Clarification On The US GSP Program

The United States’ Generalized System of Preferences (GSP) program will expire on 31st December, 2017, and all those importing GSP eligible goods to the USA, from Sri Lanka as well as all other beneficiary countries and territories will be subject to non-preferential duties from 1st January, 2018.

The US GSP expires periodically, and must be renewed by the US Congress to remain in effect. The 2015 GSP reauthorization (H.R. 1295) will expire on 31st December 31, 2017 and the US Congress has not re-authorized its renewal before adjourning for the year 2017. The United States’ Generalized System of Preferences provides duty-free treatment to goods of 120 designated beneficiary countries and territories. The program was authorized by the Trade Act of 1974 to promote economic growth in the developing countries, and was implemented on 1st January, 1976.

The Sri Lankan Ministry of Foreign Affairs issuing a media release said that this was not the first occasion on which the GSP reauthorization by the US Congress has been delayed. However, whenever GSP renewals eventually took effect after similar lapses, on previous occasions, a retroactive clause providing refunds to importers of eligible goods imported during the lapse period, has been incorporated.

The US economy is the largest single destination for Sri Lankan exports, accounting for more than 27.5 per cent of Sri Lanka’s exports. In 2016, out of total export earnings that amounted to USD 10.3 billion, exports to the US were USD 2.8 billion. In the first 10 months of 2017, exports to the US amounted to USD 2.4 billion.

At present, nearly 3,500 different products from Sri Lanka are eligible to access the US market on a duty-free basis under this program. The items include selected manufactured items, inputs used in manufacturing jewellery, carpets, selected agricultural and fishery products, and selected types of chemicals, minerals and marble. However, Sri Lanka’s largest single export item to the US, which is garments, is not eligible for benefits under the GSP program. The GSP alliance countries, including Sri Lanka, are lobbying for the renewal of the GSP program, and remain hopeful that the program will be renewed by the US Congress.

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