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US House Votes To Extend Trade Preferences Programs

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

16 December 2009


The US House of Representatives has approved legislation extending the Generalized System of Preferences (GSP) and the Andean Trade Preferences Act (ATPA) programs that allow certain goods to be imported into the United States free of import duties.

The legislation, introduced by Ways and Means Committee Chairman Charles B. Rangel (D-NY) and Ways and Means Trade Subcommittee Chairman Sander M. Levin (D-MI), extends both programs.

“This legislation keeps in place valuable benefits both for developing countries and for US workers and businesses,” said Rangel. “The bipartisan support in the House is testament to the broad importance of this legislation. I hope the Senate will be able to act swiftly as well to preserve these important programs.”

“I am glad we were able to take this critical step to preserve GSP and ATPA for the next year,” added Levin. “Now we have time to turn our sights to the important work that awaits us – undertaking a comprehensive review of all aspects of the preference programs and whether they are serving the needs of citizens in developing countries as well as our citizens. This includes considering how well existing eligibility criteria are working and whether improvements or additions are needed (for example, with regard to the environment). Similarly, we will need to consider whether all the nations that need assistance are getting it. We will be taking a careful look at all of these important questions next year, working closely with the administration.”

Congress created the GSP, the first of the US preference programs, in the Trade Act of 1974 and implemented it beginning in 1976. Under the basic GSP scheme, 132 beneficiary developing countries are eligible to export approximately 3,400 types of products duty-free to the United States.

The GSP scheme also provides additional benefits to the 44 GSP countries that are designated “least developed” under the program. These countries may export an additional 1,400 types of products to the United States. To qualify for GSP benefits, participants must meet eligibility criteria (e.g., whether the country has taken, or is taking, steps to afford internationally recognized worker rights; whether the country provides certain protections for US investors).

The GSP program currently expires on December 31, 2009. The new legislation extends the GSP program by one year.

The ATPA was enacted in December 1991 to help Bolivia, Colombia, Ecuador and Peru develop economic alternatives to drug production and trafficking. The ATPA provides benefits beyond those under the GSP, including additional product coverage. To qualify for ATPA benefits, countries must meet certain eligibility criteria, such as committing to crack down on the trade of narcotics.

On June 30, 2009, President Obama terminated Bolivia’s benefits under the program because of Bolivia’s failure to meet eligibility criteria related to counter-narcotics cooperation.

The ATPA program is currently scheduled to expire on December 31, 2009. The new legislation also extends the ATPA program by one year, for Colombia, Ecuador and Peru.


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