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USTR Kirk Comments On Generalized System Of Preferences Review

06/30/2010

Washington, D.C. – Today United States Trade Representative Ron Kirk commented following the release of the Obama Administration’s Annual Review under the Generalized System of Preferences (GSP) program. Congress created the GSP program in the Trade Act of 1974 to help developing countries expand their economies by allowing certain goods to be imported to the United States duty-free. The results of the review are available here.

Ambassador Kirk said, “GSP is central to our trade agenda and critical to developing countries’ continued growth and development. In our annual review, USTR worked to make sure GSP is working as it should, assessing GSP beneficiaries’ development, export competitiveness, and domestic policy practices. A well-functioning GSP program can help developing countries grow their export industries while providing U.S. businesses the inputs and products they need to keep good jobs here at home.”

After assessing which products should continue to benefit from duty-free treatment under GSP, President Obama determined that five products from three beneficiary countries are now sufficiently competitive in the United States. As a result, duty-free treatment will be withdrawn for those products, including certain passenger tires from Thailand, wood flooring from Brazil, and gold rope necklaces from India. The President decided to continue duty free treatment for fresh cut carnations from Colombia and silver jewelry from Thailand. Finally, the President decided to continue to provide duty-free treatment to 110 products from 19 beneficiary countries, because imports exceeded the statutory ceilings by only a small amount. In 2009, the total value of imports of these 110 products was $613 million.

The President also granted the Government of Egypt’s request to add frozen beans and frozen mixed vegetables to the list of eligible products. Those products will become eligible for duty-free benefits under the GSP program on July 1, 2010.

As part of this year’s review USTR analyzed petitions to withdraw or limit a country’s GSP benefits on criteria including whether a country is taking steps to afford internationally recognized standards for worker rights, whether it provides important investor protections including enforcement of arbitral awards, and the extent to which a country adequately and effectively protects intellectual property rights (IPR). In the context of the 2009 review USTR accepted petitions to review whether Sri Lanka met GSP eligibility criteria related to worker rights and whether Argentina met the criteria related to enforcement of arbitral awards. Several countries remain under review of whether they meet eligibility criteria. Those countries are Lebanon, Russia and Uzbekistan regarding IPR protection and Bangladesh, Niger, the Philippines and Uzbekistan regarding worker rights.

BACKGROUND

Under the GSP program, 131 beneficiary developing countries, including 43 least-developed countries such as Afghanistan, Bangladesh, and Cambodia, are eligible to export approximately 5,000 types of products duty-free to the United States.

In 2009, the United States extended duty-free treatment under the GSP program to exports worth $20.3 billion from eligible beneficiary countries. Exports to the United States under GSP constituted a significant share of total exports from a number of beneficiary countries, including Paraguay, Lebanon, Tunisia, Fiji, and Armenia.

The GSP statute includes two competitive need limitations (CNLs) on the eligibility of a product for benefits under GSP: (i) if the annual trade of a product from a specific country exceeds a value-based threshold ($140 million in 2009); or (ii) if the annual trade of a product from a specific country exceeds 50 percent of total U.S. imports of that product. The statute also authorizes the President to waive the application of these limitations if certain conditions are met.

Any CNL waiver granted remains in effect until the President determines that such waiver is no longer warranted due to changed circumstances. The statute also provides that the President should revoke any existing CNL waiver that has been in effect for five years or more if a GSP-eligible product from a specific country has an annual trade level in the previous calendar year that exceeds 150 percent of the value-based threshold or 75 percent of all U.S. imports of that product.

USTR will also publish further details on the results of the annual review in the Federal Register.