
88
(...continued)
parts (43 percent), ferroalloys (36 percent), copper wire (25 percent), and aluminum (25
percent).
8992 Other
Members believe that extension and expansion of these programs “will send a signal
to developing countries that we will stand with them as they grow.”93
Erosion of Preferential Margins. Developing countries have expressed
concern about the overall progressive erosion94 of preferential margins as a result of
across-the-board tariff negotiations within the context of multilateral trade
negotiations such as the Doha Round. In 1997, a study prepared by the Organization
for Economic Cooperation and Development (OECD) found that the degree of
erosion of preferences resulting from Uruguay Round (1986-1994) tariff concessions
by the Quad countries (Canada, European Union, Japan, United States) was indeed
significant.95 Some economists point out that if multilateral rounds of tariff
90
Women in International Trade (WIIT) Event. The Value of Attending a World Trade
Organization Ministerial Conference, January 20, 2006.
9091
“Sen. Grassley Warns Brazil, India, on GSP; Stops Short of Predicting Graduation,”
Inside U.S. Trade, May 19, 2006. “Thomas Urges USTR to Shift from Lagging Doha Round
to Completing FTAs.” Inside U.S. Trade, April 7, 2006.
9192
Washington International Trade Association (WITA) event. “The 2006 Congressional
Trade Agenda,” February 15, 2006.
CRS-23
Members believe that extension and expansion of these programs “will send a signal
to developing countries that we will stand with them as they grow.”92
Erosion of Preferential Margins. Developing countries have expressed
concern about the overall progressive erosion93 of preferential margins as a result of
across-the-board tariff negotiations within the context of multilateral trade
negotiations such as the Doha Round. In 1997, a study prepared by the Organization
for Economic Cooperation and Development (OECD) found that the degree of
erosion of preferences resulting from Uruguay Round (1986-1994) tariff concessions
by the Quad countries (Canada, European Union, Japan, United States) was indeed
significant.94 Some economists point out that if multilateral rounds of tariff
93
“Rangel Bill Would Extend Trade Benefits for Developing Countries,” Press Release,
March 30, 2006.
94
While overall multilateral preferences may be eroding, the tariff benefits for individual
items is still quite significant. For example, the U.S. tariff on flashlights (eligible for dutyfree access for all BDCs) is 12.5 percent ad valorem. Some GSP-eligible jewelry items have
tariffs as high as 13.5 percent.
95
Organization for International Cooperation and Development. Market Access for the
Least-Developed Countries: Where are the Obstacles? Published by World Trade
Organization, WT/LDC/HL/19*, October 21, 1997, Table 12, p. 47. The study estimated
that in 1997, the loss in the Canadian market was approximately 71 percent, in the EU 26
percent, in Japan 34 percent, and in the United States, 50 percent. (Hereinafter, OECD
(continued...)
CRS-23
reductions continue, the preference may disappear completely unless GSP tariff
headings are expanded to include more “import-sensitive” products.9596
Other economists say that preference erosion could be more than outweighed
by the benefits of increased market access, even for developing countries, brought
about by multilateral trade liberalization.9697 These economists say that, rather than
continuing GSP and other preferential programs (either through inertia or concern
that removing them would be seen as “acting against” the world’s poorest
populations), a better approach might be to “assist them in addressing the constraints
that really underlie their sluggish trade and growth performance.”9798
Under-Utilization of GSP. Some who oppose the program say that the
proportionately small amount of trade entering under the GSP means that the
program is under used, and therefore can be easily eliminated. Some supporters
agree that this is especially true for many least-developed country beneficiaries, who
historically are not large users of the preference.
Some in Congress favor graduating some of the more advanced BDCs, thinking
that this would leave more room for other countries, especially LDCs, to take greater
92
“Rangel Bill Would Extend Trade Benefits for Developing Countries,” Press Release,
March 30, 2006.
93
While overall multilateral preferences may be eroding, the tariff benefits for individual
items is still quite significant. For example, the U.S. tariff on flashlights (eligible for dutyfree access for all BDCs) is 12.5 percent ad valorem. Some GSP-eligible jewelry items have
tariffs as high as 13.5 percent.
94
Organization for International Cooperation and Development. Market Access for the
Least-Developed Countries: Where are the Obstacles? Published by World Trade
Organization, WT/LDC/HL/19*, October 21, 1997, Table 12, p. 47. The study estimated
that in 1997, the loss in the Canadian market was approximately 71 percent, in the EU 26
percent, in Japan 34 percent, and in the United States, 50 percent. (Hereinafter, OECD
study).
95
Sanchez Arnau, p. 282.
96
Baldwin, R.E. and Murray, T. “MFN Tariff Reductions and Developing Country Trade
Benefits Under the GSP,” Economic Journal 87:345, March 1977, p. 46.
97
OECD study, p. 27.
CRS-24
advantage of the program.98
advantage of the program.99 However, some U.S. business interests have indicated
that, absent GSP eligibility, importers are likely to seek out the best alternative source
for the goods — which would probably be China.99100
Some observers have also suggested that the GSP may not be used by some
countries due to unfamiliarity with the program, or because some BDC governments
do a poor job of promoting the existence of available opportunities under the
preference.100101 Such problems could be addressed through U.S. trade capacity
building efforts.
Trade as Foreign Assistance. The GSP program is supported by many
observers who believe that it is an effective, low-cost means of providing economic
help to developing countries. They maintain that encouraging trade by private
companies through the GSP stimulates economic development much more effectively
95
(...continued)
study).
96
Sanchez Arnau, p. 282.
97
Baldwin, R.E. and Murray, T. “MFN Tariff Reductions and Developing Country Trade
Benefits Under the GSP,” Economic Journal 87:345, March 1977, p. 46.
98
OECD study, p. 27.
99
“USTR Considers Withholding Trade Benefits from India, Brazil in Wake of WTO
Debacle,” International Trade Daily, August 9, 2006.
100
Comments of various industry representatives, District of Columbia Bar International
Section meeting on GSP, September 21, 2006.
101
GAO Report, p. 61.
CRS-24
than intergovernmental aid and other means of assistance.102
than intergovernmental aid and other means of assistance.101 Economic development
assistance through trade is a long-standing element of U.S. policy, and other trade
promotion programs such as the AGOA and the Caribbean Basin Trade Partnership
Act (CBTPA) are also based on this premise. However, no other U.S. preference
program is more broadly based or encompasses as many countries as the GSP.
Conditionality of Preferences. Additionally, some supporters of the GSP
and other non-reciprocal preferences believe that the conditions (such as worker
rights, intellectual property requirements, or drug eradication) incumbent on
developing countries if they are to qualify for GSP status provide the United States
with international political leverage that can be used to preserve U.S. foreign and
commercial interests.102103
However, some beneficiary countries actively object to these “country practice”
provisions and regard them as penalties.103104 Some countries (such as Brazil and India)
currently targeted for eligibility review perceive that such action indicates that they
are being penalized for advocating for their own national development goals in
multilateral talks.104105
Moreover, intellectual property industry representatives, worker rights groups,
and other constituencies in the United States sometimes oppose, in their view, the
98
“USTR Considers Withholding Trade Benefits from India, Brazil in Wake of WTO
Debacle,” International Trade Daily, August 9, 2006.
99
Comments of various industry representatives, District of Columbia Bar International
Section meeting on GSP, September 21, 2006.
100
GAO Report, p. 61.
101
Ibid.
102
The Coalition for GSP. The U.S. Generalized System of Preferences Program: An
Integral Part of the U.S. Economy. January 1997, p. 3.
103
104
GAO Report, p. 100.
September 6, 2006 public comment letter to USTR from ActionAid International USA
[http://www.ustr.gov].
CRS-25
U.S. administration’s allegedly inconsistent enforcement of these provisions.105106 For
example, one lobbying group expressed that they were “shocked and dumbfounded”
that the GSP is being annually renewed for such countries as Brazil, Venezuela, and
Russia in spite of intellectual property rights violations.106107 This domestic opposition
may indicate that, at times, the conditionality of the preferences is of limited
usefulness.
Lower Costs of Imports. U.S. importers of goods who import components,
parts, or materials duty-free under the GSP maintain that the preference results in
lower costs for these intermediate goods which, in turn, can be passed on to
consumers. In a May 1, 2006 letter to the House Ways and Means and Senate
Finance committees, a coalition of importers and retailers warned that if the GSP was
allowed to expire, or if its benefits were reduced, it “would impose a costly hardship
on not only beneficiary countries but their American customers as well.”107 Industry108 Industry
102
Ibid.
103
The Coalition for GSP. The U.S. Generalized System of Preferences Program: An
Integral Part of the U.S. Economy. January 1997, p. 3.
104
GAO Report, p. 100.
105
September 6, 2006 public comment letter to USTR from ActionAid International USA,
[http://www.ustr.gov].
106
See GAO Report, Chapter 5, p. 97 ff.
107
“Grassley Throws Up Obstacle to Trade-Preference Renewal.” Congress Daily,
September 18, 2006.
108
“U.S. Retailers, Importers Push for GSP Renewal Despite Opposition,” Inside U.S.
(continued...)
CRS-25
representatives mentioned that smaller domestic manufacturers who regularly import
inputs under the preference may be especially affected by a lapse or expiration of the
program because they are less able to adjust to the increased costs that would
result.108109
On the other hand, even though most U.S. producers are shielded by the
automatic safeguards triggered by increased imports under the GSP, some U.S.
manufacturers and workers might be adversely affected by the program due to CNL
waivers.109110 For example, in 2004, three U.S. producers of titanium complained that
the Bush Administration refused to terminate duty-free market access for wrought
titanium (ordinarily subject to a 15 percent duty assessment), despite a petition asking
the government not to waive the import limits. Russian imports of titanium were
allowed to continue to enter duty-free under the Presidential waiver even though its
sales made up more than 60 percent of U.S. imports.110111
Conclusion and Options for Congress
The U.S. program (as established by Title V of the Trade Act of 1974) was
extended for all countries (for which it had not previously been extended) through
December 31, 2008, in section 8002 of P.L. 109-432. The African Growth and
Opportunity Acceleration Act of 2004 (P.L.108-274) had previously authorized an
extension of GSP preferences for all beneficiary developing sub-Saharan African
105
See GAO Report, Chapter 5, p. 97 ff.
106
“Grassley Throws up Obstacle to Trade-Preference Renewal.” Congress Daily,
September 18, 2006.
107
“U.S. Retailers, Importers Push for GSP Renewal Despite Opposition,” Inside U.S.
Trade, May 5, 2006.
108
Discussion with officials of the Joint Industry Group, August 18, 2006.
109
19 U.S.C. 2463(c).
110
“Administration Decides to Keep Russian GSP Benefits for Titanium,” Inside U.S. Trade,
July 9, 2004.
CRS-26
countries under the African Growth and Opportunity Act (AGOA) through
September 30, 2015.111112 The extension in the 109th Congress represented the first time
since 1984 that the program had been extended without a lapse (see Table 53).
In the 110th Congress, the House Ways and Means Trade Subcommittee has
included an evaluation of effectiveness of the GSP and other trade preference
programs in its oversight plan, and the House Ways and Means and Senate Finance
Committees have each expressed an interest in evaluating program effectiveness. In
. In addition, since Congress extended the GSP until
December 2008, renewal beyond
that date is likely to be a legislative issue for the
second session.
Several options are available to Congress with respect to the treatment of the
GSP program. As explained more fully below, Congress could allow the GSP
program to expire, support reciprocal tariff and market access benefits through free
trade agreements, renew the GSP for least-developed beneficiaries only, renew the
108
(...continued)
Trade, May 5, 2006.
109
Discussion with officials of the Joint Industry Group, August 18, 2006.
110
19 U.S.C. 2463(c).
111
“Administration Decides to Keep Russian GSP Benefits for Titanium,” Inside U.S. Trade,
July 9, 2004.
112
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
CRS-26
existing program for all beneficiaries without major amendments, or extend the
program in a modified form. Although the GSP is a unilateral and non-reciprocal
tariff preference, any changes to the program would need to be considered in light of
the requirements of the WTO Enabling Clause, as it has been interpreted by the WTO
Appellate Body. At a minimum, the United States would need to notify and possibly
consult with other WTO Members regarding any withdrawal or modification of GSP
benefits, as required by ¶ 4 of the Clause. The United States could also pursue a
WTO waiver were any modifications of the GSP program considered not to comport
fully with U.S. WTO obligations.
Allow GSP To Expire
The GSP statute will automatically expire for all beneficiary developing
countries on December 31, 2008,112113 except for all beneficiary sub-Saharan African
countries, for which the preference is authorized through September 30, 2015.113114 No
legislative action would be required to pursue this option.
Before the preference was renewed in 2006, some believed that if the GSP were
was
not renewed, it might spur positive movement in the WTO Doha Development
Agenda.
This position was presented by then-House Ways and Means Chairman Bill Thomas
Thomas and then-Senate Finance Committee Chairman Chuck Grassley.114115 A similar position
position was also advocated in early 2002 when, while testifying on intellectual property
property issues, then-USTR Robert B. Zoellick mentioned that “the threat of loss of
GSP ...
benefits has proven to be an effective point of leverage with some of our trading
111
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
112
19 U.S.C. 2465.
113
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
114
“Thomas Urges USTR to Shift from Lagging Doha Round Completing FTAs,” Inside
U.S. Trade, April 7, 2006.
CRS-27
trading partners.”115116 Since India and Brazil (major recipients of GSP preferences and
two of
the primary advocates for developing nations in the WTO talks) faced
expiration of
the preference, some asserted that they might have been moved closer
to the U.S.
position in the negotiations. Due to the ongoing USTR review and the
bill language
suggesting certain criteria for limiting CNL waivers, these countries may
could still lose
these waivers for some (or all) products, or be graduated from the
GSP program
despite its extension.
On the other hand, country graduation, limitations on CNL waivers, or other
modifications to the GSP program could also weaken the hand of U.S. negotiators
in the DDA because it could no longer be used as an incentive for participation.
Many developing nations already perceive the United States as generally unwilling
to accept multilateral efforts to grant additional “special and differential treatment”
for developing country WTO members (an important DDA goal) unless more
reciprocal concessions for improved market access are made for U.S. products. As
a result, GSP expiration could cause the negotiating positions of developing countries
113
19 U.S.C. 2465.
114
19 U.S.C. 2466b, as amended by section 7 of the AGOA Acceleration Act of 2004 (P.L.
108-274).
115
“Thomas Urges USTR to Shift from Lagging Doha Round Completing FTAs,” Inside
U.S. Trade, April 7, 2006.
116
U.S. Senate, Committee on Foreign Relations. “Examining the Theft of American
Intellectual Property at Home and Abroad.” Hearing, February 12, 2002, S. Hrg. 107-457
CRS-27
to harden, rather than soften, as they seek to make up for these lost benefits through
the negotiations.
The United States could also lose substantial leverage in addressing important
trade-related foreign policy and development concerns that beneficiary nations must
accept prior to BDC designation. CurrentlyFurthermore, interested parties may file petitions
now file
petitions requesting the USTR to review the GSP status of BDCs based on these statutory
statutory criteria (e.g. worker rights practices). If the program were no longer in
effect, these
avenues of encouraging certain developing country practices would no
longer be
available.116117
Some domestic manufacturers, such as the U.S. automobile industry, may be
adversely impacted by GSP expiration or modification, at least in the short term, due
to dependence on duty-free (thus lower-cost) manufacturing inputs imported under
the preference. Smaller businesses could be disproportionately affected because they
are less able to adjust to increased costs of factors of production. On the other hand,
some U.S. manufacturers of import-competing products might, at least marginally,
benefit.
Some least-developed GSP recipients could be harmed substantially by GSP
expiration or other legislative changes. For example, Equatorial Guinea (9591% of its
exports, mostly petroleum products, enter under GSP in 20052006) and Angola (4859% of
its exports to the United States entered under GSP in 2006), both sub-Saharan African
African countries not designated recipients under the AGOA preference,117118 are both leastdeveloped
least-developed GSP beneficiaries. Other BDCs or regions with a significant percentage
percentage of U.S. trade entering under the GSP in 2005 included Yemen (least-developed,
115
U.S. Senate, Committee on Foreign Relations. “Examining the Theft of American
Intellectual Property at Home and Abroad.” Hearing, February 12, 2002, S. Hrg. 107-457
116
15 C.F.R. 2007.0(b).
117
See 66 F.R. 49059.
CRS-28
about 74leastdeveloped, about 87%), the West Bank (74about 29%), Zimbabwe (6466%), Armenia (59
(60%), Paraguay
(52 (48%), Mozambique (least-developed, 5170%), and Norfolk Island (51Niue (70%) and
Togo (64%).
Scrap GSP in Favor of Free-Trade Agreements or Regional
Trading Arrangements
Some in Congress have suggested that the GSP should be abandoned in favor
of free trade agreements (FTAs) or regional trading arrangements (RTAs) that would
provide the United States with reciprocal benefits. Such arrangements could provide
additional markets for U.S. exports, as well as stimulate the growth of industries in
developing-country trading partners. Thus, U.S. exporters, as well as importers,
could benefit from reciprocal tariff concessions. Since these tariff concessions under
these agreements would probably apply to many more goods and industries than are
covered by the existing GSP program, they might increase the likelihood of acrossthe-board economic stimulation in the developing country trading partner. In
addition, absent a favorable conclusion to the DDA negotiations, FTAs and RTAs
could also be used as a way to lead countries toward further multilateral trade
liberalization.
117
15 C.F.R. 2007.0(b).
118
See 66 F.R. 49059.
CRS-28
However, such reciprocal agreements could actually harm import-competing
U.S. manufacturers more than unilateral preferences under the GSP, because
automatic safeguards written into the statute, such as competitive need limitations,
might no longer apply. Any such agreement could also involve a greater number of
U.S. tariff concessions, thus certain import-sensitive items ineligible for GSP status
could also be on the table. On the other hand, other U.S. manufacturers might benefit
from the increased market access that an FTA or RTA would provide.
Some developing countries could also be put at a greater disadvantage in an
FTA or RTA because they are ill-equipped to implement the additional standards that
accompany a comprehensive U.S. free trade agreement118agreement119 Indeed, some countries
such as South Africa and other countries in the South African Customs Union
(SACU) have failed to reach FTAs with the United States due to inability to reach
these standards. In addition, since the GSP is the largest U.S. preferential trading
program, some developing countries that currently receive GSP benefits could easily
be left out of such agreements, either because their markets are of little commercial
value to U.S. interests, or because time constraints involved in the negotiating
process do not make it worthwhile for U.S. negotiators to include them.
Authorize GSP Only for Least-Developed Countries
Some in Congress favor modifying the GSP so that it applies only with respect
to least-developed BDCs. Since many African least-developed beneficiaries will
continue to receive the GSP preference until mid-2015 under AGOA, an LDC-only
GSP extension would apply only to the following 20 countries: Afghanistan, Angola,
Bangladesh, Bhutan, Burkina Faso, BurundiComoros, Cambodia, Central African Republic,
118
Vamvakidis, Ahtanasios. “Regional Trade Agreements or Broad Liberalization: Which
Path Leads to Faster Growth?” IMF Staff Papers, Vol. 46:1, March 1999, p. 42.
CRS-29
Comoros, Comoros,
Congo (DROCKinshasa), Equatorial Guinea, Haiti, Kiribati, Mauritania, Nepal, Samoa,
Somalia, Togo, Tuvalu, Vanuatu, and Yemen.
Of these countries, only sevensix (Afghanistan, Angola, Congo (DROC),
Congo [Kinshasa], Equatorial Guinea,
Samoa, Somalia, and Yemen) export goods that account for more
than 10% of total
U.S. imports under the program. Therefore, if the preference were
extended to LDCs
only (absent any other modifications), these countries, at least
initially, would be the
primary recipients to benefit.
Modify GSP
Another possible approach for Congress would be to modify the Generalized
System of Preferences scheme as it applies to all beneficiary developing countries,
including least-developed countries.
Restrict Application of Preference. The following is a list of possible
approaches if Congress desired to extend, but further restrict, imports under the GSP:
!
119
Refine statutory criteria for GSP treatment. For example, make the
existing discretionary criteria mandatory requirements.
Vamvakidis, Ahtanasios. “Regional Trade Agreements or Broad Liberalization: Which
Path Leads to Faster Growth?” IMF Staff Papers, Vol. 46:1, March 1999, p. 42.
CRS-29
!
Strengthen the requirement that benefits under the preference may
(or must) be terminated for non-compliance with mandatory or
discretionary criteria. Add additional criteria to include movement
toward sustainable development or environmental preservation.
!
Reconsider criteria for graduation of countries from GSP, or
strengthen the provision that allows graduation of individual
industries within beneficiary countries. For example, the President
could be required to grant BDC status only if a country (1) complies
with all mandatory requirements and (2) has a per-capita income
below a certain level.
!
Modify the rules of origin requirement for qualifying products to
require that a greater percentage of the direct costs of processing
operations (currently 35%)119120 originate in beneficiary developing
countries.
!
Lower the threshold at which the President may (or must) withdraw,
suspend, or limit the application of duty-free treatment of certain
products (competitive need limitation).120
119
19 U.S.C. 2463(a)(2)(A)(ii)(II). The statute further specifies that a product may be made
in one BDC or any two or more such countries that are members of the same association of
countries and are treated as one under section 19 U.S.C. 2467(2). For beneficiary countries
under AGOA, this percentage may also include up to 15 percent (as to value) of U.S. origin
(19 U.S.C. 2466a(b)(2)).
120
19 U.S.C. 2463(c).
CRS-30
121
!
Require the President to more frequently and actively monitor
(currently an annual process) the economic progress of beneficiary
countries, as well as compliance with mandatory and discretionary
criteria.
!
Weed out countries considered “unfriendly” to U.S. interests, such
as Venezuela, India, and Brazil.
Expand Application of GSP. Were Congress to expand or enhance
application of the GSP, the following options could be exercised:
121
!
Expand the list of tariff lines permitted duty-free access. Allow
some “import sensitive” products (in which developing countries
often have a competitive advantage) to receive preferential access.
!
Improve rule of origin requirements to provide more predictability.
Current rules provide no measurable definition of “substantial
transformation,” therefore, U.S. officials often make eligibility
decisions on a case-by-case basis; therefore BDCs sometimes have
no predictable way of knowing before shipment whether certain
120
19 U.S.C. 2463(a)(2)(A)(ii)(II). The statute further specifies that a product may be made
in one BDC or any two or more such countries that are members of the same association of
countries and are treated as one under section 19 U.S.C. 2467(2). For beneficiary countries
under AGOA, this percentage may also include up to 15 percent (as to value) of U.S. origin
(19 U.S.C. 2466a(b)(2)).
121
19 U.S.C. 2463(c).
CRS-30
foreign components can be included as part of the 35 percent
domestic content.121122
122
!
Eliminate competitive need limitations or raise the thresholds that
trigger them.
!
Ensure uniform application of country practice requirements, or
eliminate them.
GAO Report, p. 55.
CRS-31
Appendix
Table 1. GSP Product Imports from Leading BDCs, 2005
HTS No.
India
7113195000
8708997360
7113192900
8409999190
7113115000
Brazil
8708395050
8503009545
7403110000
7408116000
44121940312006
Country
HTS
Code
MFN
Tariff
Rate
Description
Value of
Country
Imports under
GSP
(actual U.S. $)
Value of Total
U.S. Imports
(actual U.S. $)
GSP Country
Share of
Total U.S.
Imports
5.5% Gold or platinum jewelry, whether
plated or not, not otherwise
specified or indicated (nesoi)
2.5% Parts for steering systems other than
assemblies with a universal joint, of
motor vehicles 8701 to 8705
5.5% Gold necklaces and chains, nesoi
2.5% Parts, exc conn rods, for
compression-ignition internal
combustion piston engines for road
tractors, motor buses, automobiles,
or trucks
5.0% Silver jewelry, articles and pts incl
pr mtl pltd silvr val ov $18 per
dozen pieces or parts
$1,594,212,535
$5,820,529,111
27.4%
$62,061,994
$1,098,906,905
5.7%
$59,676,268
$55,322,659
$947,604,632
$814,644,227
6.3%
6.8%
$53,063,273
$869,768,368
6.1%
2.5% Brakes and servo-brakes, nesoi, of
the motor vehicles 8701 to 8705
3.0% Parts of generators (other than
commutators)
1.0% Refined copper cathodes and
sections of cathodes
3.0% Refined copper wire with a
maximum cross-sectional dimension
of over 6mm but not over 9.5mm
8.0% Plywood 1 outer ply long leaf/short
leaf/southern yellow/slash/pitch/VA
pine both outer plys of softwood
$173,646,624
$2,525,693,996
6.9%
$119,178,277
$471,763,363
25.3%
$107,809,048
$3,238,489,287
3.3%
$106,757,090
$1,369,512,698
7.8%
$93,504,843
$215,508,500
43.4%
Thailand
7113195000
5.5% Gold or platinum jewelry, whether
$590,713,403
$869,768,368
67.9%
plated or not, nesoi
8528122800
3.9% Reception appar for TV, non-hi def,
$170,286,335
$476,837,647
35.7%
color, single picture tube, direct
view, display exceeding 35.56cm
incorporating video record or
reproduction apparatus
7113115000
5.0% Silver jewelry, articles and pts incl
$82,155,831
$869,768,368
9.5%
pr mtl pltd silvr val ov $18 per
dozen pieces or parts
4011201015
4.0% New pneumatic tires, of rubber,
$78,906,171 $1,349,223,229
5.9%
radial, used on bus/truck, on
highway, except light trucks
4414000000
3.9% Wooden frames for paintings,
$66,409,628
$405,370,252
16.4%
photographs, mirrors, or similar
objects
Source: CRS calculations based on data from USITC Trade Dataweb [http://dataweb.usitc.gov]. See appendix for top
five imports from all major GSP beneficiaries (imports of more than $100 million) in 2005.
Note: Imports for consumption, actual U.S. dollars. Tariff rates are ad valorem unless otherwise specified.
CRS-32
Table 2. Leading GSP Beneficiaries and Total, 2005
Rank
Beneficiary
Developing Country
1
India
2
Total Imports
($ millions)
GSP Duty-Free Imports
($ millions)
18,807
4,179
Angola
8,484
4,098
3
Brazil
24,437
3,628
4
Thailand
19,892
3,575
5
Indonesia
12,017
1,594
6
Equatorial Guinea
1,562
1,487
7
Turkey
5,177
1,068
8
South Africa
5,865
1,017
9
Philippines
9,248
1,008
10
Venezuela
33,965
745
Imports from Top 10
Beneficiaries
139,454
22,399
Total Imports from all
Beneficiaries
278,029
26,747
Source: U.S. International Trade Commission Dataweb ([http://dataweb.usitc.gov]).
CRS-33
Table 3. Leading GSP Products in Terms of Value, 2005
HTS MFN Tariff
No.
Range
2709 5.25 cents 10.5 cents
per barrel
7113 5% - 13.5%
Description
Value of GSP
Imports
Value of Total
U.S. Imports
Petroleum
$5,676,744,001 $137,330,950,177
products, crude
Articles of
$3,432,539,826
jewelry and
parts thereof
8708 0% - 2.5%
Automobile and $1,304,001,568
other passenger
vehicle parts
7202 0% - 10%
Ferroalloys
$668,752,557
4011 0% - 4%
New pneumatic
$629,332,578
rubber tires
$629,332,578
7606 2.7% - 6.5% Aluminum
plates, sheets,
and strip
2905 0% - 5.5%
Acyclic
$539,396,958
alcohols and
derivatives
6802 1.9% - 6.5% Worked
$471,457,609
monumental or
building stone
8544 0% - 5.3%
Insulated
$445,645,627
electrical wire
and cable
7408 1% - 3%
Copper wire
$387,934,509
3923 3% - 5.3%
Plastics for
$304,214,039
storage or
packing
4418 0% to 4.8% Builder’s
$292,373,755
joinery and
carpentry of
wood
4107 0% - 5%
Leather of
$290,666,125
bovine or
equine animals
8501 0% - 6.7%
Electric motors
$289,714,460
and generators
4412 0% - 8%
Plywood panels
$288,294,294
and other
veneered wood
GSP
Share of
Total
Imports
(%)
4.13%
$7,966,197,641
43.09%
$40,263,875,773
3.24%
$1,834,158,364
$7,414,981,951
36.46%
8.49%
$2,568,158,339
24.51%
$2,245,535,285
24.02%
$2,666,550,863
17.68%
$10,612,025,120
4.20%
$1,558,731,998
$4,376,765,968
24.89%
6.95%
$2,691,280,919
10.86%
$647,947,394
44.86%
$4,978,011,363
5.82%
$2,299,518,720
12.54%
Source: CRS calculations based on data from USITC Trade Dataweb [http://dataweb.usitc.gov].
Note: Imports for consumption, actual U.S. dollars. Tariff rates are ad valorem unless otherwise
specified.
CRS-34
Table 4. GSP Least-Developed Beneficiary Developing
Countries Not Covered by AGOA Preference
Country
Afghanistan
Income
Per Capita
(2003)
All Imports To
United States
(2005)
Imports under
GSP (2005)
% of
Imports
under GSP
NA
$67,310,191
$11,487,004
17%
Angola
$975
$8,466,134,125
$4,098,197,449
48%
Bangladesh
$376
$2,692,443,030
$21,442,691
1%
Bhutan
$797
$615,516
$11,050
2%
Burkina
Faso
$345
$2,084,203
$122,216
6%
Burundi
$83
$4,423,229
$0
0%
Cambodia
$315
$1,767,086,372
$4,335,692
0%
Cen African
Rep
$309
$5,696,947
$0
0%
Comoros
$538
$1,444,743
$0
0%
Congo
(DROC)
$107
$246,134,201
$49,841,306
20%
$5,900
$1,561,518,969
$1,487,456,698
95%
$346
$447,103,788
$1,724,979
0%
NA
$1,104,581
$0
0%
$237
$111,064,220
$3,411,300
3%
$1,505
$7,937,575
$3,420,064
43%
NA
$307,638
$31,312
10%
$362
$6,439,273
$140,975
2%
NA
$56,868
$0
0%
$1,348
$2,489,141
$49,564
2%
$565
$280,388,747
$207,004,509
74%
Equatorial
Guinea
Haiti
Kiribati
Nepal
Samoa
Somalia
Togo
Tuvalu
Vanuatu
Yemen
Source: CRS calculations based on USITC Trade Dataweb ([http://dataweb.usitc.gov]).
CRS-35
Table 5Imports under
GSP
Angola
2709002090
10.5 Crude Petroleum Testing 25 Degrees Api or
cents/bbl More
Angola
2710190530
5.25 No 6-type Fuel Oil under 25 Degrees Api Havg
cents/bbl Saybolt Universal Viscosity at 37.8 Degrees
Centigrade of More than 125 Seconds
$96,496,845
Angola
2710190535
5.25 Heavy Fuel Oils under 25 Degrees Api Havg
cents/bbl Saybolt Universal Viscosity at 37.8 Degrees
Centigrade of More than 125 Seconds, Nesoi
$19,107,248
Angola
2710112500
10.5 Naphthas, Except Motor Fuel or Motor Fuel
cents/bbl Blending Stock
$3,268,675
Angola
8481100090
Angola
9015900060
Angola
All Other GSP
2.0% Pressure-Reducing Valves, Nesoi
NA Parts and Accessories of Other Geophysical
Instruments and Appliances
$6,655,167,460
$114,298
$101,619
$0
India
7113195000
5.5% Gold or Platinum Jewelry, Whether Plated,
Clad or Not, Nesoi
$2,197,263,162
India
8502310000
2.5% Other Electric Generating Sets, Wind-Powered
$212,077,052
India
3907600010
6.5% Polyethylene Terephthalate, Bottle Grade
Resins
$102,468,980
India
5703102000
6.0% Text Carpets, Tufted, of Wool or Fah, HandHooked
$97,751,211
India
7113192900
5.5% Gold Necklaces and Neck Chains Nesoi
$88,082,567
India
All Other GSP
$2,980,309,292
Thailand
7113195000
5.5% Gold or Platinum Jewelry, Whether Plated,
Clad or Not, Nesoi
$677,782,711
Thailand
7113115000
5.0% Silver Jewelry, Articles a Pts Incl Pr Mtl Pltd
Silvr Val Ov $18 per Dozen Pieces or Parts
$211,734,669
Thailand
4011201015
4.0% New Pneumatic Tires, of Rubber, Radial, Used
on Bus/Truck, on Highway, Except Light Truck
$158,495,450
Thailand
8528122800
NA Reception Appar for Tv, Non-Hi Def, Color,
Single Picture Tube, Direct View, Display
Exceeding 35.56cm. Incorporating Video
Record or Reproduce Apparatus
$153,550,961
Thailand
4414000000
3.9% Wooden Frames for Paintings, Photographs,
Mirrors or Similar Objects
$75,838,783
Thailand
All Other GSP
$2,974,925,730
Brazil
7408116000
3.0% Refined Copper Wire with a Maximum CrossSectional Dimension Over 6mm but Not Over
9.5mm
$177,909,329
Brazil
4418904590
3.2% Builders’ Joinery and Carpentry of Wood Nesoi
$140,935,577
CRS-32
Country
HTS
Code
MFN
Tariff
Rate
Description
Value of
Imports under
GSP
Brazil
8708395050
2.5% Brakes and Servo-Brakes and Parts, Nesoi, of
the Motor Vehicles of Headings 8701 to 8705
$130,399,733
Brazil
7403110000
1.0% Refined Copper Cathodes and Sections of
Cathodes
$123,522,244
Brazil
7202938000
5.0% Ferroniobium, Nesoi
Brazil
All Other GSP
$91,564,028
$3,073,364,795
Indonesia
8525408050
NA Camcorders, Not 8mm
$95,909,376
Indonesia
4412134060
NA Plywood with At Least 1 Outer Ply of Special
Tropical Wood, Less than 6mm Thick, Not
Surface Covered, Nesoi
$83,974,501
Indonesia
7606123090
3.0% Aluminum Plates Sheets a Strip Rect Inc Sq
Alloy Not Clad with a Thickness of 6.3 Mm or
Less, Nesoi
$83,968,086
Indonesia
7113195000
5.5% Gold or Platinum Jewelry, Whether Plated,
Clad or Not, Nesoi
$82,347,617
Indonesia
3907600050
6.5% Polyethylene Terephthalate, Nesoi
$74,040,710
Indonesia
All Other GSP
$1,525,453,896
Source: USITC Trade Dataweb, [http://dataweb.usitc.gov].
Note: Imports for consumption, actual U.S. dollars. Tariff rates are ad valorem unless otherwise specified.
Table 2. Leading GSP Beneficiaries and Total, 2006
Rank
Beneficiary Developing
Country
Total Imports
($ millions)
GSP Duty-Free Imports
($ millions)
1
Angola
11,514
6,774
2
India
21,674
5,678
3
Thailand
22,345
4,252
4
Brazil
26,169
3,738
5
Indonesia
13,268
1,946
6
Equatorial Guinea
1,718
1,559
7
Philippines
9,697
1,141
8
Turkey
5,387
1,126
9
South Africa
7,497
1,066
10
Venezuela
36,283
685
Imports from Top 10 Beneficiaries
155,552
27,965
Total Imports from all Beneficiaries
310,494
32,575
Source: U.S. International Trade Commission Dataweb, at [http://dataweb.usitc.gov].
CRS-33
Table 3. GSP Implementation and Extensions, 1975-2006
Public Law
Effective Date
Date Expired
Notes
P.L. 93-618, Title V,
Trade Act of 1974
January 2, 1975
January 2, 1985
Statute originally enacted.
P.L. 98-573, Title V,
Trade and Tariff Act of 1984
October 30, 1984
July 4, 1993
Substantially amended and
restated.
P.L. 103-66, Section 13802
(in Omnibus Budget
Reconciliation Act, 1993)
August 10, 1993
September 30, 1994
Extended retroactively from
July 5, 1993 to August 10,
1993. Also struck out
reference to “Union of Soviet
Socialist Republics”
P.L. 103-465, Section 601
Uruguay Round Agreements
Act
December 8, 1994
July 31, 1995
Extended retroactively from
September 30, 1994 to
December 8, 1994. No other
amendments to provision.
P.L. 104-188, Subtitle J,
section 1952
GSP Renewal Act of 1996 (in
Small Business Job Protection
Act of 1996)
October 1, 1996 (for
GSP renewal only)
May 31, 1997
Substantially amended and
restated. Extended
retroactively from August 1,
1995 to October 1, 1996.
P.L. 105-34, Subtitle H,
section 981
(in Taxpayer Relief Act of
1997)
August 5, 1997
June 30, 1998
Extended retroactively from
May 31, 1997 to August 5,
1997. No other amendments
to provision.
P.L. 105-277, Subtitle B,
section 101
(in Omnibus Consolidated and
Emergency Supplemental
Appropriations, 1999)
October 21, 1998
June 30, 1999
Extended retroactively from
July 1, 1998 to October 21,
1998. No other amendments
to provision.
P.L. 106-170, section 508,
(in Ticket to Work and Work
Incentives Act of 1999)
December 17, 1999
September 30, 2001
Extended retroactively from
July 1, 1999 to December 17,
1999. No other amendments
to provision.
P.L. 107-210, Division D,
Title XLI
Trade Act of 2002
August 6, 2002
December 31, 2006
Extended retroactively from
September 30, 2001 to
August 6, 2002. Amended to
(1) include requirement that
BDCs take steps to support
efforts of United States to
combat terrorism and (2)
further define the term
“internationally recognized
worker rights.”
P.L. 109-432, Title VIII
December 31, 2006
December 31, 2008
Extended before program
lapse.
CRS-3634
Table 64. Beneficiary Developing Countries and Regions for
Purposes of the Generalized System of Preferences
(as of August 1, 2006April 6, 2007)
Independent Countries
Afghanistan
Albania
Algeria
Angola + G
Argentina
Armenia
+
+
Armenia
Bangladesh +/
Belize E
Benin G
Bhutan +
Bolivia J
Bosnia and HerzegovinaHercegovina
Botswana G
Brazil
Burkina Faso + G
Burundi + G
Cambodia+
Cameroon G
Cape Verde + G
Central African Republic +
Chad +G
Colombia J
Comoros +
Congo (Brazzaville) G
Congo (Kinshasa) +
Costa Rica E
Cote d’Ivoire
Croatia
Djibouti + G
Dominica E
Dominican Republic E
East Timor +
Equador J
Egypt
Equatorial Guinea +
Eritrea
Ethiopia + G
Fiji
Gabon
Gambia, The +
G
Georgia
Ghana G
Grenada E
Guinea + G
Guinea-Bissau + G
Guyana E
Haiti + E
India
Indonesia
Iraq
Jamaica E
Jordan
Kazakhstan
Kenya G
Kiribati +
Kyrgyzstan
Lebanon
Lesotho + G
Liberia + G
Macedonia, Former Yugoslav
Republic of
Madagascar + G
Malawi + G
Mali + G
Mauritania +
Mauritius G
Moldova
Mongolia
Mozambique + G
Namibia G
Nepal +
Niger + G
Nigeria G
Oman
Pakistan
Panama E
Papua New Guinea
Paraguay
PeruJ
Philippines
Philippines
Russia
Rwanda + G
St. Kitts and Nevis E
Saint Lucia E
Saint Vincent and the
Grenadines E
Samoa +
Sao Tome and Principe + G
Senegal G
Serbia and Montenegro
Seychelles G
Sierra Leone + G
Solomon Islands
Somalia +
South Africa G
Sri Lanka
Suriname
Swaziland G
Tanzania +
Thailand
Togo +
Tonga
Trinidad and Tobago
Tunisia
Turkey
Tuvalu +
Uganda + G
Ukraine
Uruguay
Uzbekistan
Vanuatu +
Venezuela
Yemen, Republic of +
Zambia + G
Zimbabwe
CRS-3735
Non-Independent Countries and Territories
Anguilla
British Indian Ocean
Territory
Christmas Island (Australia)
Cocos (Keeling) Islands
Cook Islands
Falkland Islands (Islas
Malvinas)
Gibraltar
Heard Island and McDonald
Islands
Montserrat E
Turks and Caicos Islands
Niue
Norfolk
Pitcairn Islands
Saint Helena
Wallis and Futuna
West Bank and Gaza Strip
Western Sahara
Virgin Islands, British E
Tokelau
Associations of Countries (treated as one country)
Member Countries of the
Cartagena Agreement
(Andean Group)
Bolivia
Colombia
Ecuador
Peru
Venezuela
Qualifying Member Countries of
the Association of South East
Asian Nations
Cambodia
Indonesia
Philippines
Thailand
Member Countries of the
Caribbean Common Market
(CARICOM)
Antigua and Barbuda
Barbados
Belize
Dominica
Grenada Member Countries of the
Caribbean Common
the Association of South East
Market (CARICOM)
Asian Nations
Cambodia
Currently qualifying:
Belize
Indonesia
Dominica
Philippines
Grenada
Thailand
Guyana
Jamaica
Montserrat
St. Kitts and Nevis
Saint Lucia
Saint Vincent and the
Grenadines
Trinidad and Tobago
Member Countries of the Qualifying Member Countries of
the Southern Africa
West African Economic
Development Community
and Monetary Union
Benin
(SADC)
Botswana
Burkina Faso
Mauritius
Cote d’Ivoire
Tanzania
Guinea-Bissau
Mali
Niger
Senegal
Togo
Qualifying Member Countries of
the Southern Africa Development
Community (SADC)
Botswana
Mauritius
Tanzania
Qualifying Member Countries
of the South Asian
Association for Regional
Cooperation (SAARC)
Bangladesh
Bhutan
India
Pakistan
Sri Lanka
Source: Harmonized Tariff Schedule of the United States.
+
GSP - Least-Developed Beneficiary Developing Country
Beneficiary Country of Andean Trade Preference (ATPA)
E
Beneficiary Country of Caribbean Basin Economic Trade Partnership Act (CBTPA)
G
Beneficiary Country of African Growth and Opportunity Act (AGOA)
J
CRS-38
Table 7. Top Five Imports of Leading GSP Beneficiary Countries
(Total
HTS No.
Tariff (if not
imported under
GSP)
value of imports under GSP is more than $100 million)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
Angola
2709002090
10.5 cents per
Crude petroleum testing 25 degrees API or more
barrel
$3,903,759
$88,895,796
4.39%
2710190530
No. 6-type fuel oil under 25 degrees API having
5.25 cents per
Saybolt Universal Viscosity at 37.8 degrees
barrel
centigrade of more than 125 seconds
$82,180
$13,432,207
0.61%
2709001000
5.25 cents per
Crude petroleum testing under 25 degrees API
barrel
$78,486
$48,435,155
0.16%
2710112500
10.5 cents per Naphthas, except motor fuel or motor fuel blending
barrel stock
$17,105
$6,615,774
0.26%
2710190550
Fuel oils testing under 25 degrees API having
5.25 cents per Saybolt Universal Viscosity at 37.8 degrees
barrel centigrade of 45 seconds or more but not more than
125 seconds
$16,641
$1,973,031
0.84%
$49,820
$247,477
20.13%
Argentina
4107115000
Bovine and equine upholstery leather, full grain
2.8% unsplit, whole hides and skins further prep after
tanning or crusting, except of Hdg 4114
CRS-39
HTS No.
Tariff (if not
imported under
GSP)
2905112000
5.5%
1602502040
Description
Methanol (methyl alcohol) not used in production of
synthetic fuel or for direct use as a fuel
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$48,188
$1,376,889
3.50%
Meat of bovine animals, nesoi, not containing
1.4% cereals or vegetables, prepared or preserved, in
airtight containers holding 1kg or over
$41,525
$139,876
29.69%
4107195000
Whole upholstery leather of bovines (not buffalo)
2.8% nesoi and equines nesoi, without hair on, prepared
after tanning or crusting, not 4114
$38,213
$55,660
68.66%
1704903550
5.6%
Confections or sweetmeats ready for consumption,
nesoi, put up for retail sale
$23,929
$814,099
2.94%
8708395050
2.5%
Brakes and servo-brakes, nesoi, of the motor
vehicles 8701 to 8705
$173,647
$2,525,694
6.88%
8503009545
3.0% Parts of generators (other than commutators)
$119,178
$471,763
25.26%
7403110000
1.0% Refined copper cathodes and sections of cathodes
$107,809
$3,238,489
3.33%
7408116000
Refined copper wire with a maximum cross3.0% sectional dimension of over 6mm but not over
9.5mm
$106,757
$1,369,513
7.80%
4412194031
8.0%
$93,505
$215,509
43.39%
Brazil
Plywood 1 outer ply long leaf/short leaf/southern
yellow/slash/pitch/Va pine both outer plys of
CRS-40
HTS No.
Tariff (if not
imported under
GSP)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
softwood
Chad
2709001000
5.25 cents per
Crude petroleum testing under 25 degrees API
barrel
2710190530
$108,712
$48,435,155
0.22%
No. 6-type fuel oil under 25 degrees API having
5.25 cents per
Saybolt Universal Viscosity at 37.8 degrees
barrel
centigrade of more than 125 seconds
$42,600
$13,432,207
0.32%
Plates, sheets, film, foil and strip, cellular, of
5.3% polymers of vinyl chlor, combd w text materials,
nesoi
$28,762
$73,787
38.98%
$13,174
$135,929
9.69%
$9,120
$540,448
1.69%
Colombia
3921121950
1701112000
Between
0.943854 and
Cane sugar, raw, in solid form, to be used for certain
1.4606 cents/kg,
polyhydric alcohols
as determined by
temperature
1701111000
Between
0.943854 and Cane sugar, raw solid form no added
1.4606 cents/kg, flavoring/coloring matter, nesoi, described in
as determined by additional US Note 5 (Chap. 17) & Provisional
temperature
CRS-41
HTS No.
1703105000
6905100000
Tariff (if not
imported under
GSP)
Description
0.01 cents/kg of
Cane molasses, subject to quota, nesoi
total sugars
13.5% Roofing tiles, ceramic
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$8,851
$87,491
10.12%
$7,660
$39,413
19.44%
$86,545
$947,605
9.13%
$26,874
$5,820,529
0.46%
$7,098
$525,342
1.35%
Croatia
7113192900
5.5% Gold necklaces and chains, nesoi
7113195000
5.5%
9032100090
1.7% Thermostats, nesoi
8477510090
3.1%
Machinery for molding or otherwise forming inner
tubes
$6,946
$97,106
7.15%
9032896025
1.7%
Control instruments for air conditioning,
refrigeration or heating systems, nesoi
$6,425
$353,460
1.82%
Gold or platinum jewelry, whether plated or not,
nesoi
Dominican Republic
3926909880
5.3% Other articles of plastic, nesoi
$30,318
$2,541,833
1.19%
4107125000
Bovine and equine upholstery leather, nesoi, grain
2.8% splits, whole hide and skin, further prep affter
tanning or crusting, other than leather of Hdg 4144
$27,496
$70,976
38.74%
8301406060
5.7% Other locks of base metal, nesoi
$23,789
$86,935
27.36%
8531800050
1.3% Other signaling devices, electric, nesoi
$12,741
$177,157
7.19%
CRS-42
HTS No.
8531909000
Tariff (if not
imported under
GSP)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
1.3% Electric sound/visual sign machinery parts, other
$11,145
$336,377
3.31%
2709002090
10.5 cents per
Crude petroleum testing 25 degrees API or more
barrel
$888,227
$85,358,609
1.04%
2709002010
10.5 cents per
Condensate derived wholly from natural gas
barrel
$454,750
$3,537,187
12.86%
$144,445
$1,376,889
10.49%
Grains, rolled or flaked, of cereals except rice of
heading 1006, nesoi
$28
$1,286
2.16%
Light oils and preparations of other hydrocarbon
10.5 cents per
mixtures, nesoi containing not over 50 percent of
barrel
any single hydrocarbon compound
$6
$2,402,986
0.00%
Gold or platinum jewelry, whether plated or not,
nesoi
$1,594,213
$5,820,529
27.39%
Equatorial Guinea
2905112000
5.5%
1104199000
0.45 cents per kg
2710114590
Methanol (methyl alcohol) not used in production of
synthetic fuel or for direct use as a fuel
India
7113195000
5.5%
8708997360
Parts for steeering systems other than asssemblies
2.5% with a universal joint, of motor vehicles 8701 to
8705
$62,062
$1,098,907
5.65%
7113192900
5.5% Gold necklaces and chains, nesoi
$59,676
$947,605
6.30%
CRS-43
HTS No.
Tariff (if not
imported under
GSP)
Description
8409999190
Parts, exc conn rods, for compression-ignition
2.5% internal combustion piston engines for road tractors,
motor buses, automobiles, or trucks
7113115000
5.0%
Silver jewelry, articles and pts incl pr mtl pltd silvr
val ov $18 per dozen pieces or parts
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$55,323
$814,644
6.79%
$53,063
$869,768
6.10%
$83,627
$941,452
8.88%
$69,926
$5,820,529
1.20%
Indonesia
8525408050
2.1% Camcorders, not 8mm
7113195000
5.5%
7606123090
3.0% Aluminum plates, sheet or strip, 6.3mm thick or less
$55,771
$1,626,848
3.43%
3907600050
6.5% polyethylene terephthalate, nesoi
$53,995
$661,708
8.16%
8506100000
2.7% Primary batteries, manganese dioxide
$42,498
$173,700
24.47%
1.9% Ferrochromium over 4 percent carbon
$111,337
$303,317
36.71%
$24,406
$31,632
77.16%
$22,846
$3,238,489
0.71%
$12,211
$24,680
49.4%
Gold or platinum jewelry, whether plated or not,
nesoi
Kazakhstan
7202410000
7202500000
10.0% Ferrosilicon Chromium
7403110000
1.0% Refined copper cathodes and sections of cathodes
8103200090
2.5%
Tantalum unwrought, including bars and rods
obtaind simply by sintering
CRS-44
HTS No.
7113195000
Tariff (if not
imported under
GSP)
5.5%
Description
Gold or platinum jewelry, whether plated or clad or
not, nesoi
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$6,118
$5,820,529
0.11%
$25,586
$44,306
57.75%
$23,646
$241,550
9.79%
$17,054
$131,835
12.94%
$15,024
$540,448
2.78%
$6,027
$366,445
1.64%
$148,275
$5,782,030
2.56%
$62,673
$1,471,688
4.26%
$56,386
$540,448
10.43%
Peru
0904202000
7801100000
3307900000
1701111000
6802912500
3 cents per kg
Paprika, fruit of the genus capsicum, dried or
crushed or ground
2.5% on the value
Refined lead, unwrought
of lead content
5.4%
Depilatories and other perfumery, cosmetic or toilet
preparations, nesoi
Between
0.943854 and Cane sugar, raw solid form no added
1.4606 cents/kg, flavoring/coloring matter, nesoi, described in
as determined by additional US Note 5 (Chap. 17) & Provisional
temperature
3.7% Travertine, further worked
Philippines
Insulated ignition wiring sets and wiring sets for
vehicles, aircraft, and boats
8544300000
5.0%
8544519000
2.6% Conductor: Other > 80 & <= 1000V
1701111000
Between 1.4606 Cane Sugar, in solid form, not containing flavor or
CRS-45
HTS No.
Tariff (if not
imported under
GSP)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
and 0.943854 other coloring matter
cents per kg
8501314000
4.0%
9001500000
DC motors of an output exceeding 74.6 W but not
exceeding 735 W
$47,220
$654,983
7.21%
2.0% Spectacle lenses of other materials, unmounted
$24,798
$335,148
7.40%
7202300000
3.9% Ferrosilicon manganese
$51,497
$231,177
22.28%
7113195000
5.5%
$30,009
$5,820,529
0.52%
7606123030
3.0% Aluminum plates, sheet or strip, thicker than 6.3mm
$24,262
$330,370
7.34%
8481803055
5.6%
$23,469
$234,554
10.01%
7606123090
3.0% Aluminum plates, sheet or strip, 6.3mm thick or less
$21,779
$1,626,848
1.34%
$207,292
$1,369,513
15.14%
Romania
Gold or platinum jewelry, whether plated or not,
nesoi
Gate type taps, cocks, and valves of steel, hand
operated
Russia
Refined copper wire with a maximum crosssectional dimension over 6mm but not over 9.5mm
7408116000
3.0%
7606123090
3.0% Aluminum plates, sheet or strip, 6.3mm thick or less
$68,607
$1,626,848
4.22%
7606123030
3.0% Aluminum plates, sheet or strip, thicker than 6.3mm
$68,545
$330,370
20.75%
CRS-46
HTS No.
Tariff (if not
imported under
GSP)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
2843900000
Inorganic or organic compounds of precious metals,
3.7% whether or not chemically defined; amalgrams of
precious metals, nesoi
$49,622
$89,124
55.68%
7607116000
Aluminum foil not backed rolled not further worked
over 0.01 mmbut not over 0.15 mm thick
$30,405
$142,800
21.29%
Sri Lanka
4011998500
3.4% New pneumatic tires, of rubber, nesoi
$28,681
$217,895
13.16%
4015191050
3.0% Gloves, seamless except disposable
$10,656
$96,900
11.00%
3802100000
4.8% Activated carbon
$9,864
$78,624
12.55%
4011938000
New pneumatic tires (nonradial), of rubber, for
3.4% construction or industrial handling vehicles and
machines, rim size not over 61 cm, nesoi
$8,191
$41,997
19.50%
3923210090
Sacks and bags (including cones) of polymers of
3.0% ethlyene except reclosable with integral extruded
closure, nesoi
$7,896
$490,654
1.61%
South Africa
7202410000
3.9% Ferrochromium over 4 percent carbon
$114,815
$231,177
49.67%
7606123090
3.0% Aluminum plates, sheet or strip, 6.3mm thick or less
$101,771
$1,626,848
6.26%
7202300000
3.9% Ferrosilicon manganese
$60,864
$231,177
26.33%
CRS-47
HTS No.
Tariff (if not
imported under
GSP)
Description
2849905000
3.7% Carbides, whether or not chemically defined
2804691000
5.3%
Silicon containing by weight between 99.99 and 99
percent silicon
7113195000
5.5%
Gold or platinum jewelry, whether plated or not,
nesoi
8528122800
Reception aparatus for TV, non-hi def, color, single
picture tube, direct view, display exceeding 35.56cm
3.9%
incorporating video record or reproduction
apparatus.
7113115000
5.0%
4011201015
4414000000
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$56,986
$63,066
90.36%
$50,578
$186,635
27.10%
$590,713
$5,820,529
10.15%
$170,286
$476,838
35.71%
Silver jewelry, articles and pts incl pr mtl pltd silvr
val ov $18 per dozen pieces or parts
$82,156
$869,768
9.45%
4.0%
New pneumatic tires, of rubber, radial, used on
bus/truck, on highway, except light trucks
$78,906
$1,349,223
5.85%
3.9%
Wooden frames for paintings, photographs, mirrors,
or similar objects
$66,410
$405,370
16.38%
7113195000
5.5%
Gold or platinum jewelry, whether plated, clad or
not, nesoi
$279,853
$5,820,529
4.81%
7113192900
5.5% Gold necklaces and chains, nesoi
$103,992
$947,605
10.97%
Thailand
Turkey
CRS-48
HTS No.
Tariff (if not
imported under
GSP)
Description
Refined copper wire, with a maximum crosssectional dimension under 6mm
7408190000
3.0%
6802911500
4.9% Marble, other than slabs
1509104000
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
$37,421
$85,502
43.77%
$32,619
$258,283
12.63%
Olive oil and its fractions, virgin, weighing with the
3.4 cents per kg immediate container 18KG or more, not chemically
modified
$31,548
$150,740
20.93%
Methanol (methyl alcohol) not used in production of
synthetic fuel or for direct use as a fuel
$221,247
$1,376,889
16.07%
$111,155
$861,616
12.90%
$81,417
$6,194,851
1.31%
$42,066
$1,457,852
2.89%
$36,144
$174,575
20.70%
$193,972
$88,895,796
0.22%
$9,348
$1,973,031
0.47%
Venezuela
2905112000
5.5%
2909191400
5.5% Methyl tertiary-butyl ether
8708998080
2.5%
8708704545
2.5% Road wheels, of aluminum, for vehicles, nesoi
7202215000
1.5%
Parts, nesoi, of motor vehicles, nesoi, of heading
8701 to 8705
Ferrosilicon over 55 but not more than 80 percent
silicon 3 percent or less calcium
Yemen
2709002090
10.5 cents per
Crude petroleum testing 25 degrees API or more
barrel
2710190550
5.25 cents per Fuel oils testing under 25 degrees API having
CRS-49
HTS No.
Tariff (if not
imported under
GSP)
Description
Value of Imports
Under GSP
(thousands)
Value of Imports
from World
(thousands)
GSP Share of
World
Imports
Saybolt Universal Viscosity at 37.8 degrees
barrel centigrade of 45 seconds or more but not more than
125 seconds
2710112500
10.5 cents per Naphthas, except motor fuel or motor fuel blending
barrel stock
8481809050
2.0% Other taps, cocks, valves, etc., nesoi
7113115000
5.0%
Silver jewelry, articles and pts incl pr mtl pltd silvr
val ov $18 per dozen pieces or parts
Source: ITC Trade Data Web [http://dataweb.usitc.gov] and Harmonized Tariff Schedule of the United States.
$3,662
$6,615,774
0.06%
$16
$607,535
0.00%
$7
$869,768
0.00%
Countries of the South
Asian Association for
Regional Cooperation
(SAARC)
Bangladesh
Bhutan
India
Pakistan
Sri Lanka
Source: Harmonized Tariff Schedule of the United States.
+
GSP - Least-Developed Beneficiary Developing Country
Beneficiary Country of Andean Trade Preference (ATPA)
E
Beneficiary Country of Caribbean Basin Economic Trade Partnership Act (CBTPA)
G
Beneficiary Country of African Growth and Opportunity Act (AGOA)
J