As expected, the Generalized System of Preferences (GSP) program expired on December 31, 2020. Historically, GSP legislation has been limited to specific periods of time, often one or two years. This means that the program often expires before Congress passes legislation renewing it. Previous expired GSP programs have had retroactive renewals, and we have written more about that process here. However, what exactly a 2021 GSP renewal will look like under the new administration remains unclear.
GSP is the oldest and largest U.S. trade preference program, with 119 designated beneficiary countries and territories participating. Through GSP, many of the world’s poorest countries access U.S. trade opportunities to grow their economies. GSP promotes economic development by eliminating duties on thousands of products imported from designated beneficiary countries. It also allows U.S. companies to import articles free of duty.
For GSP to be renewed, a GSP Reauthorization Bill will need to pass Congress. The eventual form of this bill is uncertain. One option is an “as is” bill renewing just-expired GSP provisions. On the other hand, some members of Congress see renewal as an opportunity to modify the program. For example, Democrat House members have introduced multiple pieces of legislation that would extend GSP and add human rights, rule of law, environmental, and anticorruption criteria. In the alternative, a Republican GSP bill introduced last year would make any GSP benefits contingent on the U.S. unemployment rate being below 4% and add additional strict labor restrictions for participating countries.
At this point it is not clear whether any of the efforts to expand the eligibility criteria, either based on Democratic or Republican proposals, has enough support to become law. However, there does seem to be broad political support for GSP, as well as support from many companies and trade associations. Therefore, it seems likely that Congress will do something with respect to GSP early in 2021.
If you have any questions regarding GSP renewal or GSP eligibility, do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.