US May Remove Trade Benefits For Developing Countries

US Trade Representative Susan Schwab announced on 7 August a review of a key programme offering duty-free access for products exported by developing countries to the US market. The review will look at whether key trading partners still should be eligible for the benefits which are offered unilaterally by the US government.

Under the Generalized System of Preferences (GSP) established in 1974, 133 countries receive trade benefits. The programme was intended in part as a bridge to help transition countries to “full economic partnership” with the United States, Schwab said. But the Office of the US Trade Representative has regularly used the threat of removal of these unilateral benefits in trade talks and enforcement efforts. The programme is up for reauthorisation at the end of the year, Schwab said in a release. Comments are being sought by USTR until 5 September.

Countries that will fall under special scrutiny for a cutback in benefits read like a who’s who of larger economies that have been battling US negotiators in various international fora, such as the World Trade Organization and the World Intellectual Property Organization, or have been cited repeatedly for inadequate intellectual property protection. They include: Argentina, Brazil, Croatia, India, Indonesia, Kazakhstan, Philippines, Romania, Russia, South Africa, Thailand, Turkey, and Venezuela.

USTR will consider “whether to limit, suspend, or withdraw the eligibility of those GSP beneficiaries for which the total value of US imports under GSP exceeded $100 million in 2005.” It also will consider cutting benefits if the World Bank classified the nation as an upper-middle-income economy in 2005, or if it accounted for more than 0.25 percent of world goods exports in 2005, as reported by the World Trade Organization, USTR said.

“One of the concerns that Congress has raised is that GSP benefits go largely to a few countries, while many developing countries are not trading much under the program. We want to ensure that we are operating the program as Congress intended,” Schwab said. “The review I am announcing today, the first in twenty years, will help make certain that we are administering the program consistent with statutory criteria. Our goal is for more countries to benefit from the program and use trade in support of their economic development.”

The statutory criteria under review include beneficiaries’ level of economic development, the extent to which they have expanded exports under the program and their competitiveness both globally and relative to GSP-eligible imports, USTR said.

USTR also is reviewing 83 waivers offered to get around the GSP program’s limitations based on competitive need. These waivers “allow certain products from specific countries to enter duty-free into the United States, without being subject to GSP statutory market share and annual import caps,” USTR said.

Several countries, such as Hong Kong, Singapore, South Korea, and Taiwan, have been graduated from the programme in the past. The United States imported $26.7 billion under the GSP program in 2005, an 18 percent increase over 2004, according to USTR.