The Generalized System of Preferences (GSP) stands as the oldest and largest U.S. trade preference program, fostering economic growth and diversity in developing countries through nonreciprocal, duty-free treatment. Enacted on January 1, 1976, under the Trade Act of 1974, GSP is a pivotal trade legislation subject to Congressional re-authorization.

Eligibility Criteria

Goods eligible for duty-free entry under GSP must either be entirely produced, grown, or manufactured in a beneficiary developing country or represent a new or distinct article of commerce originating from such a country. A substantial transformation, with at least 35 percent of the appraised value added in the beneficiary country, is a prerequisite. Additionally, the goods must be "imported directly" from the GSP-eligible country. Detailed eligibility criteria can be found here.

GSP Special Program Indicator (SPI)

Eligible tariff items are denoted by the symbols "A," "A*," or "A+" in the "Special" sub-column of the HTSUS. The "A" symbol indicates eligibility for all GSP countries, "A*" signifies certain countries' ineligibility, and "A+" designates approximately 1,500 additional tariff items for which only the least developed beneficiary countries qualify.

Competitive Need Limitations

Competitive Need Limitations (CNLs) are quantitative ceilings imposed on GSP benefits for all tariff items and beneficiary countries. These ceilings may be waived under specific circumstances, as outlined in the USTR’s GSP Guidebook.

Expiration and Pending Reinstatement

As of December 31, 2020, GSP SPIs ("A," "A+," and "A*") have expired, awaiting Congressional action for program renewal. Consequently, GSP eligible goods are subject to "General" (column 1) duty rates as of January 1, 2021, until further notice.

GSP Entry Summaries and Retroactive Refund

Importers are advised to continue flagging GSP-eligible imports with SPI "A" and pay normal trade relations (column 1) duty rates during the lapse. If GSP is retroactively renewed, CBP will automate the duty refund process for entries flagged with SPI "A."

Post Summary Correction (PSC) GSP Claims

CBP allows post-importation GSP claims via PSC and protest for importations made before GSP expiration. However, claims for importations made after GSP expiration will not be accepted.

Goods Subject to Section 232 (Aluminum and Steel)

While trade preference can be claimed for all preference programs except GSP and the African Growth and Opportunity Act (AGOA), goods subject to Section 232 duties or quotas under GSP or AGOA may not receive duty preference. Section 232 duties must be paid on these imports even if trade preferences apply.

In anticipation of GSP reinstatement, U.S. business owners, especially those importing from developing countries, should stay informed about legislative developments and be prepared to leverage the benefits of this vital trade preference program.

This information is drawn from the U.S. Customs & Border Protection Official Website. Read their information HERE.