Washington, D.C. – On April 17th, the Royal Thai embassy hosted an organizational session for a newly formed Alliance of GSP Countries (A-GSPC). The meeting was facilitated by Sandler Trade LLC and enthusiastically received by over twenty participating GSP beneficiary countries.
The U.S. Generalized System of Preferences (GSP) program, which provides duty-free treatment for imports of certain products from qualified developing countries, will expire on July 31 unless renewed by the U.S. Congress. For more information on GSP For more information on GSP view the presentation (click here).
The nations represented so far in the Alliance of GSP Countries account for more than 1 billion people and account for 40 percent of GSP imports annually! The Alliance membership is growing.
GSP beneficiary countries experienced the negative and disruptive impact on their GSP product exports and producers, many of whom are small and family-owned businesses, when the GSP program last expired in 2011 and lapsed for 10 months before being renewed with retroactive effect. U.S. importers and manufacturing companies that rely on duty-free inputs imported under the GSP program were also negatively impacted by the disruption. Even though a retroactive refund of duties was possible after the program’s eventual renewal, many businesses were not equipped to make retroactive refund claims, causing lasting damage.
At the initial meeting of the A-GSPC, Sandler Trade LLC provided information that shows that every time the GSP program expires, and the longer the expiration, the more erosive the impact on GSP trade. As shown in the table below, GSP imports fell or stagnated during periods of program expiration and short-term renewal. Imports grew steadily between 2002 and 2006 when the program was renewed for a four-year period.
Disruptions in GSP treatment can have devastating effects on small business employment and development goals in beneficiary countries. The impact on the U.S. economy is also severely disruptive. On average, U.S. businesses that export rely on imported products for 40 percent of their inputs. If the cost for these inputs rises due to tariff increases, these businesses are less competitive in the global marketplace.
The A-GSPC will do its utmost to inform members of Congress of the benefits of the GSP program for the U.S. economy and for the development and poverty reduction goals of GSP beneficiary countries. It will seek to educate members of Congress, using real-world examples, about the damaging consequences on trading patterns, companies and lives, of allowing the GSP program to lapse, even if only temporarily. Traders and producers need certainty! The A-GSPC will urge that the Congress act quickly to renew GSP before it expires and that it allow GSP to remain in place without interruption for an extended period of time. This will benefit the U.S. economy and help meet the objectives of the GSP program.
A-GSPC will work with the “Coalition for GSP”, a group of American companies and associations that benefit from GSP and is also seeking prompt renewal of the program.
Background on GSP
Congressional authorization of the GSP is due to expire on July 31, 2013 – just 74 days from today. The GSP promotes tangible economic growth for 127 eligible countries, for 3,511 products. Each of the 44 Least Developed GSP beneficiary countries may export an additional 1,464 products into the U.S. market duty-free.
$19.9 billion worth of products were imported into the United States in 2012 under GSP.
U.S. companies and consumers saved $750 million in duties thanks to the GSP program.
Approximately 82,000 jobs are directly linked to GSP in the United States.
GSP benefits more than 4 billion people living in two-thirds of the world’s economies.
Sandler Trade LLC is excited and honored to be part of this important initiative!
Contact:
Yasmine Rouaï, Global Trade Specialist: yrouai@sandlertrade.com
