"With broad bipartisan support, Congress created the GSP program to be a temporary bridge to aid developing countries in participating in the global trading system, while expanding choices for the American consumer and industry," U.S. Trade Representative Susan C. Schwab said today. "Both the United States and the participating countries have benefited greatly from these preferences. In part because of GSP, the United States remains one of the world’s most open major economies to products of developing countries."

During the 2005 Review, the Administration determined that certain imports from selected developing countries can compete effectively with imports that are subject to duties and, thus, should no longer be eligible for duty-free treatment under the GSP program. As a result, importers of those goods from affected countries must now pay duties at the normal tariff rates on those items.

The Administration also extended or preserved benefits by continuing GSP benefits that would otherwise expire and restored benefits on some goods. In 2005, $26.7 billion in products were imported duty-free from eligible beneficiary countries under the GSP program, an 18 percent increase over 2004. The majority of products imported from beneficiary countries are eligible for GSP benefits, with a significant exception being textile and apparel products.

"As part of the annual review, we found that imports of certain products from specific developing countries now account for major shares of U.S. imports of those products and are effectively competitive with imports from other countries, making them no longer eligible for duty-free status," continued Schwab. "Accordingly, we have acted to put those imports on a level playing field with other producers. This action also advances our goal to administer the GSP program in the way Congress intended, by increasing the share of benefits for those countries that need it the most."

Additionally, the Bush Administration reviewed petitions to remove certain countries from the GSP program for not meeting several statutory criteria for GSP eligibility. These criteria include taking steps to afford internationally recognized worker rights, adequately protecting intellectual property rights, and not giving preferential tariff treatment to imports from other developed countries that cause or could cause an adverse effect on U.S. commerce.

Earlier this year, the Bush Administration restored GSP eligibility to Liberia as a least developed GSP beneficiary developing country and closed reviews of certain country practice petitions without removing GSP eligibility. These cases examined worker rights in Swaziland and intellectual property rights enforcement in Pakistan, Kazakhstan, and Brazil. Because of the steps taken by each country to address the pertinent concerns, the Administration determined to continue each country’s GSP eligibility.

The following petitions remain under review: Uganda (worker rights); Lebanon and Uzbekistan (protection of intellectual property rights); and Bulgaria and Romania (preferential tariff treatment). Regarding the Russia IPR petition, the Bush Administration is continuing to seek commitments from the Russian government in the ongoing WTO negotiations for better IPR enforcement and other improvements in IPR protection.

In consultation with Members of Congress, the Administration will initiate a review of the eligibility of the major GSP beneficiaries and the current use of competitive need limitation waivers.

Background

The GSP program was created by the Trade Act of 1974. Under the program, 136 beneficiary developing countries currently export approximately 5,000 different products duty-free to the United States.

The GSP program is designed to promote economic development. 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 normal tariff rates. Under the GSP statute, if U.S. imports of a certain product from a specific country exceeded $120 million in 2005, or if imports of a certain product from a specific country were more than 50 percent of total imports of that product from all countries, imports of that product from that country lose their eligibility under the GSP program. 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.

In addition to the changes to the GSP program that were made by the President’s proclamation, USTR will publish further details on the results of the annual review in the Federal Register.

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