U.S. Generalized System of Preferences (GSP)

US Generalized System of Preferences


Latest Update

October 9, 2020.

The Current Status of the US GSP program and Ongoing Developments

The current US GSP program will be ending on December 31, 2020. Due to the current COVID pandemic, it is not likely for the GSP program to be renewed before its scheduled expiration date at the end of this year. Though renewal in Q4 2020 (during the “lame duck” session of Congress) is still possible, from currently available information, we think it is more probable for GSP renewal to pass sometime in 2021.

As has been standard procedure in past cases of lapses in the GSP, when it is finally renewed, it is likely that GSP benefits will be applied retroactively back to the expiration date – which would be January 1, 2021 – and import duties already paid on those interim shipments would then be refunded.

The Delay

The primary reasons for the delay include:

  • Currently the highest political priority in the US is dealing with the economic impact of COVID. The next round of COVID-related stimulus is currently being negotiated by the two major US political parties (Democrats and Republicans) and is not yet complete. This will be the highest priority item for the US.

    The GSP program as a developmental assistance program to developing and least developed countries, is not a high priority for Congress relative to other issues, such as COVID. Also other assistance programs that provide similar benefits for LDCs, such as the African Growth and Opportunity Act (AGOA) which provides benefits to Africa, are still in force and will not expire until 2025.

    Congress has “pay-go” rules which means for every revenue dollar they have to give up / exempt in import duty to the GSP program (for every GSP country not just Thailand), they have to make up a dollar of funding from somewhere else. In tough economic times – such as present day with COVID – finding extra funding to pay for GSP will be difficult.
  • The other issue is the upcoming Presidential election in November 2020. Like some past Presidential elections, it will likely end up in litigation and domestic politics will be focused on that ahead of everything else, including GSP.

  • On the plus side, both political parties like GSP, so it is not a contentious issue and there is high confidence that there will be sufficient votes to approve the renewal, but again finding the money to pay for it and the time in Congress to vote for it will be tough since they will be busy with other higher-priority domestic issues.
  • The American Apparel & Footwear Association is also presently pushing to have footwear added to the GSP program.

What should I do when it expires?

For filing purposes, you will continue to file as if GSP is still in force. This is to facilitate record keeping for the US Customs & Border Protection on whether your shipment was imported under the GSP or not. So when it is renewed, they can properly calculate and refund the duty from imports made during the lapsed period.


March 23, 2018. The US GSP (Generalized System of Preferences) program was renewed via the Omnibus Appropriations bill (H.R. 1625) and is reauthorized through December 31, 2020.

January 1, 2018. The US GSP (Generalized System of Preferences) program has expired as of December 31, 2017 (for all countries and all products). Though the renewal process is ongoing in the US Congress, we do not yet have any definitive date for the renewal to be completed. At this time, please continue to file your imports as if the GSP program were still in force and if the eventual renewal is done as it has been done in the past, all properly filed GSP imports made during the interim time period will have their import duties refunded retroactively.

June 29, 2015. The U.S. Congress passed and the President signed H.R. 1295 reauthorizing the Generalized System of Preferences (GSP) through December 31, 2017. Title II of the Trade Preferences Extension Act 2015, makes GSP benefits retroactive from July 31, 2013 and permits U.S. Customs and Border Protection (CBP) to refund duties paid (not including interest) on importations of GSP-eligible goods imported or withdrawn from warehouse during the GSP lapse. Further updates will be available in our GSP documents section below.

April 23, 2015. On April 16, 2015 The Senate Finance and the House Ways & Means Committees introduced the AGOA (African Growth and Opportunities Act) Extension and Enhancement Act of 2015 (“AGOA 2015”) which would also reauthorize many trade programs and the Generalized System of Preferences (GSP), in particular, through December 31, 2017. This Act would also provide retroactivity for GSP to July 31, 2013.

AGOA 2015 is expected to be considered by Congress on the same schedule as Trade Promotion Authority legislation (“TPA 2015”), which was also introduced on April 16. As such, the Senate Finance and House Ways and Means Committees will consider AGOA 2015 during markup sessions scheduled for April 22 and 23, respectively.

The House Ways and Means and Senate Finance Committees are expected to approve TPA 2015 and AGOA 2015 in the coming weeks, and the House and Senate sponsors of the bills will attempt to advance the legislation to the chambers’ floors as soon as possible thereafter. Congressional leaders are seeking to vote on both pieces of legislation before the Memorial Day recess on May 22, 2015.

Presently, many GSP beneficiary countries have joined together as The Alliance of GSP countries to request that the US promptly renew the GSP program. If you are a US Company formerly utilizing GSP benefits that have been lost due to the lapse in GSP legislation, please contact the Coalition for GSP for more information and join with other US companies pushing the renewal of GSP forwards.


GSP Documents


Background

  • The U.S. Generalized System of Preferences (GSP) is a program providing free rates of duty for products from beneficiary developing countries to encourage their economic growth, beginning in 1976. More than 145 countries are eligible for this trade preference in over 4400 product items (except textile and apparel, footwear and other sensitive items such as steel, glass, etc.).
  • The original GSP program has expired and has been extended many times. The most recent program expiration was on December 31, 2017.

  • [dcs_heading size=”2″ align=”center” color=”#3399CC”]Annual Review[/dcs_heading]
    As provided for under the U.S. GSP statute, each year the USTR (GSP subcommittee which consists only of officials from the current Administration) conducts an annual review between June 1 – April 30, to consider the addition, removal or restoration of eligibility for products and/or countries according to criteria of the GSP statute. Products may be added, removed or restored in accordance with the following:

    • Competitive Need Limit (CNL) waiver: imports from a beneficiary country may not exceed a certain set limit or 50% of total U.S. imports, otherwise GSP benefits will be terminated by July 1 of the next year. A CNL waiver may be requested for products that exceed CNL. The CNL for 2017 Annual Review is $180 million (an increment of $5 million per year).
    • De Minimis waiver: imports from a beneficiary country that exceed CNL, but the total value imported by the U.S. was less than De Minimis level, may retain GSP eligibility with a De Minimis waiver. The De Minimis level for 2017 is $23.5 million (an increment of $500,000 per year).
    • Redesignation: products that lost GSP eligibility because imports were over CNL during a previous year, but during the most recent year, imports were below CNL, may request redesignation of GSP benefits.

    Country Practice Review

    • Under the GSP statute, criteria for determining a country’s eligibility include the extent to which the country provides its workers with internationally recognized worker rights, whether or not market access is given for U.S. goods and services, and whether or not U.S. patent, copyrights and trademarks are provided protection. If the USTR determines that a country does not meet these requirements, GSP status can be revoked. During each annual review, USTR accepts petitions from interested parties to conduct a review of any beneficiary country’s trade practices to determine if the country meets the above GSP statutory criteria
    • During the 2015 Annual Review, the AFL-CIO filed a petition against Thailand alleged that it does not protect nor provide worker rights up to international standards. The AFL-CIO requested that Thailand be removed from the list of GSP beneficiary countries.
    • There is no specified statutory deadline for the USTR to make a determination of the country practice review.