Updated January 6, 2021
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 expired on December 31,
must also have taken steps to grant internationally accepted
2020.
worker rights, and implemented commitments to eliminate
What is GSP’s pu
the worst forms of child labor, among other things.
rpose? 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 $12,535 in 2020-2021). The
countries that implement GSP programs with similar rules
President may also graduate a BDC based on its level of
and objectives include Australia, Canada, the EU, Iceland,
economic development (i.e., income per capita, living
Japan, New Zealand, Norway, the Russian Federation,
standards of inhabitants, or other economic factors the
South Korea, Switzerland, and Turkey.
President deems appropriate).
Who administers the U.S. program? The President holds
the primary authority for GSP. The Trade Policy Staff
In March 2019, President Trump informed Congress that he
Committee (TPSC), an interagency committee chaired by
intended to remove GSP benefits for India (failure to
the U.S. Trade Representative (USTR), administers the
provide equitable and reasonable market access) and
program, mainly by conducting annual product and country
Turkey (based on its level of economic development). The
reviews and providing recommendations to the President.
President subsequently removed Turkey’s GSP eligibility
The U.S. International Trade Commission (ITC) reports to
effective May 17, 2019, and India’s effective June 5, 2019.
the President on the possible effects of proposed changes to
GSP on the U.S. economy. U.S. Customs and Border
Figure 1. Top 5 GSP Beneficiaries, 2019 ($ 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
goods, handbags, and other cases of various materials;
December 2020, there were 119 developing countries,
vehicle parts; jewelry; rubber pneumatic tires; and lamps
including 17 non-independent territories and 44 least-
and light fittings. Total GSP imports in 2019 amounted to
developed beneficiary developing countries (LDBDCs). In
about $21 billion.
2019, the top five BDCs in terms of U.S. imports entering
How can I tell if a product is eligible for GSP status? In
under GSP were Thailand, India, Indonesia, Brazil, and the
the HTSUS, GSP-eligible products are identified by a
Philippines.
Special Program Indicator (SPI). The SPI code “A” in the
How can I tell if a developing country is a GSP
“Special” tariff column next to an HTSUS subheading
beneficiary? The current list of all BDCs is recorded in the
identifies that the product is GSP-eligible for all BDCs. The
Harmonized Tariff Schedule of the United States (HTSUS),
code “A+” indicates that the product is eligible only from
available on the ITC website (http://hts.usitc.gov/current).
least-developed BDCs. The code “A*” identifies that the
The list can be found under General Note 4 in the HTSUS
product is not eligible to be imported under the program
“General Notes” section.
from one or more BDCs. The SPI must be indicated on the
appropriate CBP forms when importers claim duty-free
Are all products eligible for GSP duty-free status?
status.
According to the GSP statute (see 19 U.S.C. §2463), certain
products are considered “import-sensitive” and specifically
Can BDCs import an unlimited amount of a GSP-
prohibited from GSP treatment. These include most textile
eligible product? GSP imports of a single product from an
and apparel goods, watches, and some electronic, steel, and
individual BDC are limited to a certain value amount,
glass products. The President is sometimes authorized by
referred to as competitive need limits (CNL). If the CNL is
Congress, in consultation with the ITC, to designate new
exceeded, the BDC loses its GSP eligibility for that
articles as eligible for the program. The President recently
product, unless the President grants a waiver. Interested
declared certain luggage and travel articles eligible for
parties may petition for waivers if products meet certain
GSP, as previously approved by Congress in Section 204 of
specific criteria. There are no value limitations on GSP
the Trade Preferences Extension Act of 2015 (P.L. 114-27).
imports from LDBDCs or dual-African Growth and
The program currently covers more than 3,500 imported
Opportunity Act (AGOA) and GSP beneficiaries.
products. LDBDCs receive duty-free treatment for an
additional 1,500 products.
Issues for Congress
Are there other product restrictions? In order to be
If a product is eligible for GSP, but tariffs are imposed
imported under GSP, a product must be imported directly
on them based on other laws, as under President
from a BDC that is eligible for GSP treatment for that
Trump’s recent tariff actions, may the product still be
product. At least 35% of the value of an eligible product
imported duty-free? GSP benefits do not apply to any
must be produced in a BDC, or in two or more countries
products subject to duties or quotas under Section 232 of
that are part of a GSP-recognized association of countries.
the Trade Act Expansion Act of 1962 on steel and
Figure 2. Top 5 GSP Import Categories, 2019
aluminum. Developing countries are largely exempt from
the tariff rate quotas imposed under Section 201 of the
($ in millions, Imports for Consumption, Harmonized Tariff
Trade Act of 1974 on washing machines and parts, and on
Schedule 4-digit level)
solar panels and modules, provided that U.S. imports from
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 and Reform. The GSP program
expired on December 31, 2020, despite legislative efforts to
renew the program. Some Members have expressed interest
in adding additional GSP eligibility criteria, including
provisions on human rights, environmental laws, and good
governance. Others lawmakers and industry groups support
reauthorizing the program without changes for a short
period to allow more time for negotiations.
For more information on GSP, see CRS Report RL33663,
Source: ITC Trade Dataweb.
Generalized System of Preferences (GSP): Overview and

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


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https://crsreports.congress.gov | IF11232 · VERSION 6 · UPDATED

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