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Generalized System of Preferences: Overview and Issues for Congress
The U.S. Generalized System of Preferences (GSP) program provides non-reciprocal, duty-free
tariff treatment to certain products imported from designated beneficiary developing countries
(BDCs). The United States, the European Union, and other developed countries have
implemented similar programs since the 1970s. Congress first authorized the U.S. program in
Title V of the Trade Act of 1974, and most recently extended it until December 31, 2017 in Title
II of P.L. 114-27. Since the program expires at the end of this year, its renewal may be an issue
for the 115' Congress.
At the time of the last GSP renewal, enacted on June 29, 2015, the program had previously
expired. Therefore, the program was also retroactively renewed for all GSP-eligible entries
between July 31, 2013 (the previous expiration date), and the effective date of the current GSP
renewal reauthorization. P.L. 114-27 also provided the President with authority to designate new
products as eligible for GSP status, including some cotton products (for least-developed
beneficiaries only) and certain luggage and travel goods.
As of July 2017, 120 developing countries and territories were GSP beneficiaries. The GSP
program provides duty-free entry into the United States for over 3,500 products (based on 8-digit
U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-free status to an additional
1,500 products from 44 GSP beneficiaries additionally designated as least-developed beneficiary
developing countries (LDBDCs). In 2016 (last full year available) products valued at about $19
billion (imports for consumption) entered the United States duty-free under the program, out of
total imports from GSP countries of about $201.6 billion (total U.S. imports from all countries
amounted to about $2.2 trillion).
In recent years, GSP renewal has been somewhat controversial. Members of Congress have held a
range of views on whether or not to continue to include emerging market developing countries
(e.g., India, Brazil) as beneficiaries, or to limit the program to least-developed countries. Duty-
free access for certain products has caused some controversy, as well as the worker rights,
intellectual property, and other practices of certain beneficiaries. The U.S. Trade Representative
(USTR) recently announced that it will conduct closer reviews of beneficiaries' compliance with
GSP eligibility criteria. Additionally, concerns over offsets used to fund GSP renewal legislation
were a factor in the most recent GSP program lapse.
GSP is one of several trade preference programs through which the United States seeks to help
developing countries expand their economies. Other U.S. trade preference programs are
regionally focused, including the African Growth and Opportunity Act (AGOA) and the
Caribbean Basin Initiative (CBI, includes preference programs for Haiti). U.S. implementation of
GSP requires that developing countries meet certain eligibility criteria, such as taking steps to
maintain internationally recognized worker rights and protect intellectual property rights, among
other things. GSP rules of origin require that at least 35% of the appraised value of the product be
the "growth, product, or manufacture" of the BDC. Certain "import sensitive" products (e.g.,
most textiles and apparel) are specifically excluded, and limits are placed on the quantity or value
of any one product imported from any one country under the program (except for products from
LDBDCs and AGOA countries). GSP country and product eligibility are also subject to annual
This report examines, first, recent legislative developments, along with a brief history, economic
rationale, and legal background leading to the establishment of the GSP. Second, the report
describes U.S. GSP implementation. Third, the report briefly analyzes of the U.S. program's
effectiveness and stakeholders' views, and discusses possible options for Congress.
Congressional Research Service
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Jones, Vivian C. Generalized System of Preferences: Overview and Issues for Congress, report, November 14, 2017; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1043283/m1/2/?q=%22trade%22: accessed April 18, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.