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International Trade: Assessment of the Generalized System of Preferences Program

GGD-95-9 Published: Nov 09, 1994. Publicly Released: Nov 09, 1994.
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Highlights

Pursuant to a congressional request, GAO reviewed the effectiveness of the U.S. Generalized System of Preferences Program (GSP), focusing on: (1) the benefits provided to beneficiary developing countries (BDC); (2) the limitations on GSP imports; (3) how products are removed from or added to GSP coverage; and (4) whether program provisions requiring that countries follow certain intellectual property and worker rights practices are enforced.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
In considering whether to reauthorize the GSP Program, Congress may wish to consider altering the competitive need limit process in order to allow for a more thorough assessment of the competitiveness of the affected imports by, for example, extending the amount of time before exclusions under competitive need limits are implemented. This would allow for a thorough assessment of the competitiveness of the affected imports and allow affected industries more time to adjust.
Closed – Not Implemented
GSP reauthorization legislation was passed in August 1996 without action on this item.
Congress may also wish to consider whether to alter the GSP rules so that items are not penalized for having U.S. content. For example, any U.S.-origin value of a shipped item could be subtracted from the total value of the item before the 35-percent BDC origin value added is calculated.
Closed – Not Implemented
GSP reauthorization legislation was passed in August 1996 without action on this item.
If Congress considers whether or not to incorporate the 3-year rule, and a provision disallowing its waiver, in the GSP statute, it should recognize that the Trade Policy Staff Committee regulatory authority to self-initiate cases can have the same effect. Congress may wish to consider stipulating whether or not self-initiation of cases should be allowed where it would have the effect of waiving the 3-year rule.
Closed – Implemented
GSP reauthorization legislation, passed in August 1996, codifies the 3-year rule and is written to cover the issue addressed by the matter for consideration.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the U.S. Trade Representative In order to provide greater transparency to the GSP decisionmaking process and the GSP petition process, the U.S. Trade Representative should make public the guidelines the GSP Subcommittee uses in analyzing product petitions, with the stipulation that the guidelines provide a framework for, but do not limit the extent of, the Subcommittee's analysis.
Closed – Not Implemented
USTR does not think it is necessary, that the GSP Program is already sufficiently transparent.
Office of the U.S. Trade Representative In order to provide greater transparency to the GSP decisionmaking process and the GSP petition process, the U.S. Trade Representative should indicate clearly in Federal Register notices of final decisions on GSP petitions that petitioners can write to request a written explanation of any decision.
Closed – Not Implemented
USTR does not intend to modify GSP regulations until the program is on a firm footing. There has also been no completed review cycle as yet.
Office of the U.S. Trade Representative In order to provide greater transparency to the GSP decisionmaking process and the GSP petition process, the U.S. Trade Representative should modify GSP regulations to specify a mandatory core of information required for acceptance of product petitions.
Closed – Not Implemented
USTR does not intend to modify GSP regulations until the program is on a firm footing. USTR has also not been able to start a new product review cycle in which it could do this.
Office of the U.S. Trade Representative In order to improve the administration of country practice petitions, the U.S. Trade Representative should review country practice petitions on a separate and more flexible time frame from product petitions that better fits their different dynamics.
Closed – Implemented
USTR has delinked product and country practice reviews.
Office of the U.S. Trade Representative In order to improve the administration of country practice petitions, the U.S. Trade Representative should accept emergency petitions for expedited review out of cycle, when warranted by events.
Closed – Implemented
USTR said that it would be willing to self-initiate a case in a major emergency or heinous situation, and that filing a petition would not be necessary.
Office of the U.S. Trade Representative In order to improve the administration of country practice petitions, the U.S. Trade Representative should make public the guidelines used in deciding whether or not to accept country practice petitions for full review.
Closed – Implemented
USTR says that guidelines are already know. It has to be new information, the facts have to be accurate, and the allegations have to be serious.
Office of the U.S. Trade Representative In order to improve the administration of country practice petitions, the U.S. Trade Representative should clarify the "new information" standard in the GSP regulations to indicate that failure of BDC to fulfill the promises of progress that were instrumental in the decision to deny a petition would constitute substantial new information that could be the basis for acceptance of a petition.
Closed – Not Implemented
USTR does not intend to modify GSP regulations until the program is on a firm footing. However, it agrees with the substance of the recommendation.
Office of the U.S. Trade Representative In order to improve the administration of country practice petitions, the U.S. Trade Representative should take all steps necessary to expand the range of sanctions that can be taken when BDC have not met GSP country practice standards to include partial sanctions when appropriate.
Closed – Implemented
USTR has imposed partial sanctions on Pakistan for worker rights violations.

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Topics

Customs administrationDeveloping countriesForeign trade agreementsForeign trade policiesImport regulationImport restrictionInternational economic relationsInternational tradeRestrictive trade practicesTariffs