If you import goods from Turkey or India duty-free under Generalized System Preferences Designation program, your future import costs may increase.
What is the GSP Designation Program?
Generalized System of Preferences (GSP) is available to certain developing countries for duty-free entry of their goods into the U.S. if they meet the GSP criteria. This criterion includes respecting arbitral awards in favor of citizens or corporations of the U.S., combating child labor, respecting workers' rights, protection of intellectual property rights, and providing the U.S. with equitable and reasonable market access. Eligibility also includes factors related to economic development where countries can graduate out of the program as their country's economy grows.
GSP promotes economic growth and development by decreasing duties to help increase developing countries' trade with the U.S. In addition to promoting economic opportunity in developing countries, the GSP program also supports workers' rights and intellectual property rights which protect trade secrets, patents, and trademarks.
A review of program eligibility can be initiated by a petition filed with the United States Trade Representative (USTR), or a USTR self-initiation for review.
A review of India’s compliance with GSP in April 2018, was initiated as a combination of a USTR self-initiated review and the receipt of petition letters from both the Milk Producers Federation, U.S. Dairy Export Council and the Advanced Medical Technology Association.
This review revealed that India has implemented a variety of trade barriers that have had a negative impact on the commerce of the U.S. India has failed to take steps to remedy the situation and as a result President Trump has directed that their participation in the program be terminated.
A review of Turkey’s compliance with GSP was initiated as a USTR self-initiated review based on reports that Turkey has recently imposed additional duties on U.S. products and in some instances imposing additional duties that exceed the rates set out by Turkey in its World Trade Organization (WTO) schedule of concessions.
Turkey has been participating in the GSP program since 1975. In addition to the reasons stated above, Turkey’s economy has seen an increase in their Gross National Income (GNI) per capita. Declining poverty rate and export diversification by trading partner and sector are evidence that Turkey’s economic development has graduated them out of the program.
Effective Date Not Set
Although it appears that the removal of India and Turkey from GSP is imminent, an effective date has not yet been set.
We will keep you notified of all updates on this matter.
For more information on GSP, visit the USTR website here.