The generalized System of Preferences is a program authorized by Congress that grants duty-free status to certain products from beneficiary countries. The idea behind the program is to help developing economies establish and grow industries. Countries and products (as laid out in the General Notes of the Harmonized Tariff Schedule) are added and removed periodically by the U.S. Trade Representative and in all cases, the goods must meet a minimum 35% origin content requirement from the beneficiary country.
The program was last reauthorized on June 29, 2015. This reauthorization was retroactive to the program’s previous expiry date, which was on July 31, 2013. During the nearly two-year gap, U.S. importers deposited duties at the full ad-valorem rate for the goods which were being imported. Fortunately for them, when the program was once again reauthorized, the legislation included a provision to retroactively refund Customs duties paid during the time the program lapsed.
For a full detail and background about GSP and its history, we strongly recommend this recently published report by the Congressional Research Service.
To the average American, what GSP does and offers is an unknown. According to the CRS report:
“As of July 2017, 120 developing countries and territories were GSP beneficiaries. The GSP program provides duty-free entry into the United States for over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-free status to an additional 1,500 products from 44 GSP beneficiaries additionally designated as least-developed beneficiary developing countries (LDBDCs). In 2016 (last full year available) products valued at about $19 billion (imports for consumption) entered the United States duty-free under the program, out of total imports from GSP countries of about $201.6 billion (total U.S. imports from all countries amounted to about $2.2 trillion).”
To the companies and individuals importing GSP-eligible merchandise, these are significant figures. To this end, the impact of GSP on individual states and the USA as a whole is so great that a number of organizations and coalitions have come together seeking to encourage Congress to reauthorize GSP without delay or expiry. One such group is the Coalition to Renew GSP who estimate that in Illinois, the site of our corporate headquarters, an estimated $38 million in duty was saved in 2016 alone.
If your company claims GSP benefits for your imports, we strongly encourage you to contact your representatives in both the House and Senate. If your company belongs to a national trade association, ask if they have a coordinated campaign to encourage lawmakers to renew GSP. Failing that, you can look at groups like the Coalition to Renew GSP and join their efforts to renew GSP before December 31st.