According to The Office of the United States Trade Representative,
"The U.S. Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 5,000 products when imported from one of 127 designated beneficiary countries and territories. The GSP program also supports U.S. jobs. U.S. businesses imported $19.9billion worth of products under the GSP program in 2012, including many inputs used in U.S. manufacturing. According to a 2005 U.S. Chamber of Commerce study, over 80,000 American jobs are associated with moving GSP imports from the docks to farmers, manufacturers, and retail shelves. GSP was instituted on January 1, 1976, by the Trade Act of 1974."
"Products that are eligible for duty-free treatment under GSP include: most manufactured items; many types of chemicals, minerals and building stone; jewelry; many types of carpets; and certain agricultural and fishery products. Among the products that are not eligible for GSP duty-free treatment are: most textiles and apparel; watches; and most footwear, handbags, and luggage products.?
The GSP has been an active part of the Trade Act since 1976. This is a program that must be re-designated on a regular basis by the U.S. Congress. On occasion, Congress neglects to extend the program, and it appears that it may be allowed to lapse again this year.
Impact on Importers of Goods into the United States Under the GSP:
In the past, when the program has lapsed, importers have been required to pay the "general", or normal trade relations (NTR) duty rates for the shipment imported during the lapse. Once the program has been reauthorized and been made retroactive, U.S. Customs and Border Protection (CBP) has refunded the duties paid on those entries that were entered under the appropriate special programs indicator. Each renewal in the past has been made retroactive, however this is not automatic.
Pacific Customs Brokers will continue to monitor the program, and will provide further information as it is known. As always, we welcome your questions and concerns, and encourage you to contact us. You may also post your thoughts or questions in our comments section below or email us at Ask Your Broker.
- U.S. Customs and Border Protection (CBP) announcement: GSP Due to Expire July 31, 2013
- Boost Your Global Trade Benefits with the Generalized System of Preferences