As of December 31, 2020, importers who rely on the Generalized System of Preferences (GSP) program have lost those benefits. GSP has expired – again!

The GSP is the largest US trade preference program, allowing over 5000 products from over 100 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 in these posts,- 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 again, but has also been renewed again before.

What Happens 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 use the African Growth & Opportunity Act (AGOA) or the Caribbean Basin Initiative (CBI) trade preference programs which also permit duty-free entry into the US market. We can assist importers to check whether their products qualify for entry under either of these programs.

Products ineligible for 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. For these products, we can work with importers to ensure that products are correctly classified while attracting the lowest duties upon entry.

Will GSP be Renewed?

In the past, the program has been allowed to expire for several months at-a-time before eventually being renewed. Traders face not just the loss of benefits but also a period of uncertainty as to what Congress will do this time around.

Despite the calls to reform the program to better meet the needs of the poorest countries, no consensus has emerged as to the way forward on this issue. Allowing the program to expire, even as it hurts importers and beneficiary countries, signals Congressional unhappiness with the status quo. Yet, with so many issues crying for the attention of the current Congress, as well as the Biden Administration, the status quo is the best and most likely outcome, at least in the short-term.

To minimize the harm, Congress needs to pass legislation that retroactively reinstates the GSP program. Retroactive renewal would allow importers to claim refunds for duties paid on GSP-eligible goods entered during the period the program was lapsed. You can follow this issue and lend your voices to the campaign to “Renew GSP Today”.

Contact us DevelopTradeLaw LLC, an international trade law firm in Washington DC, to learn more and to explore how you can continue to import at the lowest duty rates. . We provide customs and trade law consulting services in New York, Texas, Miami, Baltimore, San Francisco, Los Angeles and other cities in the US.