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GSP and ATPA: Critical to the United States

(Updated 2/16/11)

The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974. U.S. imports under GSP in 2010 totaled approximately $23 billion. Authorization for the GSP program ended on December 31, 2010. As a result, since January 1, 2011, U.S. importers have had to pay Most Favored Nation duties on GSP-eligible goods arriving from GSP beneficiary countries. Congress is now considering whether to reauthorize the program.

The objectives of the Andean Trade Preference Act (ATPA), enacted in 1991, are to promote broad-based economic development, diversification of exports, and consolidation of democracy and to help defeat the scourge of drug trafficking by providing sustainable economic alternatives to drug-crop production in beneficiary countries. Colombia and Ecuador are currently receiving benefits under the program. In 2009, the United States imported about $9.7 billion in goods under the ATPA program. In late December 2010, Congress passed a six-week extension of the program, which ended on February 12, 2011.

GSP and ATPA Create American Jobs and Keeps U.S. Companies Competitive

  • GSP and ATPA imports support U.S. jobs. Moving GSP imports from the docks to U.S. consumers, farmers, and manufacturers supported 82,000 jobs in 2005, according to a U.S. Chamber of Commerce study.

  • GSP and ATPA help keep U.S. companies competitive. Especially in today's economy, any program that cuts costs for U.S. businesses is highly important. GSP saved U.S. importers nearly $577 million in duties in 2009, while the ATPA saved them over $92 million in duties from Colombia alone.

  • GSP and ATPA imports are critical to U.S. producers of manufactured goods. In 2005, three quarters of U.S. imports under GSP were used as inputs by U.S. companies to manufacture goods in the United States. Electrical equipment and vehicle parts are significant imports under GSP.

  • GSP and ATPA help American families on a budget. Duty-free imports under these two programs mean lower prices for consumer goods.

  • GSP and ATPA help small businesses compete. The two programs are particularly important to U.S. small businesses, many of which rely on the programs’ duty savings to stay competitive.

GSP Has Helped the World's Poorest Countries for Over Three Decades

  • Most of the world’s poorest countries participate in GSP. The GSP program currently benefits 129 developing countries and territories. The program provides special, additional benefits for products from least developed beneficiary countries, which include some of the poorest countries in the world.

  • GSP helps a diverse group of developing countries. For 2010, the top five sources of GSP imports were Angola, Thailand, India, Brazil, and Indonesia. GSP beneficiaries also include least developed beneficiary countries such Bangladesh, Mozambique, Cambodia, and Malawi.

  • GSP accounts for a large share of developing country exports. For many beneficiary countries, GSP-eligible products comprise a significant share of their overall exports to the United States. For example: 86 percent of Armenia’s total exports to the United States are under GSP, and 65 percent of Paraguay’s.

ATPA Has Helped our Counternarcotics Efforts since 1991

  • Coca, the raw material for cocaine, is grown exclusively in the Andean region of South America. The U.S. International Trade Commission has found that the ATPA continues to have a positive effect on drug-crop eradication and crop substitution, as well as job growth in export-oriented industries, in the Andean region.

  • Colombia, which accounted for 57.5 percent of U.S. imports under ATPA in 2009, has been a particularly staunch ally in the fight against coca production and narcotrafficking. It has recently suffered from severe flooding. A loss of duty free treatment would represent a further negative impact on Colombian producers of various commodities.