International Trade

Issues Concerning the Generalized System of Preferences Program Gao ID: T-GGD-94-174 June 20, 1994

The Generalized System of Preferences Program eliminated tariffs on imports from 145 Third World countries in order to promote development through trade rather than through traditional aid programs. In 1992, nearly $17 billion, or about three percent of all U.S. imports, entered duty free under the program. U.S. duties foregone on these goods were about $900 million. However, the cost to the U.S. government is pegged at 75 percent of this amount due to tax revenue offsets, according to the Congressional Budget Office. The value of duties foregone would decrease with the implementation of the estimated 40-percent tariff reductions negotiated under the Uruguay Round of the General Agreement on Tariffs and Trade for products eligible under the General System of Preferences Program. This testimony evaluates the program and presents several matters for Congress to consider during the reauthorization of the program, which is due to expire in September 1994.

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