You Can Boost Your Global Trade With The Generalized System Of Preferences

The U.S. Generalized System of Preferences (GSP) is a U.S. Customs and Border Protection (CBP) initiative that grants designated beneficiaries and territories preferential duty treatment. Similar to Canada's General Preferential Tariff Regime (GPT), the GSP program is designed to increase economic growth both abroad and in the United States.

The Office of the United States Trade Representative states that "the GSP program supports U.S. jobs. U.S. business imported $19.9 billion worth of products under the GSP program in 2012, including many inputs used in US manufacturing."

GSP was part of the Trade Act of 1974 which sought to help industries in the United States become more competitive  and took effect on January 1, 1976. Since then over one hundred countries have been designated as beneficiaries and billions of dollars saved on import duties.

Benefits Of GSP To Importers:

• GSP can significantly reduce your landed costs by eliminating duties and taxes. For example, if you source an eligible product from a designated beneficiary and pay no duties or taxes, you now own an advantage over your competition that sources from say, China.
• You also benefit by having more than one market to choose from which gives you more flexibility when sourcing products.

Types Of Designations Under GSP :

There are two types of designations under GSP containing 127 designated beneficiaries.

1. GSP Beneficiary Developing Countries (BDCs):

BDCs receive preferential duty treatment on 3511 tariff numbers.

2. Least Developed Beneficiary Developing Countries (LDBDCs):

Within that first level of designated beneficiaries are a group of 44 countries that have been designated as Least Developed Beneficiary Developing Countries (LDBDCs) which receive preferential duty treatment on an additional 1,464 tariff numbers.

In total GSP allows for duty free preferential treatment on 4,975 tariff numbers.

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GSP By The Numbers:

• Year GSP first instituted: 1976
• Total U.S. imports under GSP (2012): $19.9 billion
• Import duties saved on GSP products (2011): $700 million
• Number of GSP beneficiary countries and territories: 127
• Number of GSP beneficiaries that are least developed countries (LDCs): 44
• Total number of 8-digit U.S. tariff lines eligible for duty-free entry under GSP: 4,975
• of these, number eligible for all GSP beneficiaries: 3,511
• number eligible for LDC beneficiaries only: 1,464

GSP by the Numbers (a fact sheet on the program)

2012 Top GSP Beneficiary Developing Countries:

1. India ($4.5 billion)
2. Thailand ($3.7 billion)
3. Brazil ($2.3 billion)
4. Indonesia ($2.2 billion)
5. South Africa ($1.3 billion)
6. Philippines ($1.2 billion)
7. Turkey ($1.1 billion)
8. Angola ($632 million)
9. Russia ($544 million)
10. Argentina ($233 million) (suspended in March 2012)
11. Pakistan ($195million)
12. Sri Lanka ($158 million)
13. Tunisia ($149 million)
14. Bolivia ($128 million)
15. Georgia ($124 million)
16. Kazakhstan ($111 million)
17. Ecuador ($107 million)
18. Venezuela ($99 million)
19. Cote d`Ivoire ($96 million)
20. Congo (DROC) ($94 million)

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Resources:

CBP offers a guide to GSP providing an overview of the program and how it works.

The guide offers a look into:

• GSP eligible products
• GSP eligible countries
• Which import scenarios qualify

While navigating the waters of GSP can be tricky, with the right customs broker it can be smooth sailing and a worthy endeavor. In the same fashion as Free Trade Agreements, GSP opens up further markets to global commerce and increases the potential sources of products.

Should you need more information or have questions about the U.S. Generalized System of Preferences, please contact us.

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