The U.S. government signaled this week that it is seriously considering the withdrawal of Generalized System of Preferences eligibility for more than a dozen countries and nearly 100 products. The Office of the U.S. Trade Representative announced Monday that, based on information obtained since it launched a wholesale review of the GSP program last October, it is seeking public input by Sept. 5 to determine whether to suspend or withdraw GSP benefits for certain countries and goods.
The USTR is reviewing GSP in connection with the possible congressional reauthorization and modification of the program, which is scheduled to expire Dec. 31. Congress has expressed concern that GSP benefits have been focused on trade from a handful of countries and that developing countries who have traditionally not been major traders have received few program benefits. While this debate is a typical feature of efforts to renew GSP, it has taken on particular significance this year because the program has become a key weapon in the U.S. effort to conclude a Doha Round agreement. Key lawmakers have threatened to kill the program altogether because they believe its largest beneficiaries have been antagonistic to U.S. interests in the WTO negotiations.
Countries at Risk. The USTR notice represents a step back from such a drastic move but is still only the second time in 20 years that the removal of major economies from GSP is a possibility. The specific countries under consideration are Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa, Thailand, Turkey and Venezuela. According to the USTR, these are the countries that, in 2005, exceeded $100 million in exports to the U.S. under GSP and were either classified as an upper-middle-income economy by the World Bank or accounted for more than 0.25% of world goods exports according to the WTO.
Goods at Risk. The USTR is also investigating whether any of the 83 existing competitive need limitation waivers are no longer warranted due to changed circumstances. CNL waivers allow certain products from specific countries to enter the U.S. duty-free without being subject to GSP caps on market share and annual import levels. Currently, the following 19 GSP beneficiaries have CNL waivers: Argentina, Bosnia-Herzegovina, Brazil, Colombia, Croatia, India, Indonesia, Ivory Coast, Kazakhstan, Macedonia, Peru, the Philippines, Romania, Russia, South Africa, Thailand, Turkey, Venezuela and Zimbabwe.
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