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Legal Update

US Trade Representative Identifies Imported Articles that May Lose Duty Preferences under the Generalized System of Preferences

1 December 2011
Mayer Brown Legal Update

On December 1, 2011, the US Trade Representative (USTR) released trade data on articles that may exceed Competitive Need Limitations (CNL) thresholds under the Generalized System of Preferences (GSP). These articles could be excluded from duty-free treatment under GSP. USTR has invited petitions on waiver of CNL for articles from particular GSP beneficiary countries. Petitions on CNL are due by December 16, 2011.

USTR’s release is part of its 2011 Annual Review of the US GSP program. In a November 1, 2011 Federal Register notice, USTR requested petitions on CNL waivers and other possible modifications to GSP for 2011. Besides addressing CNL, petitioners may request that USTR modify the list of goods eligible for GSP treatment. They may also ask USTR to remove, suspend, or restrict a beneficiary country’s GSP status. The deadline for petitions not related to CNL is December 5, 2011. USTR has not said when it will release the 2011 Annual Review.

The December 1 release identifies articles imported from Indonesia, the Philippines, Argentina, Brazil, Thailand, Turkey, India, Russia, Georgia, and Venezuela. Based on available data, these articles are expected to exceed CNL limits, which limit duty-free imports to less than $150 million or 50 percent of the US import market this year. When these limits are reached for a particular product imported from a beneficiary country, that country automatically loses GSP benefits in future years unless a waiver is granted. The USTR’s release covers trade from January 2011 through September 2011. USTR will base its final CNL determinations on full-year 2011 data, which the US International Trade Commission will release in February 2012. The updated data may include additional countries and articles.

GSP provides for duty-free treatment of imports for certain products from designated developing countries. The Trade Act of 1974 instituted GSP in 1976. GSP currently benefits 129 countries and territories. India, Brazil, and Indonesia are among the top GSP beneficiaries, which also include the Philippines, Russia, South Africa, and Turkey. Among the primary products receiving GSP treatment are crude oil, tires, aluminum, automobile parts, and sugar. Mayer Brown recently reported on the reauthorization of GSP.

CNL and other aspects of GSP may affect a broad array of US imports. Importers, manufacturers, and governments should investigate how possible changes in GSP may affect them.

For more information about CNL or other GSP issues, please contact , , or .

Learn more about our Global Trade practice.

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