Trade Preferences: Economic Issues and Policy
Options
Vivian C. Jones, Coordinator
Specialist in International Trade and Finance
J. F. Hornbeck
Specialist in International Trade and Finance
M. Angeles Villarreal
Specialist in International Trade and Finance
February 24, 2011
Congressional Research Service
7-5700
www.crs.gov
R41429
CRS Report for Congress
P
repared for Members and Committees of Congress
Trade Preferences: Economic Issues and Policy Options
Summary
Since 1974, Congress has created multiple trade preference programs designed to foster economic
growth, reform, and development in less developed countries. These programs give temporary,
non-reciprocal, duty-free U.S. market access to select exports of eligible countries. Congress has
repeatedly revised and extended these programs. Congress may consider three major items related
to trade preferences in the 112th Congress: (1) renewal of the Generalized System of Preferences
(GSP, expired on December 31, 2010); (2) extension of the Andean Trade Preference Act (ATPA)
beyond February 12, 2011, and (3) possible reform of preference programs based on
comprehensive reviews in hearings held in the 111th Congress.
Congress established five trade preference programs. The GSP applies to all developing countries
worldwide. In addition, there are four regional programs including the ATPA, the Caribbean
Basin Economic Recovery Act (CBERA); the Caribbean Trade Partnership Act (CBTPA), the
African Growth and Opportunity Act (AGOA), and the Haitian Opportunity through Partnership
Encouragement (HOPE) Act. Both the GSP and the ATPA are scheduled to expire on December
31, 2010.
Unlike free trade agreements, trade preferences are non-reciprocal, meaning that developing
countries do not have to provide equivalent trade benefits to the United States. Countries must
meet certain eligibility criteria, however, such as adopting internationally recognized worker
rights, providing adequate protection of intellectual property, and operating an open market
economy under established multilateral trade rules. In the 111th Congress, the House Ways and
Means and Senate Finance Committees held hearings on the operation and impact of these
programs. In the first session, Congress extended the GSP and ATPA for one year, ending
December 31, 2010 (P.L. 111-124). In the second session, it extended provisions in the CBPTA
and HOPE Act through September 30, 2020 in the Haiti Economic Lift Program Act of 2010 (P.L.
111-171). Congress also extended the ATPA until February 12, 2011 (P.L. 111-344). In the 112th
Congress, S. 105 proposes duty-free and reduced tariff treatment for certain apparel from the
Philippines. In the 112th Congress, S. 308 seeks to extend the ATPA and GSP until June 30, 2012.
Trade preferences are permitted by the World Trade Organization (WTO) under the General
Agreement on Tariffs and Trade (GATT) “enabling clause,” which allows members to provide
more favorable treatment to developing countries. Other developed countries provide similar
preferences. In the WTO Doha Development Agenda (DDA) round of multilateral trade
negotiations, both developed and developing WTO members agreed to provide duty-free, quota-
free (DFQF) preferential access to least-developed countries, subject to adoption of the
agreement.
Evaluations of the benefits of trade preferences have been mixed. Many developing countries
have used tariff preferences to enhance their competitiveness in certain industries, particularly
apparel. In other countries, preferences are used to export major commodities such as petroleum
products, which may be less supportive of long-term economic diversification and development.
Meeting the needs of the least developing countries is a core policy issue that continues to drive
the debate over the design of preference programs. Consumers and some U.S. industries and
workers benefit from the additional trade, others compete directly with it, so perspectives on trade
preferences vary despite their overall costs apparently being small. This report discusses the
major U.S. trade preference programs, their possible economic effects, stakeholder interests, and
legislative options.
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Contents
Background ................................................................................................................................ 1
Generalized System of Preferences (GSP) ............................................................................. 2
Regional Programs................................................................................................................ 3
Central America and the Caribbean ................................................................................. 3
Andean Trade Preference Act (ATPA) ............................................................................. 4
African Growth and Opportunity Act (AGOA) ................................................................ 5
Preference Programs and the WTO.............................................................................................. 6
Stakeholder Perspectives ............................................................................................................. 7
Economic Issues ......................................................................................................................... 8
Program Effectiveness—Use of U.S. Trade Preferences ........................................................ 9
Developing Country Economic Effects................................................................................ 12
Comparative Advantage and Development .......................................................................... 14
Export Diversification......................................................................................................... 15
Preference Erosion .............................................................................................................. 15
Country Usage Concentration.............................................................................................. 16
Eligibility Issues ................................................................................................................. 16
Effects on the U.S. Market .................................................................................................. 17
Legislative Options for Congress............................................................................................... 18
Renewal Period................................................................................................................... 19
Harmonization .................................................................................................................... 19
Country Coverage ............................................................................................................... 20
Eligibility Criteria ............................................................................................................... 22
Product Coverage................................................................................................................ 22
Outlook..................................................................................................................................... 23
Figures
Figure 1. Imports Entering Under Preference Programs, 2000-2009........................................... 10
Figure 2. Preference Programs as a Percentage of All U.S. Imports, 2010 .................................. 11
Figure 3. Foreign Investment Flows to Preference Receiving Countries, 2000-2009 .................. 12
Tables
Table 1. Imports by Preference Program.................................................................................... 10
Table A-1. Eligible Countries by Preference Program ................................................................ 24
Table A-2. Major U.S. Imports by Preference Program .............................................................. 28
Appendixes
Appendix. Eligible Countries and Products Imported by Preference Program ............................ 24
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Contacts
Author Contact Information ...................................................................................................... 34
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ince 1974, Congress has created multiple trade preference programs designed to foster
economic growth and development in less developed countries. These programs give
S temporary, non-reciprocal, duty-free U.S. market access to select exports of eligible
countries. Congress conducts regular oversight of these programs, often revising and extending
them. The 112th Congress may consider two major issues relating to trade preference programs:
(1) the expiration of the Generalized System of Preferences (GSP) on December 31, 2010; and (2)
continued extension of the Andean Trade Preference Act beyond February 12, 2010. The 112th
Congress may also consider broader reform of the preference programs based on comprehensive
reviews in hearings held in both the House and the Senate in the 111th Congress.
Background
The multilateral trading system that has evolved since the end of World War II is centered on the
guiding tenet of nondiscrimination. It is embodied in the most favored nation (MFN) principle of
the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade
Organization (WTO).1 The economic rationale for this foundational idea rests on avoiding the
type of protectionist policies prominent during the inter-war period that exacerbated the Great
Depression. As fundamental as MFN treatment is to the conduct of modern trade, the
GATT/WTO also allows for certain exceptions, one being special and differential treatment
(SDT) for developing countries.
Special trade treatment permits, among other policies, preferential programs that reduce tariffs on
certain goods from eligible developing countries. Lower tariffs support an export development
strategy that is based on increasing trade and diversifying it away from traditional commodity
exports into more value-added goods in industry and manufacturing. Because commodity prices
have declined over the long run and experienced periods of extreme volatility over shorter periods
of time, countries dependent on them often find their trade position weakened over time.2 Exports
are also key to development of industry in countries with small domestic markets. By diversifying
trade to other sectors and industries it is hoped that developing economies will attract more
investment, create more jobs, become more stable, and grow faster.3
Many developed countries have unilateral trade preference programs; Congress has legislatively
established five in the United States. The first was the Generalized System of Preferences (GSP),
established in the Trade Act of 1974. It applies to developing countries as a whole. In addition,
there are four regional programs that followed, created in the Andean Trade Preference Act
(APTA), the Caribbean Basin Economic Recovery Act (CBERA); the Caribbean Basin Trade
Partnership Act (CBTPA), the African Growth and Opportunity Act (AGOA), and the Haitian
Opportunity through Partnership Encouragement (HOPE) Act (discussed in detail below). The
1 In the United States MFN treatment is defined in law as normal trade relations (NTR).
2 The terms of trade or the ratio of export prices to import prices tend to fall with commodity prices over the long run,
causing deteriorated trade and current account positions. In recent years, alternative use of crops (e.g. energy), climate
change, and other factors have led to greater volatility in commodity prices, as reflected in the sudden sharp increases
in agriculture prices in 2008 and 2011.
3 Bernard Hoekman, Will Martin, and Carlos A. Primo Braga, "Quantifying the Value of Preferences and Potential
Erosion Losses," in Trade Preference Erosion: Measurement and Policy Response, ed. Bernard Hoekman, Will Martin,
and Carlos A. Primo Braga (New York: Palgrave MacMillan, 2009), pp. 1-2.
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regional programs were built on the GSP concept, but are more targeted and tend to offer more
generous and flexible access to the U.S. market.
Trade preferences provide duty-free U.S. market access to select exports of eligible developing
countries. All U.S. preference programs are unilateral, meaning that they do not require reciprocal
trade concessions. Congress conducts oversight of these programs, revising and extending them
periodically.4 In order to qualify to receive benefits, beneficiary developing countries must meet
eligibility criteria, which vary by program. Some examples include ensuring that prospective
countries make strides toward enhancing the rule of law, adopting internationally recognized
worker rights, supporting counternarcotics policies, and providing open markets for U.S. exports.
Preference programs, as such, are regarded by many as integral elements of U.S. trade,
development, and foreign policy.
During the 111th Congress, both the House Ways and Means and Senate Finance Committees held
hearings to evaluate preference programs and possible means to improve their effectiveness.
Congress passed legislation in the first session that extend
ed the GSP and ATPA for one year through December 31, 2010 (P.L. 111-124). In the second
session, Congress extended the CBPTA through September 30, 2020, and granted additional
preferences to Haiti in the Haiti Economic Lift Program Act of 2010 (P.L. 111-171). The ATPA
was renewed for six weeks (until February 12, 2011) in P.L. 111-344. In the 112th Congress, S.
308 seeks to renew the GSP and ATPA until June 30, 2012, while H.R. 622 seeks to renew ATPA
until June 30, 2011.
Supporters of trade preferences include beneficiary developing country governments who have
established industries and jobs partially as a result of preference programs, U.S. importers,
including retailers and U.S. consuming industries, and U.S. producers working in joint production
with assembly plants in developing countries. These groups tend to favor longer-term renewal of
preferences to ensure more predictability, which is one important factor in investment and
sourcing decisions. Stakeholders opposed to preference programs include U.S. manufacturers of
competing import-sensitive products and some labor groups representing workers negatively
affected by them, although the strict labor requirements of preference programs can attract
support from labor groups. Generally, preference programs receive broad support in Congress,
but some lawmakers have reservations about their design and operation.
Generalized System of Preferences (GSP)
Authorized by Congress in 1974, the GSP is the oldest and largest trade preference program,
currently providing trade benefits to 131 countries. It was last extended through December 31,
2010, by P.L. 111-124, and has since expired. The GSP statute (Title V of the Trade Act of 1974,
P.L. 93-618, as amended) authorizes the President to grant duty-free status to selected imports
from two categories of countries: beneficiary developing countries (BDCs) and least-developed
country beneficiaries (LDBDCs),5 the latter designating additional special treatment for the
4 U.S. Congress, House, Committee on Ways and Means, Subcommittee on Foreign Trade, “Hearing on the Operation,
Impact, and Future of the U.S. Preference Programs,” Hearing Advisory, November 10, 2009.
5 According to the GSP statute (see 19 U.S.C. § 2467) beneficiary and least-developed beneficiary countries must be
designated as such by Executive Order or Presidential Proclamation. Least-developed beneficiaries are designated
according to the same eligibility criteria as beneficiary developing countries and must comply with the same
(continued...)
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poorest developing countries.6 The President may designate eligible countries, subject to various
mandatory and discretionary conditions as set out in the statute.7 In general, these include:
providing equitable and reasonable market access; taking actions to adopt internationally
recognized worker rights; supporting private ownership and repatriation of capital; not engaging
in practices that would harm U.S. economic interests; and supporting certain U.S. anti-terrorism
policies.8 The GSP program is implemented by the Trade Policy Staff Committee (TPSC), an
interagency group chaired by the Office of the U.S. Trade Representative (USTR).
In order to qualify for GSP eligibility, products must be imported directly from a BDC, where at
least 35% of the value of materials and/or processing must be completed.9 The President is
authorized to designate products as eligible for GSP status, but many agricultural, textile, apparel,
and other “import sensitive” products are excluded.10 In addition, a country (LDC beneficiaries
excluded) may lose eligibility for a particular product due to statutory competitive need
limitations (CNLs). An automatic CNL is triggered if imports of a product from a BDC: (1)
exceed a specified threshold value ($140 million in 2010); or (2) account for 50% or more of total
U.S. imports of the product. After the threshold is reached, CNLs go into effect on July 1 of the
next calendar year and may be waived under certain conditions.11
Countries are also mandatorily “graduated” from the GSP program if the President determines
that they have become a “high income” country.12 Benefits may also be limited or withdrawn if
the President determines that a beneficiary is sufficiently competitive based an assessment of its
level of economic development, per capita income, or living standards.13
Regional Programs
Central America and the Caribbean
In 1983, Congress created the first regionally-targeted preference program with strong bipartisan
passage of the Caribbean Basin Economic Recovery Act (CBERA).14 The Act provided limited
duty-free entry of select Caribbean exports as a core element of the U.S. foreign economic policy
(...continued)
requirements, but receive tariff benefits on additional products.
6 19 U.S.C. §§ 2461-2467, as amended. For a more complete description of the GSP, see CRS Report RL33663,
Generalized System of Preferences: Background and Renewal Debate, by Vivian C. Jones.
7 19 U.S.C. § 2462.
8 Ibid.
9 19 U.S.C. § 2463(a)(2).
10 19 U.S.C.§ 2463(b).
11 19 U.S.C.§ 2463(c). If a CNL is in place on a product, an interested party from a beneficiary country can request
redesignation of the product’s eligibility if imports of the product fall below the CNL limits in a subsequent year.
12 19 U.S.C. § 2462(e). The last countries graduated from the GSP were Equatorial Guinea and Croatia (effective
January 1, 2011) because the President determined that they had become “high income” countries. See Proclamation
8467 of December 23, 2009, To Modify Duty-Free Treatment Under the Generalized System of Preferences, and for
Other Purposes, 74 Federal Register 69221. The per capita GNP limit is set at the lower bound of the World Bank’s
definition of a “high income” country which was $11,116 in 2006 (see USTR, Generalized System of Preferences
Guidebook).
13 19 U.S.C. § 2462(c)(2).
14 P.L. 98-67, 19 U.S.C. § 2701ff.
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response to deteriorating economic and political conditions in the region in the 1980s. Although
considered an important new program at the time, its effects were limited by the exclusion of key
exports, especially apparel. Apparel were (and are) major products of the region, but were
designated “import sensitive” in the United States. CBERA was made permanent with a few
modest additions of eligible products in the Caribbean Basin Economic Expansion Act of 1990
(CBI II).15
Additional preferences were extended to the Caribbean region in the Caribbean Basin Trade
Partnership Act (CBTPA) in May 2000.16 In the CBTPA, Congress effectively extended benefits
to eligible Caribbean countries through fiscal year 2008 equivalent to those given to Mexico
under the North American Free Trade Agreement (NAFTA). The CBPTA also enhanced product
coverage to include certain apparel goods—provided that the fabrics were sourced in the United
States or the Caribbean and made from U.S. yarn. Congress recently extended CBTPA through
September 30, 2020 in the Haiti Economic Lift Program (HELP) Act of 2010.17
Implementation of the Dominican Republic-Central America-United States Free Trade Agreement
(CAFTA-DR) on March 1, 2006 shifted treatment of imports from the largest Caribbean apparel
producing countries from a unilateral preference program to the more liberal benefits afforded
under the new, reciprocal free trade agreement (FTA).18 Haiti was the only major apparel-
producing country in the region that was not included in CAFTA-DR.19 Because Haiti’s economic
fortunes continued to deteriorate, Congress provided uniquely generous and flexible unilateral
preferences to Haiti’s apparel sector by amending CBERA to include the Haitian Hemispheric
Opportunity through Partnership Encouragement Act of 2006 (HOPE I).20 These preferences were
further enhanced and extended by the HOPE II Act of 2008,21 and again by the HELP Act.
The HOPE Act, as amended, differs from other U.S. preference programs because it allows duty-
free treatment for Haitian apparel exports made from limited amounts of lower-cost third-country
fabrics and other inputs from countries outside the region or not part of a trade agreement with
the United State (e.g., many Asian producers). The eligibility criteria are based on GSP
provisions, with an additional requirement mandating detailed United Nations monitoring of
Haitian firms to ensure that they conform to internationally recognized worker rights.22
Andean Trade Preference Act (ATPA)
The United States originally extended special duty treatment to imports from Colombia, Ecuador,
Peru, and Bolivia in the Andean Trade Preference Act (ATPA), initially enacted on December 4,
1991.23 It lapsed on December 4, 2001, but was subsequently renewed and amended on August 6,
15 P.L. 101-382. For more background, see CRS Report RL33951, U.S. Trade Policy and the Caribbean: From Trade
Preferences to Free Trade Agreements, by J. F. Hornbeck.
16 P.L. 106-200, Title III, 19 U.S.C. §2703.
17 P.L. 111-171. See CRS Report RL34687, The Haitian Economy and the HOPE Act, by J. F. Hornbeck.
18 P.L. 109-53, 19 U.S.C. § 4001 ff.
19 The major CAFTA-DR apparel producers are the Dominican Republic, El Salvador, Guatemala, Honduras, and
Nicaragua.
20 P.L. 109-432, 19 U.S.C. 2703a.
21 P.L. 110-246, Subtitle D, Part I.
22 CRS Report RL34687, The Haitian Economy and the HOPE Act, by J. F. Hornbeck.
23 Title II of P.L. 102-182, 19 U.S.C. § 3201ff..
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2002 in the Andean Trade Promotion and Drug Eradication Act (ATPDEA).24 ATPDEA renewed
ATPA trade preferences and also expanded the preferences to include additional products
previously excluded under ATPA, including certain petroleum and petroleum products, textiles
and apparel, footwear, and tuna in flexible containers, among others. ATPA expired on February
12, 2011. Late in the 111th Congress, trade preferences for Colombia and Ecuador were given a
six-week extension (P.L. 111-344) and have not been renewed since. Peru was dropped from the
list of designated beneficiaries because the United States and Peru have a free trade agreement,
which entered into force on February 1, 2009 (P.L. 110-138). The 112th Congress may consider
legislation to extend ATPA for Colombia and Ecuador, and may address the issue of reinstating
Bolivia as a beneficiary country.
The purpose of ATPA is to provide preferential duty treatment to U.S. imports from beneficiary
countries to promote economic growth, provide “legitimate” business opportunities, and expand
job creation as alternatives to illegal crop production and drug trafficking.25 The ATPA is one part
of a broader U.S. initiative to address the drug trade problem in the Andean region. Other efforts
include drug crop eradication and additional counter-narcotics activities.
In December 2008, then-President George W. Bush determined that Bolivia failed to meet ATPA
beneficiary criteria and suspended Bolivia’s status as a beneficiary country for failure to
cooperate in counternarcotics efforts. On June 30, 2009, President Barack Obama extended this
determination. Reinstatement of Bolivia as an ATPA beneficiary country will require
congressional approval.
African Growth and Opportunity Act (AGOA)
The African Growth and Opportunity Act (AGOA)26 originated in 2000 as part of an increasing
U.S. effort to promote the development of, and deeper economic integration with, sub-Saharan
Africa. The preference program was last amended and renewed through September 30, 2015.27
GSP benefits were also extended to AGOA-eligible countries until that time, irrespective of any
other congressional determinations on GSP extension.28
AGOA provides eligible sub-Saharan African countries more generous duty-free access than
afforded under GSP, including special access for certain textile and apparel products that are
designated “import sensitive” in the GSP statute.29 AGOA also provides U.S. technical assistance
and trade capacity building to eligible governments and businesses through four regional trade
hubs in Gaborone, Botswana; Nairobi, Kenya; Accra, Ghana; and Dakar, Senegal.30
Currently, 38 countries are eligible to receive AGOA benefits. AGOA-eligible countries must
demonstrate, among other things, that they: (1) are making continual progress toward establishing
24 Title XXXI of P.L. 107-210.
25 See P.L. 107-210, Div. C, Title XXXI, sec. 3102.
26 Title I of P.L. 106-200 (19 U.S.C. § 3701 – 3741), as amended.
27 P.L. 109-432, Div. D, Title VI, section 6004.
28 19 U.S.C. § 2466a (a)(1)(B).
29 19 U.S.C. § 3721.
30 19 U.S.C. § 3732(b). Office of the United States Trade Representative, 2008 Comprehensive Report on U.S. Trade
and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act:
The Eighth of Eight Annual Reports, May 2008, p. 47.
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a market-based economy; (2) do not engage in activities that undermine U.S. national security
and foreign policy interests; and (3) do not engage in gross violations of internationally
recognized human rights or provide support for international terrorism.31
Preference Programs and the WTO
The GATT and WTO agreements are based on the fundamental principle that unconditional most-
favored-nation (non-discriminatory) status must be offered to the products of other Members with
respect to tariffs and other trade-related measures.32 Programs offering preferential treatment,
such as the GSP, are inconsistent with this principle. Because these programs were designed to
help less developed countries through trade expansion, parties to the GATT provided a legal basis
for one-way tariff preferences in the 1979 “Enabling Clause,” which stated that “contracting
parties may accord differential and more favorable treatment to developing countries, without
according such treatment to other contracting parties” under certain conditions.33 The Enabling
Clause was formally incorporated into the GATT 1994 when the Uruguay Round Agreements—
the same agreements that established the WTO—entered into force on January 1, 1995.
Other developed countries offer special trade preferences for developing countries including
Canada, the European Union, Japan, and Australia.34 Some developing nations, such as India and
Brazil, also provide tariff concessions to least developed countries (LDCs).35 Generally, each
preference-granting country extends to eligible developing countries (as determined by each
benefactor) an exemption from duties (in the form of duty-free access or reduced tariffs) on
designated “non-sensitive” manufactured products and agricultural goods. Product coverage and
the type of preferential treatment offered vary widely.36 Although most preference schemes
(including all U.S. programs) admit eligible products duty-free, some countries provide tariff
reductions, rather than complete exemption, from duties. The Australian system, for example, is
based on a five percentage point margin of preference, meaning that when the Australian General
Tariff (GT) is 5% or higher on a given product, the amount of the tariff is reduced by 5 percentage
points for products of beneficiary countries. When the GT rate is 5% or less, the preferential rate
is zero.37
Other developed countries also offer regional preferences, or preferences that “reward”
developing countries that comply with additional eligibility criteria such as anti-corruption
measures, environmental sustainability goals, or core worker rights provisions. For example, the
31 19 U.S.C. § 3703.
32 CRS Report RS22183, Trade Preferences for Developing Countries and the World Trade Organization (WTO), by
Jeanne J. Grimmett.
33 Ibid. The Enabling Clause replaced a 1974 GATT waiver on preferences under which the United States and other
countries originally adopted and implemented preference programs.
34 According to the United Nations Conference on Trade And Development (UNCTAD), there are currently 13
countries that offer GSP programs: Australia, Belarus, Bulgaria, Canada, Estonia, the European Union, Japan, New
Zealand, Norway, Russia, Switzerland, and Turkey.
35 Julia V. Sekkel, Summary of Major Trade Preference Programs, Center for Global Development, April 2009, p. 15.
36 Sanchez Arnau, Juan C., The Generalized System of Preferences and the World Trade Organization, London:
Cameron May, Ltd., 2002, p. 187.
37 United Nations Conference on Trade and Development (UNCTAD), 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.
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European Union offers additional duty-free access to its market to LDC beneficiaries under the
“Everything But Arms” preference,38 as well as an incentive-based program (known as GSP+)
that provides enhanced benefits for “vulnerable countries” (in terms of size or limited
diversification in its exports). GSP+ beneficiaries must have ratified and effectively implemented
27 specified international conventions in the fields of human rights, core labor standards,
sustainable development, and good governance.39
Also in the WTO, as a part of the Doha Round of multilateral trade negotiations, developed
country members and “developing country members declaring themselves in a position to do so”
agreed to provide “duty-free and quota-free” (DFQF) market access for all products originating
from all least-developed countries “in a manner that ensures stability, security, and
predictability.”40 Members “facing difficulties” would be permitted to exempt 3% of all tariff
lines, provided that steps are taken to build the list of covered products until total DFQF is
reached.41 Since the DDA is a “single undertaking” (which means that nothing is finally agreed
until everything is agreed), the DFQF agreement reached in 2005, will not be implemented until
the negotiating round is concluded.42
Stakeholder Perspectives
Like all public policies, the costs and benefits do not fall uniformly to all affected parties. This is
reflected in various stakeholder responses to trade preferences. Supporters include beneficiary
developing country governments, producers, workers, and exporters. Many of these countries
receive foreign investment based on U.S. trade preferences, resulting in increased employment in
certain industries.43 For these countries, jobs and related income created by U.S. trade preference
programs have become an important element for economic growth and development. Many
beneficiary stakeholders express concern that if preferences are not renewed, other low-cost
countries such as China would benefit at their expense.44
U.S. manufacturers who import intermediate products through the various trade preference
programs in downstream products also support trade preferences. Some U.S. producers,
especially in the U.S. textile and apparel industries, have made use of preferences to remain
competitive through cooperative relationships with certain beneficiaries, especially the Caribbean
and Latin American countries.45 Businesses that benefit from preference programs favor longer-
38European Council Regulation (EC) 416/2001.
39European Council Regulation (EC) 732/2008. See also the European Commission website,
http://ec.europa.eu/trade/wider-agenda/development/generalised-system-of-preferences/.
40 World Trade Organization, Ministerial Declaration, Annex F, December 18, 2005, WT/MIN(05)/DEC.
41 Ibid.
42 CRS Report RL32060, World Trade Organization Negotiations: The Doha Development Agenda, by Ian F.
Fergusson.
43 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Cong., 1st sess., November 17, 2009, Testimony of Alan Han of Nien Hsing Textile.
44 U.S. Government Accountability Office, International Trade: U.S. Trade Preference Programs Provide Important
Benefits, but a More Integrated Approach Would Better Ensure Programs Meet Shared Goals, GAO-08-443, March
2008, p. 40, http://www.gao.gov.
45 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Cong., 1st sess., November 17, 2009. Testimony of David Love, Senior Vice President
and Chief Supply Chain Officer, Levi Strauss & Co.
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term renewal of trade preferences because they provide predictability when signing import
contracts and making investment decisions.46
Trade preferences reflect both economic development and foreign policy goals. In addition to the
economic benefits, eligibility criteria create incentives for beneficiary countries to support U.S.
objectives such as adopting and enforcing internationally recognized worker rights, reducing
barriers to investment, and enforcing intellectual property rights.47 In addition, U.S. regional
preferences created with particular goals in mind—such as eradication of drug production in the
case of the Andean trade preference program—create incentives to fulfill additional U.S. policy
goals.48 Organized labor, for example, tends to support trade preferences because worker rights
provisions have led to improvements in labor rights in some regions. Labor officials have cited
the GSP process, specifically annual country practice reviews, as helpful in addressing
enforcement and rule-of-law issues relating to compliance.49 Labor support, however, is also
tempered by the fact that certain workers will be negatively affected by increased imports of
products with which they compete.
Stakeholders opposed to preferences programs mostly include U.S. manufacturers of competing
import-sensitive products. In particular, some in the U.S. textile and apparel industry are opposed
to unfettered extension of textile and apparel preferences, especially when U.S. workers are
potentially adversely affected.50
Economic Issues
All trade preference programs have in common the goal to promote export-driven growth and
development in less developed countries. The programs themselves, however, raise multiple
economic and political issues. Preference program features are a key factor in determining their
effectiveness. Among key issues is the extent to which preferences: (1) target the developing
country’s productive capacity; (2) have sufficiently flexible and manageable rules of origin; (3)
are not overly restricted by domestic interests; and (4) are extended for a sufficiently long period
of time to attract foreign investment. Because of eligibility requirements that countries must
accept from the preference giver, and the fact that they can also be unilaterally cut off, there are
also opportunity costs to preferences.51
46U.S. Government Accountability Office, International Trade: U.S. Trade Preference Programs Provide Important
Benefits, but a More Integrated Approach Would Better Ensure Programs Meet Shared Goals, GAO-08-443, March
2008, p. 42, http://www.gao.gov.
47 U.S. Congress, Senate Committee on Finance, U.S. Preference Programs: How Well Do They Work?, 110th Cong.,
1st sess., May 16, 2007, S. Hrg. 110-650 (Washington: GPO, 2007) Statement of Meredith Broadbent, Assistant U.S.
Trade Representative for Market Access and Telecommunications, Office of the U.S. Trade Representative,
Washington, D.C., p. 4.
48 Ibid.
49 “The Real Record on Workers’ Rights in Central America,” AFL-CIO, April 2005, http://www.aflcio.org.
50 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Cong., 1st sess., November 17, 2009, Testimony of David Hastings, chairman of the
Mount Vernon Mills, on behalf of the National Council of Textile Organizations (NCTO).
51 Caglar Ozden and Eric Reinhardt, The Perversity of Preferences: The Generalized System of Preferences and
Developing Country Trade Policies, 1976-2000, The World Bank Development Research Group, Working Paper,
January 2003, p. 2.
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Program Effectiveness—Use of U.S. Trade Preferences
The value trade preferences provide from a programmatic perspective rests on their ability to
increase exports from developing countries, particularly away from traditional commodities. The
value to the exporting countries is equal to what is called the preference margin, which may be
simply defined as the difference between the MFN and preferential tariffs on exported goods.52 If
the preference margin is significant, it should contribute to export growth by reducing the import
cost of goods in the United States relative to competing exports from countries without
preferences.
One simple approach to examining the benefits of preference programs is to evaluate their use by
observed growth in exports, although this provides for only a partial understanding.53 For
example, the total value of imports entering under U.S. preference programs in 2008 was $110.0
billion in 2008, and $60.5 billion in 2009 (see Figure 1 and Table 1). In 2010, the value of
imports rose $78.5 billion. U.S. imports from all countries fell dramatically in 2009, including
those entering under preference programs. The Great Recession was the major cause of U.S.
import compression in 2009, with the decline in U.S. consumption of petroleum products being a
key trend. For AGOA in particular, the dramatic decline in 2009 reflects that 93% of AGOA-
eligible imports are petroleum products, the demand for which fell precipitously with the
economic downturn (see Appendix Table A-2 for data). Such a dramatic fall in exports entering
under preference programs points to two fundamental concerns: the continued dependence on
price-volatile commodity exports, and the possible failure of preference programs to encourage
greater export diversification.
52 The “real” preference margin is better calculated as the difference between the tariff preference on competing goods
from other developing countries and the tariff preferences offered on goods from the country under study. 52 Hoekman,
Martin, and Braga, op. cit., p. 4.
53 Hoekman, Martin, and Braga, op. cit., p. 9.
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Figure 1. Imports Entering Under Preference Programs, 2000-2009
(in billions of U.S. Dollars)
60
50
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
AGOA
GSP
ATPA
CBTPA
CBERA
Source: United States International Trade Commission Trade Dataweb, http://www.usitc.gov.
Table 1. Imports by Preference Program
(in billions of U.S. Dollars)
Trade
Preference
Program
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GSP
16.4 15.7 17.7 21.3 22.7 26.7 32.6 30.8 31.7 20.3 22.6
ATPA
2.0 1.7 1.0 5.8 8.4 11.5 13.5 12.3 17.2 9.7 14.4
AGOA
0 7.6 8.3 13.2 22.0 32.7 36.1 42.3 56.4 28.1 38.7
CBERA
2.6 2.7 2.9 3.0 2.9 3.4 4.0 2.8 3.0 1.1 1.2
CBTPA
0.2 5.6 7.1 7.5 7.9 8.8 6.0 2.7 1.7 1.3 1.7
Total
21.2 33.3 37.0 50.8 63.9 83.1 92.2 90.9 110.0 60.5 78.5
Source: United States International Trade Commission Trade Dataweb, http://dataweb.usitc.gov.
Figure 2 illustrates that only 4% of about $1.9 trillion in U.S. imports entered duty-free under
preference programs in 2010.54 About 18% of U.S. imports entered duty-free (or at reduced
duties) under reciprocally negotiated free trade agreements (FTAs). In 2010, the largest
54 CRS Report RL33577, U.S. International Trade: Trends and Forecasts, by Dick K. Nanto and J. Michael Donnelly.
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percentage (78%) of U.S. imports entered under most-favored-nation (MFN), also known as
normal trade relations (NTR) rates.55 The simple average U.S. tariff rate is 3.5%, but tariffs on
certain items, including some eligible under preference programs, are much higher.56
Figure 2. Preference Programs as a Percentage of All U.S. Imports, 2010
AGOA 2.0%
MFN/NTR 78.0%
Preferences 4.2%
GSP 1.2%
FTAs 17.8%
ATPA 0.8%
CBERA 0.1%
CBTPA 0.1%
Source: United States International Trade Commission Trade Dataweb, http://dataweb.usitc.gov.
Preference margins, by and large, tend to be small, providing relatively limited benefit to
developing countries. More nuanced findings suggest, however, that certain products with high
tariffs, such as apparel, provide a much greater benefit to those countries able to produce for the
U.S. market. At the other end of the spectrum, the preference margin on petroleum is much
smaller because tariffs tend to be small or zero in the case of many countries, and so there is
much less benefit from a particular preference program. Nor does continuing to rely on petroleum
exports promote economic diversification conducive for development.57
There are also costs associated with tariff preferences. Extensive administrative procedures and
complex rules of origin often diminish their use. Also, benefits may accrue to U.S. importers
rather than exporters, if they are price setters in the domestic economy. Preferences may also
diminish production of competing goods in the importing country and cause some trade
diversion.58
55 While the WTO uses the term "most-favored-nation" to describe nondiscriminatory trade treatment, U.S. law since
1998 has referred to this treatment as "normal trade relations" (NTR) status. See P.L. 105-206, section 5003.
56 World Trade Organization, “United States: Tariffs and Imports, Summary and Duty Ranges,”
http://stat.wto.org/TariffProfiles/US_e.htm.
57 Hoekman, Martin, and Braga, op. cit., p.7.
58 Ibid., pp. 4-6.
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Figure 3. Foreign Investment Flows to Preference Receiving Countries, 2000-2009
(in billions of U.S. dollars)
Source: United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment
Database.
Figure 3 illustrates foreign direct investment (FDI) flows to beneficiary countries by preference
program from 2000 to 2009, although attributing these trends to preference programs is
analytically difficult. Nonetheless, between 2000 and 2008, the most dramatic increases in FDI
flows occurred in GSP beneficiary countries. These countries received more than $350 billion in
foreign investment in 2008. AGOA countries also experienced slow, but steady FDI growth, from
$24.8 billion in 2000 to $46.5 billion in 2008. ATPA countries, likewise, experienced slow, steady
increases in FDI flows. FDI flows to Latin American and Caribbean beneficiaries of CBERA and
CBTPA remained relatively stable during the period. As with the record on imports, the decline in
investment from 2008 to 2009 can be attributed largely to the global economic downturn.
Developing Country Economic Effects
For GSP countries, total U.S. imports from all BDCs have increased 250% over a twelve-year
time period, from $107.8 billion in 1996 to $378.0 billion in 2008. Over the same time period,
total U.S. imports entering under the GSP program increased at 170%, from $11.6 billion to $31.2
billion in 2008.59 Together, these data indicate that only about 10% of eligible exports from
designated countries have actually fallen from 10.8% to 8.3% of total exports to the United States
under the GSP program.60 Thus, in the aggregate, the GSP affects a relatively small portion of
59As shown in Figure 1, U.S. imports from developing countries, including those entering under preference programs,
fell dramatically in 2009 due to the global financial crisis. Therefore, we find that 2008 and 2010 data may be more
instructive than 2009 data when describing the economic effects of the various preference programs.
60 CRS Report RL33663, Generalized System of Preferences: Background and Renewal Debate, by Vivian C. Jones.
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developing country exports. This is due, in part, to program restrictions on key “import sensitive”
exports such as textiles and apparel and agricultural goods, and is also perhaps due in part to the
automatic CNLs on GSP-eligible products. Mandatory graduation of beneficiaries from the GSP
may also be a factor.
The Caribbean programs have had varying economic effects depending on how they have been
structured. The original CBERA program provided few incentives to the major exports of the
region (i.e., apparel), and so the response was predictably limited. This remained unchanged until
the CBTPA, passed in 2000, provided duty-free treatment for apparel, among other goods. Since
Central America is a major source of apparel goods, it was not surprising that U.S. imports under
CBTPA grew to some 30% of total imports from the region by 2003. Nonetheless, U.S. imports of
apparel under CBTPA continued to shrink as a percentage of apparel imports from the world, in
part pointing to the limits of preferential tariff treatment in the face of a highly competitive global
market. In addition, with the implementation of the CAFTA-DR, apparel concessions were more
favorable under the free trade agreement and so were no longer exported under the CBTPA. This
trend is reflected in the decline of total imports from CBERA countries from $31.8 billion in 2005
to $19.6 billion in 2008, with goods imported under the CBTPA falling from 28% in 2005 to only
9% of total imports from the region by 2008.61
The Haiti HOPE I Act was used minimally in the first two years because of its highly complicated
rules of origin and a short-term extension by Congress that did not entice investor response. With
the passage of HOPE II, the preferences were made more flexible and generous, targeted to both
knit and woven textiles and apparel. Simpler rules of origin, particularly those that did not require
use of U.S. or domestic materials, were widely used. These changes again point to the importance
of preference program design as a critical factor affecting their use. Congress amended and
enhanced the preferences for Haitian products in the HELP Act of 2010, targeting those
preferences demonstrated to be the most easily and widely used.62
The effect of the ATPA on the economies of Bolivia, Colombia, Ecuador, and Peru has also been
small but positive. A study by the United States International Trade Commission estimated that
ATPA helped to expand job opportunities in the flower and asparagus industries, particularly to
individuals who otherwise might have engaged in illicit drug crop production and related
activities.63 After ATPA was amended to include textile and apparel articles, all four countries
experienced related output and employment growth, particularly in Peru and Colombia. The
textile and apparel sectors have been a source of legitimate economic activity and employment in
some Andean regions. Industry representatives there are concerned about losing ATPA
preferences because of the importance of the United States as an export market. The removal of
Bolivia as a designated ATPA beneficiary amidst political uncertainty has likely affected the
potential for long-term investment in Bolivia, which may, in turn, have contributed to volatility in
Bolivia’s FDI flows as well as potential ATPA-related investment.64
61 CRS Report RL33951, U.S. Trade Policy and the Caribbean: From Trade Preferences to Free Trade Agreements, by
J. F. Hornbeck.
62 CRS Report RL34687, The Haitian Economy and the HOPE Act, by J. F. Hornbeck.
63 U.S. International Trade Commission, Andean Trade Preference Act: Impact on U.S. Industries and Consumers, and
on Drug Eradication and Crop Substitution, Thirteenth Report, Investigation No. 332-352, Publication 4037,
September 2008.
64 For more information, see the following reports: USITC Publication 4037; Confederación de Empresarios Privados
de Bolivia, The Importance of ATPDEA for Bolivia, October 2008; and Université de Lausanne (Unil), ATPDEA’s End:
(continued...)
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AGOA preferences, combined with macroeconomic reforms, played a positive role in economic
growth in sub-Saharan Africa in some industry sectors. For example, footwear exports from the
region grew 33% overall between 2002 and 2006 as a result of duty-free access to the U.S.
market under AGOA.65 At the same time, African exports continue to be the least diversified of
all developing regions, and many African economies still remain vulnerable to external shocks
caused by reliance on primary commodity exports such as oil.66
Comparative Advantage and Development
While preferences may lead to important gains in manufacturing growth in some sectors and
countries, a critical question is whether they help a country exploit a comparative advantage in
trade, or artificially induce investment in industries that otherwise would be uncompetitive in the
global market place. Some evidence points to support for comparative advantage in many cases
where preferences build on an existing or nascent industry, allowing firms to gain a foothold in
the international marketplace.67 Preferences appear to have provided an opportunity for some of
the current emerging markets such as India and Brazil to expand their international reach in
certain markets. For example, India’s utilization rate of the GSP program is very high (about
83%)68—spurred on, in part, by jewelry exports. The incentives created through the ATPA
program may also have played a role in the expansion of the flower industry in Colombia and
Ecuador. According to the Society of American Florists, about 67% of fresh flowers (as sold by
dollar volume) in the United States are imports, with Colombia and Ecuador as the top two
exporters. Apparel is an important sector for expanding export diversification in developing
countries, particularly those with liberal rules of origin.69 Countries such as Haiti have benefitted
significantly from flexible rules of origin for apparel goods.
On the other hand, some countries may be encouraged by preferential programs to develop
industry sectors in which they would otherwise not be able to compete, diverting public and
private investment fro other uses. Supply constraints and difficult business environments can
overcome any benefit that tariff preferences may offer.70
(...continued)
Effects on Bolivian Real Incomes, by Olivier Cadot, Etchel M. Fonseca, and Synabout Yaye Sakho, February 2008.
65 United States International Trade Commission, Sub-Saharan Africa: Factors Affecting Trade Patterns of Certain
Industries, Investigation Number 332-477, April 2008, http://www.usitc.gov/publications/332/pub3989.pdf.
66 World Bank, World Trade Indicators 2008. South Africa is the most diversified economy on the continent, despite
diversification efforts in many middle- and low-income African economies.
67 See Raed Safadi and Ralph Latimore, eds., Globalization and Emerging Economies: Brazil, Russia, India, Indonesia,
China, South Africa, Organization for International Cooperation and Development (OECD), 2008.
68 CRS calculations based on U.S. International Trace Commission (USITC) trade statistics.
69 Society of American Florists, About the Flower Industry, http://www.aboutflowers.com/about-the-flower-
industry/industry-overview.html and Hoekman, Martin, and Braga, op. cit., pp. 21-22.
70 Organization for International Cooperation and Development (OECD), Making Open Markets Work for
Development, Policy Brief, October 2005, p. 2 and Ibid.
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Export Diversification
Trade preference programs are unlikely to help poor countries achieve their development goals
unless there is some transformation in their export structure away from primary goods.71 USTR
officials argue, for example, that AGOA is helping to expand and diversify trade between the
United States and sub-Saharan Africa by building partnerships between U.S. and African
businesses.72 According to a 2009 report by the International Trade Administration, U.S. imports
under AGOA are becoming increasingly diverse. Some of the more significant growth is taking
place in jewelry and jewelry parts, fruit and nut products, fruit juices, leather products, plastic
products, and cocoa paste. Apparel production has also benefitted.73
Because sub-Saharan Africa’s preferential trade with the world still largely consists of oil and
petroleum products, however, points to the crux of the diversification problem. With petroleum
accounting for 93% of AGOA trade, the program may not be having the desired effect on Africa’s
economic development.74 Such a case argues for aid in helping countries in Africa to take fuller
advantage of the benefits that trade preferences offer and perhaps for reconsideration of programs
incentives.
Preference Erosion
Preference erosion refers to the diminishing of the preference margin because tariff levels are
being reduced in either multilateral or reciprocal bilateral or regional trade agreements. As tariffs
fall worldwide, the benefit of zero tariffs in preference programs becomes smaller. It is an
important point in the Doha Round negotiations from LDC perspectives. Particularly affected are
countries participating in preference programs that cover most of their trade. There is a
disincentive for LDCs to support multilateral trade liberalization should it result in reducing the
benefits of their preference programs.75 Products that otherwise face relatively high tariffs, such
as apparel, are also subject to relatively greater preference erosion. One study cites apparel
producing countries Cape Verde, Haiti, Malawi, Mauritania, and Sao Tome and Principe as the
most vulnerable to preference erosion.76
Given there has not been a multilateral agreement under the WTO since the 1994 Uruguay
Round, most preference erosion has occurred because of the expanding bilateral and regional
trade agreements, and the 2005 WTO Agreement on Textiles and Clothing (ATC), which
71 OECD Secretary-General. The Generalized System of Preferences: Review of the First Decade. Organization of
Economic Cooperation and Development, 1983, p. 9. CRS Report RL33663, Generalized System of Preferences:
Background and Renewal Debate, by Vivian C. Jones.
72 Office of the United States Trade Representative. “AGOA Opens Doors for U.S. Businesses,” Press Release, August
5, 2010.
73 Department of Commerce, International Trade Administration, “U.S.-African Trade Profile,” p. 2,
http://www.agoa.gov\ and Hoekman, Martin, and Braga, op. cit., pp. 21-22.
74“Trade: the U.S. and Sub-Saharan Africa: Oil is King,” Country Forecast Africa, Economist Intelligence Unit, March
12, 2010; Kalley, Karanta, “Asia’s Crude Oil Purchases from West Africa Rise Sharply in Q1,” Global Insight, World
Markets Research Center, March 8, 2010.
75 Paul Brenton and Caglar Ozden, Trade Preferences for Apparel and The Role of Rules of Origin – The Case of
Africa, The World Bank, p. 2.
76 Hoekman, Martin, and Braga, op. cit., p. 18-19.
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eliminated quantitative export restrictions and import quotas.77 Under these circumstances,
developing countries see the Doha Round as a continuation of trends that reduce their preference
benefits. There is broad agreement, however, that in the aggregate, preference erosion is
quantitatively small relative to the global benefits of MFN trade liberalization, although for
certain countries it may be costly.78
Country Usage Concentration
While U.S. preference programs are open to many countries (for example, there are over 130 GSP
beneficiaries), actual preference usage seems to be highly concentrated in only a few countries. In
2006, the top 25 preference beneficiaries accounted for 95 percent of U.S. preference imports.79
As part of the debate over preference programs, some discussion has gravitated toward
reconsidering their design in ways that would broaden their use, particularly by LDCs that may
not be endowed with energy exports or have limited capability to develop apparel manufacturing.
Eligibility Issues
Trade preferences, by their nature, divide countries into two camps: those who receive them and
those that do not. This dichotomy raises some political issues that affect attitudes toward
preference programs. Countries that have preferential access to developed economies want to
maintain that advantage. They do this by advocating for precluding the extension of preferences
to other countries. Large developing countries also lobby to ensure that their continued benefit is
not jeopardized by a change in graduation or other rules that might reduce their eligibility.
For example, some AGOA beneficiaries have expressed concern that proposals to extend duty-
free, quota-free (DFQF) access to all LDCs (including apparel exporters Bangladesh and
Cambodia) will place Africa’s developing apparel industries in direct competition with these
countries for U.S. market share, thereby eroding the preferences they currently exclusively enjoy.
Some Members have sought an overhaul of preference programs to make it easier to graduate
“advanced” developing countries such as India and Brazil from the GSP because of their
opposition of U.S. interests in DDA negotiations.80 Others in the academic world have also
pointed to the benefits of focusing preference programs exclusively on the poorest of the
developing countries.81
A second issue involves the opportunity costs of eligibility criteria. All U.S. programs, for
example, require participating countries to meet numerous non-trade related criteria. These range
77 Ibid.
78 “NGOs, Business Groups Debate Principles for Preference Reform,” Inside U.S. Trade, April 10, 2009, U.S.
Government Accountability Office (GAO), International Trade: U.S. Trade Preference Programs Provide Important
Benefits, but a More Integrated Approach Would Better Ensure Programs Meet Shared Goals, GAO-08-443, March
2008, p. 35, and Ibid., p.21.
79 U.S. Government Accountability Office (GAO), International Trade: U.S. Trade Preference Programs Provide
Important Benefits, but a More Integrated Approach Would Better Ensure Programs Meet Shared Goals, GAO-08-443,
March 2008, p. 35.
80“Sen. Grassley Warns Brazil, India, on GSP; Stops Short of Predicting Graduation,” Inside U.S. Trade, May 19, 2006.
“Ways and Means Likely to Seek One-Year Extension of GSP, ATPDEA,” Inside U.S. Trade, September 7, 2010.
81 Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It (Oxford:
Oxford University Press, 2007), pp. 168-169.
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from adopting labor commitments to ensuring assistance is forthcoming on drug interdiction,
among other policies. While the United States readily acknowledges that these foreign policy
concerns are part of their preference programs, they represent opportunity costs to the recipient
country that some argue amounts to “politicizing trade.”82
Effects on the U.S. Market
The United States potentially faces costs in permitting unilateral trade preferences to developing
countries. Domestic industries may face greater competition as lower-cost imports enter the U.S.
market, which could affect production, employment, and wages. However, preference programs
are designed to limit the economic impact on domestic producers by various means.
In the GSP, U.S. import-competing manufacturers are largely protected from severe economic
impact by three features. First, some products, such as most textile and apparel goods, are
designated “import sensitive” and are therefore ineligible for duty-free treatment.83 Second,
“competitive need limits” in the GSP are triggered if imports of a product reach a certain
threshold.84 Third, U.S. producers may petition the United States Trade Representative (USTR)
that GSP treatment granted to eligible articles be withdrawn. These petitions are considered
during the annual review of the GSP program.85
Although the smaller regional programs include preferences for additional “import-sensitive”
products, such as textiles and apparel, these differences do not greatly increase the potential for
significant negative effects on U.S. producers. First, tariff lines given duty-free access can be very
narrowly tailored to mitigate the impact of the preferences. Second, rules of origin are often
carefully written to minimize effects on domestic producers. For example, for apparel to receive
the AGOA preference, no more than 10% (by weight) of the fiber and yarns making up the
product can originate in a country other than the AGOA beneficiary or the United States.86 Some
U.S. apparel producers actually benefit from preferences through an integrated value-added chain
of production between the U.S. producers and those in Central America and the Caribbean, which
lowers their overall costs relative to other major global producers, such as those in China.87 These
cost factors have also assisted U.S. producers in retaining U.S. market share that could have been
lost to Asian producers following the expiration of the WTO Agreement on Textiles and Clothing
on January 1, 2005.88
Also in terms of U.S. benefits, some U.S. manufacturers who use imported inputs benefit from
the lower cost of the intermediate manufactured goods and raw materials imported under
82 For a summary, see Hoekman, Martin, and Braga, op. cit.
83 19 U.S.C. § 2463(b)(1).
84 19 U.S.C. § 2463(c).
85 Provisions for the GSP Annual Review are set out at 15 C.F.R. § 2007.2(c)-(h).
86 See the Office of Textiles and Apparel (OTEXA) website at http://otexa.ita.doc.gov/.
87 United States Government Accountability Office, International Trade: U.S. Trade Preference Programs Provide
Important Benefits, but a More Integrated Approach would Better Ensure Programs Meet Shared Goals, GAO-08-443,
March 2008, p. 11, http://www.gao.gov.
88 The WTO Agreement on Textiles and Clothing (1995 to January 1, 2005) established a 10-year plan for
multilaterally eliminating quotas on international trade in textiles and apparel products. It replaced the Multifibre
Arrangement signed in 1974, as part of the General Agreement on Tariffs and Trade.
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preference programs.89 U.S. demand for certain individual products, such as jewelry, leather, and
aluminum, is also quite significant. Ultimately, consumers also benefit from the lower prices of
products imported duty-free under preference programs.90
Even though preferences are structured to minimize the impact on U.S. producers, some amount
of injury does occur. For example, the U.S. International Trade Commission found that U.S.
growers of asparagus, fresh cut roses, chrysanthemums, carnations, and anthuriums may have
experienced displacement of more than 5% of the value of production in 2005 because of imports
that receive the ATPA preference.91
With regard to losses in tariff revenues, over time, most of these costs have been shown to be
relatively small. For example, CBO estimated that P.L. 111-124, which renewed the ATPA and
GSP until December 31, 2010, amounted to a loss of revenue of $589 million in FY2010 and
$196 million in FY2011.92 Imports entering duty-free are also relatively small compared to the
total dollar value of imports to the United States.
Overall effects on the U.S. economy are quite small. For example, the value of goods imported
under the GSP program in 2010 represented only about $23 billion, compared to total U.S.
imports of $1.9 trillion. Imports from all preference programs amounted to only about 4.2% of all
U.S. trade (see Figure 2).93
Legislative Options for Congress
The debate in Congress over trade preferences encompasses multiple viewpoints. Leaving the
programs largely as they are is one. Others see the need for revision to address specific problems.
These include: (1) the role that preferences may play as a disincentive for beneficiary countries,
particularly large developing countries, to embrace fully the Doha Round of multilateral trade
negotiations;94 (2) problems of compliance with eligibility criteria;95 (3) the need to press for
reciprocal trade treatments as poor countries reach a certain level of development; and (4) the
need to focus them more on the least developed countries.96 Policy discussions tend to revolve
89 United States Government Accountability Office, International Trade: U.S. Trade Preference Programs Provide
Important Benefits, but a More Integrated Approach Would Better Ensure Programs Meet Shared Goals, GAO-08-443,
March 2008, p. 12, http://www.gao.gov.
90 Ibid.
91 U.S. International Trade Commission, Andean Trade Preference Act: Impact on U.S. Industries and Consumers and
on Drug Crop Eradication and Crop Substitution, 2008, Investigation No. 332-352, September 2008, pp. 3-11,
http://www.usitc.gov.
92 Congressional Budget Office, Cost Estimate on H.R. 4284, An Act to Extend the Generalized System of Preferences
and the Andean Trade Preference Act, and for Other Purposes. Since the law also extended some customs user fees
and increased the portion of large corporate (firms with income of more than $1 billion) estimated income tax payments
due in July 2014, CBO estimated that the net impact of the legislation would actually be much lower.
93 CRS estimates based on U.S. International Trade Commission figures. See also CRS Report RL33577, U.S.
International Trade: Trends and Forecasts, by Dick K. Nanto and J. Michael Donnelly.
94 Bernard Hoekman, William J. Martin, and Carlos A. Primo Braga, Preference Erosion: The Terms of the Debate,
World Bank, May 2006.
95 See Government Accountability Office, U.S. Trade Preference Programs: An Overview of Use by Beneficiaries and
U.S. Administrative Reviews, GAO-07-1209, September 2007, p. 4.
96 Martin Vaughan, "Grassley Throws Up Obstacle to Trade Preference Renewal," Congress Daily, September 8, 2006.
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around five basic program parameters: (1) renewal period, (2) harmonization, (3) country
coverage, (4) product coverage, and (5) eligibility criteria.
Renewal Period
With the exception of CBERA, all preference programs are time-limited and Congress must
reauthorize them if they are to continue. Although Congress has generally viewed these programs
as temporary, it has historically chosen to renew them, usually without interruption and often with
broad approval. Program beneficiaries, including governments, importers, and consuming
industries, advocate diligently for continued program support.
The primary argument for longer-term renewals is to establish a predictable trade environment
that will attract long-term investment. Preferences translate into relatively lower costs of goods
imported into the United States, which provide businesses with the incentive to operate in
otherwise less competitive or desirable locations. Investors are more likely to consider long-term
commitments when preferences are not subject to repeated short-term extensions, which adds an
element of uncertainty to business planning, and also has implications for employment and
economic stability in beneficiary countries. Extended preference horizons also support
development of stable sourcing relationships and improved working environments given the
emphasis eligibility criteria places on such factors as rule of law, good business practices, and
worker rights.97 Some Members, though, view extended renewal as conditioned on other program
changes such as those discussed below.98
The 111th Congress acted to extend some preference programs. In the first session, it provided a
one-year extension for the GSP and ATPA through December 31, 2010 (P.L. 111-124). In the
second session, the HELP Act (P.L. 111-117) extended the CBTPA and Haiti HOPE Act through
September 30, 2020. In the second session, legislation to renew the GSP did not pass in the
Senate, and the ATPA received only a short-term renewal until February 12, 2011. If the 112th
Congress takes up comprehensive legislation, it is possible that it may consider the costs and
benefits of harmonizing renewal periods and perhaps act to lengthen the renewal period for GSP
and ATPA .
Harmonization
Preference programs have similar, but not identical, program features. A key theme for renewal
has been to review these policy parameters to determine if there are opportunities to simplify,
harmonize, and make more consistent program features such as eligibility criteria, rules of origin,
and product coverage. Some areas may be easier to harmonize than others. For example, it may
be possible to standardize eligibility criteria across all programs.
97 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Congress, 1st sess., November 17, 2009. Testimony of William Reinsch, President,
National Foreign Trade Council (NFTC). See also Testimony of David Love, Senior Vice President and Chief Supply
Chain Officer, Levi Strauss & Co., San Francisco, California.
98 Joseph J. Schatz, "Lawmakers Look to Trade Preferences to Boost Haiti's Recovery," CQ Today, March 10, 2010, p.
6.
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Harmonizing the complex “maze” of rules of origin could be a much greater challenge. Still,
many view this as an important step toward making the programs operate more efficiently, not
only from the perspective of businesses attempting to meet these rules, but also at the U.S. border
where customs officials must determine the eligibility of each product entering the country.
Because these rules were carefully crafted to maximize benefits to the intended countries, while
minimizing any adverse effects on U.S. producers and preventing transshipment, harmonization
may prove challenging to achieve in practice.99
Trade capacity building (TCB), or training to improve the capability of firms in beneficiary
countries to use these preferences, may provide a partial solution. The Government
Accountability Office (GAO) has reported that research on the textile and apparel inputs industry
in sub-Saharan Africa has confirmed that TCB is key to improvement of the competitiveness of
the sector and utilization of preferences.100
Country Coverage
Although preference program legislation gives the President the authority to determine country
eligibility based on designated criteria, Congress specifically designates overall which countries
may receive the preferences. For example, Congress designated 48 sub-Saharan African countries
as potentially eligible to receive the AGOA preference, but the President initially designated 34
countries as eligible based on the criteria Congress set forth in the statute.101 Congress could
legislatively expand or contract country coverage at any time. For example, several bills in
Congress seek specifically to prevent Vietnam from obtaining GSP status due to its poor record
on worker rights.102
By definition, trade preferences are targeted toward developing countries, but there are different
opinions regarding how broadly they should apply. Some argue that they should be targeted only
toward LDCs that need them most.103 Higher or “middle” income developing countries resist this
approach.
Congress could also expand regional programs or create new preference programs in order to
incorporate those LDCs not currently covered in AGOA or the other regional programs. Three
bills introduced in the 111th Congress (H.R. 1837, S. 1665, and S. 780) would have expanded
coverage in the ATPA to include Paraguay and/or Uruguay. The Tariff Relief Assistance for
Developing Economies Act of 2009 (S. 1141) would have authorized extending AGOA-like trade
99 U.S. Congress, Senate Committee on Finance, U.S. Preference Programs: Options for Reform, 111th Cong., 2nd
sess., March 9, 2010.
100 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Cong., 1st sess., Testimony of Loren Yager, Director, International Affairs and Trade,
GAO.
10119 U.S.C. § 3706; Executive Office of the President, Proclamation 7350 of October 2, 2000, “To Implement the
African Growth and Opportunity Act and to Designate Eritrea as a Beneficiary Developing Country for Purposes of the
Generalized System of Preferences,” 65 Federal Register 59321, October 4, 2000. Currently, 40 countries are eligible
to receive AGOA preferences.
102CRS Report RL34702, Potential Trade Effects of Adding Vietnam to the Generalized System of Preferences
Program, by Vivian C. Jones and Michael F. Martin.
103Center for Global Development, Open Markets for the Poorest Countries, p. 6; Paul Collier, The Bottom Billion, pp.
167-168, and Amy Tsul, “Senate Finance Chairman Baucus, Grassley Describe Trade Preference Reform Elements,”
International Trade Daily, March 10, 2010.
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preferences for textile and apparel goods to non-African LDCs, including Afghanistan,
Bangladesh, Bhutan, Cambodia, Kiribati, Lao People’s Democratic Republic, Maldives, Nepal,
Samoa, Solomon Islands, Timor-Leste (East Timor), Tuvalu, Vanuatu, and Yemen. The bill would
have also extend product coverage for these countries to other “import-sensitive” items, subject to
International Trade Commission (ITC) recommendation and Presidential determination. In the
112th Congress, S. 105, the Save Our American Industries (SAVE) Act of 2011, would extend
preferential treatment to certain apparel products from the Philippines.
Another approach would be to reduce coverage for advanced developing countries, or require
more reciprocity from these nations.104 Decreasing the number of country participants could also
be achieved by applying mandatory country “graduation” to all preference programs, such as
currently implemented in the GSP. According to the GSP statute, mandatory graduation occurs
when a beneficiary country is determined to be a “high income country” as defined by official
International Bank for Reconstruction and Development (World Bank) statistics.105 Alternatively,
Congress could choose another measure of income for graduation from preference programs, or
require that country graduation be determined by a comprehensive review of its industries and
economy.106
One bill—the New Partnership for Trade Development Act of 2009 (H.R. 4101)—sought to
expand country coverage in textiles and apparel to more LDCs, while limiting the imports of
more competitive countries. The legislation would have amended the AGOA and GSP programs
to expand preferences for LDCs, while strengthening and improving benefits to AGOA countries
to ensure that existing African beneficiaries would not be negatively affected.107 The bill would
have strengthened AGOA preferences by granting DFQF treatment to all least-developed AGOA
countries; applying the GSP 35% value-added rules, and extending the third-country fabric
provision until September 30, 2015.108 It would also have extended DFQF benefits to additional
eligible non-African LDCs. For those countries that are already “significant apparel suppliers” to
the United States,109 the bill would limit apparel imports eligible for preferences. The bill would
have also allowed extension of coverage to articles deemed “import-sensitive” with respect to the
GSP under certain conditions. The bill would have required a transparent decision-making
process regarding GSP competitive need limit waivers. The bill would also have continued to
extend benefits to “upper-middle income” GSP beneficiaries, provided that they, in turn, grant
trade preferences to LDCs and sub-Saharan African countries.
104U.S. Congress, Senate Committee on Finance, U.S. Preference Programs: Options for Reform, 111th Cong., 2nd
sess., March 9, 2010, Statement of Senator Charles Grassley.
10519 U.S.C. § 2462(e). The World Bank currently uses gross national income (GNI) per capita as its main indicator for
classifying economies, and countries are determined to be “high income” if they have reached a per capita income level
of $11,906 or more. See World Bank, Country Classifications, http://data.worldbank.org/about/country-classifications.
106 The President already has authority to do this as outlined in GSP discretionary criteria. See 19 U.S.C.§ 2462(c)(2).
107House of Representatives, Office of Representative Jim McDermott, “Rep. McDermott Introduces Bill to Improve
Trade Benefits to Poor Countries,” Press Release, November 20, 2009.
108 Third-country fabric provisions allow an apparel product to contain some fabric inputs originating anywhere in the
world and still be imported duty-free under a preference program. The AGOA preference includes a Special Rule (in
force until September 30, 2012) for lesser-developed beneficiaries allowing them to include a limited amount of third-
party fabric in AGOA apparel imports.
109H.R. 4101 defines a “significant apparel supplier” as an LDC beneficiary from which total U.S. apparel imports in a
calendar year exceed 2% of the aggregate square meter equivalents of all U.S. apparel imports in that year.
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Eligibility Criteria
Some importers and non-governmental organizations (NGOs) advocate amending preference
program eligibility criteria so that they are “clear, commercially meaningful, and achievable.”110
Proponents of this view tend to differ in their selection of criteria, however. For example, some
NGO advocates object to conditions requiring protection of intellectual property on the grounds
that the application of these criteria can be “arbitrary and unpredictable.”111 Business proponents,
however, might be more favorable to inclusion of intellectual property eligibility criteria on the
grounds that such protections help them to preserve the value of their products.
An alternative might be to reconstitute preference programs to include incentives to beneficiaries
other than tariff reductions, or to create an additional preference program for countries that are
willing to comply with additional U.S. objectives. The European Union, for example, has crafted
a “GSP-plus” program that offers additional product coverage to particularly vulnerable
developing countries, provided that they have ratified and implemented a number of core
international conventions on human rights, labor rights, good governance and environmental
protection.112
Product Coverage
Congress could re-evaluate current product coverage, and decide to expand or eliminate certain
products from preference programs. For example preference advocates argue that immediate
DFQF could be extended to all LDCs with minimal effects on the U.S. economy.113
No U.S. preference program as currently authorized provides complete DFQF access. For
example, some U.S. products, such as certain apparel, leather, electronics, steel, and glass
products, are deemed “import-sensitive” in GSP due to possible negative effects on U.S. domestic
producers. In terms of DFQF access for textiles and ready-made apparel products, the AGOA
program is the broadest, although significant restrictions are still in place (i.e., caps are placed on
use of yarns and fabrics that are of third-country or sub-Saharan African origin).
As part of the World Trade Organization (WTO) Doha Round negotiations, the United States and
other developed country WTO members and “developing country members declaring themselves
in a position to do so” agreed to provide DFQF access, but these commitments will not take effect
until (or unless) the Doha Round is completed.114
Some in Congress favor expanding product coverage in preference programs. For example,
several bills in the 111th Congress sought to expand AGOA-like textile and apparel benefits to
110 U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and Future of the U.S.
Preference Programs, 111th Cong., 1st sess., November 17, 2009, Statement for the Record, U.S. Preference Reform
Working Group.
111 Kimberley Ann Elliott, et al., Open Markets for the Poorest Countries: Trade Preferences that Work., Center for
Global Development, April 2010, p. 13.
112 European Commission, Generalized System of Preferences, http://ec.europa.eu/trade/wider-
agenda/development/generalised-system-of-preferences/index_en.htm.
113See Kimberly Ann Elliott, et al., Open Markets for the Poorest Countries: Trade Preferences that Work, Center for
Global Development, April 2010.
114 World Trade Organization, Ministerial Declaration, Annex F, December 18, 2005, WT/MIN(05)/DEC.
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other non-African LDCs—a move that some African countries oppose due to concerns that they
would be put at a disadvantage compared to LDCs like Cambodia and Bangladesh that have
sophisticated, established apparel industries already in place.115 In the 112th Congress, S. 105, the
Save our Industries Act of 2011 (SAVE Act), seeks to extend textile and apparel preferences to
the Philippines.
If Congress chose to expand or harmonize product coverage, it could also shield import-
competing U.S. industries by applying an across-the-board cap on preferential access. For
example, the CNL thresholds that apply in GSP (discussed above) could be implemented in all
programs, or be enacted in a harmonized program. Congress could also provide tariff reductions
(as opposed to duty-free access) for certain “import-sensitive” products in all U.S. preference
programs as currently implemented. This approach is similar to the Australian GSP program,
which provides a 5% preference margin on products with tariffs over 5%, rather than strictly
duty-free access.116
Preferences also differ with regard to cumulation, which allows for combining inputs from
numerous beneficiary countries under one or more preference programs as long as a substantial
transformation still occurs in the beneficiary country. For example, one of the requirements for
apparel articles to qualify for the ATPA states that they may be sewn or assembled in one or more
ATPA beneficiary countries or the United States. In the GSP, certain pre-designated regional
groups may meet the value-added requirement by combining (cumulating) inputs in order to
qualify for preferential access. The Haiti HOPE Act provisions also allow for regional cumulation
and limited use of third-party materials. Allowing LDC beneficiaries to “cumulate” inputs from
all developing countries could provide flexibility and could have the added effect of simplifying
rules of origin.117 Congress could restrict or expand the availability of preferences by modifying
these provisions to include a greater or lesser percentage of inputs from other beneficiary
countries, or by permitting a larger percentage of third-party inputs.
Outlook
The 111th Congress held hearings on trade preference programs in both the House and Senate,
where some Members expressed interest in amending and harmonizing some of the preferences
provisions. As specialized programs intended to serve as a form of assistance to developing
countries, program design is critical in determining whether those countries most in need are
being well served. Because these are complex programs with multiple design features, evaluating
them is a challenging and complicated exercise. It remains to be seen if 112th Congress will take
up preference reform.
115 For example, see U.S. Congress, House Committee on Ways and Means, Hearing on the Operation, Impact, and
Future of the U.S. Preference Programs, 111th Cong., 1st sess., November 17, 2009, Statement for the Record, African
Cotton and Textiles Industries Federation.
116 United Nations Conference on Trade and Development (UNCTAD), GSP - Handbook on the Scheme of Australia,
UNCTAD/ITCD/TSB/Misc.56, 2000.
117 Kimberly Ann Elliott, et al., Open Markets for the Poorest Countries: Trade Preferences that Work, Center for
Global Development, April 2010, pp. 9-10.
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Appendix. Eligible Countries and Products
Imported by Preference Program
Table A-1. Eligible Countries by Preference Program
(Least-Developed Countries (LDCs) in Italics)
Caribbean Basin
Generalized
Caribbean Basin
Trade
Designated
System of
Economic
Partnership Act
Andean Trade
African Growth
Beneficiary
Preferences
Recovery Act
of 2000
Preference Act
and Opportunity
Countries
(GSP)
(CBERA)
(CBTPA)
(ATPA)
Act (AGOA)
Afghanistan
X
Albania X
Algeria X
Angola
X X
Antigua and
Barbuda
X
Argentina
X
Armenia
X
Aruba
X
Azerbaijan X
Bahamas X
Bangladesh X
Barbados X X
Belize X
X
X
Benin
X X
Bhutan
X
Bolivia
X
Bosnia and
X
Hercegovina
Botswana X X
Brazil
X
Burkina Faso
X X
Burundi
X X
Cambodia
X
Cameroon
X X
Cape Verde
X X
Chad
X
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Caribbean Basin
Generalized
Caribbean Basin
Trade
Designated
System of
Economic
Partnership Act
Andean Trade
African Growth
Beneficiary
Preferences
Recovery Act
of 2000
Preference Act
and Opportunity
Countries
(GSP)
(CBERA)
(CBTPA)
(ATPA)
Act (AGOA)
Central African
X
Republic
Colombia
X X
Comoros
X X
Congo
X X
(Brazzaville)
Congo (Kinshasa)
X
Cote d’Ivoire
X
Djibouti
X X
Dominica X X
East Timor
X
Ecuador
X X
Egypt
X
Eritrea
X
Ethiopia
X X
Fiji
X
Gabon
X X
Gambia, The
X X
Georgia
X
Ghana
X X
Grenada X X
Guinea
X
Guinea-Bissau
X X
Guyana
X X X
Haiti
X X X
India X
Indonesia X
Iraq X
Jamaica X X X
Jordan X
Kazakhstan X
Kenya
X X
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Caribbean Basin
Generalized
Caribbean Basin
Trade
Designated
System of
Economic
Partnership Act
Andean Trade
African Growth
Beneficiary
Preferences
Recovery Act
of 2000
Preference Act
and Opportunity
Countries
(GSP)
(CBERA)
(CBTPA)
(ATPA)
Act (AGOA)
Kiribati
X
Kosovo X
Kyrgyzstan X
Lebanon X
Lesotho
X X
Liberia
X X
Macedonia X
Madagascar
X
Malawi
X X
Maldives X
Mali
X X
Mauritania
X X
Mauritius
X X
Moldova X
Mongolia X
Montenegro X
Montserrat X
Mozambique
X X
Namibia
X X
Nepal
X
Netherlands
Antilles
X
Niger
X
Federal Republic
X
of Nigeria
Pakistan X
Panama X X X
Papua New
Guinea
X
Paraguay X
Peru
X
Philippines
X
Russia X
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Caribbean Basin
Generalized
Caribbean Basin
Trade
Designated
System of
Economic
Partnership Act
Andean Trade
African Growth
Beneficiary
Preferences
Recovery Act
of 2000
Preference Act
and Opportunity
Countries
(GSP)
(CBERA)
(CBTPA)
(ATPA)
Act (AGOA)
Rwanda
X X
Saint Lucia
X
X
X
Samoa
X
Sao Tome and
X X
Principe
Senegal
X X
Serbia X
Seychel es
X X
Sierra Leone
X X
Solomon Islands
X
Somalia
X
South Africa
X X
Sri Lanka
X
St. Kitts/Nevis
X
X
St. Vincent and
the Grenadines
X X
Suriname X
Swaziland
X X
Tanzania
X X
Thailand X
Togo
X X
Tonga X
Trinidad and
Tobago
X X
Tunisia X
Turkey X
Tuvalu
X
Uganda
X X
Ukraine X
Uruguay X
Uzbekistan X
Vanuatu
X
Venezuela X
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Caribbean Basin
Generalized
Caribbean Basin
Trade
Designated
System of
Economic
Partnership Act
Andean Trade
African Growth
Beneficiary
Preferences
Recovery Act
of 2000
Preference Act
and Opportunity
Countries
(GSP)
(CBERA)
(CBTPA)
(ATPA)
Act (AGOA)
Virgin Islands,
British
X
Yemen
X
Zambia
X X
Zimbabwe X
Source: Harmonized Tariff Schedule of the United States (HTSUS) Revision 1, July 1, 2010. See General Notes
4, 7, 16, and 17 for definitive country listings.
Notes: GSP Independent Countries only. See HTSUS General Note 4 for a listing of Non-Independent
Countries and Territories, and Associations of Countries that are treated as one country for purposes of the
GSP.
LDCs are designated as such for purposes of the GSP and receive duty-free access to additional tariff lines.
Table A-2. Major U.S. Imports by Preference Program
Top 15 U.S. Imports under the Generalized System of Preferences (GSP), 2008
HTS Subheading and Description
Actual U.S.
Dollars
27090020 - Petroleum oils and oils from bituminous minerals, crude, testing 25 degrees A.P.I. or
9,740,681,021
more (LDC only)
27090010 - Petroleum oils and oils from bituminous minerals, crude, testing under 25 degrees
1,024,288,176
A.P.I. (LDC only)
71121150 - Silver articles of jewelry and parts thereof, not elsewhere specified, valued over $18
481,322,767
per dozen pieces or parts
71131929 - Gold necklaces and neck chains
381,788,293
40111010 - New pneumatic radial tires, of rubber, of a kind used on motor cars
379,467,478
76061230 – Aluminum al oy, plates/sheets/strip
339,609,297
71131950 - Precious metal (other than silver) articles of jewelry and parts thereof, whether or
322,809,325
not plated or clad with precious metal, not elsewhere specified
39076000 – Polyethylene terephthalate in primary forms
253,278,318
40112010 - New pneumatic radial tires, of rubber, of a kind used on buses or trucks
207,368,571
21069099 - Food preparations not elsewhere specified or included, not canned or frozen
165,198,981
68029900 - Monumental or building stone & arts. thereof, further worked than simply cut/sawn,
154,998,583
not elsewhere specified
40151910 – Seamless gloves of vulcanized rubber other than hard rubber, other than surgical or
140,171,668
medical gloves
90015000 – Spectacle lenses of materials other than glass, unmounted
118,288,524
85042300 - Liquid dielectric transformers having a power handling capacity exceeding 10,000 kVA
108,983,792
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17011110 - Cane sugar, raw, in solid form, without added flavoring or coloring
89,661,957
Subtotal - GSP Imports Above:
13,907,916,751
All Other:
17,754,837,014
Total GSP Imports:
31,662,753,765
Source: United States International Trade Commission Dataweb. http://dataweb.usitc.gov.
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.
Top 15 U.S. Imports under the Caribbean Basin Economic Recovery Act (CBERA), 2008
HTS Subheading and Description
Actual U.S.
Dollars
29851120 – Methanol (Methyl alcohol), other than imported only for use in producing synthetic
1,175,154,686
natural gas (SNG) or for direct use as fuel
22071060 - Undenatured ethyl alcohol of 80% by volume alcohol or higher, for non-beverage
483,063,905
purposes
08043040 - Pineapples, fresh or dried, not reduced in size, in crates or other packages
393,122,221
39031100 - Polystyrene, expandable, in primary forms
135,521,790
20091100 - Orange juice, frozen, unfermented and not containing added spirits
64,689,149
07149020 - Fresh or chilled yams, whether or not sliced or in the form of pellets
29,915,488
71081250 - Gold, nonmonetary, unwrought
26,890,097
17011110 - Cane sugar, raw, in solid form, without added flavoring or coloring
22,300,311
22072000 - Ethyl alcohol and other spirits, denatured, of any strength
20,003,309
08072000 - Papayas (papaws), fresh
14,048,666
16041440 - Tunas and skipjack, not in airtight containers, not in oil, in bulk or in immediate
12,925,254
containers weighing with contents over 6.8 kg each
22071030 - Undenatured ethyl alcohol of 80 % by volume of alcohol or higher, for beverage
8,685,447
purposes
85291020 - Television antennas and antenna reflectors, and parts suitable for use therewith
7,652,688
08045040 - Guavas, mangoes, and mangosteens, fresh, if entered during the period September 1
5,173,035
through May 31, inclusive
22029090 - Nonalcoholic beverages, not elsewhere specified not including fruit or vegetable
4,226,852
juices of heading 2009
Subtotal - Total CBERA Products Above:
2,403,372,898
All Other:
619,158,293
Total CBERA Imports:
3,022,531,191
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Top 15 U.S. Imports under the Caribbean Basin Trade Partnership Act (CBTPA), 2008
HTS Subheading and Description
Actual U.S.
Dollars
27099920 - Petroleum oils and oils from bituminous minerals, crude, testing 25 degrees A.P.I. or
903,985,774
more
61091000 - T-shirts, singlets, tank tops and similar garments, knitted or crocheted, of cotton
168,910,180
61102020 – Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, not
145,801,021
elsewhere specified
27101125 – Naphthas (excluding motor fuel/motor fuel blended stock) from petroleum oils &
143,644,824
bituminous minerals (o/than crude)
62034240 - Men's or boys' trousers and shorts, not bibs, not knitted or crocheted, of cotton, not
50,873,428
containing 15% or more by weight of down
61099010 - T-shirts, singlets, tank tops and similar garments, knitted or crocheted, of man-made
22,106,139
fibers
27101905 -Distillate and residual fuel oil (including blends) derived from petroleum or oils from
19,571,420
bituminous minerals, testing under 25 degrees A.P.I.
62034340 - Men's or boys' trousers, breeches & shorts, of synthetic fibers, containing under 15%
19,062,093
weight down, and containing under 36% weight wool, not water resistant
27101145 - Light oil mixtures of hydrocarbons from petroleum oils & bituminous minerals(other
15,073,275
than crude)
62053020 - Men's or boys' shirts, not knitted or crocheted, of manmade fibers, not elsewhere
6,224,233
specified
16041430 - Tunas and skipjack, not in oil, in airtight containers, not over 7 kg, not a product of
2,555,140
U.S. possessions, over quota
61081100 - Women's or girls' slips and petticoats, knitted or crocheted, of man-made fibers
1,660,626
61143020 – Bodysuits and bodyshirts, knitted or crocheted, of man-made fibers
1,321,716
27101930 - Lubricating oils, with or without additives, from petroleum oils and bituminous
603,007
minerals (o/than crude)
61012000 - Men's or boys' overcoats, carcoats, capes, cloaks, anoraks, windbreakers and similar
289,819
articles, knitted or crocheted, of cotton
Total CBTPA Items Above:
1,501,682,695
All other CBTPA:
199,886,135
Total CBTPA Imports:
1,701,568,830
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Top 15 U.S. Imports under the Andean Trade Preference Act (ATPA), 2008
HTS Subheading and Description
Actual U.S.
Dollars
27090010 - Petroleum oils and oils from bituminous minerals, crude, testing under 25 degrees
10,128,076,615
A.P.I.
27090020 - Petroleum oils and oils from bituminous minerals, crude, testing 25 degrees A.P.I. or
2,078,529,699
more
74031100 - Refined copper cathodes and sections of cathodes
844,388,290
27101905 – Distillate and residual fuel oil (including blends) derived from petroleum or oils from
628,662,292
bituminous minerals, testing under 25 degrees A.P.I.
27101125 -Naphthas (except motor fuel/motor fuel blended stock) from petroleum oils &
377,140,870
bituminous minerals (other than crude)
06031100 - Sweetheart, Spray and other Roses, fresh cut
310,291,331
61102020 - Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, not
239,924,774
elsewhere specified
06031900 - fresh cut, Anthuriums, Alstroemeria, Gypsophilia, Lilies, Snapdragons and flowers, not
192,515,808
elsewhere specified
61051000 – Men's or boys' shirts, knitted or crocheted, of cotton
176,191,218
61091000 - T-shirts, singlets, tank tops and similar garments, knitted or crocheted, of cotton
162,482,114
7092090 - Asparagus, not elsewhere specified, fresh or chilled
145,195,953
62034240 - Men's or boys' trousers and shorts, not bibs, not knitted or crocheted, of cotton, not
85,840,968
containing 15% or more by weight of down
16041430 - Tunas and skipjack, not in oil, in airtight containers, not over 7 kg, not a product of
70,067,275
U.S. possessions, over quota
06034240 - Chrysanthemums, fresh cut
66,942,147
06031270 - Other Carnations, fresh cut
37,759,897
Subtotal - All ATPA Items Above:
15,544,009,251
All Other:
1,698,665,706
Total ATPA Imports:
17,242,674,957
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Top 15 U.S. Imports under the African Growth and Opportunity Act (AGOA), 2008
HTS Subheading and Description
Actual U.S.
Dollars
27090020 - Petroleum oils and oils from bituminous minerals, crude, testing 25 degrees A.P.I. or
48,518,019,968
more
27090010 - Petroleum oils from bituminous minerals testing under 25 degrees A.P.I.
2,731,811,660
87032300 -Motor cars & other motor vehicles for transport of persons, with spark-ignition
1,553,389,022
internal combustion reciprocal piston engine with cylinder capacity of 1500 cc and not more than
3000 cc
27101905 - Distillate and residual fuel oil (including blends) derived from petroleum or oils from
750,982,539
bituminous minerals, testing under 25 degrees A.P.I.
27101125 -Naphthas (except motor fuel/motor fuel blended stock) from petroleum oils &
658,853,842
bituminous minerals (other than crude)
72021150 - Ferromanganese containing by weight more than 4 % carbon
367,406,195
62046240 -Women's or girls' trousers, breeches and shorts, not knitted or crocheted, of cotton,
256,791,659
not elsewhere specified
87032400 - Motor cars & other motor vehicles for transport of persons, with spark internal
250,978,213
combustion reciprocating piston engine with cylinder capacity of 3000 cc.
61102020 -Sweaters, pul overs and similar articles, knitted or crocheted, of cotton, not elsewhere
161,602,238
specified
62034240 - Men's or boys' trousers and shorts, not bibs, not knitted or crocheted, of cotton, not
152,706,522
containing 15% or more by weight of down
62052020 - Men's or boys' shirts, not knitted or crocheted, of cotton, not elsewhere specified
81,008,135
61103030 - Sweaters, pullovers and similar articles, knitted or crocheted, of manmade fibers, not
75,623,601
elsewhere specified
38237060 -Industrial fatty alcohols other than derived from fatty substances of animal or
73,833,844
vegetable origin
61046220 - Women's or girls' trousers, breeches and shorts, knitted or crocheted, of cotton
73,810,107
27101145 - Light oil mixtures of hydrocarbons from petroleum oils & bituminous minerals(other
50,463,377
than crude) or preparations 70% or more by weight from petroleum oils, not elsewhere specified
Subtotal - AGOA Imports Above:
55,757,280,922
All Other:
616,369,979
Total AGOA Imports:
56,373,650,901
Source: Harmonized Tariff Schedule of the United States (HTSUS); International Trade Commission Trade
Dataweb, http://dataweb.usitc.gov.
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Author Contact Information
Vivian C. Jones, Coordinator
M. Angeles Villarreal
Specialist in International Trade and Finance
Specialist in International Trade and Finance
vcjones@crs.loc.gov, 7-7823
avillarreal@crs.loc.gov, 7-0321
J. F. Hornbeck
Specialist in International Trade and Finance
jhornbeck@crs.loc.gov, 7-7782
Congressional Research Service
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