New in GSP: Luggage in, Bolivia under review

USTR makes luggage imports eligible for GSP treatment and puts Bolivia under review for child labor law.

By: Chris Gillis
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Photo: ImYanis / Shutterstock.com
   The Office of the U.S. Trade Representative has released the Trump administration’s first annual review of the country’s Generalized System of Preferences, a longtime trade program that allows certain approved imports from developing countries to enter the United States duty-free.
   U.S. Trade Representative Robert Lighthizer said the administration is “committed to vigorously enforcing the eligibility criteria of our trade preferences programs.”
   More specifically, the Trump administration will initiate a country practice review of Bolivia’s compliance with GSP eligibility criteria related to child labor, and changes to its list of products eligible for GSP treatment. The Bolivian government in 2014 passed a law allowing children to work as young as 10 years old, which has upset many international child welfare organizations.
   “Trade under GSP provides strong incentives for developing countries to make market-oriented reforms and provide greater access for American goods and services,” Lighthizer said.
   One of the biggest changes for GSP made by the administration is the inclusion of certain travel goods to the list of eligible products.
   The 2015 Trade Preference Extension Act (TPEA) gave the president authority to add certain travel products to GSP, such as luggage, handbags, backpacks, tote bags, and pocket goods. In June 2016, the Obama administration added eligibility for travel goods for African and least developed GSP countries, but left the full inclusion of these products in GSP up to the next administration.
   “Members of Congress have shown a strong interest in seeing GSP access for travel goods extended to all GSP countries," the USTR said. "U.S. travel goods brands and retailers have indicated that this action would help them broaden their sourcing opportunities for these products."
   USTR said that making travel goods GSP-eligible is expected to be “neutral with respect to overall U.S. import levels, and therefore also to the U.S. trade balance, though this action may shift some of the overseas production of these products from non-GSP countries to GSP countries.” The change will take effect July 1.
   As part of its GSP 2016/2017 annual review, USTR led an interagency GSP Subcommittee of the Trade Policy Staff Committee, which reviewed industry requests seeking to add or remove products from the list of GSP eligible goods and waive product exclusions for certain countries based on statutory requirements related to competitiveness. The subcommittee also held public hearings and reviewed analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on domestic industries and consumers.
   The American Apparel & Footwear Association (AAFA) applauded the Trump administration’s USTR for including travel goods more fully in GSP. The trade group said the industry has paid more than $90 million in duties on imports of travel goods from developing countries.
   AAFA said its members can now put what they previously spent in duties on these imports into their U.S. workforce and increase investments in product innovation.
   “Additionally, this move will encourage diversification of the supply chain into developing economies, including the Philippines, Thailand, Pakistan, Indonesia, and Sri Lanka,” the group said.
   AAFA would also like GSP to include footwear. In late May, Reps. Adrian Smith, R-Neb., and Earl Blumeneauer, D-Ore., introduced a bill (H.R. 2735) to add footwear to the list of GSP-eligible imports.
   About 120 developing countries and territories eligible for GSP can enter their products into the United States duty-free. The total value of GSP-eligible imports that entered the United States in 2016 was $18.7 billion, according to USTR.
   To qualify for GSP, a beneficiary country must meet eligibility criteria established by Congress, including respecting arbitral awards, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the United States with equitable and reasonable market access.
   U.S. importers are now urging Congress to approve legislation to reauthorize GSP before the program’s expiration at the end of the year. Whenever GSP is allowed to lapse, companies must scramble to find tens of millions of dollars in their budgets to pay these import taxes until the trade preferences program is reapproved by Congress.