International Trade

The Generalized System of Preferences (GSP) Program, which provides duty-free access to the United States for products of developing countries, awaits congressional reauthorization. This program eliminates tariffs on some imports for developing countries in order to promote development through trade rather than traditional aid programs. Concerns have been raised as to whether administration of the program adequately considers the impact of GSP imports on domestic producers and effectively enforces beneficiary country obligations. This program analyzes (1) benefits provided to beneficiary developing countries, (2) limitations on GSP imports, (3) administration of the program for adding or removing products from GSP coverage, and (4) administration of program provisions requiring that countries follow certain intellectual property and worker rights practices.

GAO found that: (1) only a few of the more advanced or larger developing countries receive GSP benefits; (2) although imports from BDC have increased annually, overall imports from several GSP countries have decreased because of their economic graduation; (3) new General Agreement on Tariffs and Trade tariff reductions have reduced the value of GSP duty-free benefits and U.S. leverage to demand compliance with GSP requirements; (4) BDC believe that the GSP program has helped their economic development; (5) in 1992, GSP benefits totalled $16.7 billion and the United States lost nearly $900 million in foregone duties; (6) over the last few years, Mexico has received the most GSP benefits; (7) several GSP program provisions limit duty-free entry in specific cases; (8) administrative exclusions under GSP should diminish, since Mexico has graduated from the GSP program and competitive need limit exclusions have been increasing for other beneficiary countries; (9) although the administrative process for considering petitions to add or remove products from GSP coverage is generally effective and well-structured, opportunities exist to improve program administration through better information dissemination and strengthened product petition acceptance requirements; and (10) adding new provisions to strengthen intellectual property and worker rights during program renewal may place too many conditions on beneficiary countries for their continued program participation.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: