As of August 1st (2013), importers who rely on the Generalized System of Preferences (GSP) preference program have lost those benefits. As I explained in previous posts the GSP program allows about 5,000 products from about 127 developing countries to enter the United States on a duty-free basis. The duty-free access benefits exporters from developing countries as it helps them to be competitive in the U.S. market. A variety of US importers also rely on the program for access to lower-priced consumer goods and manufacturing inputs.
As we further explained, GSP legislation is drafted so that the program expires and has to be renewed to ensure continued access to its benefits. So, GSP has expired and been renewed before.
What Do I Do Now?
GSP-eligible products can continue to enter the United States. Importers have the following options:
- For eligible products arriving from Africa or the Caribbean, the importer can instead enter using the African Growth & Opportunity Act (AGOA) or the Caribbean Basin Initiative (CBI), programs which also permit duty-free entry into the US market. (Products from Ecuador — see comments below — may also be eligible for the Andean Trade Preference Act (ATPA) program.)
- Products that are ineligible for either of these programs will be assessed the most-favored nation (MFN) or non-discriminatory tariff rate that is applied to goods arriving from most US trade partners.
More information is available here.
Will GSP be Renewed?
The Obama Administration has urged Congress to renew GSP.
The Renew GSP Today Coalition of US companies continues its campaign to get the program renewed as soon as possible.
The twenty members of the Alliance of GSP Countries have added their voice to this campaign.
Despite having known, since its last renewal, of the July 31, 2013 expiration deadline, legislation to extend GSP (HR 2709 in the House; and S 1331 in the Senate) was only introduced in Congress in mid-July. Both bills would extend the program until September 30th, 2015. Two years is not ideal, but apparently Congress continues to expect that it will be able to agree on the long-awaited reforms to the program.
At this time, the bills remain in Congress. They could still be passed before too much damage is done. Neither of them contains anything controversial. And, of importance to importers, as currently worded they would both allow the program to be reinstated retroactively. This would allow importers to claim refunds for duties paid on goods entered during the period the program was lapsed.