Download Locations

• U.S. Department of State
• National Agricultural Law Center

Summary

The Generalized System of Preferences (GSP) provides duty-free tariff treatment to certain products imported from designated developing countries. The United States, the European Union, and other developed countries implemented such programs in the in the 1970s in order to promote economic growth in developing countries by stimulating their exports. The U.S. program (as established by Title V of the Trade Act of 1974) was last reauthorized through December 31, 2006 in section 4101 of the Trade Act of 2002 (P.L. 107-210). Congress may consider legislation (H.R. 6142) under suspension of the rules to, among other things, renew the preference for two years. H.R. 5070 seeks to renew the preference for one year and H.R. 6076 and its companion bill S. 3904 would renew GSP for two years. S. 191 seeks to extend AGOA-type benefits to certain Asian and Pacific least-developed countries, including an extension of GSP for these countries alone. In previous years that the GSP was set to expire, its subsequent renewal was generally considered non-controversial. Even when the preference was allowed to lapse, as it has at several times in its history, it was widely expected that Congress would retroactively renew the preference, as in the Trade Act of 2002. However, this year, due, in part, to the present impasse in multilateral trade talks in the World Trade Organization Doha Development Agenda (DDA) and congressional concerns regarding the inclusion of certain more advanced developing countries such as India and Brazil in the program -- renewal of the preference seems more tenuous. The Bush Administration favors GSP renewal, but also appears willing to review and modify the program in order to respond to congressional concerns. In early August, the United States Trade Representative (USTR) requested public comments "relating to whether the Administration's operation of the program should be changed so that benefits are not focused on a few countries." To that end, the USTR and other administration officials are to review whether to limit, suspend, or withdraw the eligibility of 13 major GSP beneficiaries on the grounds that in 2005 (1) the total value of U.S. imports under GSP for each of these countries exceeded $100 million or (2) any of the countries is classified by the World Bank as an uppermiddle-income economy or accounted for more than 0.25% of total world goods exports. The USTR are to also review all 83 current waivers to automatic competitive need limits triggered by import volumes to see if any of the waivers should be withdrawn. This report presents, first, a brief history, economic rationale, and legal background leading to the establishment of the Generalized System of Preferences. A brief comparison of GSP programs worldwide, especially as they compare to the U.S. system, is also presented. Second, the U.S. implementation of the GSP is discussed, along with the present debate surrounding its renewal and legislative developments to date. Third, an analysis of the U.S. program's effectiveness and the positions of various stakeholders are presented. Fourth, possible implications of the expiration of the U.S. program and other possible options for Congress are discussed. This report will be updated as events warrant.

Related Legislation:
• H.R.6142
• H.R.5070
• H.R.6076
• S.3904
• S.191

XML