U.S. Importers Should Closely Monitor GSP Program Reauthorization Efforts
U.S. importers that purchase and import products covered by the Generalized System of Preferences (GSP) should closely monitor the status of the reauthorization of the GSP program, which is set to expire on December 31, 2006. Congress has passed legislation extending the GSP program's statutory authority on a retroactive basis the seven previous times it has come up for renewal. However, there is increasing evidence that this year may be different.
House Ways and Means Committee Chairman Bill Thomas (R-CA) and Senate Finance Committee chairman Charles Grassley (R-IA) have recently suggested that Congress should let GSP's statutory authority lapse. Even if GSP is renewed, Congress will likely require significant changes to the program, including the possible removal of large developing countries from eligibility for GSP benefits. Senator Grassley has questioned whether Brazil and India should receive GSP benefits. Other large developing countries that have come under scrutiny as to whether they should received GSP benefits include Argentina, China, Russia, Thailand and Turkey.
If Congress extends GSP's statutory authority without mandating the graduation of any individual countries, the USTR could unilaterally decide to to graduate some countries from GSP. The USTR conducted a public hearing in late 2005 to consider whether some beneficiary countries are now sufficiently competitive that they should no longer be kept in the GSP program.
GSP provides preferential duty-free entry for more than 4,650 products from 144 designated beneficiary countries and territories. GSP was reauthorized by the Trade Act of 2002 for the five-year period ending on December 31, 2006.