U.S. Trade Preference Programs Set To Expire on December 31st

August 20, 2009

The U.S. Generalized System of Preferences (GSP) and the Andean Trade Promotion and Drug Eradication Act (ATPDEA) are set to expire on December 31, 2009, unless new legislation extending the programs is approved by Congress. The U.S uses these programs and the African Growth and Opportunity Act (AGOA), to grant duty free access to goods from developing countries.[1]

Under the GSP program, eligible articles from designated developing countries may qualify for duty free treatment, as long as they have been substantially transformed in the beneficiary country and incorporate 35% of their dutiable value in that country or in an approved group of beneficiary countries. ATPDEA provides additional benefits for goods of Colombia, Ecuador, Peru and Bolivia. Both programs offer important duty-saving opportunities for U.S. companies.

Last year, Congress passed a one-year extension of GSP and a differentiated extension of ATPDEA (reflecting concerns about Bolivia’s and Ecuador’s eligibility for the program). Bolivia has since had its benefits under ATPDEA suspended and Congressional leaders from both parties made clear their intentions to reform U.S. trade preference programs.

Ideally, Congressional leaders would like to complete legislation reforming the programs before GSP and ATPDEA expire at the end of 2009. However, with the Senate Finance committee already busy with, among other things, the Customs Reauthorization Bill, it is unclear if Congress will have time to complete a reform package before the programs expire. Neither the Senate Finance or House Ways and Means Committee have indicated how they will approach the issue of extending GSP and ATPDEA beyond December 31, 2009 if a reform package is not completed in time.