International Trade
The United States Needs an Integrated Approach to Trade Preference Programs Gao ID: GAO-08-907T June 12, 2008U.S. trade preference programs promote economic development in poorer nations by providing duty-free export opportunities in the United States. The Generalized System of Preferences, Caribbean Basin Initiative, Andean Trade Preference Act, and African Growth and Opportunity Act unilaterally reduce U.S. tariffs for many products from over 130 countries. However, two of these programs expire partially or in full this year, and Congress is exploring options as it considers renewal. This testimony describes the growth in preference program imports since 1992, identifies policy trade-offs concerning these programs, and evaluates the overall U.S. approach to preference programs. The testimony is based on two recent studies on trade preference programs, issued in September 2007 and March 2008. For those studies, GAO analyzed trade data, reviewed trade literature and program documents, interviewed U.S. officials, and did fieldwork in six trade preference beneficiary countries.
Total U.S. preference imports grew from $20 billion in 1992 to $92 billion in 2006, with most of this growth taking place since 2000. The increases from preference program countries reflect legislation passed by Congress in 1996 and 2000 that enhanced preference programs and added new eligible products. Preference programs give rise to three critical policy trade-offs. First, preferences entail a trade-off to the extent opportunities for beneficiary countries to export products duty free must be balanced against U.S. industry interests. Some products of importance to developing countries, notably agriculture and apparel, are ineligible by statute as a result. Secondly, certain developing countries have been given additional preferential benefits for such import-sensitive products under regional programs. But some of the poorest countries, outside targeted regions, do not qualify. Third, Congress faces a trade-off between longer program renewals, which may encourage investment and undermine support for the likely greater economic benefits of broader trade liberalization, a key U.S. goal, and shorter renewals, which may provide opportunities to leverage the programs to meet evolving priorities. Trade preference programs have proliferated over time, becoming more complex, but neither Congress nor the administration formally considers them as a whole. Responsive to their legal mandates, the Office of the U.S. Trade Representative (USTR) and other agencies use different approaches to monitor compliance with program criteria, resulting in disconnected review processes and gaps in addressing some countries and issues. Disparate reporting makes it difficult to determine progress on programs' contribution to economic development in beneficiary countries.
GAO-08-907T, International Trade: The United States Needs an Integrated Approach to Trade Preference Programs
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Testimony:
Before the Committee on Finance, United States Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Thursday, June 12, 2008:
International Trade:
The United States Needs an Integrated Approach to Trade Preference
Programs:
Statement of Loren Yager:
Director, International Affairs and Trade:
GAO-08-907T:
GAO Highlights:
Highlights of GAO-08-907T, a testimony before the Committee on Finance,
U.S. Senate.
Why GAO Did This Study:
U.S. trade preference programs promote economic development in poorer
nations by providing duty-free export opportunities in the United
States. The Generalized System of Preferences, Caribbean Basin
Initiative, Andean Trade Preference Act, and African Growth and
Opportunity Act unilaterally reduce U.S. tariffs for many products from
over 130 countries. However, two of these programs expire partially or
in full this year, and Congress is exploring options as it considers
renewal.
This testimony describes the growth in preference program imports since
1992, identifies policy trade-offs concerning these programs, and
evaluates the overall U.S. approach to preference programs. The
testimony is based on two recent studies on trade preference programs,
issued in September 2007 and March 2008. For those studies, GAO
analyzed trade data, reviewed trade literature and program documents,
interviewed U.S. officials, and did fieldwork in six trade preference
beneficiary countries.
What GAO Found:
Total U.S. preference imports grew from $20 billion in 1992 to $92
billion in 2006, with most of this growth taking place since 2000. The
increases from preference program countries reflect legislation passed
by Congress in 1996 and 2000 that enhanced preference programs and
added new eligible products.
Preference programs give rise to three critical policy trade-offs.
First, preferences entail a trade-off to the extent opportunities for
beneficiary countries to export products duty free must be balanced
against U.S. industry interests. Some products of importance to
developing countries, notably agriculture and apparel, are ineligible
by statute as a result. Secondly, certain developing countries have
been given additional preferential benefits for such import-sensitive
products under regional programs. But some of the poorest countries,
outside targeted regions, do not qualify. Third, Congress faces a trade-
off between longer program renewals, which may encourage investment and
undermine support for the likely greater economic benefits of broader
trade liberalization, a key U.S. goal, and shorter renewals, which may
provide opportunities to leverage the programs to meet evolving
priorities.
Trade preference programs have proliferated over time, becoming more
complex (as shown below), but neither Congress nor the administration
formally considers them as a whole. Responsive to their legal mandates,
the Office of the U.S. Trade Representative (USTR) and other agencies
use different approaches to monitor compliance with program criteria,
resulting in disconnected review processes and gaps in addressing some
countries and issues. Disparate reporting makes it difficult to
determine progress on programs‘ contribution to economic development in
beneficiary countries.
Growth of Trade Programs over Time:
[See PDF for image]
This figure is a timeline depicting the growth of trade programs over
time, as follows:
1976:
GSP.
1983:
GSP;
CBI.
1991:
GSP;
CBI;
ATPA.
1996:
GSP;
LDC;
CBI;
ATPA.
2000:
GSP;
LDC;
CBI;
CBTA;
ATP;
AGOA.
2002:
GSP;
LDC;
CBI;
CBTA;
ATP;
AGOA;
ATPDEA.
2006:
GSP;
LDC;
CBI;
CBTA;
ATP;
AGOA;
ATPDEA;
HOPE.
Notes:
AGOA: African Growth and Opportunity Act;
ATPA: Andean Trade Preference Act;
ATPDEA: Andean Trade Promotion and Drug Eradication Act;
CBI: Caribbean Basin Initiative;
CBTPA: Caribbean Basin Trade Partnership Act;
GSP: Generalized System of Preferences;
HOPE: Haitian Hemispheric Opportunity through Partnership Encouragement
Act;
LDC: Expanded GSP for Least-developed Country.
Source: GAO analysis of official U.S. trade statistics.
[End of figure]
What GAO Recommends:
In the March 2008 report, GAO made a number of recommendations to the
U.S. Trade Representative, including to review beneficiary countries
that have not been considered under the regional programs, and
periodically consider preference programs jointly. In response, USTR
indicated that it would undertake an interagency review of the programs
and consolidate discussion of them in its annual report.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-907T]. For more
information, contact Loren Yager at (202) 512-4347 or yagerl@gao.gov.
[End of section]
United States Government Accountability Office: Washington, DC 20548:
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss our work on U.S. trade
preference programs. Since the committee's hearing last year on this
subject, GAO has completed two in-depth studies of U.S. preference
programs for the Finance Committee and the Committee on Ways and Means.
[Footnote 1] Our findings suggest that these programs do provide
benefits to recipient nations, but it is more challenging to determine
programs' contribution to economic development in those nations. Our
findings in those studies also support the need to consider whether a
more integrated approach would better ensure programs meet shared
goals.
This hearing is particularly timely, as a number of the preference
programs were or are still scheduled for expiration during the current
calendar year. We believe that this provides an opportunity for
Congress and the administration to review the progress and performance
of these programs as a group and begin to address some of the difficult
questions that you posed in the last hearing. In order to contribute to
that discussion, I will address three topics today. First, I will
describe preference import trends. Second, I will outline key policy
trade-offs between various domestic and foreign interests that are
inevitable in the design of preference programs. Finally, I will
summarize our recent findings and recommendations regarding the
importance of considering the preference programs as a group.
My remarks are based on the two studies of the preference programs that
we have published in the last year. In conducting the work for
Congress, we consulted with the Office of the U.S. Trade Representative
(USTR) and other executive agencies involved in implementing the
programs, as well as representatives from trade and development
organizations who have expertise and interest in the programs. In
addition, we met with government representatives from a number of the
beneficiary nations, including some of the larger beneficiaries such as
Brazil, as well as poorer nations such as Haiti and Ghana. We conducted
this performance audit from March 2007 to February 2008 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
Background:
In an effort to promote and achieve various U.S. foreign policy
objectives, trade preference programs have expanded in number and scope
over the past 3 decades. The purpose of these programs is to foster
economic development through increased trade with qualified beneficiary
countries while not harming U.S. domestic producers. Trade preference
programs extend unilateral tariff reductions to over 130 developing
countries. Currently, the United States offers the Generalized System
of Preferences (GSP) [Footnote 2] and three regional programs, the
Caribbean Basin Initiative (CBI), [Footnote 3] the Andean Trade
Preference Act (ATPA),[Footnote 4] and the African Growth and
Opportunity Act (AGOA). Special preferences for Haiti became part of
CBI with enactment of the Haitian Hemispheric Opportunity through
Partnership Encouragement (HOPE) Act in December 2006. The regional
programs cover additional products but have more extensive criteria for
participation than the GSP program. Eight agencies have key roles in
administering U.S. trade preference programs. Led by USTR, they include
the Departments of Agriculture, Commerce, Homeland Security, Labor,
State, and Treasury, as well as the U.S. International Trade Commission
(ITC).
GSP--the longest standing U.S. preference program--expires December 31,
2008, as do ATPA benefits. At the same time, legislative proposals to
provide additional, targeted benefits for the poorest countries are
pending. U.S. trade preference programs are widely used, but some
economists and others have raised questions about them. Their concerns
include the potential for diversion of trade from other countries that
these programs can cause; the complexity, scope of coverage, duration,
and conditionality of these programs; and the potential opposition to
multilateral and bilateral import liberalization preferences can
create.
U.S. Preference Imports Have Increased Sharply:
U.S. imports from countries benefiting from U.S. preference programs
have increased significantly over the past decade. Total U.S.
preference imports grew from $20 billion in 1992 to $92 billion in
2006. Most of this growth in U.S. imports from preference countries has
taken place since 2000. Whereas total U.S. preference imports grew at
an annual rate of 0.5 percent from 1992 to 1996, the growth quickened
to an annual rate of 8 percent from 1996 to 2000, and 19 percent since
2000. This accelerated growth suggests an expansionary effect of
increased product coverage and liberalized rules of origin for LDCs
under GSP in 1996 and for African countries under AGOA in 2000.
Figure 1: Trends in U.S Preference Import Levels (1992-2006):
[See PDF for image]
This figure is a multiple line graph depicting the following data:
Trends in U.S Preference Import Levels (1992-2006):
Year: 1992;
ATPA/ATPDEA: $0 billion;
CBI/CTPA: $2 billion;
GSP: $17 billion.
Year: 1993;
ATPA/ATPDEA: $0 billion;
CBI/CTPA: $2 billion;
GSP: $20 billion.
Year: 1994;
ATPA/ATPDEA: $1 billion;
CBI/CTPA: $2 billion;
GSP: $18 billion.
Year: 1995;
ATPA/ATPDEA: $1 billion;
CBI/CTPA: $2 billion;
GSP: $18 billion.
Year: 1996 (GSP expanded);
ATPA/ATPDEA: $1 billion;
CBI/CTPA: $3 billion;
GSP: $17 billion.
Year: 1997;
ATPA/ATPDEA: $1 billion;
CBI/CTPA: $3 billion;
GSP: $16 billion.
Year: 1998;
ATPA/ATPDEA: $2 billion;
CBI/CTPA: $3 billion;
GSP: $16 billion.
Year: 1999;
ATPA/ATPDEA: $2 billion;
CBI/CTPA: $3 billion;
GSP: $14 billion.
Year: 2000 (AGOA initiated; CBTPA added);
ATPA/ATPDEA: $2 billion;
CBI/CTPA: $3 billion;
GSP: $16 billion.
Year: 2001;
ATPA/ATPDEA: $2 billion;
CBI/CTPA: $8 billion;
GSP: $16 billion;
AGOA: $8 billion.
Year: 2002 (ATPDEA added; GSP renewed through 2006);
ATPA/ATPDEA: $1 billion;
CBI/CTPA: $10 billion;
GSP: $18 billion;
AGOA: $8 billion.
Year: 2003;
ATPA/ATPDEA: $6 billion;
CBI/CTPA: $10 billion;
GSP: $21 billion;
AGOA: $13 billion.
Year: 2004;
ATPA/ATPDEA: $8 billion;
CBI/CTPA: $11 billion;
GSP: $23 billion;
AGOA: $22 billion.
Year: 2005;
ATPA/ATPDEA: $11 billion;
CBI/CTPA: $12 billion;
GSP: $27 billion;
AGOA: $33 billion.
Year: 2006;
ATPA/ATPDEA: $13 billion;
CBI/CTPA: $10 billion;
GSP: $33 billion;
AGOA: $36 billion.
Source: GAO analysis of U.S. official trade statistics, based on
preferences actually claimed upon entry.
Note: Values of imports are expressed in nominal dollars, not adjusted
for inflation.
[End of figure]
There is also some evidence that leading suppliers under U.S.
preference programs have "arrived" as global exporters. For example,
the 3 leading non-fuel suppliers of U.S. preference imports---India,
Thailand, and Brazil--were among the top 20 world exporters and U.S.
import suppliers in 2007, and their exports in 2007 grew faster than
world exports, according to the World Trade Organization (WTO).
[Footnote 5]
Critical Policy Trade-offs among U.S. Consumers, Producers, and Foreign
Beneficiaries Are Inherent in Preference Programs:
Preference programs entail three critical policy trade-offs. First, the
programs are designed to offer duty-free access to the U.S. market to
increase beneficiary trade, but only to the extent it does not harm
U.S. industries. U.S. preference programs provide duty-free treatment
for over half of the 10,500 U.S. tariff lines, in addition to those
that are already duty-free on a most favored nation basis. But, they
also exclude many other products from duty-free status, including some
that developing countries are capable of producing and exporting. GAO's
analysis showed that notable gaps remain, particularly in agricultural
and apparel products. For 48 GSP-eligible countries, more than three-
fourths of the value of U.S. imports that are subject to duties (i.e.,
are dutiable) are left out of the programs. For example, just 1 percent
of Bangladesh's dutiable exports to the United States and 4 percent of
Pakistan's are eligible for GSP. Although regional preference programs
tend to have more generous coverage, they sometimes feature "caps" on
the amount of imports that can enter duty-free, which may significantly
limit market access. Imports subject to caps under AGOA include certain
meat products, a large number of dairy products, many sugar products,
chocolate, a range of prepared food products, certain tobacco products,
and groundnuts (peanuts), the latter being of particular importance to
some African countries.
The second trade-off is related and involves deciding which developing
countries can enjoy particular preferential benefits. A few LDCs in
Asia are not included in the U.S. regional preference programs,
although they are eligible for GSP-LDC benefits. Two of these
countries--Bangladesh and Cambodia--have become major exporters of
apparel to the United States and have complained about the lack of duty-
free access for their goods. African private-sector spokesmen have
raised concerns that giving preferential access to Bangladesh and
Cambodia for apparel might endanger the nascent African apparel export
industry that has grown up under AGOA. Certain U.S. industries have
joined African nations in opposing the idea of extending duty-free
access for apparel from these countries, arguing these nations are
already so competitive in exporting to the United States that in
combination they surpass U.S. FTA partners Mexico and CAFTA, as well as
the Andean/AGOA regions, which are the major export market for U.S.
producers of textiles.
This same trade-off involves decisions regarding the graduation of
countries or products from the programs. It relates to the original
intention that preference programs would confer temporary trade
advantages on particular developing countries, which would eventually
become unnecessary as countries became more competitive. Specifically,
the GSP program has mechanisms to limit duty-free benefits by
"graduating" countries that are no longer considered to need
preferential treatment, based on income and competitiveness criteria.
Since 1989, 28 countries have been graduated from GSP, mainly as a
result of "mandatory" graduation criteria such as high income status or
joining the European Union. Five countries in the Central American and
Caribbean region were recently removed from GSP and CBI/CBTPA when they
entered free trade agreements with the United States.
In the GSP program, the United States also pursues an approach of
ending duty-free access for individual products from a given country by
means of import ceilings--Competitive Needs Limitations (CNL). Over one-
third of the trade from GSP beneficiaries--$13 billion in imports in
2006--is no longer eligible for preferences because countries have
exceeded CNL ceilings for those products. Although the intent of
country and product graduation is to focus benefits on those countries
most in need of the competitive margin preferences provide, some U.S.
and beneficiary country officials observe that remaining GSP
beneficiaries will not necessarily profit from another country's loss
of preference benefits. We repeatedly heard concerns that China would
be most likely to gain U.S. imports as a result of a beneficiary's loss
of preferences. In 2007, the President revoked eight CNL waivers as a
result of legislation passed in December 2006. Consequently, over $3.7
billion of trade in 2006 from six GSP beneficiaries--notably Brazil,
India, and Thailand--lost duty-free treatment. Members of the business
community raised concerns that revocation of these waivers would harm
U.S. business interests while failing to provide more opportunities for
poorer beneficiaries. GAO's analysis showed that China and Hong Kong
were the largest suppliers of the precious metal jewelry formerly
eligible under GSP for duty-free import by India and Thailand; Canada,
Mexico, Japan, and China were the leading competitors to Brazil's motor
parts.[Footnote 6]
Policymakers face a third trade-off in setting the duration of
preferential benefits in authorizing legislation. Preference
beneficiaries and U.S. businesses that import from them agree that
longer and more predictable renewal periods for program benefits are
desirable. Private-sector and foreign government representatives have
complained that short program renewal periods discourage longer-term
productive investments that might be made to take advantage of
preferences, such as factories or agribusiness ventures. Members of
Congress have recognized this argument with respect to Africa and, in
December 2006, Congress renewed AGOA's third-country fabric provisions
until 2012 and AGOA's general provisions until 2015. However, some U.S.
officials believe that periodic program expirations can be useful as
leverage to encourage countries to act in accordance with U.S.
interests such as global and bilateral trade liberalization.
Furthermore, making preferences permanent may deepen resistance to U.S.
calls for developing country recipients to lower barriers to trade in
their own markets. Global and bilateral trade liberalization is a
primary U.S. trade policy objective, based on the premise that
increased trade flows will support economic growth for the United
States and other countries. Spokesmen for countries that benefit from
trade preferences have told us that any agreement reached under Doha
round of global trade talks at the WTO must, at a minimum, provide a
significant transition period to allow beneficiary countries to adjust
to the loss of preferences.[Footnote 7]
Proliferation of Preference Programs Has Led to a Need for a More
Integrated Approach:
Preference programs have proliferated over time. In response to
differing statutory requirements, agencies pursue different approaches
to monitoring the various criteria set for programs. The result is a
lack of systematic review and little to no reporting on impact.
Trade Preferences Have Proliferated, Creating a Complex Array of
Programs, but Congress Still Considers Each Program Separately:
U.S. trade preferences have evolved into an increasingly complex array
of programs. Congress generally considers these programs separately,
partly because they have disparate termination dates. [Footnote 8]
Table 1: Growth of Trade Preference Programs:
Program: GSP;
Enactment date: January 1975; Several amendments;
Number of eligible countries, 2007: 131.
Program: CBI: Caribbean Basin Economic Recovery Act;
Enactment date: August 1983;
Number of eligible countries, 2007: 19.
Caribbean Basin Economic Recovery Expansion Act;
Enactment date: Amended August 1990;
Number of eligible countries, 2007: 19.
Program: CBI: CBTPA;
Enactment date: May 2000;
Number of eligible countries, 2007: 9.
Program: CBI: HOPE;
Enactment date: December 2006;
Number of eligible countries, 2007: 1.
Program: ATPA:
Enactment date: December 1991;
Number of eligible countries, 2007: 4.
Program: ATPA: ATPDEA;
Enactment date: Amended August 2002;
Number of eligible countries, 2007: 4.
Program: AGOA;
Enactment date: May 2000; Several amendments;
Number of eligible countries, 2007: 39.
Source: GAO.
[End of table]
Many countries participate in more than one of these programs. Of the
137 countries and territories eligible for preference programs, as of
January 1, 2007, 78 benefit from more than one program, and 34 were
eligible for more than two programs.[Footnote 9]
While there is overlap in various aspects of trade preference programs,
each program is currently considered separately by Congress based on
its distinct timetable and expiration date. Typically the focus has
been on issues relevant to specific programs, such as counternarcotics
cooperation efforts in the case of ATPA, or phasing out benefits for
advanced developing countries in the case of GSP. As a result, until
last year's hearing before this committee, congressional deliberations
have not provided for cross-programmatic consideration or oversight.
The oversight difficulties associated with this array of preference
programs and distinct timetables is compounded by different statutory
review and reporting requirements for agencies. Reflecting the relevant
statutory requirements, two different approaches--a petition process
and periodic reviews--have evolved to monitor compliance with criteria
set for various programs. We observed advantages to each approach, but
individual program reviews appear disconnected and result in gaps.
The petition-driven GSP reviews of country practices and product
coverage have the advantage of adapting the programs to changing market
conditions and the concerns of businesses, foreign governments, and
others.[Footnote 10] However, the petition process can result in gaps
in reviews of country compliance with the criteria for participation:
* From 2001 to 2006, three-quarters of the countries eligible only for
GSP did not get examined at all for their conformity with eligibility
criteria.
* Long periods passed between overall reviews of GSP. USTR completed an
overall review of the GSP program in fall 2006. USTR completed the last
general review of the program approximately 20 years earlier, in
January 1987.
* The petition-driven review process also fails to systematically
incorporate other ongoing monitoring efforts. For example, the lack of
review under GSP provisions of any of the 26 preference beneficiary
countries cited by USTR in 2006 for having problems related to the
adequate and effective protection of U.S. intellectual property rights
(IPR) makes it appear no linkage exists between GSP and ongoing
monitoring of IPR protection abroad.
The periodic reviews under the regional programs offer more timely and
consistent evaluations of country performance against the criteria for
participation, but may still miss important concerns. For example, 11
countries that are in regional programs were later subject of GSP
complaints in the 2001 to 2006 period:
* Although AGOA has the most intensive evaluation of country
performance against the criteria for participation, the GSP process
later validated and resulted in further progress in resolving concerns
with AGOA beneficiaries Swaziland and Uganda on labor issues.
* The African country of Equatorial Guinea has been reviewed for AGOA
eligibility and found to be ineligible. Yet, Equatorial Guinea has not
been subject to a GSP country practice petition or reviewed under GSP.
As a result, Equatorial Guinea remains eligible for GSP and exported
more than 90 percent of its $1.7 billion in exports duty free to the
United States under that program in 2006.[Footnote 11]
Only One Preference Program Directly Links to Capacity Building
Efforts:
Many developing countries have expressed concern about their inability
to take advantage of trade preferences because they lack the capacity
to participate in international trade. Sub-Saharan Africa has been the
primary focus of U.S. trade capacity-building efforts linked to the
preference programs, with the United States allocating $394 million in
fiscal year 2006 to that continent. Although AGOA authorizing
legislation refers to trade capacity assistance, USTR officials noted
that Congress has not appropriated funds specifically for that purpose.
However, USTR has used the legislative language as leverage with U.S.
agencies that have development assistance funding to target greater
resources to trade capacity building. In other regions of the world,
U.S. trade capacity building assistance has less linkage to preference
programs.
Separate Reporting and Examination Hinder Measuring Progress on
Programs' Contribution to Economic Development:
Separate reporting for the various preference programs makes it
difficult to measure progress toward achieving the fundamental and
shared goal of promoting economic development. Only one program (CBI)
requires agencies to directly report on impact on the beneficiaries.
Nevertheless, in response to statutory requirements, several government
agencies report on certain economic aspects of the regional trade
preference programs. However, different approaches are used, resulting
in disparate analyses that are not readily comparable. Agencies do not
regularly report on the economic development impact of GSP. Moreover,
there is no evaluation of how trade preferences, as a whole, affect
economic development in beneficiary countries.
GAO Recommendations and Agency Response:
To address the concerns I have summarized today, in our March 2008
report, GAO recommended that USTR periodically review beneficiary
countries that have not been considered under the GSP or regional
programs. Additionally, we recommended that USTR should periodically
convene relevant agencies to discuss the programs jointly. In response,
USTR is undertaking two actions. First, USTR will conduct a review of
the operation and administration of U.S. preference programs to explore
practical steps that might improve existing communication and
coordination across programs. Second, beginning with the annual Report
of the President of the United States on the Trade Agreements Program
to be issued on March 1, 2009, the discussion of the operation of all
U.S. trade preference programs will be consolidated into its own
section.
We also suggested that Congress should consider whether trade
preference programs' review and reporting requirements may be better
integrated to facilitate evaluating progress in meeting shared economic
development goals. We believe that the hearings held by the committee
last year and again today are responsive to the need to consider these
programs in an integrated fashion and are pleased to be able to
contribute to this discussion.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions that you or other members of the committee may
have.
GAO Contact and Staff Acknowledgments:
For further information on this testimony, please contact Loren Yager
at (202) 512-4347, or by e-mail at yagerl@gao.gov. Juan Gobel,
Assistant Director; Kim Frankena, Assistant Director; R. Gifford
Howland; Karen Deans; Ernie Jackson; and Ken Bombara made key
contributions to this statement.
[End of testimony]
Footnotes:
[1] GAO, International Trade: U.S. Trade Preference Programs Provide
Important Benefits, but a More Integrated Approach Would Better Ensure
Programs Meet Shared Goals, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-443] (Washington, D.C.: Mar. 7, 2008), and GAO,
International Trade: An Overview of Use of U.S. Trade Preference
Programs by Beneficiaries and U.S. Administrative Reviews, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-1209] (Washington, D.C.: Sept.
27, 2007).
[2] In 1996, the number of duty-free tariff lines offered under GSP was
expanded to provide additional benefits to beneficiary least-developed
countries (LDC).
[3] In 2000, CBI was expanded by the Caribbean Basin Trade Partnership
Act (CBTPA).
[4] In 2002, ATPA was expanded by the Andean Trade Promotion and Drug
Eradication Act (ATPDEA).
[5] For additional information, see WTO, World Trade 2007, Prospects
for 2008: Developing, Transition Economies Cushion Trade Slowdown,
Press Release No. 520, Apr. 17, 2008, p. 19.
[6] For GAO's analysis of the scope and impact of the CNL waiver
terminations, see pp. 38-41 of [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1209].
[7] For additional information on these issues see [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-443] and [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-1209].
[8] For example, the Caribbean Basin Trade Partnership Act was to
expire on September 30, 2008, while GSP and ATPA expire December 31,
2008.
[9] For a listing of beneficiary countries and the programs for which
they are eligible, see p. 48 of [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-443].
[10] In the annual GSP review process, petitions may be filed by
interested parties (for example, governments, businesses, or
nongovernmental organizations) to request actions allowed under the
statutes and regulations governing the GSP program, including adding or
removing a product from overall GSP eligibility, waiving the
competitive-need-limit for a product from a specific beneficiary. Any
person may file a petition requesting that the status of any eligible
beneficiary be reviewed with respect to any of the designation criteria
listed in the statute governing the GSP program, including worker
rights and intellectual property rights. For a summary of GAO's
analysis of the product and country petitions filed in recent years,
see pp. 42-44 and p. 72 of [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1209].
[11] AGOA requires countries to be eligible for GSP, but the reverse is
not true; AGOA's criteria are more extensive than GSP. For example,
AGOA requires countries to have or be making progress toward political
pluralism and the rule of law and prohibits participation of countries
that undermine U.S. national security and foreign policy, commit gross
violations of human rights, or support international terrorism. GAO's
analysis showed that all (100 percent of the value) of Equatorial
Guinea's exports to the United States were eligible for GSP in 2006.
Equatorial Guinea exported approximately $1.6 billion in fuel products
to the United States under GSP in 2006.
[End of section]
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