US Reviews Trade Preferences Programme

by Leroy Baker, Tax-News.com, New York

04 August 2009

The Obama administration is to explore how trade preference programs can help developing countries raise living standards and alleviate poverty.

The government is reviewing trade preferences in preparation for the annual African Growth and Opportunity Act (AGOA) Forum to be held in Nairobi, Kenya, from August 4 to 6.

"Expanded trade with the world's developing countries is critical to boosting their growth, reducing income inequality, and providing people with hope for the future,” said US Trade Representative Ron Kirk. “The GSP program is an important step in helping to revive global trade and restoring our sense of faith in international commerce to help improve lives at home and abroad."

The Generalized System of Preferences (GSP) program has been in effect since 1976 and is the basis for all US trade preference programs. The program provides preferential treatment for 4,650 products from 144 developing countries, including 43 least-developed countries totaling USD31.7bn in imports. The program was renewed by Congress in October last year and the current legislation expires on December 31, 2009.

Generally, when goods are imported into the United States, customs duties are collected on the products. The GSP program helps developing countries by providing "preferences" to certain products - allowing US importers to import certain goods from beneficiary developing countries free of customs. This also helps US business importing goods from GSP countries to cut costs.

The GSP program also advances the protection of intellectual property rights abroad by requiring that beneficiary countries take steps to provide adequate and effective IP safeguards.

The US administration has just concluded its annual review of the eligibility of countries covered by the program and the products that are eligible for duty-free treatment under the program. As part of each annual review, interested parties file petitions seeking changes in the treatment of countries and products.

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