Order Code RS22541
Updated November 10, 2008
Generalized System of Preferences:
Agricultural Imports
Renée Johnson
Specialist in Agricultural Policy
Resources, Science, and Industry DivisionJanuary 3, 2011
Congressional Research Service
7-5700
www.crs.gov
RS22541
CRS Report for Congress
Prepared for Members and Committees of Congress
Generalized System of Preferences: Agricultural Imports
Summary
The Generalized System of Preferences (GSP) provides duty-free tariff treatment
for certain
products from designated developing countries. Agricultural imports under
the GSP totaled $2.1 2
billion in 20072009, about 711% of all U.S. GSP imports. Leading
agricultural imports include sugar, confectionery, cocoa, olive oil, processed meats,
drinking waters, and
processed foods and food processing inputs, sugar and sugar confectionery, cocoa, processed and
fresh fruits and vegetables, beverages and drinking waters, olive oil, processed meats, and
miscellaneous food preparations and inputs for further processing.
The majority of these imports
are from Thailand, Argentina, BrazilBrazil, Argentina, India, and the
Philippines. Some in Congress have called
continued to call for changes to the program that could limit
GSP benefits to certain countries,
among other changes. Opinion within the U.S.
agriculture industry is mixed, reflecting both
support for and opposition to the current
program. Congress made changes to the program in
2006, tightening its requirements
on imports under certain circumstances. The 110th
In the past few years, Congress has extended GSP through
2009, likely making the GSP a legislative issue in the 111th Congress. Also, the
leadership of the Senate Finance Committee and the House Ways and Means Committee
continue a series of short-term extensions.
However, the 111th Congress did not extend the GSP in 2010, and it was set to expire December
31, 2010 (P.L. 111-124). The expiration of the GSP will likely become a legislative issue in the
112th Congress. In addition, leaders of the House Ways and Means Committee and the Senate
Finance Committee have continued to express an interest in evaluating the effectiveness of U.S.
trade preference
programs, including the GSP.
Background
The U.S. Generalized System of Preferences (GSP) was established by the Trade Act
of 1974 (19 U.S.C. 2465; Sec. 505) and now provides preferential duty-free entry to more
than 4,650 agricultural and non-agricultural products from 131 designated beneficiary
countries and territories.1 Agricultural products account for about 7% of the total value
of annual GSP imports. Duty-free access for agricultural imports under the program is
an important issue for many in the U.S. agriculture industry who either support or oppose
1
Office of the U.S. Trade Representative (USTR), Generalized System of Preferences, at
[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html].
CRS-2
the program. However, some in Congress have called for changes to the program that
could limit or curtail GSP benefits to certain countries, among other changes. The GSP
is currently reauthorized through December 31, 2009 (P.L. 110-436).
GSP Agricultural Imports
In 2007, U.S. imports under the GSP program totaled $30.8 billion, accounting for
less than 2% of all commodity imports. Leading U.S. imports under the GSP are
manufactured products and parts, chemicals, plastics, minerals, and forestry products.
Roughly one-fourth of all GSP imports consist of jewelry, electrical, and transportation
equipment, both finished products and parts.2
Agricultural products accounted for 7% of all imports under the GSP, totaling $2.1
billion in 2007. Compared to 2000, the value of agricultural imports under the program
has nearly doubled. In 2007, imports under the GSP accounted for about 4% of total U.S.
agricultural imports.3 Table 1 shows the leading agricultural products (ranked by value)
imported into the United States under the GSP program. Leading imports include sugar
and confectionery products, processed fruit and vegetable preparations, olive oil, waters
and other beverages, processed food inputs for further processing, processed meats and
fish products, tropical and non-tropical fruits and vegetables, and cocoa and cocoacontaining products.
Most GSP agricultural imports are supplied by beneficiary countries that have been
identified for possible graduation from the program. In 2007, the top six beneficiary
countries ranked by import value — Thailand, Argentina, Brazil, India, the Philippines,
and Turkey — accounted for the majority of agricultural imports under the GSP (see
Table 2). Brazil and India accounted for nearly one-fifth of agricultural imports under
the program. These countries are among those identified by critics of GSP as countries
whose benefits under the program should be limited or curtailed.
More than 20% of GSP agricultural imports consist of sugar and sugar-based
products, and cocoa and cocoa-containing products. Sugar and confectionery imports
accounted for 17% of the value of agricultural imports under the GSP program (Table 1).
Major GSP suppliers of cane and beet sugar imports were the Philippines, Paraguay, Peru,
Panama, and South Africa. Major suppliers of confectionery were Brazil, Argentina,
Colombia, Thailand, and Turkey. Cocoa and cocoa-containing products accounted for 4%
of GSP agricultural imports, and were supplied mainly by Brazil, the Côte d’Ivoire, and
Indonesia. Indonesia, among other countries, is a supplier of imports of sugar alcohols
and other agriculture-based organic chemicals, such as sorbitol.
Another nearly 40% of agricultural imports under the GSP program include food
processing inputs, such as miscellaneous processed foods, processed oils and fats, fruit
and vegetable preparations, and ag-based chemicals and byproducts. Other product
2
U.S. Chamber of Commerce, Estimated Impacts of the U.S. Generalized System of Preferences
to U.S. Industry and Consumers, October, 2006, at [http://www.uschamber.com/publications/
reports/0610gsp].
3
USDA reports U.S. agricultural imports totaled $47.7 billion in 2007 [http://www.ers.usda.gov/
Data/FATUS/MonthlySummary.htm].
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categories and suppliers are as follows. Olive oil accounted for 7% of GSP agricultural
imports in 2007, supplied by Tunisia, Turkey, and Argentina. Mineral waters and other
types of nonalcoholic beverages (another 6%) were supplied by Fiji and Thailand, among
others. Imports of fresh and prepared fruits and vegetables (about 10%) include bananas
and other tropical produce, and dried beans, tubers, onions, and melons from most Latin
American countries and India, the Philippines, and Thailand. Argentina is a leading
supplier of processed meat under the GSP; Indonesia supplies processed fish and seafood.
Table 1. U.S. Agricultural Imports under GSP, 2007
HTS Chapter(s)
Subsection
17
19, 21, 13
20, 14
22
23, 3501-3505,
3301, 38 (part)
1509
16
8 (part), 7
18
12, 15 (part)
8 (part)
24
9
4
10, 11
2905 (part)
6
8 (part)
5, 4301, 41 (part)
1, 2
50-53 (part)
Import Categories
Sugars and sugar confectionery
Processed foods & food processing inputs
Processed fruits & vegetables, inputs
Beverages, water, spirits, and vinegar
Other ag-based chemicals, residues, & byproducts
Olive oil
Processed meat & fish products
Other fresh fruits and vegetables
Cocoa & cocoa-containing products
Oilseeds & processed oils/fats
Fresh tropical fruits
Tobacco products
Coffee, tea, & spices
Dairy products
Grain-based products
Ag-based organic chemicals (e.g. sorbitol)
Plants and cut flowers
Nuts
Misc. animal products, incl. hides
Meat products, incl. live animals
Ag-based textile inputs (cotton, wool, etc.)
Total
2007
GSP Share
($ millions) % Share All Ag Imports
353.8
17%
14%
316.1
15%
4%
293.3
14%
6%
156.3
8%
1%
154.0
7%
3%
142.3
116.2
110.0
91.1
70.1
46.9
45.0
40.8
31.8
29.9
19.1
18.0
17.3
6.9
0.4
0.3
2059.7
7%
6%
5%
4%
3%
2%
2%
2%
2%
1%
1%
1%
1%
<1%
<1%
<1%
100%
15%
3%
1%
3%
2%
2%
3%
1%
2%
1%
19%
2%
2%
1%
0%
0%
3%
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.usitc.gov]. Imports for
consumption, actual U.S. dollars. Select GSP countries ranked in terms of value of imports. Agriculture commodities as defined by
the WTO Agreement on Agriculture. Includes U.S. Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and
fish products, except processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53 (for information, see USDA, Profiles
of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
Legislative and Administrative Changes to GSP
The 110th Congress extended the GSP for one year through December 31, 2009 (P.L.
110-436). Given this one-year extension, the GSP will continue to be a legislative issue
in the 111th Congress. In addition, the leadership of the Senate Finance Committee and
the House Ways and Means Committee continue to express the need to evaluate the
effectiveness of the GSP, as well as other U.S. trade preference programs. Chairman
Baucus of the Senate Finance Committee has said he hopes to review all U.S. trade
preference programs in the 111th Congress, and to evaluate which countries are benefitting
CRS-4
under the program.4 This follows an oversight hearing by the committee, which was
conducted in June 2008 and focused on ways to reform trade preference programs,
including the GSP. According to committee staff, that hearing was considered a first step
toward a possible bill seeking to reform trade preference programs.5
Amendments to the GSP in 2006 followed extensive debate about the program
during the 109th Congress. Specifically, some in Congress questioned the inclusion of
certain more advanced developing countries (BDCs)6 as beneficiaries under the GSP and
also commented that certain BDCs had contributed to the ongoing impasse in multilateral
trade talks in the WTO Doha Development Agenda.7 In response to these concerns,
Congress amended the program in 2006 by tightening the rules on “competitive need
limits” (CNL)8 waivers that allow imports from beneficiary countries in excess of GSP
statutory thresholds for some products (P.L. 109-432). Historically, there have been few
CNL waivers to the GSP for agricultural products and it is unlikely that these program
changes will greatly affect U.S. agricultural imports under the program. In 2006,
Congress had also renewed the GSP for two years through 2008.
In addition, the Trade Policy Staff Committee (TPSC), an advisory committee
chaired by the U.S. Trade Representative, has instituted a series of investigations to
evaluate possible changes to the GSP.9 In its 2006 review the TPSC announced that the
more than 80 previously granted CNL waivers would be individually evaluated, in
addition to the standard practice of examining petitions for new CNL waivers. The TPSC
said that it would also examine the eligibility status of several “middle income”
economies.10 Among the countries identified for possible removal as beneficiaries under
the program were Argentina, Brazil, India, the Philippines, Thailand, and Turkey. These
countries account for over 60% of the value of U.S. agricultural products imported
duty-free under the program. Although none of the countries cited lost their overall GSP
eligibility as a result of these reviews, several previously granted CNL waivers from these
countries were revoked. For agricultural imports under the GSP, the Côte d’Ivoire lost
4
See, e.g., “Senate Moves on APTA,” Washington Trade Daily, October 3, 2008.
5
“Senate Finance Mulls Preference Overhaul, May Focus on Poorest,” Washington Trade Daily,
June 13, 2008.
6
BDCs under the GSP, as of 2008, are listed in the General Notes section of the U.S. Harmonized
Tariff Schedule, at [http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0800htsa.pdf].
7
See, e.g., U.S. Senate, Committee on Finance, Opening Statement of Senator Charles Grassley,
Hearing on the Nomination of Susan C. Schwab to be U.S. Trade Representative, May 16, 2006.
8
The previous law stipulated a CNL requiring that countries export no more than 50% of total
U.S. imports of each product or no more than a specified dollar amount of the imports for a given
year. The amended law further tightened these requirements.
9
72 Federal Register 35895, June 28, 2007 (2006 Review); and 73 Federal Register 38297, June
3, 2008 (2007 Review). Regulations for implementing the GSP are at 15 C.F.R. Part 2007.
10
Countries may “graduate” or be removed as a beneficiary developing country if the country
is determined to be sufficiently competitive or developed (19 U.S.C. 2462(e)). For example, in
2008, the Republic of Trinidad and Tobago graduated from the GSP program when it was
determined to have become a ‘’high income’‘ country. Also, countries that formally enter into
a bilateral trading relationship with another developed country may also become ineligible, as
happened in 2007 for Bulgaria and Romania when they joined the European Union.
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CNL waivers for fresh or dried, shelled kola nuts (HTS 0802.90.94), as part of the 2006
review. Argentina lost CNL waivers for cooked, shelled, fresh or dried peanuts (HTS
1202.20.40), as part of the 2007 review. These waivers had allowed for these products
to be imported from the Côte d’Ivoire and Argentina duty-free under GSP despite the
statutory import thresholds. Other countries lost CNL waivers for some non-agricultural
products, but not for agricultural products. The 2006 review included decisions on other
country and product petitions involving agricultural products, but these changes are
unlikely to greatly affect U.S. agricultural imports under the program.
For more information and for a discussion of possible legislative options, see CRS
Report RL33663, Generalized System of Preferences: Background and Renewal Debate,
by Vivian C. Jones.
Table 2. U.S. Agricultural Imports under GSP, by Country, 2007
Country
of Origin
2007
% % Change
($ mill) Share 2003-2007
Thailand
Argentina
Brazil
360
242
240
17.5%
11.8%
11.6%
India
179
8.7%
Philippines
136
6.6%
Turkey
134
6.5%
Peru
94
4.6%
Indonesia
Fiji
Tunisia
Colombia
87
69
69
50
4.2%
3.4%
3.4%
2.4%
Ecuador
39
1.9%
South Africa
Subtotal
Other BDCs
Total
35
1.7%
1,734 84.0%
325 15.8%
2,060 100.0%
Major import product categories
nonalcoholic beverages, misc. food preparations, misc. preserved fruits and
61%
vegetables, confectionery, pasta
88%
prepared meat, sugar confectionery, cheese, olive oil, gelatin derivatives
15%
gelatin derivatives, chocolate and cocoa products, confectionery, mangoes
vegetable saps/extracts, gelatin derivatives, preserved cucumbers, essential oils
108%
(peppermint), ground/crushed peppers, miscellaneous food preparations
cane/beet sugar, coconut oil and coconuts, banana products, fresh/processed
22%
tropical fruits, nonalcoholic beverages, misc. food preparations
fruit juice, olive oil, prepared/preserved vegetables, ground/crushed peppers,
103%
preserved bell peppers, confectionery
ground/crushed peppers, mangoes, artichokes, onions, artificial margarine
143%
products and other edible fats/oils, melons, misc. prepared vegetables
tobacco products, edible animal products, confectionery, organic chemicals,
50%
cocoa powder, misc. food preparations, seafood products
115% mineral waters, sugar cane, molasses, tropical fruits/vegetables, snack foods
1459%
olive oil/oil products, dates, pasta, misc. food preparations, sauces, capers
3% sugar, chewing gum, confectionery, processed fruits/nuts, grains/preparations
preserved/frozen fruit products, sugar, floriculture/plants, seeds, bulbs, tuber
131%
vegetables
cane/beet sugar, misc. food preparations, wine, plant bulbs/roots and plants,
57%
active yeasts, spices, essential oils (citrus), fruit juices
66%
-41%
29%
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.usitc.gov]. Imports for
consumption, actual U.S. dollars. Includes U.S. Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and fish
products, except processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53. Select GSP countries ranked in terms of
value of imports in 2007 (10-digit HTS level). Agriculture commodities as defined by the WTO Agreement on Agriculture (for
information, see USDA, Profiles of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
Possible Implications of Changes to the GSP
The 2006 statutory changes to the GSP tightening rules for CNL waivers are unlikely
to greatly affect U.S. agricultural imports under the program. Historically, there have
been few CNL waivers for agricultural products imported duty-free under the GSP.
Current waivers include sugar and preserved bananas (Philippines), sugar, carnations,
figs, yams, and gelatin derivatives (Colombia), certain nuts (Argentina), animal hides
CRS-6
(Argentina, South Africa, and Thailand), and caviar (Russia).11 Other types of program
changes, however, could affect U.S. agricultural imports under the GSP, including
additional limits on CNL waivers from certain countries or graduation of some
beneficiary countries. Countries that account for the majority of U.S. agricultural imports
under the GSP are Thailand, Brazil, Argentina, India, the Philippines, and Turkey.
Comments submitted to USTR on its 2006 proposal from U.S. agricultural industry
groups are mixed.12 The American Farm Bureau Federation (AFBF) expressed its general
opposition to the GSP program, stating that products imported duty-free under the
program compete with U.S.-produced goods without granting a commensurate level of
opportunity for U.S. producers in foreign markets. AFBF further supported withdrawal
of CNL waivers for the Philippines, Argentina, and Colombia. The Grocery
Manufacturers Association (GMA) expressed support for the current GSP program and
identified certain agricultural products of importance to GMA under the program,
including sugar confections, spices, and certain processed foods and inputs from Brazil,
India, and Argentina. GMA’s position was generally supported by comments from the
American Spice Trade Association, the National Confectioners Association, and the
Chocolate Manufacturers Association.
What remains unclear is whether duty-free access for most agricultural imports under
the GSP greatly influences a country’s willingness to export these products to the United
States. In most cases, costs associated with import tariffs are borne by the importer. These
costs may be passed on to the BDCs in terms of lower import prices. However, import
tariffs to the United States for most of these products tend to be low. As calculated by
CRS, ad valorem equivalent tariffs range from 3%-4% for sugar, 2%-10% for cocoacontaining products, 5%-12% for confectionery, 1%-2% for most processed meats, about
2% for olive oil, less than 1% for mineral water, and about 5% for agriculture-based
organic chemicals.13 In general, any additional costs that might be incurred by the BDCs
as a result of the proposed changes could be more than offset by the generally higher U.S.
prices for most products compared to prices in other world markets. Nevertheless, the
imposition of even relatively low import tariffs could represent an increase in input costs
to some U.S. food processors and industrial users. These costs could be passed on to
consumers through higher prices for these and other finished agricultural or manufactured
products. As shown in Table 1, about one-half of GSP agricultural imports are
intermediate goods and inputs, such as raw sugar, miscellaneous processed foods,
preparations, and byproducts, and agriculture-based organic chemicals.
11
USTR, CNL Waivers, at [http://www.ustr.gov/Trade_Development/Preference_Programs/
GSP/CNL_Waivers_Current_Waivers_to_GSP_Competitive_Need_Limitations_(CNLs).html].
12
13
Public comments are posted at USTR’s website, at [http://www.ustr.gov/].
Calculated tariffs based on the in-quota rate. Under the GSP, agricultural products subject to
a TRQ exceeding the in-quota quantity is ineligible for duty-free import (19 U.S.C. 2463(b)(3))., and broader reform of these programs might be
possible.
Congressional Research Service
Generalized System of Preferences: Agricultural Imports
Contents
Background ................................................................................................................................1
GSP Agricultural Imports ............................................................................................................1
Legislative and Administrative Changes to GSP ..........................................................................4
Possible Implications of Changes to the GSP...............................................................................5
Tables
Table 1. U.S. Agricultural Imports under GSP, 2009 ....................................................................2
Table 2. U.S. Agricultural Imports under GSP, by Country, 2009 .................................................3
Contacts
Author Contact Information ........................................................................................................6
Congressional Research Service
Generalized System of Preferences: Agricultural Imports
Background
The U.S. Generalized System of Preferences (GSP) was established by the Trade Act of 1974 (19
U.S.C. 2465; Sec. 505) and now provides preferential duty-free entry to more than 4,800
agricultural and non-agricultural products from 131 designated beneficiary countries and
territories. 1 Agricultural products under the GSP totaled $2.2 billion in 2009, accounting for about
11% of the total value of annual GSP imports. Duty-free access for agricultural imports under the
program is an important issue for many in the U.S. agriculture industry who either support or
oppose the program. However, some in Congress have called for changes to the program that
could limit or curtail benefits to certain countries, among other changes. In 2008 and again in
2009, GSP was reauthorized through a series of one-year extensions. The 111th Congress did not
extend the GSP in 2010, and it was set to expire December 31, 2010 (P.L. 111-124).2
GSP Agricultural Imports
In 2008, U.S. imports under the GSP program totaled $20.3 billion, accounting for less than 2%
of all commodity imports. Leading U.S. imports under the GSP are manufactured products and
parts, chemicals, plastics, minerals, and forestry products. Roughly one-fourth of all GSP imports
consist of jewelry, electrical, and transportation equipment, both finished products and parts.3
Agricultural products accounted for 11% of all imports under the GSP, totaling $2.2 billion in
2009. Compared to 2000, the value of agricultural imports under the program has nearly doubled.
In 2009, imports under the GSP accounted for about 3% of total U.S. agricultural imports.4 Table
1 shows the leading agricultural products (ranked by value) imported into the United States under
the GSP program. Leading imports include processed foods and food processing inputs, sugar and
sugar confectionery, cocoa, processed and fresh fruits and vegetables, drinking waters, olive oil,
processed meats, and miscellaneous food preparations and inputs for further processing.
Most GSP agricultural imports are supplied by beneficiary countries that have been identified for
possible graduation from the program. In 2009, the top six beneficiary countries ranked by import
value—Thailand, Brazil, Argentina, India, the Philippines, and Turkey—accounted for the
majority of agricultural imports under the GSP (see Table 2). Brazil and India accounted for
nearly one-fifth of agricultural imports under the program. These countries are among those
identified by critics of GSP as countries whose benefits under the program should be limited or
curtailed.
1
Office of the U.S. Trade Representative (USTR), Generalized System of Preferences, http://www.ustr.gov/
Trade_Development/Preference_Programs/GSP/Section_Index.html.
2
The African Growth and Opportunity Acceleration Act of 2004 (P.L. 108-274) extended GSP preferences for all
beneficiary developing sub-Saharan African countries under the African Growth and Opportunity Act through
September 30, 2015.
3
U.S. Chamber of Commerce, Estimated Impacts of the U.S. Generalized System of Preferences to U.S. Industry and
Consumers, October, 2006, http://www.uschamber.com/reports/estimated-impacts-us-generalized-system-preferencesus-industry-and-consumers.
4
The value of U.S. agricultural imports totaled $78.8 billion in 2009 (compiled by CRS using trade data from U.S.
International Trade Commission. Imports for consumption, actual U.S. dollars. Agriculture commodities as defined by
the WTO Agreement on Agriculture (USDA, Profiles of Tariffs in Global Agricultural Markets, AER-796, Appendix,
January 2001).
Congressional Research Service
1
Generalized System of Preferences: Agricultural Imports
More than 20% of GSP agricultural imports consist of sugar and sugar-based products, and cocoa
and cocoa-containing products. Sugar and confectionery imports accounted for 18% of the value
of agricultural imports under the GSP program (Table 1). Major GSP suppliers of cane and beet
sugar imports were the Philippines, Paraguay, Peru, Panama, and South Africa. Major suppliers of
confectionery were Brazil, Argentina, Colombia, the Philippines, South Africa, Thailand, and
Turkey. Cocoa and cocoa-containing products accounted for 5% of GSP agricultural imports, and
were supplied mainly by Brazil, the Côte d’Ivoire, and other African nations. Indonesia, among
other countries, is a supplier of imports of sugar alcohols and other agriculture-based organic
chemicals, such as sorbitol.
Table 1. U.S. Agricultural Imports under GSP, 2009
HTS Chapter(s)
Subsection
Import Categories
19, 21, 13
Processed foods & food processing inputs
385.1
18%
5%
17
Sugar and sugar confectionary
378.9
17%
13%
20, 14
Processed fruits & vegetables, inputs
329.8
15%
7%
22
Beverages, water, spirits, and vinegar
152.7
7%
1%
1509
Olive oil
150.5
7%
17%
23, 3501-3505, 3301, 38
(part)
Other ag-based chemicals, residues, &
byproducts
148.2
7%
3%
16
Processed meat & fish products
120.9
6%
3%
8 (part), 7
Other fresh fruits and vegetables
116.3
5%
1%
18
Cocoa & cocoa-containing products
102.1
5%
3%
8 (part)
Fresh tropical fruits
48.3
2%
2%
10, 11
Grain-based products
42.3
2%
1%
12, 15 (part)
Oilseeds & processed oils/fats
41.3
2%
1%
24
Tobacco products
39.5
2%
3%
4
Dairy products
36.8
2%
2%
9
Coffee, tea, & spices
33.2
2%
1%
2905 (part)
Ag-based organic chemicals (e.g. sorbitol)
19.7
1%
25%
6
Plants and cut flowers
15.8
1%
3%
5, 4301, 41 (part)
Misc. animal products, incl. hides
5.3
0%
1%
8 (part)
Nuts
3.6
0%
0%
1, 2
Meat products, incl. live animals
0.3
0%
0%
50-53 (part)
Ag-based textile inputs (cotton, wool)
0.2
0%
0%
2,170.8
100%
3%
Total
2009
($ millions)
% Share
GSP Share All
Ag Imports
Source: CRS calculations from data from U.S. International Trade Commission, http://dataweb.usitc.gov.
Imports for consumption, actual U.S. dollars. Select GSP countries ranked by value of imports. Agriculture
commodities as defined by the WTO Agreement on Agriculture. Includes U.S. Harmonized Tariff Schedule
chapters 1-24, excluding chapter 3 (fish and fish products, except processed), and parts of chapters 29, 33, 35,
48, 41, 43, and 50-53 (USDA, Profiles of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
Congressional Research Service
2
Generalized System of Preferences: Agricultural Imports
Table 2. U.S. Agricultural Imports under GSP, by Country, 2009
Country
of Origin
2009
($ millions
%
Share
% Change
20052009
Major import product categories
Thailand
425.4
19.6%
48%
food preparations, preserved fruits and vegetables, waters,
grain products, sauces and condiments, confectionery,
Brazil
273.0
12.6%
30%
fruit juices, gelatin derivatives, sugar confectionery, tropical
fruits, miscellaneous food preparations, cocoa products
Argentina
241.7
11.1%
24%
casein, olive oil, prepared meats, gelatin derivatives, cheese
and curd, sugar confectionery, wine
India
211.9
9.8%
71%
vegetable saps/extracts, gelatin derivatives, preserved
cucumbers, essential oils (peppermint), spices
Philippines
137.1
6.3%
18%
cane/beet sugar, fresh/processed fruits and tropical fruits,
fish products, coconut oil and coconuts, grains, waters
Turkey
131.7
6.1%
16%
sugar confectionary, olive oil, prepared/preserved fruits and
vegetables, fruit juices, condiments and spices
Tunisia
106.1
4.9%
406%
Indonesia
78.9
3.6%
61%
Colombia
72.6
3.3%
1%
Fiji
47.4
2.2%
-20%
South Africa
42.1
1.9%
34%
sugar, wine, fish products, yeasts, live plants and seeds,
essential oils, food preparations, spices
Cote d`Ivoire
40.8
1.9%
85%
preserved/frozen fruit products, sugar, floriculture/plants,
seeds, bulbs, tuber vegetables
Pakistan
34.9
1.6%
272%
Ecuador
33.4
1.5%
52%
Venezuela
29.2
1.3%
161%
1,906
87.8%
42%
265
12.2%
16%
2,171
100.0%
-49%
Subtotal
Other
Total
olive oil and olive products, tropical fruits, sugar
confectionary, sauces and condiments, spices
sugar alcohols and organic chemicals, seafood, tobacco
products, sugar confectionary, edible animal products
sugar and confectionary, miscellaneous food preparations,
molasses, tropical fruits/vegetables, cocoa products
mineral waters, molasses, tropical fruits/vegetables, grain
products, miscellaneous food preparations, plants
cane/beet sugar, rice, miscellaneous food preparations,
spices, fresh/processed fruits and tropical fruits
tropical fruits/vegetables, prepared fish products,
miscellaneous food preparations, fruit juices, cocoa products
Source: CRS calculations from data from U.S. International Trade Commission (USITC),
http://dataweb.usitc.gov. Imports for consumption, actual U.S. dollars. Includes U.S. Harmonized Tariff Schedule
(HTS) chapters 1-24, excluding chapter 3 (fish and fish products, except processed), and parts of HTS chapters
29, 33, 35, 48, 41, 43, and 50-53. Select GSP countries ranked in terms of value of imports in 2007 (10-digit HTS
level). Agriculture commodities as defined by the WTO Agreement on Agriculture (for information, see USDA,
Profiles of Tariffs in Global Agricultural Markets, AER-796, Appendix, January 2001).
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Generalized System of Preferences: Agricultural Imports
Another nearly 40% of agricultural imports under the GSP program include food processing
inputs, such as miscellaneous processed foods, processed oils and fats, fruit and vegetable
preparations, and ag-based chemicals and byproducts. Other product categories and suppliers are
as follows. Olive oil accounted for 7% of GSP agricultural imports in 2009, supplied by Tunisia,
Turkey, and Argentina. Mineral waters and other types of nonalcoholic beverages (another 6%)
were supplied by Fiji and Thailand, among others. Imports of fresh and prepared fruits and
vegetables (about 10%) include bananas and other tropical produce.
Legislative and Administrative Changes to GSP
In the past few years, Congress has extended GSP through a series of short-term extensions.
However, the 111th Congress did not extend the GSP in 2010, and it was set to expire December
31, 2010 (P.L. 111-124). The expiration of the GSP will likely become a legislative issue in the
112th Congress, especially since many in Congress continue to support the program. 5 In addition,
the leaders of the House Ways and Means Committee and the Senate Finance Committee have
continued to express an interest in evaluating the effectiveness of U.S. trade preference programs,
including the GSP, and broader reform of these programs has been expected in recent years.
The House Ways and Means Subcommittee on Trade conducted a hearing evaluating the
effectiveness of U.S. trade preference programs, including the GSP, in November 2009;6 the
Senate Finance Committee conducted an oversight hearing in June 2008, focusing on ways to
reform U.S. trade preference programs.7 Prior to the one-year extension in December 2009, the
Obama Administration had indicated that the debate on preference reform may extend into next
year; however, some Members have expressed their reluctance to pass a GSP renewal without
also enacting meaningful reform legislation. 8
Amendments to the GSP in 2006 followed extensive debate about the program during the 109th
Congress. Specifically, some in Congress questioned the inclusion of certain more advanced
developing countries (BDCs)9 as beneficiaries under the GSP and also commented that certain
BDCs had contributed to the ongoing impasse in multilateral trade talks in the WTO Doha
Development Agenda.10 In response to these concerns, Congress amended the program in 2006 by
tightening the rules on “competitive need limits” (CNL)11 waivers that allow imports from
beneficiary countries in excess of GSP statutory thresholds for some products (P.L. 109-432).
5
“Congress Passes Short-Term ATPDEA, TAA Extensions, But Not GSP,” Inside U.S. Trade, December 23, 2010;
and press release of Senator Max Baucus, “Baucus Commends Passage of Short-Term Extension of Job-Creating Trade
Bill, Seeks Longer Extension,” December 22, 2010.
6
House Ways and Means Subcommittee on Trade, “Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs,” November 17, 2009.
7
Senate Finance Committee, “Oversight of Trade Functions: Customs and Other Trade Agencies,” June 24, 2008.
8
See, e.g., remarks of Senator Charles Grassley, Ranking Member of Senate Finance Committee, Washington
International Trade Association, June 18, 2009.
9
A current listing of BDCs under the GSP is available in the U.S. Harmonized Tariff Schedule (General Notes).
10
See, e.g., U.S. Senate, Committee on Finance, Opening Statement of Senator Charles Grassley, Hearing on the
Nomination of Susan C. Schwab to be U.S. Trade Representative, May 16, 2006.
11
The previous law stipulated a CNL requiring that countries export no more than 50% of total U.S. imports of each
product or no more than a specified dollar amount of the imports for a given year. The amended law further tightened
these requirements.
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Generalized System of Preferences: Agricultural Imports
Historically, there have been few CNL waivers to the GSP for agricultural products and it is
unlikely that these program changes will greatly affect U.S. agricultural imports under the
program. In 2006, Congress had also renewed the GSP for two years through 2008.
Also, in 2006, the Trade Policy Staff Committee (TPSC), an advisory committee chaired by the
U.S. Trade Representative, instituted a series of investigations to evaluate possible changes to the
GSP.12 In its 2006 review the TPSC announced that the more than 80 previously granted CNL
waivers would be individually evaluated, in addition to the standard practice of examining
petitions for new CNL waivers. The TPSC said that it would also examine the eligibility status of
several “middle income” economies.13 Among the countries identified for possible removal as
beneficiaries under the program were Argentina, Brazil, India, the Philippines, Thailand, and
Turkey. These countries account for over 60% of the value of U.S. agricultural products imported
duty-free under the program. Although none of the countries cited lost their overall GSP
eligibility as a result of these reviews, several previously granted CNL waivers from these
countries were revoked. For agricultural imports under the GSP, the Côte d’Ivoire lost CNL
waivers for fresh or dried, shelled kola nuts (HTS 0802.90.94), as part of the 2006 review.
Argentina lost CNL waivers for cooked, shelled, fresh or dried peanuts (HTS 1202.20.40), as part
of the 2007 review. These waivers had allowed for these products to be imported from the Côte
d’Ivoire and Argentina duty-free under GSP despite the statutory import thresholds. Other
countries lost CNL waivers for some non-agricultural products, but not for agricultural products.
The 2006 review included decisions on other country and product petitions involving agricultural
products, but these changes are unlikely to greatly affect U.S. agricultural imports under the GSP.
For more information and for a discussion of possible legislative options, see CRS Report
RL33663, Generalized System of Preferences: Background and Renewal Debate.
Possible Implications of Changes to the GSP
The 2006 statutory changes to the GSP tightening rules for CNL waivers are unlikely to greatly
affect U.S. agricultural imports under the program. Historically, there have been few CNL
waivers for agricultural products imported duty-free under the GSP. Current waivers include
sugar and preserved bananas (Philippines), sugar, carnations, figs, yams, and gelatin derivatives
(Colombia), certain nuts (Argentina), animal hides (Argentina, South Africa, and Thailand), and
caviar (Russia). Other types of program changes, however, could affect U.S. agricultural imports
under the GSP, including additional limits on CNL waivers from certain countries or graduation
of some beneficiary countries. Countries that account for the majority of U.S. agricultural imports
under the GSP are Thailand, Brazil, Argentina, India, the Philippines, and Turkey.
Comments submitted to USTR as part of its 2006 review from U.S. agricultural industry groups
are mixed.14 For example, the American Farm Bureau Federation (AFBF) expressed its general
12
72 Federal Register 35895, June 28, 2007 (2006 Review); and 73 Federal Register 38297, June 3, 2008 (2007
Review). Regulations for implementing the GSP are at 15 C.F.R. Part 2007.
13
Countries may “graduate” or be removed as a beneficiary developing country if the country is determined to be
sufficiently competitive or developed (19 U.S.C. 2462(e)). For example, in 2008, the Republic of Trinidad and Tobago
graduated from the GSP program when it was determined to have become a ‘‘high income’’ country. Also, countries
that formally enter into a bilateral trading relationship with another developed country may also become ineligible, as
happened in 2007 for Bulgaria and Romania when they joined the European Union.
14
Based on public comments to the 2006 TPSC recommendations, posted at USTR’s website.
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Generalized System of Preferences: Agricultural Imports
opposition to the GSP program, stating that products imported duty-free under the program
compete with U.S.-produced goods without granting a commensurate level of opportunity for
U.S. producers in foreign markets. AFBF further supported withdrawal of CNL waivers for the
Philippines, Argentina, and Colombia. The Grocery Manufacturers Association (GMA) expressed
support for the current GSP program and identified certain agricultural products of importance to
GMA under the program, including sugar confections, spices, and certain processed foods and
inputs from Brazil, India, and Argentina. GMA’s position was generally supported by comments
from the American Spice Trade Association, the National Confectioners Association, and the
Chocolate Manufacturers Association. GMA also was a signatory of a letter sent to House and
Senate leaders in late 2010 urging Congress to extend the GSP.15
What remains unclear is whether duty-free access for most agricultural imports under the GSP
greatly influences a country’s willingness to export these products to the United States. In most
cases, costs associated with import tariffs are borne by the importer. These costs may be passed
on to the BDCs in terms of lower import prices. However, import tariffs to the United States for
most of these products tend to be low. As calculated by CRS, ad valorem equivalent tariffs range
from 3%-4% for sugar, 2%-10% for cocoa-containing products, 5%-12% for confectionery, 1%2% for most processed meats, about 2% for olive oil, less than 1% for mineral water, and about
5% for agriculture-based organic chemicals. 16 In general, any additional costs that might be
incurred by the BDCs as a result of the proposed changes could be more than offset by the
generally higher U.S. prices for most products compared to prices in other world markets.
Nevertheless, the imposition of even relatively low import tariffs could represent an increase in
input costs to some U.S. food processors and industrial users. These costs could be passed on to
consumers through higher prices for these and other finished agricultural or manufactured
products. As shown in Table 1, about one-half of GSP agricultural imports are intermediate goods
and inputs, such as raw sugar, miscellaneous processed foods, preparations, and byproducts, and
agriculture-based organic chemicals.
Author Contact Information
Renée Johnson
Specialist in Agricultural Policy
rjohnson@crs.loc.gov, 7-9588
15
Letter to Representatives Sander Levin and Dave Camp, and Senators Max Baucus and Charles Grassley, from
several U.S. companies and manufacturing associations, including GMA, November 10, 2010,
https://www.apparelandfootwear.org/UserFiles/File/Letters/2010/111010gspcoalition.pdf.
16
Calculated tariffs based on the in-quota rate. Under the GSP, agricultural products subject to a TRQ exceeding the inquota quantity is ineligible for duty-free import (19 U.S.C. 2463(b)(3)).
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