Generalized System of Preferences (GSP): Overview and Issues for Congress

September 26, 2006 – November 22, 2023 RL33663

Generalized System of Preferences (GSP):
Overview and Issues for Congress
Updated November 22, 2023
Congressional Research Service
https://crsreports.congress.gov
RL33663

Generalized System of Preferences (GSP): Overview and Issues for Congress

Summary
The U.S. Generalized System of Preferences (GSP) program provided nonreciprocal, duty-free
tariff treatment to certain products imported to the United States from designated beneficiary
developing countries (BDCs). Congress first authorized the U.S. program in Title V of the Trade
Act of 1974. The European Union and other developed countries have implemented similar
programs since the 1970s. The U.S. GSP program expired on December 31, 2020 despite
legislative efforts to extend the program in the 116th Congress. Although the program has expired,
U.S. Customs and Border Protection (CBP) has instructed importers to continue flagging GSP-
eligible products on import documents so that it may automate duty refunds if Congress
retroactively reauthorizes the program. Congress has typically applied the retroactivity from the
day after the program expired to when the reauthorization came into effect.
Prior to the program expiring, 119 developing countries and territories were eligible beneficiary
developing countries (BDCs). The program provided duty-free entry into the United States for
over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs,
and duty-free status to an additional 1,500 products from 44 GSP beneficiaries designated as
least-developed beneficiary developing countries (LDBDCs). In 2020, products valued at $16.9
billion (imports for consumption) entered the United States duty-free under the program, out of
$152.0 billion worth of total imports from GSP-eligible countries. Total U.S. imports from all
countries amounted to about $2.3 trillion in 2020. In 2022, $21.5 billion worth of imports (for
consumption) would have been eligible for duty-free treatment under the program if it had been
reauthorized.
GSP was one of several trade preference programs through which the United States sought to help
developing countries expand their economies. Other U.S. trade preference programs, which are
built on GSP, are regionally focused, including the African Growth and Opportunity Act (AGOA)
and the Caribbean Basin Initiative (CBI, includes preference programs for Haiti). There are also
country-specific programs for Haiti and Nepal. Under GSP, developing countries would have to
meet certain eligibility criteria, such as providing the United States with adequate market access,
taking steps to maintain internationally recognized worker rights, and protecting intellectual
property rights. GSP rules of origin required that at least 35% of the appraised value of the
eligible product be the “growth, product, or manufacture” of the BDC. Certain “import-sensitive”
products (e.g., most textiles and apparel) were specifically excluded, and limits were placed on
the quantity or value of any one product imported from any one country under the program
(except for products from LDBDCs and AGOA countries). GSP country and product eligibility
were subject to annual review.
There is bipartisan interest in reauthorizing GSP, though some Members of Congress have
proposed changes to the program. Proposed amendments include adding new eligibility criteria
(e.g., human rights, enforcement of environmental laws and international agreements, good
governance, and digital trade), increasing reporting of annual review results, and amending the
value limits placed on eligible products.
This report examines, first, recent legislative developments, along with a brief history, economic
rationale, and legal background leading to the establishment of GSP. Second, the report describes
U.S. GSP implementation. Third, the report briefly analyzes the U.S. program’s effectiveness and
stakeholders’ views, and discusses possible options for Congress.
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Generalized System of Preferences (GSP): Overview and Issues for Congress

Introduction
The Generalized System of Preferences (GSP) provided nonreciprocal, duty-free tariff treatment
to certain products imported into the United States from designated beneficiary developing
countries (BDCs). The United States, the European Union (EU), and other developed countries
have implemented similar programs since the 1970s in order to promote economic growth in
developing nations. GSP authorization lapsed at the end of 2020, but the U.S. customs agency has
instructed importers to continue flagging GSP-eligible imports to allow duties to be refunded
automatically if Congress retroactively reauthorizes the program.
Prior to the lapse in authorization, 119 developing countries and territories were eligible for GSP
benefits. The GSP program provided duty-free entry into the United States for over 3,500
products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-
free status to an additional 1,500 products from 44 GSP beneficiaries additionally designated as
“least-developed beneficiary developing countries” (LDBDCs). In 2020, products valued at $16.9
billion (imports for consumption) entered the United States duty-free under the program, out of
$152.0 billion worth of total imports from GSP-eligible countries. Total U.S. imports from all
countries amounted to about $2.3 trillion in 2020.
This report briefly summarizes recent GSP developments. It provides a brief history, economic
rationale, legal background, and comparison of preferential trade programs worldwide and
describes the U.S. implementation of the GSP program.
Latest Developments
On December 31, 2020, GSP expired despite legislative efforts to reauthorize the program. U.S.
Customs and Border Protection (CBP) issued guidance on the expiration of GSP, instructing
imports to continue identifying eligible products with the Special Product Indicator (SPI) for GSP
on import documents.1 This would enable CBP to automate the duty refund process in the event
that Congress reauthorizes the program with a retroactive refund clause.2 In 2022, the total value
of imports that would have been eligible for duty-free treatment under GSP was $21.5 billion.3
Supporters of the program estimate that U.S. importers have at least $2.6 billion in tariffs on
GSP-eligible imports between January 2021 and April 2023.4
The debate surrounding possible reauthorization of GSP revolves around the program’s eligibility
criteria. Some Members of Congress support reforming the program’s eligibility criteria, such as
strengthening the provisions on worker rights, and adding new eligibility requirements on gender
equality, human rights, good governance, digital trade, and environmental law and regulations.5

1 In the Harmonized Tariff Schedule of the United States (HTSUS), the SPI code “A” in the “Special” tariff column
next to an HTSUS subheading identifies that the product is GSP-eligible for all BDCs. The code “A+” indicates that the
product is eligible only from least-developed BDCs. The code “A*” identifies that the product is not eligible to be
imported under the program from one or more BDCs. The SPI must be indicated on the appropriate CBP forms when
importers claim duty-free status.
2 CBP, “CSMS #45244051—Guidance: Generalized System of Preferences (GSP) Expires Effective, December 31,
2020,” December 21, 2020, https://content.govdelivery.com/bulletins/gd/USDHSCBP-2b25e93.
3 U.S. International Trade Commission Dataweb, data retrieved May 3, 2022.
4 Coalition for GSP, "GSP Lapse Costs American Companies $2.6+ billion through April 2023," press release, June 14,
2023, https://renewgsptoday.com/2023/06/14/gsp-lapse-costs-american-companies-2-6-billion-through-april-2023/.
5 Isabelle Icso, “Grassley: Democrats Holding GSP Renewal ‘Hostage’ to Win Trade Changes,” Inside U.S. Trade,
December 1, 2020. Isabelle Icso, “Wyden: GSP Changes Needed to ‘Raise the Bar’ for U.S. Trading Partners,” Inside
U.S. Trade, December 2, 2020.
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Others are concerned that adding new eligibility criteria would increase compliance costs for
developing countries and discourage their participation. In the 118th Congress, H.R. 4276 would
reauthorize GSP through December 2026 and add eligibility criteria related to human rights
violations, enforcement of environmental laws and international commitments, and good
governance. The proposed legislation is similar to bills introduced in the 117th Congress: the
Senate-passed United States Innovation and Competition Act of 2021 (S. 1260) and the House-
passed America COMPETES Act of 2022 (H.R. 4521). The Senate bill differed in that the
proposed new eligibility criteria included provisions related to gender equality and digital trade.
Some Members in the 117th Congress also sought to modify the competitive needs limits (see
“Competitive Need Limits (CNL)”) provisions by amending the calculation of CNL thresholds
from an annual $500,000 increase to an annual 6.5% increase of the previous year’s threshold
(H.R. 6171).
On September 20, 2023, the House Ways and Means Subcommittee on Trade held a hearing on
GSP reauthorization.6 Various Members expressed bipartisan interest in reauthorizing and
amending the program’s eligibility criteria. Some also questioned whether the program’s rules of
origin requirement should be updated to encourage higher use of local or U.S. inputs.
History, Rationale, and Comparison of
GSP Programs
The basic principle behind trade preference programs worldwide is to provide developing
countries with unilateral preferential market access to developed-country markets in order to spur
economic growth in poorer countries. The preferential access is in the form of lower tariff rates
(or as in the U.S. case, duty-free status) for certain products that are determined not to be “import
sensitive” in the receiving country market. The program concept was first adopted internationally
in 1968 by the United Nations Conference on Trade and Development (UNCTAD) at the
UNCTAD II Conference.7
Economic and Political Basis
The GSP concept and programs were established based on the premise that preferential tariff rates
in developed country markets could promote export-driven industry growth in developing
countries. It was believed that this, in turn, would help to free beneficiaries from heavy
dependence on trade in primary products (e.g., raw materials), and help diversify their economies
to promote stable growth.8
Some economists claim that GSP was established, in part, as a means of reconciling two
divergent economic perspectives of trade equity that arose during early negotiations on the
General Agreement on Tariffs and Trade (GATT).9 Industrialized, developed nations argued that

6 U.S. Congress, House Committee on Ways and Means, Subcommittee on Trade, Reforming the Generalized System of
Preferences to Safeguard U.S. Supply Chains and Combat China, 118th Cong., 1st sess., September 20, 2023.
7 U.N. Conference on Trade and Development, http://unctad.org. In addition to the United States and the European
Union, other developed countries that have GSP programs include Australia, Bulgaria, Canada, Japan, New Zealand,
Norway, the Russian Federation, Switzerland, and Turkey.
8 OECD Secretary-General. The Generalized System of Preferences: Review of the First Decade. Organisation for
Economic Co-operation and Development, 1983, p. 9 (hereinafter OECD GSP Review).
9 Sapir, A. and L. Lundberg, “The U.S. Generalized System of Preferences and its Impacts,” in R. Baldwin and A.
Krueger (eds.) The Structure and Evolution of Recent U.S. Trade Policy, Chicago: The University of Chicago Press,
1984.
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the most-favored-nation (MFN) principle should be the fundamental and universal principle
governing multilateral trade, while less-developed countries believed that equal treatment of
economically unequal trading partners did not constitute equity in trade benefits.10 These
countries called for “special and differential treatment” for developing countries. Economists
assert that GSP schemes thus became one of the means of offering a form of special treatment
that developing nations sought, while allaying the fears of developed countries that tariff
“disarmament” might create serious disruptions among import-sensitive industries in their
domestic markets.11
Due to differences in developed countries’ economic structures and tariff programs—as well as
differences in the types of domestic industries and products each country wanted to shield from
greater foreign competition—it proved difficult to create one unified system of tariff concessions
on additional products. Therefore, the GSP concept became a system of individual national
schemes based on common goals and principles—each with a view toward providing developing
countries with generally equivalent opportunities for export growth.12 As a result, the preference-
granting countries implemented various individual schemes of temporary, generalized,
nonreciprocal preferences under which tariffs were lowered or eliminated on some imports from
certain developing countries.
Although not specifically allowed or codified in the GATT, the programs of most GSP-granting
countries place certain conditions on the nonreciprocal preferences by: (1) excluding certain
countries; (2) determining specific product coverage; (3) determining rules of origin governing
the preference; (4) determining the duration of the scheme; (5) reducing preferential margins
accruing to developing countries by continuing to lower or remove tariffs as a result of
multilateral, bilateral, and regional negotiations; (6) preventing the concentration of benefits
among a few countries; (7) including safeguard mechanisms or “escape” clauses to protect
import-sensitive industries; and (8) placing caps on the volume of duty-free trade entering under
their programs.13
GATT/World Trade Organization Framework
By its very nature as a trade preference, the GSP concept posed a problem under the GATT,
because granting preferences to particular countries is inconsistent with the fundamental
nondiscrimination obligation placed on GATT Parties (GATT Article I:1) to grant MFN tariff
treatment to the products of all other GATT Parties. However, since preference programs were
viewed as a means of transitioning developing countries to greater trade liberalization and
economic development, GATT Parties accommodated them in a series of joint actions.
First, in 1965, the GATT Parties added Part IV to the General Agreement, an amendment that
recognizes the special economic needs of developing countries and asserts the principle of
nonreciprocity. Under this principle, developed countries may forego the receipt of reciprocal
benefits for their negotiated commitments to reduce or eliminate tariffs and restrictions on the

10 The most-favored-nation principle means that countries must treat imports from other trading partners on the same
basis as that given to other nations. Therefore, with certain exceptions (including GSP, regional trading arrangements,
and free trade agreements), tariffs are applied uniformly across countries, and reductions in tariffs to one country are
provided to others. The term “most-favored-nation” has been changed in U.S. law to “normal trade relations” (Section
5003 of P.L. 105-206).
11 OECD GSP Review, p. 11.
12 Ibid., p. 10.
13 David Wall, “Problems with Preferences,” International Affairs, vol. 47, October 1971, p. 95.
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trade of less developed contracting parties.14 Second, because of the underlying MFN issue,
GATT Parties in 1971 adopted a waiver of Article I for GSP programs to allow developed
contracting parties to accord more favorable tariff treatment to the products of developing
countries for 10 years.15 The GSP was described in the decision as a “system of generalized, non-
reciprocal and non-discriminatory preferences beneficial to the developing countries.”
Enabling Clause
At the end of the Tokyo Round of Multilateral Trade Negotiations in 1979, developing countries
secured adoption of the so-called Enabling Clause, a permanent deviation from MFN by joint
decision of the GATT Contracting Parties.16 The clause states that notwithstanding GATT Article
I, “contracting parties may accord differential and more favorable treatment to developing
countries, without according such treatment to other contracting parties,” and applies this
exception to the following:
(a) Preferential tariff treatment accorded by developed contracting parties to products
originating in developing countries in accordance with the Generalized System of
Preferences;
(b) Differential and more favorable treatment with respect to the provisions of the General
Agreement concerning non-tariff measures governed by the provisions of instruments
multilaterally negotiated under the auspices of the GATT;
(c) Regional or global arrangements entered into amongst less-developed contracting
parties for the mutual reductions or elimination of tariffs and, in accordance with criteria
or conditions which may be prescribed by the contracting parties for the mutual reduction
or elimination of non-tariff measures, on products imported from one another;
(d) Special treatment on the least developed among the developing countries in the context
of any general or specific measures in favour of developing countries.
Additional Commitment to Least Developed Countries
When launching the Doha Development Agenda (DDA) negotiations in November 2001, World
Trade Organization (WTO, successor to the GATT established in 1995) members committed
themselves to provide “duty free/quota free” (DFQF) access to the products of least-developed
countries, in keeping with the shared objective of the international community as expressed in the
Millennium Development Goals.17 During DDA negotiations at the sixth WTO Ministerial
Conference in Hong Kong in December 2005, developed country WTO members and
“developing country members declaring themselves in a position to do so” agreed to deepen this
commitment by providing DFQF access to at least 97% of products originating from least
developed countries (LDCs) by 2008, “in a manner that ensures stability, security and
predictability.”18 Many developed countries continued to implement these provisions despite the
failure of the DDA. As of the WTO Nairobi Ministerial in October 2015, most developed

14 Edmond McGovern, International Trade Regulation ¶ 9.212 (updated 1999). Part IV is generally viewed as
nonbinding, though some have argued otherwise with regard to certain of its provisions. Id.; John H. Jackson, William
J. Davey & Alan O. Sykes Jr., Legal Problems of International Economic Relations 1171 (4th ed. 2002).
15 GATT, Generalized System of Preferences; Decision of 25 June 1971, L/3545 (June 28, 1971).
16 GATT, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries;
Decision of 28 November 1979, L/4903 (December 3, 1979).
17 World Trade Organization, “The WTO and the Millennium Development Goals,” http://www.wto.org/english/
thewto_e/coher_e/mdg_e/mdg_e.htm.
18 World Trade Organization, Ministerial Declaration, Annex F. December 18, 2005, WT/MIN(05)/DEC.
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countries granted either full or near full access to LDCs, and several developing countries had
also taken concrete steps to provide duty-free access to products from LDCs.19
Comparison of International GSP Programs
Other developed countries besides the United States that implement GSP programs include
Australia, Canada, the EU, Iceland, Japan, New Zealand, Norway, the Russian Federation,
Switzerland, and Turkey.20 One economist has referred to these programs as a nonhomogeneous
set of national schemes sharing certain common characteristics.21 Generally, each preference-
granting country extends to qualifying developing countries (as determined by each benefactor)
an exemption from duties (reduced tariffs or duty-free access) on most manufactured products
and certain “non-sensitive” agricultural products. Product coverage and the type of preferential
treatment offered varies widely.22
In the WTO, the developing country status of members is generally based on self-determination.
For GSP, however, each preference-granting country establishes particular criteria and conditions
for defining and identifying developing country beneficiaries. Consequently, the list of
beneficiaries and exceptions may vary greatly among countries. If political or economic changes
have taken place in a beneficiary country, it might be excluded from GSP programs in some
countries but not in others. For example, in 2020 the EU suspended Cambodia’s GSP membership
due to concerns over human rights abuses, while it remains a GSP beneficiary in the U.S.
program.23
Some countries, including the United States, also reserve the right to exclude countries if they
have entered into another kind of commercial arrangement (e.g., a free trade agreement) with any
other GSP-granting developed country, and in the U.S. case, “if it has, or is likely to have, a
significant adverse effect on United States commerce.”24
In terms of additional GSP product coverage for LDCs, the EU’s program, which offers duty-free
access for “Everything but Arms,” is currently perhaps the most inclusive.25 GSP-granting
countries may also have incentive-based programs that provide enhanced benefits for beneficiary
countries that meet certain additional criteria. In 2007, for example, the EU implemented a

19 According to the World Trade Organization Preferential Trade Arrangements database (http://ptadb.wto.org/
ptaList.aspx), LDC-specific duty-free tariff preference schemes have been implemented in Morocco, Chile, China,
Chinese Taipei, Korea, Kyrgyz Republic, Tajikistan, and Thailand. See also Sena Kimm Gnagnon and Shishir
Priyadarshi, Has the Multilateral Hong Kong Ministerial Decision on Duty Free Quota Free Market Access Provided a
Breakthrough in the Least Developed Countries’ Export Performance?, World Trade Organization, Economic
Research and Statistics Division, WTO Working Paper ERSD-2016-06, July 2016.
20 U.N. Conference on Trade and Development, “About GSP,” at http://www.unctad.org.
21 Sanchez Arnau, Juan C. The Generalized System of Preferences and the World Trade Organization. London:
Cameron May, Ltd., 2002, p. 187.
22 Ibid.
23 European Commission, “Cambodia Loses Duty-free Access to the EU Market over Human Rights Concerns,” press
release, August 12, 2020, https://trade.ec.europa.eu/doclib/press/index.cfm?id=2177.
24 19 U.S.C. 2462(b)(2)(c).
25 European Communities, GSP Council Regulation (EC) No. 2501/2001. See also Council Regulation (EC) No.
732/2008 of 22 July 2008 applying a scheme of generalised tariff preferences for the period from 1 January 2009 to 31
December 2011 and amending Regulations (EC) No 552/97, (EC) No 1933/2006 and Commission Regulations (EC)
No 1100/2006 and (EC) No 964/2007. Published in Official Journal of the European Communities, (OJ) OJ L 211 of 6
August 2008. The “Everything but Arms” provision applies to all goods except arms and munitions and white sugar.
(from October 1, 2009, to September 2012, sugar importers “shall undertake to purchase such products at a minimum
price not lower than 90% of the reference price.”). See Council Regulation (EC) No 2501/2001.
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regulation that grants additional GSP benefits to countries that have demonstrated their
commitment to sustainable development and internationally recognized worker rights.26
Each preference-granting nation also has safeguards in place to ensure that any significant
increases in imports of a certain product do not adversely affect the receiving country’s domestic
market. Generally, these restrictions take the form of quantitative limits on goods entering under
GSP. Under Japan’s system, for example, imports of certain products under the preference are
limited by quantity or value (whichever is applicable) on a first-come, first-served basis,
administered monthly (or daily, if indicated). For other products, import ceilings and maximum
country amounts are set by prior allotment.27 The United States quantitatively limits imports
under the GSP program by placing “competitive need limit” (CNL) thresholds on the quantity or
value of commodities entering duty-free, as discussed in more detail below.
Each GSP benefactor also has criteria for graduation—the point at which beneficiaries no longer
qualify for benefits because they have reached a certain level of development. Most preference-
granting countries require mandatory graduation based on a certain level of income per capita
based on World Bank calculations. Some programs, such as the EU’s, also specifically provide for
graduation of certain GSP recipients with respect to specific product sectors. A description of
three other countries’ GSP programs follows.
EU Generalised Scheme of Preferences
The European Economic Community (EEC) began implementing GSP in January of 1971. In the
current EU scheme, developing countries are automatically granted GSP status by the EU if they
are classified as having an income level below “upper middle income” by the World Bank, and do
not benefit from another arrangement (e.g., a free trade agreement or economic partnership
agreement) already granting them preferential access to the EU market.28 GSP countries must also
respect the principles of fifteen core conventions on human rights and labor rights listed in the
GSP regulation.29
The EU Generalised Scheme of Preferences (EU GSP) has three different preference
arrangements:
• The “Standard” GSP framework grants duty reductions for about 66% of all EU
tariff lines, to low-income or middle-income countries that do not benefit from
any other preferential trade access to the EU market. As of October 2023, there
were 12 Standard GSP beneficiaries.30
• The Sustainable Development and Good Governance (GSP+) program grants
duty-free access to the same 66% of EU tariff lines as Standard GSP to
beneficiaries that are found to be especially vulnerable in terms of economic
diversification and import volumes. In return, these countries must ratify and
effectively implement 27 core international conventions, human and labor rights,

26 Ibid.
27 World Trade Organization, Committee on Trade and Development. Notification by Japan, June 21, 2000,
WT/COMTD/N/2/Add.9.
28 European Commission website, “Generalized Scheme of Preferences,” https://ec.europa.eu/trade/policy/countries-
and-regions/development/generalised-scheme-of-preferences/.
29 The GSP regulations and the list of conventions can be found at the EU law website, https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:32012R0978#d1e32-60-1.
30 GSP Hub. “Country Info,” https://gsphub.eu/country-info, Accessed October 5, 2023.
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environmental protection, and good governance.31 As of July 2022, there were
seven GSP+ beneficiary countries.
• The Everything but Arms (EBA) arrangement grants full duty-free, quota-free
access for all products except arms and ammunition for all United Nations-
classified least-developed countries. As of July 2022, there were 47 EBA
beneficiaries.32
Economic Partnership Agreements
Since 2000, as part of a long-term overhaul of the EU’s relationship of its trade arrangements
with developing countries, including its GSP beneficiaries, negotiations have been ongoing to
establish reciprocal, WTO-compliant “Economic Partnership Agreements” (EPAs) with
developing country trading partners in the African, Caribbean, and Pacific (ACP) regions. There
were seven EPAs in the implementation phase, involving 32 ACP countries.33
Changes to the EU GSP
On January 1, 2014, the EU implemented additional substantial changes to the EU GSP program
that it stated were intended to: (1) better focus on countries in need; (2) further promote core
principles of sustainable development and good governance; and (3) enhance stability and
predictability.34 As part of the changes, the EU mandatorily graduated all countries identified by
the World Bank as upper-middle income and above, and excluded those countries that benefit
from a preferential market access arrangement with the EU. To add a measure of stability to the
program, the EU extended GSP benefits for 10 years, and provided transition periods of at least
one year for those countries that would lose EU GSP eligibility.
The EU GSP program is scheduled to expire on December 31, 2023. The European Commission
proposed a new framework for the EU GSP that would introduce several changes to the program,
including: a new arrangement for countries projected to graduate from least developed country
status; several new compliance requirements on international conventions on human rights, labor
rights, governance, and environmental protection; improvements to monitoring compliance with
the program; and a new rapid response procedure to withdraw benefits under “exceptionally
grave” violations of international standards.35 If the proposal is adopted, the changes would go
into effect on January 1, 2024 for a ten-year period. In July 2023, the Commission proposed a

31 European Commission, Report from the Commission to the European Parliament and the Council: Report on the
Generalized Scheme of Preferences Covering the Period 2016-2017, COM(2018) 36 final, Brussels, January 19, 2018.
32 Cambodia’s preferential access has been suspended since February 2019. GSP Hub. “Country Info,”
https://gsphub.eu/country-info, Accessed July 21, 2022.
33 European Commission, Economic Partnership Agreements: Putting Partnership into Practice, 2020. The EU has
implemented agreements with countries in Eastern and Southern Africa, the Southern African Development
Community, the Caribbean, and the Pacific regions. The EU has also concluded EPA negotiations with 16 Western
African countries, 5 East African countries, and Zambia. These EPAs will be implemented when all parties have signed
the agreements.
34 Regulation (EU) No. 978/2012 of the European Parliament and of the Council of 25 October 2012 Applying a
Scheme of Generalized Tariff Preferences and repealing Council Regulation (EC) No. 732/2008, OJ L 303/1, October
31, 2012. See also European Commission, “Revised EU Trade Scheme to Help Developing Countries Applies on 1
January 2014,” Press Release, December 19, 2013.
35 European Commission, Proposal for a Regulation of the European Parliament and of the Council on Applying a
Generalised Scheme of Tariff Preferences and Repealing Regulation (EU) No 978-2012 of the European Parliament
and of the Council, COM (2021) 579 final, September 22, 2021.
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three-year extension of the program through December 2027 to ensure continuity and provide
time for legislators to agree upon a new framework.36
Canada’s General Preferential Tariff (GPT)
Canada’s General Preferential Tariff (GPT), first implemented in 1974, provides duty-free or
reduced tariff rates for designated developing country beneficiaries. The GPT program expires,
and is reviewed and amended on a 10-year cycle. Canada’s Economic Action Plan for 2012
announced a comprehensive review of the GPT in advance of its expiration on June 30, 2014, due
to “significant shifts in the income levels and trade competitiveness of certain developing
countries” since 1974, and to ensure that the GPT is “aligned with Canada’s development policy
objectives.”37 As a result of the review, Canada withdrew GPT benefits from 72 countries, but
continues to extend preferential treatment to 103 beneficiaries, 48 of which also benefit from
Canada’s Least Developed Country Tariff (LDCT).38 Canada announced that it would continue to
review the list of beneficiary countries biannually, and will automatically graduate countries that
are either classified for two consecutive years as high or upper-middle income countries; or have
a 1% or greater share of world exports for two consecutive years.39 Canada’s GPT is currently
authorized until December 31, 2024.
Japan’s Generalized System of Preferences
Japan’s GSP program, first implemented in 1971, provides preferential tariff treatment to 128
developing countries and five territories, and is currently authorized through March 31, 2031.40
Beneficiaries are designated on the basis of: (1) being in a stage of development, (2) having its
own trade and tariff system, (3) the country’s desire to receive preferential tariff treatment, and
(4) a determination by Cabinet Order that the beneficiary is a country or territory to which such
preferences may be extended.41
Reduced or duty-free status is provided for 416 products in the agricultural and fisheries sectors
(Harmonized System [HS] chapters 1-24) and for 3,151 industrial/manufactured products (HS
chapters 25-97). Most industrial products are duty-free to GSP beneficiaries, but tariff reductions
are provided on some import-sensitive items.42 Forty-six countries recognized as LDCs by the
United Nations receive duty-free, quota-free market access for the above products, as well as for
additional items (about 98% of all products defined at the tariff-line level).43
A country or territory may be partially graduated from Japan’s GSP scheme if it is classified as a
high-income country in World Bank statistics in the previous year, or is classified as an upper-
middle income country and the value of the beneficiary’s exports exceeds 1% of the total value of

36 European Commission, Proposal for a Regulation of the European Parliament and of the Council Amending
Regulation (EU) No 978/2012 if the European Parliament and of the Council of 25 October 2012 Applying a Scheme of
Generalised Tariff Preferences and Repealing Council Regulation (EC) No 732/2008, COM(2023)426, July 4, 2023.
37 Canada Gazette, “Proposed Amendments to Canada’s General Preferential Tariff,” Volume 146, No. 51, December
22, 2012.
38 Ibid.
39 Ibid.
40 Ministry of Foreign Affairs of Japan, “Generalized System of Preferences: Explanatory Notes for Japan’s Scheme,”
https://www.mofa.go.jp/policy/economy/gsp/explain.html.
41 Ibid.
42 Ibid.
43 Ibid. See also World Trade Organization, Trade Policy Review, Report by Japan, WT/TPR/G/351, January 18, 2017.
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world exports in the previous year.44 Countries are permanently graduated from GSP if they are
classified by the World Bank as a high-income economy for three consecutive years.
Beneficiaries may lose GSP benefits for certain products if, for the past three years, regarding
Japanese exports of that product: (1) the average value of Japan’s imports of the product
originating from the beneficiary for the past three years exceeds 1.5 billion yen and 50% of the
world’s exports of the product to Japan, or (2) in the case of any fish product, the country or
territory is judged (by a Regional Fisheries Management Organization) to be against the
conservation of certain fish species.45
United States GSP Implementation
Congress first authorized the U.S. Generalized System of Preferences scheme in Title V of the
Trade Act of 1974 (P.L. 93-618), as amended.46 Title V authorized the President to grant duty-free
treatment under GSP for eligible products imported from any BDC or any LDBDC, provided the
President with economic criteria in deciding whether to take any such action, and specified
certain other criteria for designating eligible countries and products.47
GSP country eligibility or changes in product coverage were made at the discretion of the
President, drawing on the advice of the International Trade Commission (ITC) and the United
States Trade Representative (USTR). The Trade Policy Staff Committee (TPSC), an executive
branch interagency body chaired by the office of the USTR, served as the interagency policy
coordination mechanism for GSP matters.48 The GSP Subcommittee of the TPSC conducted
annual reviews in which petitions related to GSP country and product eligibility were assessed,
and made recommendations to the full TPSC, which, in turn, passed recommendations to the
USTR.49
Country Eligibility Criteria
When designating BDCs and LDBDCs, the President was directed to take into account certain
mandatory and discretionary criteria. The law prohibited (with certain exceptions) the President
from extending GSP treatment to certain countries, as follows:50
• other industrialized countries (Australia, Canada, EU member states, Iceland,
Japan, Monaco, New Zealand, Norway, and Switzerland are specifically
excluded);

44 World exports as captured in World Trade Organization statistics. Japan Customs website, “Graduation/Exclusion
from the GSP Scheme,” http://www.customs.go.jp/english/c-answer_e/imtsukan/1506_e.htm.
45 Ibid.
46 Trade Act of 1974, P.L. 93-618, Title V, as amended, 19 U.S.C. §2461-2467. See Table A-1, “GSP Implementation
and Renewal.”
47 19 U.S.C. §2461.
48 According to 15 C.F.R. §2002.2, “The [Trade Policy Staff] Committee consists of a chairman designated by the
Special Representative from his Office, and of senior trade policy staff officials designated from their respective
agencies or offices by the Secretaries of Agriculture, Commerce, Defense, Interior, Labor, State, and Treasury, by the
Executive Director of the Council on International Economic Policy, and by the Chairman of the International Trade
Commission.” GSP regulations are found at 15 C.F.R. §2007.
49 The GSP Subcommittee includes officials from the agencies listed in footnote 46, except for Interior and Defense,
and also includes the U.S. Agency for International Development.
50 19 U.S.C. §2462.
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• communist countries, unless they are a WTO member, a member of the
International Monetary Fund, and receive Normal Trade Relations (NTR)
treatment from the United States; must also not be “dominated or controlled by
international communism”;
• countries that collude with other countries to withhold supplies or resources from
international trade or raise the price of goods in a way that could cause serious
disruption to the world economy;
• countries that provide preferential treatment to the products of another developed
country in a manner likely to have a significant adverse impact on U.S.
commerce;
• countries that have nationalized or expropriated the property of U.S. citizens
(including corporations, partnerships, or associations that are 50% or more
beneficially owned by U.S. citizens), or otherwise infringe on U.S. citizens’
intellectual property rights (IPR), including patents, trademarks, or copyrights;
• countries that have taken steps to repudiate or nullify existing contracts or
agreements of U.S. citizens (or corporations, partnerships, or associations that are
50% or more owned by U.S. citizens) in a way that would nationalize or seize
ownership or control of the property, including patents, trademarks, or
copyrights;
• countries that have imposed or enforced taxes or other restrictive conditions or
measures on the property of U.S. citizens; unless the President determines that
compensation is being made, good faith negotiations are in progress, or a dispute
has been handed over to arbitration in the Convention for the Settlement of
Investment Disputes or another forum;
• countries that have failed to act in good faith to recognize as binding or enforce
arbitral awards in favor of U.S. citizens (or corporations, partnerships, or
associations that are 50% or more owned by U.S. citizens); and
• countries that grant sanctuary from prosecution to any individual or group that
has committed an act of international terrorism, or have not taken steps to support
U.S. efforts against terrorism.
Mandatory criteria also required that beneficiary countries:
• have taken or are taking steps to grant internationally recognized worker rights
(including collective bargaining, freedom from compulsory labor, minimum age
for employment of children, and acceptable working conditions with respect to
minimum wages, hours of work, and occupational safety and health); and
• implement their commitments to eliminate the worst forms of child labor.51
The President had the authority to waive certain mandatory criteria if he determined that GSP
designation of any country was in the national economic interest of the United States and reported
this determination to Congress.52
The President was also directed to consider certain discretionary criteria, or “factors affecting
country designation”:

51 19 U.S.C. §2462(b). The most recent GSP amendments required the support of U.S. efforts against terrorism and
expanded the definition of internationally recognized worker rights (Section 4102 of P.L. 107-210).
52 19 U.S.C. §2462(b)(2).
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• a country’s expressed desire to be designated a beneficiary developing country
for purposes of the U.S. program;
• the level of economic development of a country;
• whether or not other developed countries are extending similar preferential tariff
treatment to a country;
• a country is committed to providing reasonable and equitable access to its market
and basic commodity resources, and the extent to which a country has assured the
United States that it will not engage in unreasonable export practices;
• the extent to which a country provides adequate protection of intellectual
property rights;
• the extent to which a country has taken action to reduce trade-distorting
investment policies and practices, and to reduce or eliminate barriers to trade in
services; and
• whether or not a country has taken steps to grant internationally recognized
worker rights.53
The law further authorized the President, based on the required and discretionary factors
mentioned above, to withdraw, suspend, or limit GSP treatment for any beneficiary developing
country at any time (see Table B-1 for a list of currently eligible GSP beneficiaries). Figure 1
shows eligible GSP duty-free imports of the top 10 BDCs as a proportion of their total imports to
the United States in 2020.
Figure 1. Top 10 U.S. GSP Beneficiary Countries, 2020
GSP imports compared to BDC’s Normal Trade Relations (NTR) imports, $ billions

Source: CRS analysis of data from U.S. International Trade Commission (ITC) Dataweb.
Note: Thailand’s GSP benefits were partially suspended effective in April and December 2020 for worker rights
and market access issues. Data depicts the last year the program was authorized. Congress may choose to
retroactively reauthorize the program, in which case CBP would refund duties paid on eligible imports.

53 19 U.S.C. §2462(c). op. cit., p. 20.
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Least-Developed Beneficiaries
The President was authorized by statute to designate any BDC as an LDBDC, based on an
assessment of the conditions and factors previously mentioned.54 Although the United Nations’
designation of LDCs played a large factor in GSP least-developed beneficiary determinations,55
U.S. officials could also assess compliance with GSP statutory requirements and comments from
the public (as requested in the Federal Register) before identifying a country as “least-developed”
for purposes of GSP.56
Country Graduation from GSP
The President was authorized to terminate, suspend, or limit GSP status of a BDC if he
determined that a country was sufficiently competitive or developed. In May 2019, President
Trump terminated Turkey’s GSP eligibility for this reason.57
Mandatory GSP country graduation occurred when the BDC was determined to be a “high
income country” as defined by official World Bank statistics (gross national income [GNI] per
capita of $13,846 or more as of July 2023).58 The last time that countries were mandatorily
graduated from GSP was in 2015, when President Obama determined that Seychelles, Uruguay,
and Venezuela had become “high income” countries, and therefore, no longer eligible for GSP
benefits, effective January 1, 2017.59
If a country became part of an association of countries specifically excluded from GSP, the
country was also mandatorily withdrawn from GSP. Bulgaria and Romania were the last countries
to lose GSP eligibility for this reason, effective when they became EU member states as of
January 1, 2007.60 Croatia, the latest country to join the EU (in 2013), was also previously a GSP
beneficiary, but was mandatorily graduated from GSP as a “high income” country in 2009, prior
to its accession to the EU.61
Although not specifically required by GSP statute, a developing country that entered into a free
trade agreement (FTA) with the United States, at the discretion of Congress, generally lost GSP

54 19 U.S.C. §2462(a)(2).
55 19 U.S.C. §2462(c)(2).
56 For example, see USTR, “Generalized System of Preferences (GSP): Initiation of a Review to Consider the
Designation of East Timor as a Least Developed Beneficiary Country under the GSP,” 71 Federal Register 43543,
August 1, 2006. In practice, Administration designations are generally based on the United Nations designations of
LDCs.
57 Proclamation 9887 of May 16, 2019, “To Modify the List of Beneficiary Developing Countries Under the Trade Act
of 1974,” 84 Federal Register 23425, May 20, 2019.
58 19 U.S.C. §2462(e).
59 Proclamation 9333 of September 30, 2015, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and for Other Purposes, 80 Federal Register 60249, October 5, 2015.
60 Proclamation 8098 of December 29, 2006, “To Take Certain Actions Under the African Growth and Opportunity Act
and the Generalized System of Preferences,” 72 Federal Register 459, January 4, 2007. Croatia, the last country to join
the EU in July 2013, was also previously a GSP beneficiary, but graduated in 2011. European Union member states are
specifically identified as ineligible for designation as GSP countries in 19 U.S.C. §2462 (b)(1)(C).
61 Croatia was designated a BDC in Proclamation 6465 of August 25, 1992, “To Amend the Generalized System of
Preferences,” 57 Federal Register 30395, August 27, 1992, and was graduated from the GSP program in Proclamation
8467 of December 23, 2009, “To Modify Duty-Free Treatment Under the Generalized System of Preferences,” 74
Federal Register 69221, December 30, 2009.
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eligibility in favor of the reciprocal concessions granted by the FTA. Specific language to this
effect appeared in FTA implementing legislation.62
The President also was authorized to suspend, terminate, withdraw, or limit a country’s GSP
status if he determined that a country was not complying with one or more of GSP statute’s
eligibility requirements.63 On March 29, 2021, the USTR stated that it would consider Burma’s
GSP eligibility with respect to internationally recognized worker rights when it announced the
suspension of U.S. trade engagement with the country following the military coup.64
Reporting Requirements
The President was required to advise Congress prior to the designation of any country as a GSP
beneficiary, and at least 60 days before he designated any country as a least-developed
beneficiary country.65 The President also had to notify Congress at least 60 days in advance of the
termination of a country’s GSP status.66 A country’s change in status became effective following
the President’s formal announcement by executive order or presidential proclamation.67 The
President must also have advised Congress “as necessary” on the application of presidential
authority, and the actions taken to “withdraw, suspend, or limit” the application of duty-free
treatment if beneficiaries were found to not be in compliance with certain eligibility criteria.68
Additional GSP reporting requirements included an annual report to Congress on the status of
internationally recognized worker rights within each BDC, including findings of the Secretary of
Labor with respect to the beneficiary country’s implementation of its international commitments
to eliminate the worst forms of child labor.69
Eligible Products
The Trade Act of 1974 authorized the President to designate certain imports as eligible for duty-
free treatment under GSP after receiving advice from the ITC.70 “Import-sensitive” products
specifically excluded from preferential treatment under GSP included most textiles and apparel
goods; watches; footwear and other accessories; most electronics, steel, and glass products; and
certain agricultural products that are subject to tariff-rate quotas.71 Congress, from time to time,
has amended the GSP law to provide the President with additional authority to declare duty-free
access for certain products previously considered “import-sensitive,” provided that the ITC
examines the possible effects on the U.S. market of granting duty-free access to GSP

62 Colombia and Panama were the latest countries to lose GSP status for this reason. See Section 201(a)(2) of the
United States-Colombia Trade Promotion Agreement (P.L. 112-42) and Section 201(a)(2) of the United States-Panama
Trade Promotion Implementation Act (P.L. 112-43). One country, Jordan, continues to be eligible for GSP benefits
even though it entered into an FTA with the United States in 2001.
63 19 U.S.C. §2462(d)(1).
64 U.S. Trade Representative, "USTR Suspends Trade Engagement with Burma Following Military Coup and Violence
Against Civilians," press release, March 29, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-
releases/2021/march/ustr-suspends-trade-engagement-burma-following-military-coup-and-violence-against-civilians.
65 19 U.S.C. §2462(f)(1).
66 19 U.S.C. §2462(f)(2).
67 19 U.S.C. §2462(d)(2).
68 19 U.S.C. §2462(d)(3).
69 19 U.S.C. §2464. See U.S. Department of Labor, Bureau of International Labor Affairs, 2022 Findings on the Worst
Forms of Child Labor, https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings.
70 19 U.S.C. §2463(a)(1).
71 19 U.S.C. §2463(b).
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beneficiaries. The last time that Congress amended the list of import-sensitive products was in
Section 204 of P.L. 114-27, the Trade Preferences Extension Act of 2015, which gave the
President the authority to designate certain luggage and travel products as eligible for GSP.72 The
value of travel goods imported under the GSP program substantially increased beginning in 2017,
contributing to the increase in total U.S. imports of such products (Figure 2).
Figure 2. Imports of Travel Goods, Handbags, and Wallets
In current U.S. dollars

Source: CRS analysis of data from ITC Trade Dataweb.
Notes: *Section 204 of the Trade Preferences Extension Act of 2015 expanded the list of eligible products that
may be designated to certain luggage and travel products found under HTS heading 4202.
**Although GSP expired on December 31, 2020, U.S. Customs and Border Protection (CBP) instructed
importers to indicate GSP preferential status for eligible imports so that CBP may automate duty refunds in the
case that the program is reauthorized retroactively. 2021 and 2022 shown to provide an idea of the value
imports that would have qualified for GSP benefits.
GSP Rules of Origin
Eligible goods under the U.S. GSP program must have met certain rules of origin (ROO)
requirements in order to qualify for duty-free treatment. First, duty-free entry was only allowed if
the article was imported directly from the beneficiary country into the United States without
entering the commerce of a third country. Second, at least 35% of the appraised value of the
product was required to be the “growth, product, or manufacture” of a beneficiary developing

72 President Obama designated travel goods eligible for GSP when imported from least-developed countries only, see
Proclamation 9333 of September 30, 2015, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and For Other Purposes,” 80 Federal Register 60247, October 5, 2015. President Trump designated these
products eligible for all beneficiaries, see Proclamation 9625 of June 29, 2017, “To Modify Duty-Free Treatment
Under the Generalized System of Preferences and for Other Purposes, 82 Federal Register 30711, June 30, 2017.
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country, as defined by the sum of (1) the cost or value of materials produced in the BDC (or any
two or more BDCs that are members of the same association or countries and are treated as one
country for purposes of the U.S. law), plus (2) the direct costs of processing in the country.73
GSP Product Coverage
More than 3,500 products were eligible for duty-free treatment, and about 1,500 additional
products originating in LDBDCs could receive similar preferential treatment.74 Figure 3 shows
the top 10 products that would have qualified for GSP benefits in 2022 if the program was
authorized. Table 1 provides the Harmonized Tariff Schedule (HTS) subheading and description
of the leading products, along with the tariff rates that have been assessed on the products since
the program expired.
Figure 3. Top 10 U.S. GSP Imports, 2022*
In millions current U.S. dollars

Source: CRS analysis of data from ITC Trade Dataweb.

73 19 U.S.C. §2463(a).
74 GSP-eligible products are classified in the Harmonized Tariff Schedule of the United States (HTSUS) eight-digit
tariff level.
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Notes: Products are categorized at the HTSUS 8-digit level. *Although GSP expired on December 31, 2020,
CBP instructed importers to indicate GSP preferential status for eligible imports so that CBP may automate duty
refunds in the case that the program is reauthorized retroactively.
Table 1. Leading U.S. GSP Imports, 2022*
HTS
NTR Tariff
GSP Imports
Number
Rate
HTS Description
(millions U.S. $)
4202.92.31
17.6%
Travel, sports and similar bags with outer surface of
$936.0
man-made fibers
4202.22.15
16.0%
Handbags, whether or not with shoulder strap,
$513.3
including those without handle, with outer surface
of plastic sheeting
9404.21.00
3%
Mattresses of cellular rubber or plastics, whether
$375.6
or not covered
4202.12.21
20%
Trunks, suitcases, vanity cases and similar
$371.8
containers with outer surface of plastics
4202.21.90
9%
Leather handbags with value greater than$20
$299.1
4011.20.10
4%
Rubber tires for buses and trucks
$293.1
4202.92.45
20%
Travel, sports and similar bags with outer surface of
$332.0
textile materials not of vegetable fibers, man-made
fibers, or paper yarn/cotton with silk
0603.11.00
6.0%
Fresh Roses
$305.1
8415.90.80
1.4%
Air condition parts
$300.5
4015.19.10
3.0%
Seamless gloves of vulcanized rubber other than
$300.0
hard rubber, other than surgical or medical gloves
Source: CRS analysis of data from ITC Trade Dataweb and the U.S. Harmonized Tariff Schedule.
Notes: NTR tariff rate refers to the rate that applies if the article is not imported duty-free under GSP.
*Although GSP expired on December 31, 2020, CBP instructed importers to indicate GSP preferential status for
eligible imports so that CBP may automate duty refunds in the case that the program is reauthorized
retroactively.
Annual Reviews
The TPSC’s GSP Subcommittee conducted annual reviews of the list of eligible products,
generally on the basis of petitions received from beneficiary countries or interested parties
requesting that additional products be reviewed (i.e., added or removed) for GSP eligibility.75
When a country’s petition for product eligibility was approved, the product would become GSP-
eligible for all BDCs (or only for LDBDCs if so designated).76 USTR has not conducted an
annual review since 2020 as a result of the lapse of GSP authorization. In the context of an annual
product review, countries may petition for certain products to be added to GSP, or to receive
waivers of certain limits to GSP status, as described below. USTR also accepted public comments

75 The GSP Subcommittee is a sub-group of the Trade Policy Staff Committee (TPSC). The TPSC, through the USTR,
is charged with advising the President on GSP beneficiary country designations and covered products (see Section 8 of
Executive Order 11846, 40 Federal Register 14291, as amended).
76 USTR, U.S. Generalized System of Preferences: Guidebook, September 2016 (hereinafter, GSP Guidebook).
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and held hearings to provide the opportunity for interested parties to provide insight during the
annual review process.
The GSP Subcommittee also annually reviewed issues regarding BDCs’ and LDBDCs’
observance of country practices (such as worker rights or IPR protection); investigated petitions
to add or remove items from the list of eligible products; and considered which products should
be removed on the basis that they were “sufficiently competitive,” or “import sensitive” relative
to U.S. domestic firms.77
The GSP Subcommittee, after consultations with the ITC, would make recommendations to the
President regarding various product waivers that BDCs may have requested. Waiver petitions, if
granted, were country-specific. Any modifications to product lists would usually take effect on
July 1 of the calendar year after the next annual review was launched, but could also be
announced and become effective at other times of the year. At the completion of an annual
review, the results were announced by proclamation.
Petitions to Add to or Remove Products from GSP
In the context of a GSP annual review, beneficiaries or other interested parties were able to
request that certain products be added to the list of eligible products for GSP. If a beneficiary
requested that a product be provided GSP status, and the request was approved, the product
became GSP-eligible for all GSP beneficiaries (or, in some instances, for least-developed
beneficiaries only). As a result of the 2020 annual product review, the President added fresh-cut
roses (HTS 0603.11.00) to the list of eligible products.78
Interested parties could also request that products be removed from GSP status. In the 2020
annual review, parboiled rice (HTS 1006.30.10) was removed from GSP eligibility.79
Competitive Need Limits (CNL)
The GSP statute established “competitive need limit” (CNL) requirements for the President to
suspend GSP treatment for individual products from BDCs (LDBDCs and AGOA countries were
exempt) if
• imports of a product from a single country reached a specified threshold value,
which increases by $5 million each calendar year (i.e., $190 million in 2019 and
$195 million in 2020); or
• 50% or more of total U.S. imports of a product entering under GSP came from a
single country.80
Section 502 of P.L. 115-141 amended the date that products that exceed the CNL become GSP-
ineligible from GSP to November 1 of the next calendar year rather than July 1.

77 19 U.S.C. §2463(d)(1)(A). See United States International Trade Commission, Generalized System of Preferences:
Possible Modifications, 2017 Review, Publication Number 4827, Investigation Number 332-567, September 2018,
https://usitc.gov/sites/default/files/publications/332/pub4827.pdf.
78 Proclamation 10107 of October 30, 2020, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and for Other Purposes,” 85 Federal Register 70027, November 4, 2020.
79 Ibid.
80 LDBDCs and sub-Saharan African beneficiaries of AGOA are exempt from competitive need limits (19 U.S.C.
§2463(c)(2)(A)). See also GSP Guidebook, p. 11.
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In the 2020 product review, due to CNLs, Ecuador lost its GSP eligibility for taro (HTS
0714.40.10), and Brazil for gum, wood or sulfate turpentine (HTS 3805.10.00), and diesel-
powered electric generating sets (HTS 8502.12.00).81
CNL Waivers
Also in the context of an annual review, BDCs could petition for CNL waivers, which the
President would review on a case-by-case basis. In deciding whether to grant a waiver, the
President was required to (1) receive advice from the ITC as to whether a U.S. domestic industry
could be adversely affected by the waiver; (2) determine that the waiver is in the U.S. economic
interest; and (3) publish the determination in the Federal Register.82 The President was also
required to give “great weight” to the extent to which the BDC opens its markets to the United
States and protects IPR.83
In 2006, Congress amended the GSP law to provide that the President should revoke any CNL
waiver that had been in effect for five years or more if (1) the exports of the product were in
excess of 1.5 times of the specified dollar amount reflected in the CNL provision; or (2) imports
of the product exceeded 75% of the appraised value of total imports of the product into the United
States in a calendar year.84
In the 2020 GSP annual review, four countries: Argentina, Brazil, Ecuador, and Indonesia
received CNL waivers for products, including taro, chemicals, plywood, gold jewelry, and
engines.85
De Minimis Waivers
Under GSP, de minimis waivers could also be provided if the total dollar value of a particular
product imported into the United States from all countries was small; CNL would not apply for
the identified product. The de minimis level was adjusted each year, in increments of $500,000.86
In the 2020 GSP product review, de minimis waivers were granted to 24 products from eight
countries, including fresh cut orchids from Thailand, shelled macadamia nuts from Brazil, woven
rattan from Indonesia, and more.87
Waivers for Articles Not Produced in the United States (NPUS)
As part of the last GSP renewal, (Division M, Section 502 of P.L. 115-141, enacted in March
2018) Congress amended the GSP statute to provide that BDCs could apply for waivers of
competitive need limits for certain products that were not produced in the United States for three

81 Proclamation 10107 of October 30, 2020, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and for Other Purposes,” 85 Federal Register 70027, November 4, 2020.
82 19 U.S.C. §2463(d).
83 19 U.S.C. §2463(d)(2).
84 Ibid.
85 Proclamation 10107 of October 30, 2020, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and for Other Purposes,” 85 Federal Register 70027, November 4, 2020.
86 19 U.S.C. §2463(c)(2)(F). These waivers were automatically reviewed by the GSP Subcommittee (see below), but
granted at the discretion of the President.
87 Proclamation 10107 of October 30, 2020, “To Modify Duty-Free Treatment Under the Generalized System of
Preferences and for Other Purposes,” 85 Federal Register 70027, November 4, 2020. USTR, “Results of the 2020
Annual Generalized System of Preferences (GSP) Review,” 85 Federal Register 71391, November 9, 2020. For a full
list of products granted de minimis waivers, see https://ustr.gov/sites/default/files/files/Press/Releases/
GSP%20Annual%20Product%20Review%20-%20Final%20Decisions.pdf.
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years prior to the waiver request. Interested parties could petition for a waiver during the annual
review process.88 Prior to this amendment, certain products that the President determined were
not produced in the United States on January 1, 1995, were eligible for CNL waivers.
Reviews of Country Practices
As part of GSP annual reviews, any interested party could file a request that the GSP eligibility of
any GSP beneficiary be reviewed. For example, the GSP review of India, announced in April
2018, was based on market access petitions from three U.S. industry associations alleging that
India did not provide equitable and reasonable access to its market.89 India’s GSP eligibility was
subsequently removed by Proclamation 9902 of May 31, 2019.90 On October 30, 2020, Thailand’s
GSP eligibility for certain products was suspended as a result of a petition filed by the National
Pork Producers Council in 2018, alleging that it was not meeting the GSP eligibility criterion to
provide equitable and reasonable market access.91 Thailand was also being investigated for
worker rights issues, and in context of the 2020 annual review, the President suspended
Thailand’s GSP eligibility for 231 products worth about $817 million in 2019, effective
December 30, 2020.92 The products included steering wheels, plastic glass frames, certain
chemical products, and rubber or plastic bedding.93 Thai officials expressed confidence that Thai
exports of these products were competitive in the U.S. market despite the tariffs ranging from 3%
to 4% on these items that would be assessed due to the GSP suspension. The officials estimated
that the losses would only amount to about $19 million.94
In October 2017, the USTR announced a “proactive” process for ensuring that GSP beneficiaries
were complying with the program’s eligibility criteria. The process included increased efforts to
conclude outstanding country practices reviews, and a triennial assessment of each beneficiary’s
compliance with the statutory GSP eligibility criteria. The first assessment period (in 2018)
focused on Asian BDCs. If the TPSC review raised concerns about a BDC’s compliance, it could
self-initiate a country practice review of the country’s continued GSP eligibility.95 The country
practice reviews of India, Indonesia, and Turkey initiated in 2018, Azerbaijan in 2019, and Eritrea
and Zimbabwe in 2020 were, in part, self-initiated by the TPSC due to this compliance review
strategy.96

88 19 U.S.C. §2463(c)(2)(E). See USTR Guidebook, p. 11.
89 USTR, “Initiation of Country Practice of India, Indonesia, and Kazakhstan,” 83 Federal Register 18618, April 27,
2018. See also USTR Transcript, Public Country Practice Hearing for the Generalized System of Preferences (GSP),
June 19, 2018, https://www.regulations.gov/document?D=USTR-2018-0012-0017.
90 Proclamation 9902 of May 31, 2019, “To Modify the List of Beneficiary Developing Countries Under the Trade Act
of 1974, 84 Federal Register 26323, June 5, 2019.
91 USTR, “USTR Announces GSP Enforcement Action, Country Successes, and New Eligibility Reviews,” Press
Release, October 30, 2020.
92 “Thailand: Slight Impacts of U.S. GSP Suspension,” Asia News Monitor, November 4, 2020.
93 “GSP Suspension Gauged to Cost $19 Million in Losses,” The Bangkok Post, November 3, 2020.
94 Ibid.
95 USTR, “USTR Announces New Enforcement Priorities for GSP,” press release, October 2017, https://ustr.gov/
about-us/policy-offices/press-office/press-releases/2017/october/ustr-announces-new-enforcement. Division M, Section
501(c) of P.L. 115-141, required that the USTR write an annual report on efforts to ensure that BDCs are meeting the
eligibility criteria specified in the GSP Law (expires December 31, 2020). USTR, “USTR Announces GSP Enforcement
Actions and Successes for Seven Countries,” October 25, 2019. USTR, “USTR Announces GSP Enforcement Action,
Country Successes, and New Eligibility Reviews,” Press Release, October 30, 2020.
96 USTR, “Initiation of Country Practice of India, Indonesia, and Kazakhstan,” 83 Federal Register 18618, April 27,
2018. USTR, “Generalized System of Preferences (GSP): Notice Regarding the Initiation of a Country Practice Review
of Turkey,” 83 Federal Register 40839, August 16, 2018.
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The USTR held two hearings for ongoing reviews of specific country practices in November
2018 and January 2020. The hearings were held for the following countries: Azerbaijan (worker
rights), Bolivia (worker rights), Ecuador (arbitral awards), Georgia (worker rights), Indonesia
(intellectual property rights), Iraq (worker rights), Kazakhstan (worker rights), South Africa
(intellectual property rights), Thailand (worker rights and market access), Ukraine (intellectual
property rights), and Uzbekistan (worker rights and intellectual property rights).97 In addition,
both hearings included discussions on the country designation review for Laos.98 In October
2020, the USTR announced that the country practices investigations for Bolivia, Georgia,
Indonesia (market access), Iraq, and Uzbekistan had been resolved with no loss of GSP benefits.99
The GSP re-designation review for Laos ended without granting GSP eligibility.100 Country
practices reviews of Azerbaijan, Ecuador, Indonesia (IPR), Kazakhstan, South Africa, and
Ukraine are still ongoing.101
In the 118th Congress, the proposed American Worker and Trade Competitiveness Act (H.R.
4276) includes provisions that would require the USTR to apply a similar process to regularly
assess BDC compliance with GSP eligibility criteria.
Effects of the U.S. GSP Program
The statutory goals of the U.S. GSP program were to: (1) promote the development of developing
countries; (2) promote trade, rather than aid, as a more efficient way of promoting economic
development; (3) stimulate U.S. exports in developing country markets; and (4) promote trade
liberalization in developing countries.102 It is difficult to assess whether or not the program alone
had achieved these goals, however, because GSP was only one of many initiatives used by the
United States to assist poorer countries. Economic success within countries is also related to
internal economic and other factors, such as governance, stability, wise policy decisions,
availability of infrastructure to foster industry, and legal/financial frameworks that encourage
foreign investment. External macroeconomic factors, including global economic growth,
worldwide economic shocks, exchange rates, and regional stability may also influence the growth
of developing countries.
What follows, therefore, are general comments, rather than hard data, about the impact of GSP on
developing countries, and possible economic effects on the U.S. market. The positions of various
stakeholders regarding the value of the program are also discussed.

97 USTR, “Generalized System of Preferences (GSP): Notice Regarding a Hearing for Ongoing Country Practice
Reviews of Bolivia, Ecuador, Georgia, Indonesia, Iraq, Thailand, and Uzbekistan and the Ongoing Country
Designation Review of Laos,” 83 Federal Register 52048, October 15, 2018.
98 Ibid.
99 Ibid. Country practice reviews do not have definitive termination dates. The TPSC provides its findings and
recommendations to the President.
100 USTR, Ongoing Country Reviews: Active and Recently Closed GSP Country Practices Reviews, November 2020,
https://ustr.gov/issue-areas/preference-programs/generalized-system-preferences-gsp/current-reviews/ongoing-country.
101 Ibid.
102 P.L. 98-573, Section 501(b), 19 U.S.C. §2461 note. Additional factors are to allow for differences in developing
countries; help developing countries generate foreign exchange reserves, further integrate developing countries into the
international trading system; and encourage developing countries to eliminate trade barriers, guard intellectual property
rights, provide worker rights; and address concerns of the United States with regard to adverse effects on U.S.
producers and workers and compliance with GATT obligations.
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Effects on Developing Countries
From 2000 to 2008, total U.S. imports from all GSP countries (see Figure 4, red line, includes
imports entering the United States without preferential tariff treatment) increased dramatically by
value, from $172 billion in 2000 to a peak of $384 billion in 2008. In 2009, imports from GSP
countries decreased by 36% (to $246 billion), largely due to the effects of the global economic
downturn. Total imports increased to $367 billion in 2011, but decreased gradually to $202 billion
in 2016. Total imports from all GSP countries declined sharply from a high of $238 billion in
2018 to $152 billion in 2020, likely due to the COVID-19 pandemic.
U.S. imports of GSP-eligible products (see Figure 4, blue line, represents only imported products
that qualify for GSP duty-free treatment) have been relatively static.103 A number of factors could
explain this, including uncertainty based on short-term GSP program renewals and long pauses
between program authorization periods. Other programmatic factors that could keep GSP imports
fairly constant over time include suspension, termination, or graduation of some countries from
GSP eligibility; exclusion of certain products from eligibility through CNLs; and the entry of
some developing countries (many of which had been GSP beneficiaries) into FTAs with the
United States and thus being disqualified from GSP eligibility. In addition, some products from
BDCs may have received more favorable treatment under other trade preference programs, such
as AGOA or the Caribbean Basin Initiative (CBI).104
Figure 4. U.S. Imports from GSP Beneficiary Countries
2000 to 2022, in current U.S. dollars

Source: CRS analysis of data from ITC Trade Dataweb.

103 GSP trade data are estimated for 2021 and 2022 (when GSP had expired) based on U.S. entries of goods filed
electronically with a Special Program Indicator (SPI) designating them as eligible for GSP benefits. In addition,
African Growth and Opportunity Act (AGOA) countries continued to receive GSP benefits despite GSP expiration.
104 World Bank, World Integrated Trade Solution (WITS) database. http://wits.worldbank.org.
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Note: *Although GSP expired on December 31, 2020, CBP instructed importers to indicate GSP preferential
status for eligible imports so that in the case that the program is reauthorized retroactively, CBP may refund
duties efficiently.
Many developing countries with a natural competitive advantage in certain products have used
trade preferences such as GSP to gain a foothold in the international market. For example, India
and Thailand, two countries with well-established jewelry industries, were able to expand their
international reach through GSP programs. As the jewelry products reached their CNL thresholds,
those countries were no longer eligible to receive duty-free status for their jewelry products under
GSP, but gained a foothold in the U.S. and international markets that enabled their jewelry
industries to continue to be competitive.105
However, some developing countries could also be encouraged by preferential trade programs to
develop industry sectors in which they might not otherwise ever be able to compete, thus
diverting resources from other industries that might stand a better chance of becoming
competitive over time (trade diversion).106
Some economists assert that the lack of reciprocity in the GSP program could result in long-term
costs for beneficiary countries, because by not engaging in multilateral, reciprocal negotiations in
favor of preference programs, these countries keep in place protectionist trade policies that could
ultimately impede their long-term growth. Nonreciprocal preferences could also become an
impediment to multilateral trade negotiations because beneficiaries may prefer to seek ways of
maintaining them rather than exchanging them for reciprocal benefits.107 Nonreciprocal access,
particularly for countries with large or rapidly growing domestic markets, may also contribute to
concerns over “fairness” in the U.S. trading relationship among policymakers.108
For these reasons, some economists prefer multilateral, nondiscriminatory tariff cuts because
preferential tariff programs, such as GSP, could lead to inefficient production and trade patterns in
developing countries.109 They say that when tariffs are reduced across-the-board, rather than in a
preferential manner, countries tend to produce and export on the basis of their comparative
advantage—exporting products that they produce relatively efficiently and importing products
that others produce relatively efficiently.110
Economic Effects on the U.S. Market
In 2021, $18.7 billion worth of U.S. imports could have claimed GSP preferences if the program
was authorization; total imports from beneficiary countries were valued at $191.9 billion. In
comparison, total U.S. imports from all countries for 2021 amounted to about $2.8 trillion. These
figures suggest that the overall effects of GSP on the U.S. economy were relatively small. In

105 Gold neck chains and other jewelry products continue to be leading products imported under GSP, but imports of
these products from India and Thailand under GSP have been replaced by GSP imports from Turkey, South Africa,
Indonesia, Pakistan, and Bolivia.
106 OECD, “Making Open Markets Work for Development,” Policy Brief, October 2005, p. 2.
107 Patrick Low, Roberta Piermartini, and Jurgen Richtering, Multilateral Solutions to the Erosion of Non-Reciprocal
Preferences in NAMA, World Trade Organization, Economic Research and Statistics Division, Working Paper ERSD-
2005-05, October 2005. R. E. Baldwin and T. Murray, “MFN Tariff Reductions and Developing Country Trade
Benefits Under the GSP,” The Economic Journal, vol. 87, no. 345 (March 1977), pp. 30-46.
108 For example, Ambassador Lighthizer expressed concerns over the issue during a House Ways and Means
Committee hearing on June 17, 2020. For the hearing transcript, see https://waysandmeans.house.gov/legislation/
hearings/2020-trade-policy-agenda.
109 Bernard Herz and Marco Wagner, The Dark Side of the Generalized System of Preferences, German Council of
Economic Experts, Working Paper 02/2010, February 2010, p. 27.
110 Ibid.
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addition, most U.S. producers of import-competing products were largely protected from severe
economic impact. First, certain products, such as most textile and apparel products, were
designated as “import sensitive” and therefore were ineligible for duty-free treatment. Second,
CNLs were triggered when imports of a product from a single country reached a specified
threshold value, or when 50% of total U.S. imports of a product come from a single country.111
Third, U.S. manufacturers or producers could petition the USTR to withdraw GSP benefits from a
certain product if they were injured by the preference.112
In federal budgetary terms, the Congressional Budget Office estimated that retroactive
reauthorization of GSP and extension of other trade preference programs (i.e., AGOA and CBI) to
2033 would cost the United States (in foregone tariff revenues) about $15 billion from 2024-
2033.113
Many U.S. manufacturers and importers have benefitted from the lower cost of consumer goods
and raw materials imported under the GSP program.114 U.S. demand for certain individual
products, including jewelry, leather, and aluminum, is quite significant.115 The Coalition for GSP,
a group of U.S. companies and associations that benefit from, and advocate for, the GSP program,
estimate that U.S. importers have paid up to $1.47 billion in tariffs on GSP-eligible imports
between January 2021 and April 2022.116 It asserts that, during periods of GSP expiration, small
and medium enterprises (SMEs) bear a disproportionate share of the burden, resulting in lower
sales and lost jobs.117 It is also possible, however, that other factors, including slower growth and
reduced demand in the U.S. market, contribute to adverse economic impacts on these businesses.
Stakeholders’ Concerns
Supporters of the GSP program include beneficiary developing country governments and
exporters, U.S. importers, and U.S. manufacturers who use inputs entering under GSP in
downstream products. Some Members of Congress favor GSP renewal, because they believe it is
an important development and foreign policy tool. Opposing the program are some U.S.
producers who manufacture competing products and some in Congress who favor more reciprocal
approaches to trade policy. What follows is a thematic approach to the major topics of discussion
in the GSP renewal debate.

111 19 U.S.C. §2463(c).
112 15 C.F.R. part 2007.0(a).
113 CBO, Budgetary Outcomes Under Alternative Assumptions About Spending and Revenue, May 2023,
https://www.cbo.gov/system/files/2023-05/59154-Budgetary-Outcomes.pdf. This estimate is based on the assumption
that Congress would retroactively reauthorize GSP from 2021-2033 and also includes the foregone revenue of other
U.S. trade preference programs.
114 Coalition for GSP, Lost Sales, Investments, and Jobs: Impact of GSP Expiration After One Year, September 16,
2014.The Coalition for GSP, a coalition of more than 600 U.S. companies and organizations in support of GSP
renewal, makes the case that nonrenewal of GSP costs U.S. businesses an estimated $2 million per day in additional
tariffs, see http://renewgsptoday.com.
115 In some product categories, imports under GSP account for 25% or more of total U.S. imports. For example, in
2013, 94% of copper stranded wire in HTS 7413.00.10; 76% of ferrochromium in HTS 7272.41.00; 72% of cocoa paste
in HTS 1803.20.00; and 70% of plywood sheets of 6mm thick and under in HTS 4412.31.40 were imported under the
GSP program. GSP expired on July 31, 2013.
116 Coalition for GSP, "$118 Million in GSP Expiration Costs in April Set Record for 2nd Month in a Row," press
release, June 6, 2022, https://renewgsptoday.com/2022/06/08/118-million-in-gsp-expiration-costs-in-april-set-record-
for-2nd-month-in-a-row/.
117 Ibid.
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“Special and Differential Treatment”
Developing countries have long maintained that “special and differential treatment,” such as that
provided by the GSP, is an important assurance of access to U.S. and other developed country
markets in the midst of increasing globalization.118 Many of these countries have built industries
or segments of industries based on receiving certain tariff preferences.
Some in Congress and in previous Administrations have expressed the desire to see reciprocal
trade relationships with some of the emerging market economies that are still beneficiaries of
nonreciprocal U.S. preference programs.119 At the same time, there is continued broad support for
preference programs in general, including GSP, CBI, and AGOA.120
Erosion of Preferential Margins
Developing countries have expressed concern about the overall progressive erosion of
preferential margins as a result of across-the-board tariff reductions resulting from WTO
agreements and, more recently, the proliferation of bilateral and regional free trade agreements.121
Several economic studies predict tariff reductions by developed countries would generally hurt
exports of developing countries, but certain economies, specifically least-developed economies
and small island economies may be affected the most.122 Other economists say that preference
erosion could be more than outweighed by the benefits of increased market access brought about
by multilateral or reciprocal trade liberalization.123 These economists say that, rather than
continuing GSP and other preferential programs (either through inertia or concern that removing
them would be seen as acting against the world’s poorest populations), a better approach might be
to “assist them in addressing the constraints that really underlie their sluggish trade and growth
performance.”124
Expanding GSP eligibility for additional products, especially textile and apparel products, may
erode preferential benefits for beneficiary countries under AGOA and CBI. On October 2, 2020,
some Members of Congress introduced legislation that would have opposed the inclusion of
textile and apparel products as eligible for designation under GSP.125 It stated several reasons for
opposing the inclusion of the products, including potential harm to domestic industries as import-
sensitive items and possible erosion of existing preferential treatment of textile and apparel
products to certain Latin American and Caribbean countries as well as sub-Saharan African
countries under regional trade preference programs. Regional programs, such as the CBI, also

118 For example, see World Trade Organization, Committee on Trade and Development, Special and Differential
Treatment Provisions in WTO Agreements and Decisions, Note by the Secretariat, WT/COMTD/W/196, June 14, 2013,
at http://www.wto.org/english/tratop_e/devel_e/dev_special_differential_provisions_e.htm.
119 For example, see U.S. Congress, Senate Committee on Finance, The African Growth and Opportunity Act at 14: The
Road Ahead, 113th Cong., 2nd sess., July 30, 2014.
120 Inside U.S. Trade, “Bipartisan Support Shown for CBTPA’s Renewal, but Some Want Link to GSP,” September 11,
2020.
121 While overall multilateral preferences may be eroding, tariff benefits for individual items are still quite significant.
For example, the U.S. tariff on flashlights (eligible for duty-free access for all BDCs) is 12.5% ad valorem. Some GSP-
eligible jewelry items have tariffs as high as 13.5%.
122 Bernard Hoekman, Will Martin, and Carlos A. Primo Braga, “Quantifying the Value of Preferences and Potential
Erosion Losses,” Trade Preference Erosion: Measurement and Policy Response, World Bank, 2009, pp. 18-21.
123 Baldwin, R.E. and Murray, T. “MFN Tariff Reductions and Developing Country Trade Benefits Under the GSP,”
Economic Journal 87:345, March 1977, p. 46.
124 OECD GSP Review, p. 27.
125 H.Res. 1178.
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established strong supply chain networks and bilateral trade relations between the United States
and Latin American and Caribbean beneficiary countries. Policymakers and industry groups that
oppose the inclusion of textile and apparel products argue that expanding GSP eligibility to those
products would weaken existing supply chain networks by providing preferential benefits to
countries outside the region.126
Underutilization of GSP
Some academic literature on preference programs, including GSP and free trade agreements,
suggests that they are not used to their fullest extent. One reason cited is that the benefits accruing
to importers may not be worth the additional costs (such as the additional paperwork needed to
fulfill the local content rule of origin) associated with claiming the preference.127 One method of
calculating preference utilization by country is by taking the share of eligible imports that claimed
preferential status (i.e., GSP) over total imports of eligible products (i.e., GSP plus NTR
imports).128 In 2019 (most recent data available), by import value, the overall GSP utilization rate
was around 43.1%.129
Additional literature suggests that some countries may not use GSP for a variety of reasons,
including exporters being unfamiliar with the program; BDC governments not sufficiently
promoting the existence of available opportunities under the preference program; lack of
available infrastructure (for example, undeveloped or damaged roads and ports that impede the
efforts to get goods into the international market); developing countries’ major products being
deemed import sensitive; or a combination of all of these factors.130 One option for addressing
these factors could be to provide assistance to GSP beneficiaries through U.S. trade capacity
building efforts similar to those employed as part of AGOA.131 The relatively long-term
reauthorization of AGOA also may have encouraged beneficiary countries to develop utilization
strategies.132
Trade as Foreign Assistance
No other U.S. trade preference program is more broadly based or encompasses as many countries
as GSP. As a result, the program has been supported by many observers who believe that it was an
effective, low-cost means of providing economic assistance to developing countries. Supporters
maintain that encouraging trade by private companies through the GSP program could stimulate

126 Office of Congressman Albio Sires, “Congressman Sires and Colleagues Introduce Bipartisan Resolution to Protect
Supply Chains in the Western Hemisphere and Sub-Saharan Africa,” press release, October 6, 2020,
https://sires.house.gov/media-center/press-releases/congressman-sires-and-colleagues-introduce-bipartisan-resolution-
to; National Council of Textile Organizations, “NCTO Supports House Resolution Opposing Expansion of Generalized
System of Preferences Program (GSP) to Include Apparel, Textiles, Footwear,” press release, October 6, 2020.
127 Shushanik Hakobyan, “Accounting for Underutilization of Trade Preference Programs: The U.S. Generalized
System of Preferences,” August 2012, p. 1.
128 The utilization rate is calculated using a formula from Alexander Keck and Andreas Lendle, New Evidence on
Preference Utilization, World Trade Organization, Staff Working Paper ERSD-2012-12, September 3, 2012, p. 6.
129 CRS analysis of import data from ITC Trade Dataweb, calculated using a formula from Alexander Keck and
Andreas Lendle, New Evidence on Preference Utilization, World Trade Organization, Staff Working Paper ERSD-
2012-12, September 3, 2012, p. 6. Does not include GSP-eligible products limited to LDBDCs.
130 U.S. Government Accountability Office. International Trade: U.S. Trade Preference Programs Provide Important
Benefits, But a More Integrated Approach Would Better Ensure that Programs Meet Shared Goals. GAO 08-443,
March 2008, pp. 53-55 (hereinafter 2008 GAO Report).
131 For more information, see CRS In Focus IF10149, African Growth and Opportunity Act (AGOA), by Liana Wong.
132 AGOA was extended from September 30, 2015, to September 30, 2025, in Section 103 of P.L. 114-27.
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economic development much more effectively than intergovernmental aid and other means of
assistance.133 Economic development assistance through trade is a long-standing element of U.S.
foreign policy, and other trade promotion programs such as AGOA and CBI are also based on this
premise.
Conditionality of Preferences
Some supporters of GSP and other nonreciprocal programs assert that the conditions required
(such as worker rights and IPR requirements) for GSP qualification provide the United States
with leverage that can be used to promote U.S. economic and foreign policy goals and
interests.134 For example, in October 2019, President Trump partially restored Ukraine’s GSP
benefits, which were partially suspended in December 2017, after determining that the country
made progress in “providing adequate and effective protection of intellectual property rights.”135
USTR and the TPSC Subcommittee on GSP also regularly engaged through bilateral meetings
with BDCs on GSP eligibility criteria compliance, such as meeting with the government of
Kazakhstan to discuss the implementation of its amended Trade Union Law.136
In the 117th Congress, several bills were introduced to modify GSP’s eligibility criteria. For
example, measures include provisions that would have added eligibility criteria on gender
equality and human rights, good governance, and environmental law and regulation, as well as
amend provisions on worker rights.137 Some Members of Congress contended that the proposed
eligibility criteria, such as provisions on environment and human rights violation, will modernize
the program to address modern issues.138 However, some policy experts cautioned that adding too
many requirements may increase compliance costs, making it difficult for developing countries
with limited capacity to meet the eligibility criteria.139 H.R. 4276, introduced in the 118th
Congress, proposes similar amendments as the bills introduced in the previous Congress.
Lower Costs of Imports
U.S. businesses that import components, parts, or materials that were duty-free under the GSP
maintain that the preferences result in lower costs for these intermediate goods which, in turn, can
make U.S. firms more competitive, and the savings can be passed on to consumers. These
supporters assert that GSP is as important for many domestic manufacturers and importers as for
the countries that receive preferential access for their products.140

133 September 21, 2006, DC Bar meeting.
134 The Coalition for GSP and the Trade Partnership. The U.S. Generalized System of Preferences Program, February
2013, p. 3, at http://tradepartnership.com/gsp/us-generalized-system-of-preferences/. See also
http://renewgsptoday.com.
135 Executive Office of the President, "To Modify Duty-Free Treatment Under the Generalized System of Preferences,"
84 Federal Register 58567, October 25, 2019.
136 United States Trade Representative, 2022 Trade Policy Agenda & 2021 Annual Report, March 2022, p. 143.
137 See Division G, Title IV of proposed United States Innovation and Competition Act of 2021 (S. 1260) and Division
K, Title V of the America COMPETES Act (H.R. 4521).
138 House Ways and Means Committee Chairman Richard Neal, "Ways and Means Democrats Introduce Legislation to
Reform and Renew Key U.S. Trade Programs," press release, June 17, 2021.
139 Edward Gresser, Trade, the Poor, and "America is back": A friendly Critique of Congress' GSP Renewal Bills, with
Some Ideas on Improving Them, Progressive Policy Institute, January 2022, p. 8.
140 Coalition for GSP, “American Companies Frustrated by Congress’ Inability to Renew Generalized System of
Preferences Program,” press release, August 1, 2013, http://renewgsptoday.com/.
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Even though most U.S. producers are shielded to a certain extent by CNLs and were somewhat
protected by the exclusion of import-sensitive products from GSP eligibility, U.S. manufacturers
and workers were sometimes adversely affected by GSP imports. Some of these companies
petitioned for the elimination of specific products from GSP eligibility.141 For example, in 2010,
Exxel Outdoors, a U.S. company that manufactures certain non-down sleeping bags, petitioned
for their removal from GSP eligibility, claiming that their business operations were being harmed
by imports of duty-free sleeping bags from Bangladesh under the GSP program.142 These sleeping
bag categories were ultimately removed from GSP duty-free treatment in January 2012.143
Options for Congress
The GSP program expired on December 31, 2020. Congress may consider reauthorizing the
program and, if so, whether to reauthorize it with a retroactive refund clause for U.S. imports to
receive refunds on duties paid on GSP-eligible products during the expired period. Since the 117th
Congress, some Members have suggested various reforms of the GSP program. Possible options
include supporting reciprocal tariff and market access benefits through FTAs, renewing the GSP
for least-developed beneficiaries only, extending the program in a modified form (e.g., with new
eligibility criteria), or letting the program lapse altogether.
Although the GSP was a nonreciprocal tariff preference, any changes to the program may need to
be considered in light of the requirements of the WTO Enabling Clause, as it has been interpreted
by the WTO Appellate Body. At a minimum, the United States may need to notify—and possibly
consult with—other WTO members regarding any withdrawal or modification of GSP benefits, as
required by paragraph 4 of the Enabling Clause.144 The United States could also pursue a WTO
waiver were any modifications of the GSP program considered not to comport fully with U.S.
WTO obligations.
Negotiate Trade Agreements with GSP Countries
Some U.S. policymakers have suggested that developing countries might benefit more from WTO
multilateral negotiations, FTAs, or some form of agreement that could also provide reciprocal
trade benefits and improved market access for the United States.145 Arguably, this was one of the
policy arguments for the EU’s pursuit of Economic Partnership Agreements with many of its
former GSP beneficiaries. Because tariff concessions under these agreements could apply to more
sectors of the economy than GSP, such agreements could increase the likelihood of spurring
across-the-board economic growth in developing countries. Each one of the United States’ current
comprehensive FTA partners, with the exception of Canada and Australia, was at one time a
beneficiary of the GSP program.146

141 19 U.S.C. §2463(c).
142 “Sleeping Bags Removed from GSP after USTR Administrative Review,” Inside U.S. Trade, January 5, 2012.
143 77 Federal Register 1549, January 10, 2012.
144 Paragraph 4 states that any contracting party that grants a preferential program and seeks to modify or withdraw it
must notify the other contracting parties, give them adequate time and opportunity to discuss any difficulties, and help
them to reach satisfactory solutions. See http://www.wto.org/english/docs_e/legal_e/enabling1979_e.htm.
145 For example, then-USTR Froman indicated that he favored negotiating an FTA with South Africa on July 29 and
30, 2014. See Inside U.S. Trade, “Froman Signals Interest in ‘Reciprocal’ Trade Arrangement with South Africa,” July
31, 2014.
146 Some U.S. FTA partners were GSP beneficiaries at the time FTA implementing legislation was enacted. Singapore
(continued...)
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Authorize GSP Only for Least-Developed Countries
Some in Congress have expressed the possibility of modifying GSP so that the benefits apply
primarily to least-developed beneficiaries. The Trump Administration in effect took some steps in
this direction by removing GSP eligibility from some more “advanced” developing countries,
such as India and Turkey.
Narrowing the scope of eligibility could benefit the LDCs that remain in the program by reducing
competition in the U.S. market from more advanced developing countries. Assuming that many
least-developed African beneficiaries147 would continue to receive the GSP preference under
AGOA, other LDCs that might benefit from an LDC-only GSP program are Afghanistan, Bhutan,
Burma, Burundi, Cambodia, Congo (Kinshasa), Haiti,148 Kiribati, Mauritania, Nepal, Samoa,
Somalia, South Sudan, the Solomon Islands, Timor-Leste, Tuvalu, and Vanuatu.149
Of these countries, in 2022, the LDCs that imported the most GSP-eligible goods by value were
Cambodia ($3.5 billion), Burma ($234 million), Ethiopia ($22 million), Nepal ($12 million), and
Angola ($11 million).150 Greater U.S. efforts through trade capacity building could also
potentially help LDCs take greater advantage of the GSP program.
Reform GSP
Congress could change the GSP eligibility criteria, as it applies to all BDCs. Some of these
options could have the effect of expanding the GSP program, while others could serve to restrict
its application. Expanding the program, such as increasing the number of eligible products or
relaxing the rules of origin (ROO) requirements, may encourage higher utilization. On the other
hand, restricting the program by strengthening eligibility criteria or lowering the income
graduation threshold could limit benefits to countries meeting the eligibility criteria or developing
countries that need the market access the most.
Expand Application of GSP
Should Congress seek to expand or enhance application of the GSP in a reauthorization, it may
consider the following options:

and South Korea were graduated from GSP in 1989, and thus were not GSP beneficiaries at the time the United States
implemented their respective FTAs. Israel retained GSP status until 1995, and Jordan still enjoys GSP status.
Implementing language for all other FTAs contained language similar to “the President shall terminate the designation
of ... as a beneficiary developing country for the purposes of title V of the Trade Act of 1974 on the date of entry into
force of the Agreement.”
147 The least-developed GSP countries that also benefit from AGOA (as of October 2023) are: Angola, Benin, Central
African Republic, Chad, Comoros, Djibouti, Democratic Republic of Congo, The Gambia, Guinea-Bissau, Lesotho,
Liberia, Madagascar, Malawi, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Tanzania,
Togo, Uganda, and Zambia.
148 Haiti is also member of the Caribbean Basin Trade Partnership Act (CBTPA) and also receives additional unilateral
preferences through legislation such as the Haitian Hemispheric Opportunity through Partnership Encouragement Act
of 2006 (P.L. 109-432), which was last reauthorized until September 30, 2025 under the Trade Preferences Extension
Act of 2015 (P.L. 114-27).
149 Burundi, Mauritania, Somalia, and South Sudan are not designated as beneficiary AGOA countries in 2023, but
retain their GSP eligibility if the program is reauthorized.
150 GSP expired on December 31, 2020. CBP instructed importers to continue claiming preferential treatment on GSP-
eligible imports in 2021 so that CBP may refund duties paid if the program is retroactively reauthorized. International
Trade Commission Trade Dataweb (http://dataweb.usitc.gov). Trade figures are for least-developed GSP beneficiaries
using 2021 annual data.
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Generalized System of Preferences (GSP): Overview and Issues for Congress

• Expand the list of tariff lines permitted duty-free access. Allow some import-
sensitive products to receive preferential access.151
• Increase flexibility of ROO requirements. For example, allow more GSP
beneficiaries to cumulate inputs with other beneficiaries or the United States to
meet the 35% domestic content requirement or lower the domestic content
requirement.152
• Eliminate the competitive need limitations for BDCs, or raise the thresholds that
trigger them.
• Reauthorize GSP for longer time periods or make the program permanent.
Restrict Application of Preferences
The following is a list of possible approaches if Congress desires to extend the program but
restrict imports under GSP:
• Consider mandatory graduation for “middle income” countries, similar to EU
GSP changes, or strengthen the language giving the President authority to
graduate countries based on competitiveness.
• Strengthen provision that allows graduation of individual industry sectors within
beneficiary countries.
• Modify the ROO requirement for qualifying products to require that a greater
percentage of the direct costs of processing operations (currently 35%) originate
in beneficiary developing countries or introduce separate ROO requirements for
possible addition of textiles and apparel products.153
• Lower the threshold at which the President may (or must) withdraw, suspend, or
limit the application of duty-free treatment of certain products (CNLs).154
• Require the President to more frequently and actively monitor (an annual process
existing statute) the economic progress of beneficiary countries, as well as
compliance with GSP criteria.
• Reform eligibility criteria to strengthen provisions on worker rights as well as
introduce new criteria, such as good governance, gender equality, and
environmental law and regulation.

151 For example, Sections 202 and 204 of P.L. 114-27 permitted duty-free access to certain textile articles and travel
goods.
152 2008 GAO Report, p. 75. The GSP, at present, allows only specifically designated “associations of countries,” (e.g.,
the Member Countries of the West African Economic and Monetary Union (WAEMU)) to combine inputs to reach the
35% threshold.
153 19 U.S.C. §2463(a)(2)(A)(ii)(II). The statute further specifies that a product may be made in one BDC or any two or
more such countries that are members of the same designated association of countries. For beneficiary countries under
AGOA, this percentage may also include up to 15% (as to value) of U.S. origin (19 U.S.C. §2466a(b)(2)).
154 19 U.S.C. §2463(c).
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Appendix A. GSP Implementation and Renewal
Table A-1. GSP Implementation and Renewal, 1974-2021
Public Law
Effective Date
Date Expired
Notes
P.L. 93-618, Title V,
January 2, 1975
January 2, 1985
Statute originally enacted.
Trade Act of 1974
P.L. 98-573, Title V,
October 30, 1984
July 4, 1993
Substantially amended and
Trade and Tariff Act of 1984
restated.
P.L. 103-66, Section 13802
August 10, 1993
September 30, 1994
Extended retroactively from
(in Omnibus Budget
July 5, 1993, to August 10,
Reconciliation Act, 1993)
1993. Also struck out
reference to “Union of Soviet
Socialist Republics.”
P.L. 103-465, Section 601
December 8, 1994
July 31, 1995
Extended retroactively from
Uruguay Round Agreements
September 30, 1994, to
Act
December 8, 1994. No other
amendments to provision.
P.L. 104-188, Subtitle J,
October 1, 1996 (for May 31, 1997
Substantially amended and
Section 1952
GSP renewal only)
restated. Extended
GSP Renewal Act of 1996 (in
retroactively from August 1,
Small Business Job Protection
1995, to October 1, 1996.
Act of 1996)
P.L. 105-34, Subtitle H,
August 5, 1997
June 30, 1998
Extended retroactively from
Section 981
May 31, 1997, to August 5,
(in Taxpayer Relief Act of
1997. No other amendments
1997)
to provision.
P.L. 105-277, Subtitle B,
October 21, 1998
June 30, 1999
Extended retroactively from
Section 101
July 1, 1998, to October 21,
(in Omnibus Consolidated and
1998. No other amendments
Emergency Supplemental
to provision.
Appropriations, 1999)
P.L. 106-170, Section 508,
December 17, 1999
September 30, 2001
Extended retroactively from
(in Ticket to Work and Work
July 1, 1999, to December 17,
Incentives Act of 1999)
1999. No other amendments
to provision.
P.L. 107-210, Division D, Title
August 6, 2002
December 31, 2006
Extended retroactively from
XLI
September 30, 2001, to
Trade Act of 2002
August 6, 2002. Amended to
(1) include requirement that
BDCs take steps to support
efforts of United States to
combat terrorism and (2)
further define the term
“internationally recognized
worker rights.”
P.L. 109-432, Title VIII
December 31, 2006
December 31, 2008
Extended before program
lapse.
P.L. 110-436, Section 4
October 16, 2008
December 31, 2009
Extended before program
lapse.
P.L. 111-124
December 28, 2009
December 31, 2010
Extended before program
lapse.
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Public Law
Effective Date
Date Expired
Notes
P.L. 112-40
November 5, 2011
July 31, 2013
Extended retroactively from
December 31, 2010, to
November 5, 2011.
P.L. 114-27, Title II
July 29, 2015
December 31, 2017
Extended retroactively from
July 31, 2013, to July 29, 2015.
P.L. 115-141, Division M, Title
April 22, 2018
December 31, 2020
Extended retroactively from
V
January 1, 2018, to April 22,
2018.
Source: CRS analysis using Congress.gov, http://www.congress.gov.
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Appendix B. GSP Beneficiary Countries
Table B-1. Beneficiary Developing Countries and Regions for Purposes of the
Generalized System of Preferences
(as of December 2020)
Independent Countries
Afghanistan A+
Ecuador
Liberia A+
Serbia
Albania
Egypt
North Macedonia
Sierra Leone A+
Algeria
Eritrea
Madagascar A+
Solomon Islands A+
Angola A+
Eswatini
Malawi A+
Somalia A+
Argentina
Ethiopia A+

Armenia
Fiji
Maldives
South Africa
Azerbaijan
Gabon
Mali A+
South Sudan A+
Belize
Gambia, The A+
Mauritania A+
Sri Lanka
Benin A+
Georgia
Mauritius
Suriname
Bhutan A+
Ghana
Moldova
Tanzania A+
Bolivia
Grenada
Mongolia
Thailand
Bosnia and Hercegovina
Guinea A+
Montenegro
Timor-Leste A+
Botswana
Guinea-Bissau A+
Mozambique A+
Togo A+
Brazil
Guyana
Namibia
Tonga
Burkina Faso A+
Haiti A+
Nepal A+
Tunisia
Burma A+
Indonesia
Niger A+
Tuvalu A+
Burundi A+
Iraq
Nigeria
Uganda A+
Cambodia A+
Jamaica
Pakistan
Ukraine
Cameroon
Jordan
Papua New Guinea
Uzbekistan
Cape Verde
Kazakhstan
Paraguay
Vanuatu A+
Central African
Kenya
Philippines
Zambia A+
RepublicA+
Chad A+
Kiribati A+
Republic of Yemen A+
Zimbabwe
Comoros A+
Kosovo
Rwanda A+

Congo (Brazzavil e)
Kyrgyzstan
Saint Lucia

Congo (Kinshasa) A+
Lebanon
Saint Vincent and the

Grenadines
Cote d’Ivoire
Lesotho A+
Samoa A+

Djibouti A+

Sao Tome and Principe A+
Dominica

Senegal A+

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Nonindependent Countries and Territories Eligible for GSP Benefits
Anguil a
Heard Island and McDonald Islands
Tokelau
British Indian Ocean Territory
Montserrat
Virgin Islands, British
Christmas Island (Australia)
Niue
Wallis and Futuna
Cocos (Keeling) Islands
Norfolk Island
West Bank and Gaza Strip
Cook Islands
Pitcairn Islands
Western Sahara
Falkland Islands (Islas Malvinas)
Saint Helena

Associations of Countries (treated as one country)
Member Countries of the
Member Countries of the West Qualifying Member Countries
Cartagena Agreement
African Economic and
of the Association of South
(Andean Group)
Monetary Union (WAEMU)
East Asian Nations (ASEAN)
Bolivia
Benin
Burma
Ecuador
Burkina Faso
Cambodia
Cote d’Ivoire
Indonesia
Guinea-Bissau
Philippines
Mali
Thailand
Niger
Senegal
Togo
Qualifying Member Countries
Qualifying Member Countries
Member Countries of the
of the Southern Africa
of the South Asian Association
Caribbean Common Market
Development Community
for Regional Cooperation
(CARICOM)
(SADC)
(SAARC)
Belize
Botswana
Afghanistan
Mauritius
Bhutan
Dominica
Tanzania
Maldives
Grenada
Nepal
Guyana
Pakistan
Jamaica
Sri Lanka
Montserrat
Saint Lucia
Saint Vincent and the Grenadines
Source: Harmonized Tariff Schedule of the United States, 2020, Revision 28, accessed December 2020.
Note: “A+” indicates least-developed countries.

Author Information

Liana Wong

Analyst in International Trade and Finance

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Generalized System of Preferences (GSP): Overview and Issues for Congress

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
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