Updated September 23, 2020
Generalized System of Preferences (GSP)
What is the GSP? The Generalized System of Preferences
(BDCs) are selected by the President on the basis of certain
(GSP) is a trade program that provides nonreciprocal, duty-
mandatory eligibility criteria (see 19 U.S.C. §2462). For
free treatment for certain U.S. imports from eligible
example, eligible countries must not have nationalized or
developing countries. The GSP is the largest such U.S.
expropriated the property of U.S. citizens, infringed on U.S.
program; there are other regional preference programs
citizens’ intellectual property rights, or repudiated or
including the African Growth and Opportunity Act
nullified existing contracts with U.S. citizens. Countries
(AGOA). The GSP program is currently authorized through
must also have taken steps to grant internationally accepted
December 31, 2020.
worker rights, and implemented commitments to eliminate
What is GSP’s purpose
the worst forms of child labor, among other things.
? Congress created GSP to spur
economic development in poor countries through trade. The
The President may also consider certain discretionary
program began in the 1970s when the United States and
criteria, including the country’s level of economic
other developed country members of the United Nations
development, whether it is committed to providing
(U.N.) sought ways to enable developing countries to
reasonable and equitable market access for foreign goods
diversify their economies and grow through trade. Rather
and investment, and the level at which the country is
than creating one unified GSP system, developed countries
providing protection of intellectual property rights.
created their own programs based on a common set of
Can a country’s GSP status change? The President may
principles.
terminate, suspend, or limit GSP status at any time, based
When did the U.S. program begin? The U.S. program
on the eligibility criteria, provided that Congress is notified
was authorized in Title V of the Trade Act of 1974 (19
60 days prior to the action. BDCs are also mandatorily
U.S.C. §§2461-2467), and went into force on January 2,
“graduated” from the GSP if they are determined by the
1975.
President to be a “high income country,” as defined by
official World Bank statistics (i.e., gross national income
What other countries have GSP programs? Other
per capita of greater than $12,536 in 2020-2021). The
countries that implement GSP programs with similar rules
President may also graduate a BDC based on its level of
and objectives include Australia, Canada, the EU, Iceland,
economic development (i.e., income per capita, living
Japan, New Zealand, Norway, the Russian Federation,
standards of inhabitants, or any other economic factors the
South Korea, Switzerland, and Turkey.
President deems appropriate).
Who administers the U.S. program? The President holds
the primary authority for GSP. The Trade Policy Staff
In March 2019, President Trump informed Congress that he
Committee (TPSC), an interagency committee chaired by
intended to remove GSP benefits for India (failure to
the U.S. Trade Representative (USTR), administers the
provide equitable and reasonable market access) and
program, mainly by conducting annual product and country
Turkey (based on its level of economic development). The
reviews and providing recommendations to the President.
President subsequently removed Turkey’s GSP eligibility
The U.S. International Trade Commission (ITC) reports to
effective May 17, 2019, and India’s effective June 5, 2019.
the President on the possible effects of proposed changes to
GSP on the U.S. economy. U.S. Customs and Border
Figure 1. Top 5 GSP Beneficiaries, 2019 ($ in bil ions,
Protection (CBP) enforces GSP at the border.
Imports for Consumption)
Is GSP permanent? GSP was first authorized for 10 years,
until 1985. Since then, it has been reauthorized 14 times,
with authorizations generally lasting 2 to 3 years. Congress
most recently extended the program until December 31,
2020, in Division M, Title V of the Consolidated
Appropriations Act, 2018 (P.L. 115-141).
Has the GSP program ever expired before being
reauthorized? The GSP program has lapsed prior to its
reauthorization in 10 of the 14 times it was extended.
Congressional practice has been to extend the program
retroactively from the original expiration date, so that

importers are refunded (without interest) for the duties
Source: ITC Trade Dataweb.
incurred during the lapse.
Notes: India’s GSP eligibility was terminated effective June 5, 2019.
Are all developing countries automatically included in

the GSP program? Beneficiary developing countries
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Generalized System of Preferences (GSP)
How many countries are GSP beneficiaries? As of
vehicle parts; jewelry; rubber pneumatic tires; and lamps
December 2019, there were 119 developing countries,
and light fittings. Total GSP imports in 2019 amounted to
including 17 non-independent territories and 44 least-
about $21 billion.
developed beneficiary developing countries (LDBDCs). In
How can I tell if a product is eligible for GSP status? In
2019, the top five BDCs in terms of U.S. imports entering
the HTSUS, GSP-eligible products are identified by a
under GSP were Thailand, India, Indonesia, Brazil, and the
Special Program Indicator (SPI). The SPI code “A” in the
Philippines.
“Special” tariff column next to an HTSUS subheading
How can I tell if a developing country is a GSP
identifies that the product is GSP-eligible for all BDCs. The
beneficiary? The current list of all BDCs is recorded in the
code “A+” indicates that the product is eligible only from
Harmonized Tariff Schedule of the United States (HTSUS),
least-developed BDCs. The code “A*” identifies that the
available on the ITC website (http://hts.usitc.gov/current).
product is not eligible to be imported under the program
The list can be found under General Note 4 in the HTSUS
from one or more BDCs. The SPI must be indicated on the
“General Notes” section.
appropriate CBP forms when importers claim duty-free
status.
Are all products eligible for GSP duty-free status?
According to the GSP statute (see 19 U.S.C. §2463), certain
Can BDCs import an unlimited amount of a GSP-
products are considered “import-sensitive” and specifically
eligible product? GSP imports of a single product from an
prohibited from GSP treatment. These include most textile
individual BDC are limited to a certain value amount,
and apparel goods, watches, and some electronic, steel, and
referred to as competitive need limits (CNL). If the CNL is
glass products. The President is sometimes authorized by
exceeded, the BDC loses its GSP eligibility for that
Congress, in consultation with the ITC, to designate new
product, unless the President grants a waiver. Interested
articles as eligible for the program. The President recently
parties may petition for waivers if products meet certain
declared certain luggage and travel articles eligible for
specific criteria. There are no value limitations on GSP
GSP, as previously approved by Congress in Section 204 of
imports from LDBDCs or dual-African Growth and
the Trade Preferences Extension Act of 2015 (P.L. 114-27).
Opportunity Act (AGOA) and GSP beneficiaries.
The program currently covers more than 3,500 imported
products. LDBDCs receive duty-free treatment for an
Issues for Congress
additional 1,500 products.
If a product is eligible for GSP, but tariffs are imposed
Are there other product restrictions? In order to be
on them based on other laws, as under President
imported under GSP, a product must be imported directly
Trump’s recent tariff actions, may the product still be
from a BDC that is eligible for GSP treatment for that
imported duty-free? GSP benefits do not apply to any
product. At least 35% of the value of an eligible product
products subject to duties or quotas under Section 232 of
must be produced in a BDC, or in two or more countries
the Trade Act Expansion Act of 1962 on steel and
that are part of a GSP-recognized association of countries.
aluminum. Developing countries are largely exempt from
Figure 2. Top 5 GSP Import Categories, 2019
the tariff rate quotas imposed under Section 201 of the
Trade Act of 1974 on washing machines and parts, and on
($ in millions, Imports for Consumption, Harmonized Tariff
solar panels and modules, provided that U.S. imports from
Schedule 4-digit level)
an individual country do not exceed 3% by value, or if total
imports of the product from all developing countries do not
exceed 9%. The tariffs assessed under Section 301 of the
Trade Act of 1974 apply only to products from China,
which is not a GSP beneficiary.
GSP Reauthorization. The GSP program was reauthorized
until December 31, 2020, thus the 116th Congress may
consider further extending the program. Many importers
and developing countries state that longer program
authorizations would provide greater predictability when
making decisions about sourcing merchandise. However,
the program also represents a loss of revenue in the form of
foregone tariffs, which must be offset as a result of program
extensions. The Congressional Budget Office (CBO)
estimated that the most recent extension (in P.L. 115-141)
would cost $347 million in 2018, $475 million in 2019, and
Source: ITC Trade Dataweb.
$492 million in 2020. For more information on the GSP,

see CRS Report RL33663, Generalized System of
What kinds of products are GSP-eligible? Products
Preferences (GSP): Overview and Issues for Congress, by
eligible to be imported under GSP must be found not to be
“import
Vivian C. Jones
-sensitive,” and before new products are added, the
public has an opportunity to comment, hearings are held,
Vivian C. Jones, Specialist in International Trade and
and the ITC reports on the possible effects of the product’s
Finance
GSP eligibility on the economy and U.S. manufacturers.
The top five categories of GSP imports in 2019 were travel
IF11232
goods, handbags, and other cases of various materials;
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Generalized System of Preferences (GSP)


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https://crsreports.congress.gov | IF11232 · VERSION 5 · UPDATED

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