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Bush Administration Completes 2005 Annual Review of Generalized System of Preferences Program

June 30, 2006

WASHINGTON – The
Bush Administration announced today the outcome of the 2005 Annual Review of the
Generalized System of Preferences (GSP), a program created in 1974 under which
136 beneficiary developing countries currently export certain products duty-free
to the United States. In the Annual Review, as required by regulations, the
Administration evaluates the list of articles and countries eligible for
duty-free treatment under GSP using statutory criteria.


"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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