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Legal Update

US Congress Restores the Generalized System of Preferences Program and the Andean Trade Preferences Act

18 October 2011
Mayer Brown Legal Update

On October 12, 2011, the US Congress passed legislation renewing the US Generalized System of Preferences program (GSP), which had expired on December 31, 2010, along with the Andean Trade Preferences Act program (ATPA). Congress renewed both programs through July 31, 2013. The reinstatements are retroactive to January 1, 2011 for GSP and February 12, 2011 for the ATPA. 

GSP provides for duty-free treatment of imports for certain products from designated developing countries. ATPA extends such duty-free treatment to a broader set of goods from Andean-region countries. The 2002 Andean Trade Promotion and Drug Eradication Act amended the ATPA, extending duty-free treatment to additional products. Renewal of the programs occurred in tandem with passage of free trade agreements with Korea, Colombia, and Panama. 

The two preference programs benefit US importers, including those that use covered imports as manufacturing inputs. The Obama administration states that GSP saved US importers almost $577 million in duties in 2009. GSP advocates estimate that US companies have paid nearly $2 million per day in additional duties since GSP expired on December 31, 2010.

GSP was instituted in 1976 by the Trade Act of 1974. The program aids economic development among less-developed countries and currently benefits 129 countries and territories. Under GSP, 4,881 US tariff lines are eligible for duty-free entry. Among the primary products receiving GSP treatment are crude oil, tires, aluminum, automobile parts, and sugar. Angola, India, Brazil and Indonesia are the top GSP beneficiaries, with the Philippines, Russia, South Africa, and Turkey also benefitting. 

The ATPA was enacted in 1991 to help Bolivia, Colombia, Ecuador, and Peru promote their economic development and to expand economic alternatives to drug trafficking by eliminating tariffs on certain products from the region. The previous extension expired on February 12, 2011. Once the Colombia free trade agreement is in force, the country will no longer be a beneficiary under ATPA or GSP.

For more information about these import preference programs, or any other matter raised in this Legal Update, please contact , , , or .

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