Order Code RS22541
November 29, 2006
CRS Report for Congress
Received through the CRS Web
Generalized System of Preferences Renewal:
Agricultural Imports
Renée Johnson
Analyst in Agricultural Economics
Resources, Science, and Industry Division
Summary
The Generalized System of Preferences (GSP) provides duty-free tariff treatment
for certain products from designated developing countries. Legislation authorizing the
current GSP program expires December 31, 2006. Agricultural imports under the GSP
totaled $1.9 billion in 2005, about 7% of all U.S. GSP imports. Leading agricultural
imports include sugar, confectionery, cocoa, olive oil, processed meats, drinking waters,
and miscellaneous food preparations and inputs for further processing. The majority of
these imports are from Argentina, Brazil, India, the Philippines, Thailand, and Turkey.
These countries are among those identified by some in Congress and in a recent Bush
Administration proposal as countries whose GSP benefits may be limited or curtailed.
Opinion within the U.S. agriculture industry is mixed, reflecting both support for and
opposition to the current program. This report will be updated as conditions warrant.
Background
The U.S. Generalized System of Preferences (GSP) provides preferential duty-free
entry to more than 4,650 agricultural and non-agricultural products from 144 designated
beneficiary countries and territories.1 Agricultural products account for only about 7% of
annual GSP imports; however, duty-free access for agricultural imports under the program
is an important issue for many in the U.S. agriculture industry who either support or
oppose the program. The ongoing debate over GSP renewal has led some in Congress to
consider whether the GSP statute should be amended by limiting benefits for certain more
advanced beneficiary developing countries (BDCs). The Bush Administration also is
considering a proposal to limit GSP benefits or to graduate certain BDCs from the
program. Among the identified countries that may be affected by these changes are
Argentina, Brazil, India, the Philippines, Thailand, and Turkey. These countries account
1 Office of the U.S. Trade Representative (USTR), Generalized System of Preferences, at
[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html]. GSP
was established by Title V of the Trade Act of 1974 and was last reauthorized through 2006 in
Section 4101 of the Trade Act of 2002 (P.L. 107-210). See also CRS Report RL33663,
Generalized System of Preferences: Background and Renewal Debate, by Vivian C. Jones.
Congressional Research Service ˜ The Library of Congress

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for the majority of U.S. agriculture products imported duty-free under the program.
Legislation authorizing the GSP expires December 31, 2006.
GSP Agricultural Imports
In 2005, U.S. imports under the GSP program totaled $26.7 billion, accounting for
about 2% of all commodity imports. Leading U.S. imports under the GSP are
manufactured products and parts, chemicals, plastics, minerals, and forestry products.
More than 25% of all GSP imports consist of jewelry, electrical, and transportation
equipment, both finished products and parts.2 Agricultural products accounted for 7% of
all imports under the GSP, totaling $1.9 billion in 2005. Compared to 2000, the value of
agricultural imports under the program has more than doubled. Of all agricultural imports,
imports under the GSP account for about a 3% share.
Table 1 shows the leading agricultural products (ranked by value) imported into the
United States under the GSP program in 2005. Leading imports include sugar and
confectionery products, processed fruit and vegetable preparations, processed food inputs
for further processing, olive oil, waters and other beverages, processed meats and fish
products, non-tropical fruits and vegetables, and cocoa and cocoa-containing products.
Table 1. U.S. Agricultural Imports under GSP Import Program, 2005
HTS Chapter(s)
2005
Percent
GSP Share
Subsection
Import Categories
($millions)
Share
All Ag Imports
17
Sugars and sugar confectionery
443
24%
19%
20, 14
Processed fruits & vegetables, inputs
241
13%
6%
19, 21, 13
Processed foods & food processing inputs
237
13%
6%
1509
Olive oil
116
6%
<1%
22
Beverages, water, spirits, and vinegar
115
6%
1%
8 (part), 7
Other fresh fruits and vegetables
113
6%
1%
16
Processed meat & fish products
105
6%
3%
18
Cocoa & cocoa-containing products
105
6%
4%
23, 3501-3505,
Other ag-based chemicals, residues, &
78
4%
2%
3301, 38 (part)
byproducts
9
Coffee, tea, & spices
65
4%
2%
24
Tobacco products
58
3%
5%
8 (part)
Fresh tropical fruits
48
3%
2%
4
Dairy products
36
2%
2%
12, 15 (part)
Oilseeds & processed oils/fats
36
2%
5%
6
Plants and cut flowers
23
1%
2%
10, 11
Grain-based products
17
1%
1%
2905 (part)
Ag-based organic chemicals (e.g. sorbitol)
15
1%
15%
8 (part)
Nuts
7
<1%
2%
5, 4301, 41 (part) Misc. animal products, incl. hides
3
<1%
<1%
1, 2
Meat products, incl. live animals
2
<1%
<1%
50-53 (part)
Ag-based textile inputs (cotton, wool, etc.)
1
<1%
<1%
Total
1,864
100%
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 in 2005. Agriculture commodities as defined by the WTO Agreement on Agriculture. Includes U.S.
Harmonized Tariff Schedule (HTS) chapters 1-24, excluding chapter 3 (fish and fish products, except
processed), and parts of HTS chapters 29, 33, 35, 48, 41, 43, and 50-53.
2 U.S. Chamber of Commerce, Estimated Impacts of the U.S. Generalized System of Preferences
to U.S. Industry and Consumers, at [http://www.uschamber.com/publications/reports/default].

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Most GSP agricultural imports are supplied by beneficiary countries that have been
identified for possible graduation from the program. In 2005, the top six BDCs ranked by
import value — Thailand, Brazil, Argentina, India, the Philippines, and Turkey —
accounted for 56% of agricultural imports under the GSP (see Table 2). Brazil and India
accounted for nearly one-fifth of agricultural imports under the program. These countries
are among those identified by critics of the current program as countries whose GSP
benefits should be limited or curtailed.
Table 2. U.S. Agriculture Imports, under GSP Import Program,
by Country, 2005
Country
2005
%Change
of Origin
($mill)
%Share 2000-2005
Major import product categories
misc. food preparations, beverages, misc. preserved fruits
Thailand
288
15%
68%
and vegetables, confectionery, pasta
chocolate, confectionery, gelatin & gelatin derivatives,
Brazil
209
11%
125%
tropical fruits, cocoa powder
prepared meats, confectionery, cheese, olive oil, gelatin &
Argentina
195
10%
252%
gelatin derivatives
ground/crushed peppers, vegetable extracts, preserved
124
7%
104%
cucumbers, essential oils (peppermint),
India
miscellaneous food preparations
cane/beet sugar, fresh/processed tropical fruit, industrial
Philippines
116
6%
83%
fatty oils, misc. food preparations
olive oil, prepared/preserved vegetables, ground/crushed
Turkey
114
6%
263%
peppers, confectionery, fruit juices
organic chemicals, tobacco products, seafood products,
Indonesia
49
3%
-3%
misc. food preparations, confectionery
cane/beet sugar, wine, crushed/ground peppers, plant
South Africa
31
2%
18%
bulbs/roots, essential oils (citrus), nuts
waters, cereal flour, soups/broths, chocolate, preserved
Venezuela
11
1%
-70%
fruits and vegetables
sauces/condiments, soups/broth, preserved meat products,
Croatia
9
<1%
70%
drinking waters, yeasts, chocolate/cocoa
cocoa preparations, chocolate, vegetable extracts, prepared
Russia
6
<1%
-42%
seafood, confectionery, fruit juice
Kazakhstan
3
<1%
-59%
caviar, wheat gluten
caviar, drinking waters, fish-based fats/oils, carbonated
Romania
1
<1%
39%
beverages, nuts/seeds
Subtotal
1,157
62%
89%
Other BDCs
707
38%
127%
Total
1,864
100%
101%
Source: CRS calculations from data from U.S. International Trade Commission (USITC), [http://dataweb.
usitc.gov]. Imports for consumption, actual U.S. dollars. Includes U.S. Harmonized Tariff Schedule (HTS)
chapters 1-24, excluding chapter 3 (fish and fish products, except processed), and parts of HTS chapters
29, 33, 35, 48, 41, 43, and 50-53. Select GSP countries ranked in terms of value of imports in 2005 (10-digit
HTS level). Agriculture commodities as defined by the WTO Agreement on Agriculture.
More than 30% of GSP agricultural imports consist of sugar and sugar-based
products, and cocoa and cocoa-containing products. Sugar and confectionery product
imports accounted for 24% of the value of agriculture imports under the GSP program
(see Table 1). Major GSP suppliers of cane and beet sugar imports were the Philippines,
Thailand, and Brazil, as well as other Latin American countries. Major suppliers of sugar
confectionery were Brazil, Argentina, and Thailand. Cocoa and cocoa-containing products
accounted for 6% of GSP agricultural imports, and were supplied mainly by Brazil,
Argentina, and Thailand, as well as by various African and other Latin American
countries. Indonesia, the Philippines, Brazil, and Turkey were major suppliers of imports
of sugar alcohols and other agriculture-based organic chemicals (including sorbitol),
which accounted for about 1% of GSP agricultural imports in 2005.

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Another nearly 30% of agricultural imports under the GSP program include
processed meat and fish products, olive oil, fresh fruits and vegetables, and drinking
waters. Another one-quarter of imports comprise miscellaneous processed foods and
inputs and fruit and vegetable preparations. Leading suppliers of processed meat under
the GSP include Argentina, Uruguay, Croatia, and Brazil; suppliers of processed fish and
seafood include Thailand, Indonesia, and Kazakhstan. Imports of fresh non-tropical fruits
and vegetables include mostly dried beans, tubers, and onions from India, Peru, Thailand,
and Argentina, and melons from Central American countries, Brazil, and Thailand.
Suppliers of other provisionally preserved, prepared, or frozen fruit and vegetable
products include Thailand, Argentina, and Brazil. Major suppliers of water and beverages
are Thailand, the Philippines, Venezuela, Brazil, Egypt, and India. Suppliers of olive oil
include Turkey and Argentina, among other Middle Eastern countries.
Proposed Changes to the GSP
Legislation authorizing the current GSP program expires December 31, 2006.
Renewal of the current program is a topic of debate, in part because some in Congress
question the inclusion of certain more advanced BDCs under the GSP program. Some in
Congress also believe that certain BDCs have contributed to the ongoing impasse in
multilateral trade talks in the WTO Doha Development Agenda. To date, legislation
seeking to amend the GSP statute has focused on restricting the President’s ability to grant
“competitive need limits” (CNL) waivers3 that allow BDCs to exceed GSP statutory
thresholds for some products. In part due to these congressional concerns, the Trade
Policy Staff Committee (TPSC), an advisory committee chaired by USTR, is investigating
whether some BDCs should be graduated from the program.4
In the 109th Congress, House Ways and Means Committee Chairman Bill Thomas
introduced H.R. 6142, which would renew the GSP program for two years but also seeks
to amend the GSP statute. The proposed changes would limit CNL waivers for any
eligible imported product from a BDC if (1) the eligible product’s aggregated appraised
value exceeded $1.5 billion during any calendar year or (2) the BDC’s per capita gross
national income (GNI) exceeded $3,400 in the preceding calendar year. This would limit
CNL waivers to certain BDCs for some imports, including agricultural products.
Historically, there have been few CNL waivers to GSP for agricultural products. Current
waivers for agricultural products include sugar and preserved bananas from the
Philippines, nuts from Argentina, and caviar from Russia.5 Under the legislation, CNL
waivers would be limited for BDCs classified as “upper middle income” countries and for
some BDCs classified as “lower middle income” countries, based on per capita GNI
groupings reported by the World Bank.6 This could affect existing CNL waivers for
agricultural products from Argentina and Russia, but not from the Philippines.
3 The law stipulates a CNL which requires that countries export no more than 50% of total U.S.
imports of each product or no more than a specified dollar amount of the imports for a given year.
4 BDCs under the GSP, as of 2006, are listed in the General Notes section of the U.S. Harmonized
Tariff Schedule, at [http://hotdocs.usitc.gov/docs/tata/hts/bychapter/0612gn.pdf#page=11].
5 USTR, CNL Waivers, at [http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/
Section_Index.html].
6 GNI per capita income categories: $3,466-$10,725 (upper middle); $876-$3,465 (lower middle).
India, Indonesia, Philippines, and Thailand have reported GNI per capita under $3,400.

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Senate Finance Committee Chairman Charles Grassley also commented that he
would “likely oppose the extension of the GSP program” and that “any extension of GSP
would likely not be a continuation of the status quo.”7 His comments identified Brazil and
India as countries that benefit under the current GSP program but also as two of the
countries he thought most responsible for holding up the Doha negotiations, suggesting
that these countries might become ineligible under the GSP program.
Others in Congress favor a short-term extension of the GSP while Congress
continues to deliberate and hold hearings on possible amendments to the GSP and other
trade preference programs. In September 2006, the 110th Congress’s likely incoming
chairmen of the House Ways and Means Committee, Charles Rangel, and Senate Finance
Committee, Max Baucus, introduced identical bills seeking to extend the current GSP and
other trade preference programs. Both the House bill (H.R. 6076) and the Senate bill (S.
3904) would extend the GSP program for two years through 2008. Another Rangel bill
introduced in March 2006 (H.R. 5070) would renew the current GSP program for one
year. These bills do not propose any programmatic changes to the GSP statute. When the
bills were introduced, the primary reason cited for renewing GSP was the need for U.S.
trade preference programs that promote economic growth and stability in developing
countries by stimulating exports.8
The Bush Administration also has indicated that it may consider changes to the
current GSP program. On August 6, 2006, the USTR requested review and public
comment on changes to the eligibility requirements for certain GSP beneficiaries and
existing CNL waivers, which could affect the eligibility status of 13 countries.9 The
identified countries are Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, the
Philippines, Romania, Russia, South Africa, Thailand, Turkey, and Venezuela. Under the
current GSP program, mandatory country graduation occurs when a BDC is determined
to be a “high income” country or following a review of the BDC’s advances in economic
development and trade competitiveness.10 The last time beneficiary countries were
graduated from the GSP program was 2004.11
Possible Implications of Changes to the GSP
The proposed legislative changes, if enacted, could restrict the President’s ability to
grant CNL waivers allowing BDCs to exceed statutory thresholds for some products.
7 U.S. Senate, Committee on Finance, Opening Statement of Senator Chuck Grassley, Hearing
on the Nomination of Susan C. Schwab to be U.S. Trade Representative, May 16, 2006.
8 U.S. House of Representatives, “Rangel Urges Passage of Expiring Trade Benefits,” press
release of Representative Charles Rangel, Sept. 25, 2006; House of Representatives, “Rangel Bill
Would Extend Trade Benefits for Developing Countries,” press release of Representative Charles
Rangel, Mar. 30, 2006; and U.S. Senate, “Baucus Bill Would Extend Expiring Trade Programs,”
press release of U.S. Senator Max Baucus, Sept. 15, 2006.
9 71 Federal Register 45079, August 8, 2006.
10 GATT, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of
Developing Countries; Decision of 28 November 1979, L/4903 (Dec. 3, 1979) (footnotes
omitted), at [http://www.wto.org/gatt_docs/English/SULPDF/90970166.pdf].
11 69 Federal Register 10131, March 4, 2004. Graduation was effective January 1, 2006.

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Based on current CNL waivers to GSP, this could deny waivers for nuts from Argentina
and caviar from Russia, and possibly products from some other BDCs. If the
administrative changes being evaluated by the TPSC are implemented by USTR, certain
beneficiary countries, including Thailand, Brazil, Argentina, India, the Philippines, and
Turkey, might be graduated from the program and no longer be eligible to receive benefits
under the GSP. These countries account for the majority of U.S. agriculture products
imported duty-free under program.
Comments on the Administration’s proposal submitted to USTR from the U.S.
agriculture industry groups are mixed.12 The American Farm Bureau Federation (AFBF)
expressed its general opposition to the GSP program, stating that products imported 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
supports withdrawal of CNL waivers for the Philippines, Argentina, and Colombia. The
Grocery Manufacturers Association (GMA) expressed support for the current GSP
program and identified certain agricultural products of importance to GMA under the
program, including sugar confections, spices, and certain processed foods and inputs from
Brazil, India, and Argentina. GMA’s position was generally supported by comments from
the 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 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.13 In general, any additional costs that might be incurred by the BDCs
as a result of the proposed changes could be more than offset by the generally higher U.S.
prices for most products compared to prices in other world markets. Nevertheless, the
imposition of even relatively low import tariffs could represent an increase in input costs
to some U.S. food processors and industrial users. These costs could be passed on to
consumers through higher prices for these and other finished agricultural or manufactured
products. As shown in Table 1, about one-half of GSP agricultural imports are
intermediate goods and inputs, such as raw sugar, miscellaneous processed foods,
preparations, and byproducts, and agriculture-based organic chemicals. These and other
stakeholder concerns likely will be raised during the debate on GSP renewal and
deliberations regarding possible amendments to the program.
12 USTR, Public Comments Received in the Review on the Eligibility of Certain GSP
Beneficiaries and Existing CNL Waivers, General, at [http://www.ustr.gov/Trade_Development/
Preference_Programs/GSP/Section_Index.html].
13 Calculated tariffs based on the in-quota rate. Under the GSP, agricultural products subject to
a TRQ exceeding the in-quota quantity is ineligible for duty-free import (19 U.S.C. 2463(b)(3)).

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