Pending USTR Review of Duty Preference Program Presents Opportunities and Risks
International Trade & Customs Update
Date: August 06, 2012
On July 30, 2012, the Office of the U.S. Trade Representative (USTR) announced its review of the popular Generalized System of Preferences (GSP) duty preference program for 2012. Under the GSP program, approximately 4,800 products imported into the United States from 129 developing countries and territories receive duty-free treatment. These products include most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Products not eligible for GSP duty-free treatment include most textiles and apparel; watches; and most footwear, handbags and luggage products.
The annual review allows interested parties to file petitions to modify the list of products eligible for duty-free treatment under the GSP program and to modify the GSP status of certain countries based on statutory criteria. The GSP product review allows interested parties to submit petitions to:
- Add products as eligible for GSP benefits.
- Withdraw, suspend or limit the duty-free treatment of a GSP-eligible product.
- Waive the competitive need limitations (CNL) - quantitative ceilings - for individual countries as to specific GSP-eligible products.
The country practices review allows interested parties to submit petitions to review the GSP eligibility of any currently eligible country based on statutory criteria. In recent years, countries' eligibility has been challenged for such reasons as having a poor worker rights record, refusing to recognize or enforce arbitral awards of U.S. parties and having inadequate intellectual property protections.
The annual GSP review process presents U.S. importers with opportunities to eliminate duties on key imports or to maintain their duty-free status for a longer period through a CNL waiver. An importer currently enjoying GSP treatment for imports, however, could have those benefits challenged by U.S. manufacturers of the same or similar products seeking to remove the duty-free status and may want to defend its interests as a participant in the process. Also, an importer enjoying GSP treatment for imports should determine whether those imports have exceeded or will likely exceed the CNLs applying to those products. If they have exceeded the CNLs or are likely to do so, an importer should petition for a CNL waiver; otherwise, a GSP-eligible product exceeding a CNL will have its designation revoked on July 1 of the following year.
The review process also presents U.S. manufacturers with the opportunity to challenge GSP treatment for certain competing imports and to petition for a review of the GSP eligibility of a country under a wide range of statutory criteria.
The deadline for petitions to modify the list of products eligible for duty-free treatment under the GSP program or to review the GSP status of a GSP-eligible country is October 5, 2012. The deadline for petitions requesting CNL waivers is November 21, 2012. Interested parties will then have the opportunity to respond to these petitions in writing and at a public hearing in the months to follow.