The Generalized System of Preferences (GSP) program expired on July 31st, 2013. This means that nearly 5,000 products coming from the developing world into the United States are no longer receiving duty-free treatment. The impact is not limited to developing countries –,U.S. importers now have the added burden of paying duties (ranging from 1% to 25%) that they did not anticipate, amounting to $2 million per day. This means more expensive manufacturing inputs and consumer goods in the months that GSP is not in effect. As a result, thousands of U.S. jobs are at stake as well as many small business livelihoods here and abroad.
The Alliance was formed in May 2013 to educate Members of the United States Congress about the importance of the GSP program to the Alliance countries. The countries that joined the Alliance, spearheaded by the Royal Thai embassy, are Algeria, Bangladesh, Brazil, Ecuador, Egypt, Fiji, Georgia, Indonesia, Macedonia, Moldova, Mongolia, Nepal, Pakistan, Paraguay, Philippines, Sri Lanka, Tunisia, Ukraine, Uruguay, and Yemen. The Alliance has sent letters to Members of Congress outlining benefits of the GSP program, including real life stories of improvements in their countries. The Alliance also held numerous meetings with trade staff of U.S. Senators and Representatives. In these meetings, we sought to convey the urgency of renewing the GSP program and the high costs to U.S. and Alliance-member economies of allowing GSP to expire, even on a temporary basis. Congressional staff were appreciative of the information on the program and its far reaching positive impact.
Despite the determination of the Alliance and trade staff on the Hill, the program expired at the end of July. Data shows that, even prior to expiration, GSP trade had already begun to slow. In the first seven months of this year, with GSP renewal in the balance, U.S. imports under the GSP program already decreased by 6.6 percent. We fear that the decline will continue as long as there is uncertainty about GSP renewal. Many businesses, especially small ones, are already being impacted. The longer GSP renewal is postponed, the more Alliance country exporters will lose hard-won U.S. customers to lower-cost producers. When GSP expired in 2011, U.S. GSP imports declined by 17 percent while overall U.S. imports grew 15 percent; GSP import levels have still not recovered to their 2010 level.
We will continue to meet with senior staff to Senate and House Members to urge that GSP be renewed as soon as possible through whatever legislative vehicle is feasible. The Alliance is committed to continuing the conversation on the importance of this program to developing countries as well as U.S. manufacturers and consumers. The longer GSP expiration continues the higher the economic cost to all concerned.
For Background on the GSP program, please see