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USTR Announces Outcome of Generalized System of Preferences Review

06/29/2012

Washington, D.C.
– United States Trade Representative Ron Kirk announced today the outcome of the Obama Administration’s 2011 Annual Review under the Generalized System of Preferences (GSP) program. GSP is a 36-year-old trade preference program under which the United States provides duty-free treatment to many imports from developing countries.

Ambassador Kirk said, “GSP is a valuable tool for advancing the Administration’s goals to boost trade and to advance international economic development. The GSP program helps developing countries to grow their economies while also helping U.S. businesses, workers, and consumers by lowering the costs of imported goods, including those used as inputs for U.S. manufacturing. The annual review allows the Administration to ensure that the program is working as intended.”

Based on the Administration’s review of various issues and petitions related to eligibility of products under the GSP program, President Obama made several determinations today affecting product coverage under GSP. He determined that seven cotton fiber products should be added to the list of those eligible for duty-free treatment under the program when imported from least developed country (LDC) beneficiaries. The addition of these products implements one element of the LDC trade initiatives that USTR announced at the December 2011 World Trade Organization Ministerial. The President also: 1) redesignated one product as eligible for duty-free treatment under the GSP program; 2) granted waivers of competitive need limitations (CNLs) for over 100 products from 12 countries, including both petitioned and de minimis waivers; and 3) determined that eleven products from six countries should no longer be eligible for duty-free treatment under the GSP program because the relevant country is sufficiently competitive and exceeded CNLs for the product. The changes to GSP eligibility for these products will become effective on July 1, 2012.

As part of this year’s review, the Administration also considered petitions to withdraw or suspend certain countries’ eligibility for GSP benefits based on statutory criteria, including whether a country is taking steps to afford internationally recognized standards for worker rights and the extent to which a country adequately and effectively protects intellectual property rights (IPR). In the course of the 2011 review, USTR has accepted for formal review four new country practice petitions: on Fiji and Iraq regarding worker rights, and Indonesia and Ukraine regarding IPR. Next steps in the review of these petitions will be announced in a forthcoming notice in the Federal Register. As announced in a separate release, as part of this year’s review, USTR has decided to close the GSP country practice review of worker rights in Sri Lanka without any change to Sri Lanka’s GSP trade benefits. Several other country practice petitions accepted in previous years remain under review: Lebanon, Russia, and Uzbekistan regarding IPR protection, and Bangladesh, Georgia, Niger, the Philippines, and Uzbekistan regarding worker rights.

The full results of the 2011 GSP Annual Review are available here and will also be announced in the Federal Register.

BACKGROUND

Under the GSP program, up to 5,000 types of products from 128 beneficiary developing countries, including 43 least-developed countries, are eligible for duty-free importation into the United States. In 2011, the total value of imports that entered the United States duty-free under GSP was $18.5 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 (CNLs), and 3) to withdraw or limit a country’s eligibility for GSP tariff benefits based on statutory eligibility criteria. The committee also reviews products eligible for de minimis waivers of CNLs and the reinstatement of GSP eligibility for products previously excluded from duty-free treatment when imported from certain countries based on CNLs. For those product and country practice 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.

For more information on the GSP program, visit the GSP page on the USTR Web site at http://www.ustr.gov/trade-topics/trade-development/preference-programs/generalized-system-preference-gsp