GSP - A COMPARISON

8/7/2019 GSP - A COMPARISON

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Table 1: Key Trade Preference Programs AvailableUnited States The European Union Canada

GSP Plus (GSP+)

Date Implemented

GSP January 1, 1976 GSP 1971 MFNAGOA October 1, 2000 GSP Plus (GSP+) January 1, 2006 GPT July 1, 1974

1991March 5, 2001 LDCT 1983

CBI & CBTPACCC

Expiration Date

GSP

GSP December 31, 201 MFN

AGOA September 30, 201

GSP Plus (GSP+) GPT June 30, 2014

EBA Permanent

LDCT June 30, 2014

CBI & CBTPACCC

Notes:

The Philippines is alread under the US GSP.

The Philippines and Viet Nam are among those granted GPT and MFN Tariff in Canada.

THE GENERALIZE SYSTEM OF PREFENCES (GSP)A COMPARISON ON THE SCHEME OF THE USA, EU and CANADA

Unilateral PreferencePrograms Offered

The Generalized System

of Preferences (GSP)

The Generalized System

of Preferences (GSP)

Most Favored Nation Tariff

(MFN)The African Growthand Opportunity Act (AGOA)

General Preferential Tariff (GPT)

The Andean Trade Partnershipand Drug Eradication Act (ATPDEA) Everything But Arms

(EBA)

Least Developed Countries'Tariff (LDCT)

and The Caribbean BasinTrade Partnership Act (CBTPA)

Commonwealth CaribbeanCountries (CCC)

ATPDEA (Andean PreferenceTrade Act) Everything But

Arms (EBA)January 1, 1984October 1, 2000en e onDecember 31,2010 (beneficiarycountries after January1, 2011 are subject toNormal TradeRelation duties )

2015, but new regulations ineffect from January 1,2009to December 31, 2011

ATPDEA (Andean TradePartnership and DrugEradication Act)

December 31, 2009for Colombia, Peru;June 30, 2009 forBolivia, Ecuador expired onFEBRUARY 11,2011

,CBTPA expired onSeptember 30,2010

In May (2008), Vietnam formally presented to the US a request to be designated as a beneficiary developing country under the U.S. GeneralizedSystem of Preferences Program. The US government is considering whether to grant GSP benefits to Vietnam.

However, statute that governs GSP states that duty-free treatment provided under the GSP shall not remain in effect after December31, 2010.As a result, imports of GSP products from GSP beneficiary countries arriving in the US on or after January 1, 2011, will be subject to regular,


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Vietnam and the Philippines fall under Group I in the GSP scheme of the European Community.

Table 2: Countries/Territories Covered

United States The European Union CanadaGSP GSP MFN

AGOA GSP PLUS GPT

ATPDEA EBA LDCT

CBI & CBTPA CCC

Table 3: PRODUCT ELIGIBILITY/COVERAGE

Table 4 : Duty TreatmentUnited States The European Union Canada

Approximately 132 developingcountries, including thoseeligible for other preferenceprogramsEXCEPT Cuba, China, Vietnam,Malaysia; 44 designated LDCs

176 Countriesand Territories,excluding noone of note.

includes Philippinesand Vietnam

Up to 41 Countries of Sub-SaharanAfrica.

Currently 16countries/territories

Approximately 173developing countries -also applies toPhilippines andVietnam(including China),excluding no one of note

Bolivia, Colombia,Ecuador and Peru;benefits for Bolivia have beentemporarily suspended

49 LeastDevelopedCountries;plus Cape Verde

49 Least DevelopedCountries

24 countriesin Central Americaand the Caribbean,

except Cuba

CommonwealthCaribbean Countries(e.g. St. Christopher &

Nevis, St. Lucia, St.Vincent and theGrenadines, Tonga, Turks& Caicos Islands, BritishVirgin Islands

(GSP)

(GSP) (GPT)

Out of approximately 6,700 dutiable tariff lines, close to 4,650products from developing countries receive dutiy-freetreatment, with LDCs receiving preferential treatment on morethan 1,400 additional items.

Approximately 6,350 products (of 7357dutiable products) receive preferentialtreatment, divided into sensitive (about3,900 tariff lines) and non-sensitive.

Under the GPT more than5,700 product tariff lines,or about sixty-seven percent of Canada's tariff schedule, enters the country duty-free. Theremainder faces tariffs lower than the MFN rates


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Zero for all preference programs GSP GPT

GSP PLUS

EBA LDCT

Table 5: Rules of OriginUnited States The European Union Canada

GPT

LDCT

Table 6: Eligibility CriteriaUnited States The European Union Canada

Zero for non-sensitiveproducts. Sensitiveproducts receive 3.5-percentage pointreduction in the MFNduty (for ad valorem

duties) . Productssubject to specificduties receive a 30percent reduction

Ranges from zero up tothe MFN rate, dependingon the product

Zero on allcovered products

delayedliberalization (for

Zero for all eligibleproducts

Generally: The value added in a beneficiary country must equal at least 35 per cent of theappraised value of the article at the time of entry into the US.Imported materials can be counted towards the value-addedrequirement only if they are "substantially transformed" intonew and different constituent materials of which the eligiblearticle is composed

Generally: The final productmust provide a change of tariff heading from the materials used toproduce it and the value of importedinputs must not exceed 40 percent of the value of the finished product

GPT allows fullcumulationamong beneficiaries,who must accountfor 60 percent of thefinal value

Textile and apparel benefitsunder AGOA, CBTPA, AND ATPDEAgenerally require that the article be wholly formed in thebeneficiary country using yarn and fabric from the UnitedStates or the beneficiary country. AGOA permits the usage of third country fabrics in limited quantities from the poorestcountries through 2012

Partial cumulation is permittedon a regional basis(subject to certain conditions).

Rules of origin are moreliberalthan under the GPT.Goods wholly produced inone or more LDCs qualifyfor treatment.Additionally, goodsoriginating in one or moreLDC with no more than 60percent of the valueoriginating outside of theLDC qualify forpreferential treatment.

Apparel produced in aLDC can use textile inputsfrom any developingcountry or Canada

The country:

a) is not a communist country (with some exceptions)

GSP benefits could be temporarily withdrawn in whole or in

part if countries engage in certain activities such asemploying slave or forced labor, prison labor, systematicviolation of the freedom of association and collectivebargaining, and rules of origin fraud, among others

None, but the Government of Canada

has removed countries from GPT andLDCT if they become members of theEuropean Union or if they violatecertain human rights

b) is not part of a cartel thatwitholds vital resourcesc) does not grant reverse preferences to other developed

d) has not nationalized or expropriated e) does not aid or abet individuals or groups that have

f) provides adequate and effective intellectual property right


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i) has asked for preferences

Table 7: LOSING BENEFITS/QUOTAS and GRADUATIONUnited States The European Union Canada

Products: No product cut-off formula.

Countries:

sources:UNILATERAL PREFERENTIAL TRADE PROGRAMSOFFERED BY THE UNITED STATES, THE EUROPEAN UNION,AND CANADA: A COMPARISONDaniel Anthony*December 2008The Trade Partnership1001 Connecticut Ave., NWSuite 1110Washington DC 20036________ * Daniel Anthony is the Director of Research and Government Relations for The Trade Partnership. Theviews expressed in this paper are solely those of the authors.

h) has implemented commitments to eliminate the worst form

j) does not exceed the per capita income threshold for

Specific products may lose GSPbenefits if imports from acountry exceed a dollarthreshold/import threshold - if U.S. imports of that productsurpass the designated CNL(Competitive Need Limit). In2009, the import threshold forproducts is defined at the 8-digittariff line level as $140 million,increasing by $5 million eachyear, or fifty percent of total U.S.imports of that product in theprevious calendar year.

Sectors may lose benefits if importsof the sector exceed 15 percent of allimports from all beneficiaries or acountry's trade in a specific sectorexceeds thresholds calculated by theEU.

(GSP only): In addition tochanged circumstancesregarding the eligibility criteria,countries lose benefits uponclassification as a high-incomecountry by the World Bank, or if a country has entered into a FTA

(Free Trade Agreement with theU.S. or a bilateral agreementwith another country (e.g.joining the European Union).

(GSP only): Countries lose GSP benefitsupon classification as a high-incomecountryby the World Bank for three consecutiveyears.

Graduation: No formal graduation mechanism exists, but Canada doesnot remove GPT benefits for countries that join the European Union

Ant ony, Danie . "Uni atera Pre erentia Tra e Programs O ere y t e Unite States, T e European Union, an Cana a: A Comaparison" T e Tra e Partners2008.Available athtt ://www.trade artnershi .com/ df files/GSP Com arison. df


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* Julia V. Sekkel is a Research Assistant, Center for Global Development.

Other sources:

Sekkel, Julia V. "Summary of Major Trade Preference Program."April 2009.Available athttp://www.cgdev.org/doc/Trade/Summary_of_Major_Trade_Preference_Programs_Final_12_09.pdf

UNCTAD (2010). "Generalized System of Preferences: Handbook on the Scheme of the United States of America" (UNCTAD/ITCD/TSB/Misc.62/Rev.4).Available athttp://www.unctad.org/en/docs/itcdtsbmisc58rev2_en.pdf

UNCTAD (2001). "Generalized System of Preferences: Handbook on the Scheme of Canada" (UNCTAD/ITCD/TSB/Misc. 66) - Advance Copy Available athttp://www.unctad.org/en/docs/itcdtsbmisc66_en.pdf

UNCTAD (2002). "Generalized System of Preferences: Handbook on the Scheme of The European Community" (UNCTAD/ITCD/TSB/Misc. 25/Rev. 2)Available athttp://www.erca.gov.et/GSP-EU.pdf

UNCTAD (2008). "Generalized System of Preferences:Handbook on the Scheme of the European Community" (UNCTAD/ITCD/TSB/Misc. 25/Rev. 3)Available athttp://www.unctad.org/en/docs/itcdtsbmisc25rev3_en.pdf htt ://www.unctad.or /tem lates/Pa e.as ?intItemID=1425&lan =1

http://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariffhttp://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=aThe Vietnam Trade Office and Sidley Austin LLP. "Frequently Asked Questions - Understanding Vietnam and GSP. June 2008.

www.regulations.govhttp://www.ustr.gov/trade-topics/trade-development/preference-prohttp://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow
http://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariff%E2%80%A6http://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=ahttp://www.regulations.gov/http://www.regulations.gov/http://www.ustr.gov/trade-topics/trade-development/preference-pro%E2%80%A6http://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow%E2%80%A6http://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow%E2%80%A6http://www.ustr.gov/trade-topics/trade-development/preference-pro%E2%80%A6http://www.regulations.gov/http://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=ahttp://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariff%E2%80%A6


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. Decem er


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Table 1: Key Trade Preference Programs AvailableUnited States The European Union Canada

GSP Plus (GSP+)

Date Implemented

GSP January 1, 1976 GSP 1971 MFNAGOA October 1, 2000 GSP Plus (GSP+) January 1, 2006 GPT July 1, 1974

1991

March 5, 2001 LDCT 1983CBI & CBTPA

CCC

Expiration Date

GSP

GSP December 31, 201 MFN

AGOA September 30, 201GSP Plus (GSP+) GPT June 30, 2014

EBA Permanent

LDCT June 30, 2014

CBI & CBTPACCC

Notes:

The Philippines is alread under the US GSP.

The Philippines and Viet Nam are among those granted GPT and MFN Tariff in Canada.


Unilateral PreferencePrograms Offered

The Generalized Systemof Preferences (GSP)

The Generalized Systemof Preferences (GSP)

Most Favored Nation Tariff (MFN)

The African Growthand Opportunity Act (AGOA)

Tariff (GPT)

The Andean Trade Partnershipand Drug Eradication Act (ATPDEA) Everything But Arms

(EBA)

Countries'Tariff (LDCT)

and The Caribbean BasinTrade Partnership Act (CBTPA)

Commonwealth CaribbeanCountries (CCC)

ATPDEA (Andean PreferenceTrade Act) Everything But

Arms (EBA)January 1, 1984October 1, 2000en e onDecember 31,2010 (beneficiarycountries after January1, 2011 are subject toNormal TradeRelation duties )

2015, but new regulations ineffect from January 1,2009to December 31, 2011

ATPDEA (Andean TradePartnership and DrugEradication Act)

December 31, 2009for Colombia, Peru;June 30, 2009 forBolivia, Ecuador expired onFEBRUARY 11,2011

,CBTPA expired onSeptember 30,2010

In May (2008), Vietnam formally presented to the US a request to be designated as a beneficiary developing country under the U.S.Generalized System of Preferences Program. The US government is considering whether to grant GSP benefits to Vietnam.

However, statute that governs GSP states that duty-free treatment provided under the GSP shall not remain in effect after

December 31, 2010.As a result, imports of GSP products from GSP beneficiary countries arriving in the US on or after January 1, 2011, will be subject to


12/20

Vietnam and the Philippines fall under Group I in the GSP scheme of the European Community.


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Table 2: Countries/Territories CoveredUnited States The European Union Canada

GSP GSP MFN

AGOA GSP PLUS GPT

ATPDEA EBA LDCT

CBI & CBTP CCC


Approximately 132 developing countries,

including those eligible for otherpreference programsEXCEPT Cuba, China, Vietnam, Malaysia;44 designated LDCs

176 Countries andTerritories,excluding no one of

includes Philippines andVietnam

Up to 41 Countries of Sub-SaharanAfrica.

Currently 16 countries/territories

Approximately 173 developingcountries - also applies toPhilippines and Vietnam

Bolivia, Colombia,Ecuador and Peru;benefits for Bolivia have been temporarilysuspended

49 Least DevelopedCountries;plus Cape Verde

49 Least DevelopedCountries

24 countries

in Central Americaand the Caribbean,except Cuba

Commonwealth Caribbean Countries

(e.g. St. Christopher & Nevis, St.Lucia, St. Vincent and theGrenadines, Tonga, Turks & CaicosIslands, British Virgin Islands


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Table 3: PRODUCT ELIGIBILITY/COVERAGE


United States(GSP)

e uropeanUnion(GSP)

Canada(GPT)

Out of approximately 6,700dutiable tariff lines, close to 4,650products from developingcountries receive dutiy-freetreatment, with LDCs receivingpreferential treatment on morethan 1,400 additional items.

Approximately 6,350products (of 7357dutiable products)receive preferentialtreatment, divided intosensitive (about 3,900tariff lines) and non-sensitive.

Under the GPT more than5,700 product tariff lines,or about sixty-seven percentof Canada's tariff schedule,enters the country duty-free. The remainder facestariffs lower than the MFNrates


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Table 4 : Duty Treatment

United States The European Union CanadaGSP GPT

GSP PLUS

EBA LDCT


Zero for all

preferenceprograms

Zero for non-sensitive products.

Sensitive products receive 3.5-percentage point reduction inthe MFN duty (for ad valoremduties) . Products subject tospecific duties receive a 30percent reduction

Ranges from zero up to

the MFN rate,depending on theproduct

Zero on all coveredproducts

Zero duties for allproducts through delayedliberalization (for

bananas, sugar and rice)

Zero for all eligibleproducts


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Table 5: Rules of OriginUnited States The European Union Canada

GPT

LDCT


Generally: The value added

in a beneficiary country must equalat least 35 per cent of the appraisedvalue of the article at the time of entry into the US. Imported materialscan be counted towards the value-added requirement only if they are"substantially transformed" into newand different constituent materials of which the eligible article is composed

Generally: The final productmust provide a change of tariff heading from the materials usedto produce it and the value of imported inputs must notexceed 40 percent of the valueof the finished product

GPT allows full cumulationamong beneficiaries,who must account for 60percent of the final value

Textile and apparel benefitsunder AGOA, CBTPA, AND ATPDEAgenerally require that the article bewholly formed in the beneficiarycountry using yarn and fabric fromthe United States or the beneficiarycountry. AGOA permits the usage of third country fabrics in limitedquantities from the poorest countriesthrough 2012

Partial cumulation is permitted

on a regional basis(subject to certain conditions).

Rules of origin are more liberalthan under the GPT. Goods whollyproduced in one or more LDCsqualify for treatment. Additionally,goods originating in one or moreLDC with no more than 60 percentof the value originating outside of the LDC qualify for preferentialtreatment. Apparel produced in aLDC can use textile inputs fromany developing country or Canada


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Table 6: Eligibility Criteria

United States The European Union Canada

i) has asked for preferences


The country:a) is not a communist country (with someexceptions)

GSP benefits could be temporarilywithdrawn in whole or in part if countriesengage in certain activities such asemploying slave or forced labor, prisonlabor, systematic violation of thefreedom of association and collectivebargaining, and rules of origin fraud,among others

None, but the Government of Canadahas removed countries from GPT andLDCT if they become members of theEuropean Union or if they violatecertain human rights

b) is not part of a cartel thatwitholds vital resourcesc) does not grant reverse preferences toother developed countries

d) has not nationalized or expropriatedU. S. property

e) does not aid or abet individuals orgroups that have committed

international terrorismf) provides adequate and effectiveintellectual property right protections

g) is taking steps to provideinternationally recognized worker rights

h) has implemented commitments toeliminate the worst form of child labor

j) does not exceed the per capita incomethreshold for designation


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Table 7: LOSING BENEFITS/QUOTAS and GRADUATIONUnited States The European Union Canada

Products: No product cut-off formula.

Countries:


Specific products may lose GSP benefits if

imports from a country exceed a dollarthreshold/import threshold - if U.S. imports of that product surpass the designated CNL(Competitive Need Limit). In 2009, the importthreshold for products is defined at the 8-digittariff line level as $140 million, increasing by $5million each year, or fifty percent of total U.S.imports of that product in the previous calendaryear.

Sectors may lose benefits if imports of

the sector exceed 15 percent of allimports from all beneficiaries or acountry's trade in a specific sectorexceeds thresholds calculated by theEU.

(GSP only): In addition to changedcircumstances regarding the eligibility criteria,countries lose benefits upon classification as ahigh-income country by the World Bank, or if acountry has entered into a FTA (Free TradeAgreement with the U.S. or a bilateralagreement with another country (e.g. joiningthe European Union).

(GSP only): Countries lose GSP benefitsupon classification as a high-income

countryby the World Bank for three consecutiveyears.

Graduation: No formal graduationmechanism exists, but Canadadoes not remove GPT benefits forcountries that join the European Union


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SOURCES:UNILATERAL PREFERENTIAL TRADE PROGRAMSOFFERED BY THE UNITED STATES, THE EUROPEAN UNION,AND CANADA: A COMPARISONDaniel Anthony*December 2008

The Trade Partnership1001 Connecticut Ave., NWSuite 1110Washington DC 20036________ * Daniel Anthony is the Director of Research and Government Relations for The Trade Partnership. Thviews expressed in this paper are solely those of the authors.

* Julia V. Sekkel is a Research Assistant, Center for Global Development.

Anthony, Daniel. "Unilateral Preferential Trade Programs Offered by the United States, TheEuropean Union, and Canada: A Comaparison" The Trade Partnership . December 2008.Available athttp://www.tradepartnership.com/pdf_files/GSP_Comparison.pdf

Sekkel, Julia V. "Summary of Major Trade Preference Program."April 2009.Available athttp://www.cgdev.org/doc/Trade/Summary_of_Major_Trade_Preference_Programs_Final_12_09.pdf

UNCTAD (2010). "Generalized System of Preferences: Handbook on the Scheme of the UnitedStates of America" (UNCTAD/ITCD/TSB/Misc.62/Rev.4).Available athttp://www.unctad.org/en/docs/itcdtsbmisc58rev2_en.pdf

UNCTAD (2001). "Generalized System of Preferences: Handbook on the Scheme of Canada"(UNCTAD/ITCD/TSB/Misc. 66) - Advance Copy Available athttp://www.unctad.org/en/docs/itcdtsbmisc66_en.pdf http://www.unctad.org/Templates/Page.asp?intItemID=1424&lang

UNCTAD (2002). "Generalized System of Preferences: Handbook on the Scheme of The EuropeanCommunity" (UNCTAD/ITCD/TSB/Misc. 25/Rev. 2)Available athttp://www.erca.gov.et/GSP-EU.pdf


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Other sources:

UNCTAD (2008). "Generalized System of Preferences:Handbook on the Scheme of the European Community" (UNCTAD/ITCD/TSB/Misc. 25/Rev. 3)Available athttp://www.unctad.org/en/docs/itcdtsbmisc25rev3_en.pdf http://www.unctad.org/templates/Page.asp?intItemID=1425&lang=1

http://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariffhttp://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=aThe Vietnam Trade Office and Sidley Austin LLP. "Frequently AskedQuestions - Understanding Vietnam and GSP. June 2008.Available athttp://www.us-asean.org/Vietnam/GSP/FAQ.pdf

www.regulations.govhttp://www.ustr.gov/trade-topics/trade-development/preference-prohttp://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow
http://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariff%E2%80%A6http://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=ahttp://www.regulations.gov/http://www.ustr.gov/trade-topics/trade-development/preference-pro%E2%80%A6http://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow%E2%80%A6http://www.ecuadortimes.net/2011/02/11/atpdea-to-expire-tomorrow%E2%80%A6http://www.ustr.gov/trade-topics/trade-development/preference-pro%E2%80%A6http://www.regulations.gov/http://investincanada.gc.ca/eng/establish-a-business/faq.aspx?action=ahttp://investincanada.gc.ca/eng/advantage-canada/tax-advantage/tariff%E2%80%A6

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GSP - A COMPARISON