GSP and ATPDEA Set to Expire December 31, 2006

Issue 527, September 19, 2006

Both the Generalized System of Preferences (GSP) and the Andean Trade Promotion and Drug Eradication Act (ATPDEA) are scheduled to expire on December 31, 2006. Through GSP, about 4,700 manufactured products originating in any of the 144 beneficiary developing countries receive duty free entry benefits. ATPDEA provides similar duty-free access to about 5,600 products from Bolivia, Colombia, Ecuador and Peru.

It appears unlikely at this time that either will be renewed or extended by Congress before they expire. In the past, whenever GSP expired it was renewed retroactively later in the following year. Retroactive renewal is possible after expiration, but it is unlikely that any such renewal will return either bill to the current status.

Both Senate Finance Committee Chairman Charles Grassley and House Ways and Means Committee Chairman Bill Thomas have said that they oppose renewal of either bill. Some of the major countries that currently enjoy GSP benefits are seen as responsible for blocking agreement in the Doha Round negotiations. The House Ways and Means Committee sees ATPDEA as an obstacle to negotiations with Bolivia and Ecuador to agree to bilateral free trade agreements with the U.S.

Any renewal of GSP is unlikely to include all of the countries currently enjoying benefits. Faced with a major trade deficit Congress is becoming more inclined to discontinue unilateral benefits whenever possible in favor of bilateral free trade agreements.

The Office of the U.S. Trade Representative is considering possible changes to GSP under the existing legal framework. The USTR is evaluating responses to its 2006 product and country eligibility review. It is possible that the revisions may result in renewal of GSP in a modified form.

For more information, please contact your local sales representative.