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U.S. Trade Representative Froman Announces Outcome of Generalized System of Preferences Review

Washington, D.C. – United States Trade Representative Michael Froman announced today the outcome of the Obama Administration’s 2012 Annual Review under the Generalized System of Preferences (GSP) program. GSP is a 37-year-old trade preference program under which the United States provides duty-free treatment to many imports from developing countries.

“GSP is a time-tested tool for advancing international economic development 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,” Ambassador Froman said. “The annual review allows the Administration to ensure that the program continues to meet the needs of developing countries while taking into account such factors as the growing competitiveness of many emerging market economies and the country eligibility criteria set forth in the GSP statute.”

Ambassador Froman added, "Given the GSP program's importance both for developing countries and for U.S. jobs and economic growth, the Administration will work with Congress to renew GSP – so that developing countries can continue to expand their economies through trade with the United States, and so that U.S. businesses and consumers can continue to benefit from the cost savings on GSP products, including intermediate inputs for Made-in-America goods.”

Based on the Administration’s review of several issues and petitions related to eligibility of products under the GSP program, President Obama made determinations today affecting product coverage under GSP. The President: 1) granted waivers of competitive need limitations (CNLs) for over 100 products from 14 countries, including both petitioned and de minimis waivers; and 2) determined that two products from two countries – a corn product from Brazil and passenger tires from Indonesia – 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, 2013. The Administration deferred decisions on petitions to add three products – cut roses, frozen broccoli, and certain preserved artichokes – to duty-free treatment under GSP.

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, whether a country acts in good faith in recognizing and enforcing arbitral awards in favor of United States citizens, and the extent to which a country adequately and effectively protects intellectual property rights (IPR). As described in a separate press release, the President has decided, drawing on the recommendation of the U.S. Trade Representative, to suspend the GSP benefits of Bangladesh based on that country's failure to meet the statutory GSP country eligibility criterion related to worker rights. In addition, USTR has accepted for review a country practice petition on Ecuador related to recognition and enforcement of arbitral awards. Initial steps in the review of the Ecuador petition will be announced in a forthcoming notice published in the Federal Register. Several other country practice petitions accepted in previous years remain under review: Indonesia, Russia, Ukraine, and Uzbekistan regarding protection of IPR, and Fiji, Georgia, Iraq, Niger, the Philippines, and Uzbekistan regarding worker rights.

The full results of the 2012 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 127 beneficiary developing countries, including 44 least-developed countries, are eligible for duty-free treatment when exported to the United States. In 2012, the total value of imports that entered the United States duty-free under GSP was $19.9 billion.

As part of the annual GSP review, an interagency 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 and CNL waiver petitions – reviews analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on U.S. industries and consumers.

For more information on the GSP program, visit the GSP page on the USTR Web site here.