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SGAO
Accountability. Integrity* Reliability
Highlights
Highlights of GAO-10-262T, a testimony
before the Subcommittee for Trade,
Committee on Ways and Means, House of
Representatives
Why GAO Did This Study
U.S. trade preference programs
promote economic development in
poorer nations by providing duty-
free export opportunities in the
United States. The Generalized
System of Preferences, Caribbean
Basin Initiative, Andean Trade
Preference Act, and African
Growth and Opportunity Act
unilaterally reduce U.S. tariffs for
many products from over 130
countries. However, two of these
programs expire partially or in full
this year, and Congress is exploring
options as it considers renewal.
This testimony describes the
growth in preference program
imports, identifies policy trade-offs,
and summarizes GAO
recommendations and options
suggested by a panel of experts on
the African Growth and
Opportunity Act (AGOA). The
testimony is based on studies
issued in September 2007, March
2008, and August 2009. For those
studies, GAO analyzed trade data,
reviewed trade literature and
program documents, interviewed
U.S. officials, did fieldwork in nine
countries, and convened a panel of
experts.
In the March 2008 report, GAO
recommended that the U.S. Trade
Representative review beneficiary
countries that have not been
considered under the regional
programs, and periodically
consider preference programs
jointly. In response, USTR officials
told us that the relevant agencies
will meet at least annually. USTR
also changed its annual report to
discuss the preference programs in
one place.
View GAO-10-262T or key components.
For more information, contact Loren Yager at
(202) 512-4347 or yagerl@gao.gov.INTERNATIONAL TRADE
Options for Congressional Consideration to Improve
U.S. Trade Preference Programs
What GAO Found
Total U.S. preference imports grew from $20 billion in 1992 to $110 billion in
2008, with most of this growth taking place since 2000. The increases from
preference program countries primarily reflect the addition of new eligible
products, increased petroleum imports from some African countries, and the
rapid growth of exports from countries such as India, Thailand, and Brazil.
Preference programs give rise to three critical policy trade-offs. First,
opportunities for beneficiary countries to export products duty free must be
balanced against U.S. industry interests. Some products of importance to
developing countries, notably agriculture and apparel, are ineligible by statute
as a result. Second, some developing countries, such as Bangladesh and
Cambodia, are not included in U.S. regional preference programs; however,
there is concern that they are already competitive in marketing apparel to the
United States and that giving them greater duty-free access could harm the
apparel industry in Africa and elsewhere. Third, Congress faces a trade-off
between longer preference program renewals, which may encourage
investment, and shorter renewals, which may provide leverage to encourage
countries to act in accordance with U.S. interests such as trade liberalization.
GAO reported in March 2008 that preference programs have proliferated and
become increasingly complex, which has contributed to a lack of systematic
review. Moreover, we found that there was little to no reporting on the impact
of these programs. In addition, GAO solicited options from a panel of experts
in June 2009 for improving the competitiveness of the textile and apparel
sector in AGOA countries. Options they suggested included aligning trade
capacity building with trade preference programs, modifying rules of origin to
facilitate joint production among trade preference program beneficiaries and
free trade partners, and creating non-punitive and voluntary incentives to
encourage the use of inputs from the United States or its trade preference
partners to stimulate investment in beneficiary countries.
Growth of Trade Programs over Time1975
(1975) (1
(1991)996)
GO CBTPA000)
(2000)AGOA African Growth and Opportunity Act
ATPA Andean Trade Preference Act
ATPDEA Andean Trade Promotion and Drug Eradication Act
CBI Caribbean Basin InitiativeSif .
(2002) HO
(2006)
CBTPA Caribbean Basin Trade Partnership Act
GSP Generalized System of Preferences
HOPE Haitian Hemispheric Opportunity through
Partnership Encouragement Act
LDC Expanded GSP for Least-developed CountrySource: GAO analysis of USTR documents on Generalized System of Preferences,
African Growth and Opportunity Act,Andean Trade Preference Act, and Caribbean Basin Initiative..United States Government Accountability Office
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United States. Government Accountability Office. International Trade: Options for Congressional Consideration to Improve U.S. Trade Preference Programs, text, November 17, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc293636/m1/2/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.