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Bush Administration Completes 2007 Annual Review of Generalized System of Preferences Program

June 29, 2008



Ambassador Susan C. Schwab announced today the outcome of
the Bush Administration’s 2007 Annual Review of the Generalized System of
Preferences (GSP), a program created in 1974 that provides duty-free treatment
for nearly 5,000 products exported to the United States from 132 beneficiary
developing countries. 

As a result of this year’s review, duty-free treatment for
the vast majority of products covered by GSP will continue.  In addition,
the Administration will continue GSP eligibility for 99 exports from specific
countries, even though the quantities of those exports exceeded statutory
thresholds in 2007.  As authorized by the GSP statute, the Administration
will waive those thresholds known as “competitive need limitations”
(CNLs).  In keeping with the goals of the program and Congressional intent,
GSP eligibility will be terminated for 25 products from specific beneficiary
countries in order to advance a more targeted and effective program to promote
economic development.

“Congress created the GSP program to serve as a bridge for
developing countries as they increase their participation in the global trading
system,” U.S. Trade Representative Susan C. Schwab said today.  “The GSP
program has helped to promote development and reduce poverty in the developing
countries while expanding our bilateral trade.  It has also helped make the
States one of the world’s most open economies
to products of developing countries.”

In this year’s review, the Administration granted waivers
of the CNLs to ensure continued GSP duty-free benefits to 99 products from 15
beneficiary countries, with an approximate import value of $422 million in
2007.  In addition, three types of aluminum products were added to the list
of GSP-eligible products from all beneficiary countries.

Consistent with statutory provisions concerning product
competitiveness and after extensive analysis, the Administration determined that
25 products from beneficiary countries can compete effectively in the
U.S. market without duty-free
treatment and will no longer be eligible under the GSP program.  In 2007,
these imports were valued at approximately $1.4 billion. This group includes 21
products that exceeded the statutory CNLs and four products that have had
waivers to the CNLs for the past five years and are now subject to statutory
“super-competitiveness” thresholds.

Concurrent with the 2007 Annual Review, the Administration
completed a review of the steps taken by GSP countries to eliminate the worst
forms of child labor, including bonded labor, in the production of seven
categories of handmade carpet imported under the U.S. GSP program.  Since
becoming eligible for GSP in 2005, U.S. imports of these carpets from 23
GSP beneficiaries have grown from $11 million in 2004 to $119 million in
2007.  As a result of the review, the Administration made no changes to the
GSP eligibility of the carpets under review, but will continue to monitor these

The Annual Review also involved an analysis of petitions
to withdraw or limit a country’s GSP benefits for not meeting GSP eligibility
criteria. These criteria include the extent to which a country provides adequate
and effective protection of intellectual property rights (IPR) and whether a
country is taking steps to ensure internationally recognized worker
rights.  Several beneficiaries remain under active scrutiny because of such
concerns, including: Lebanon,
Russia and
Uzbekistan regarding their
lack of IPR protection, and Bangladesh, Niger, the Philippines and Uzbekistan
regarding worker rights. With respect to a petition from the International
Intellectual Property Alliance on Russia’s IPR protection, the Administration
continues to monitor closely the Russian government’s progress in meeting the
commitments it undertook in the November 2006 Agreement with the United States
on IPR and to seek further progress in the context of ongoing WTO accession


Congress created the GSP program in the Trade Act of
1974.  Under the program, 132 beneficiary developing countries, including
44 least-developed beneficiary developing countries, currently export
approximately 5,000 products duty-free to the United

In 2007, the United States extended GSP duty-free
treatment to imports worth $30.8 billion from eligible beneficiary
countries.  The majority of products imported from beneficiary countries
are eligible for GSP benefits, with a significant exception being textile and
apparel products.  U.S.
imports under GSP constituted a significant share of total U.S. imports from a number of beneficiary
countries, including Macedonia, Fiji, Lebanon and Georgia. 

Each year, the United
States conducts an annual review to determine if there are
certain imports currently eligible for GSP benefits that could compete
effectively in the U.S. market if imported at tariff
rates applicable to goods of non-GSP beneficiary countries.  In making
decisions on product eligibility, the Administration considers petitions to
continue duty-free treatment, holds public hearings, and reviews analyses
prepared by the U.S. International Trade Commission of the economic impact of
eligibility decisions on domestic industries.

The GSP statute includes two 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 ($130 million in 2007); 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 statutory 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.  In December 2006, Congress amended the GSP statute when it
renewed the program to provide 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.

The GSP Annual Review focused on several key areas,
including consideration of: 1) whether to continue GSP eligibility for products
from specific countries that exceeded CNLs; 2) whether to add products that can
be imported from all GSP beneficiaries; 3) whether to terminate GSP eligibility
for products that could be found competitive or meet other pertinent statutory
criteria; and 4) petitions challenging the continued eligibility of certain
beneficiary countries for the GSP program.

The results of the annual review are available at

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