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USTR Announces Outcome of Generalized System of Preferences Review

12/29/2011

Washington, D.C. – United States Trade Representative Ron Kirk announced today the outcome of the Obama Administration’s 2010 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.

Ambassador Kirk said, “GSP is an important element both of this Administration’s trade agenda and of its efforts to help developing countries grow their economies through increased trade. The annual review of GSP helps us to ensure that the program is working as it should and that developments affecting country and product eligibility are taken into account, consistent with the GSP statute. A well-functioning GSP program also helps U.S. businesses, workers, and consumers by lowering the costs of imported goods, including those used as inputs for U.S. manufacturing.”

Based on the Administration’s review of product petitions accepted for the 2010 GSP Annual Review, President Obama determined that one product – certain non-down sleeping bags – should be removed from eligibility for duty-free treatment under GSP because it is import-sensitive in the context of GSP. A petition to remove GSP duty-free treatment for two types of self-adhesive plastic tape was denied.

The Administration continues to review several country practices petitions that seek to withdraw or limit a country’s GSP benefits based on that country’s non-compliance with certain statutory eligibility criteria. As previously announced in the Federal Register, a public hearing will be held at USTR on January 24, 2012 to receive testimony on country practices petitions related to worker rights issues in Bangladesh, Georgia, Niger, Philippines, Sri Lanka and Uzbekistan.

The full results of the 2010 GSP Annual Review are available here and will also be announced in the Federal Register.

BACKGROUND

On October 21, 2011, President Obama signed legislation authorizing the GSP program through July 31, 2013 and retroactively applying GSP trade benefits for eligible products that entered the United States on or after January 1, 2011. Under the GSP program, 129 beneficiary developing countries, including 42 least-developed countries, are eligible to export up to 4,881 types of products to the United States duty-free. In 2010, the total value of imports that entered the United States duty-free under GSP was $22.6 billion.

As part of the annual GSP review, an interagency U.S. Government committee led by USTR receives and considers petitions seeking 1) to add or remove products from the list of those eligible for duty-free treatment under GSP, 2) to waive product exclusions for certain countries based on statutory requirements related to competitiveness (“competitive need limitations”), and 3) to withdraw or limit a country’s eligibility for GSP trade benefits based on statutory eligibility 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. For those petitions accepted for review, the USTR-led committee holds public hearings, solicits public comments, and – in the case of product petitions – reviews analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on domestic industries and consumers. Any change to the lists of products or countries eligible for GSP benefits requires a presidential determination.

The 2010 GSP Annual Review was suspended during the lapse in GSP authorization in 2011. The review of product and country practices petitions accepted as part of the 2010 GSP Annual Review resumed following the reauthorization of the program in October 2011. However, petitions seeking waivers of competitive need limitations (CNLs) were dismissed, as announced in a Federal Register notice on November 1, 2011. In that notice, USTR announced that, in view of the ten-month lapse in authorization of the GSP program, it would not be taking any actions with respect to CNL-related product exclusions based on 2010 trade.

For more information on the GSP program, visit the GSP page on the USTR web site here.