	Introduction

The Generalized System of Preferences (GSP) provides nonreciprocal, duty-free tariff treatment to certain products imported into the United States from designated beneficiary developing countries (BDCs). The United States, the European Union (EU), and other developed countries have implemented similar programs since the 1970s in order to promote economic growth in developing nations. Currently, 121 developing countries and territories are GSP beneficiary developing countries (BDCs). The GSP program provides duty-free entry into the United States for over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-free status to an additional 1,500 products from 44 GSP beneficiaries additionally designated as least-developed beneficiary developing countries (LDBDCs). In 2017, products valued at about $21.2 billion (imports for consumption) entered the United States duty-free under the program, out of total imports from GSP countries of about $220 billion. Total U.S. imports from all countries amounted to about $2.3 trillion in 2017. This report briefly summarizes recent GSP developments. It provides a brief history, economic rationale, legal background, and comparison of preferential trade programs worldwide and describes the U.S. implementation of the GSP program. 115-141 ). Division M, Title V of the Act extended the GSP program until December 31, 2020. The program was also retroactively renewed for all GSP-eligible entries between December 31, 2017 (the previous expiration date), and April 22, 2018, the effective date of the current GSP renewal reauthorization. United States GSP Implementation

Congress first authorized the U.S. Generalized System of Preferences scheme in Title V of the Trade Act of 1974 ( P.L. The law prohibits (with certain exceptions) the President from extending GSP treatment to certain countries, as follows:
other industrialized countries (Australia, Canada, EU member states, Iceland, Japan, Monaco, New Zealand, Norway, and Switzerland are specifically excluded); communist countries, unless they are a WTO member, a member of the International Monetary Fund, and receive Normal Trade Relations (NTR) treatment from the United States; must also not be "dominated or controlled by international communism"; countries that collude with other countries to withhold supplies or resources from international trade or raise the price of goods in a way that could cause serious disruption to the world economy; countries that provide preferential treatment to the products of another developed country in a manner likely to have a significant adverse impact on U.S. commerce; countries that have nationalized or expropriated the property of U.S. citizens (including corporations, partnerships, or associations that are 50% or more beneficially owned by U.S. citizens), or otherwise infringe on U.S. citizens' intellectual property rights (IPR), including patents, trademarks, or copyrights; countries that have taken steps to repudiate or nullify existing contracts or agreements of U.S. citizens (or corporations, partnerships, or associations that are 50% or more owned by U.S. citizens) in a way that would nationalize or seize ownership or control of the property, including patents, trademarks, or copyrights; countries that have imposed or enforced taxes or other restrictive conditions or measures on the property of U.S. citizens; unless the President determines that compensation is being made, good faith negotiations are in progress, or a dispute has been handed over to arbitration in the Convention for the Settlement of Investment Disputes or another forum; countries that have failed to act in good faith to recognize as binding or enforce arbitral awards in favor of U.S. citizens (or corporations, partnerships, or associations that are 50% or more owned by U.S. citizens); and countries that grant sanctuary from prosecution to any individual or group that has committed an act of international terrorism, or have not taken steps to support U.S. efforts against terrorism. Second, at least 35% of the appraised value of the product must be the "growth, product, or manufacture" of a beneficiary developing country, as defined by the sum of (1) the cost or value of materials produced in the BDC (or any two or more BDCs that are members of the same association or countries and are treated as one country for purposes of the U.S. law), plus (2) the direct costs of processing in the country. The process will include increased efforts to conclude outstanding country practices reviews, and a triennial assessment of each beneficiary's compliance with the statutory GSP eligibility criteria. On October 15, 2018, the U.S. Trade Representative (USTR) announced a hearing of GSP beneficiaries for ongoing reviews of specific country practices. In addition, some products from BDCs under the GSP program may receive more favorable treatment under other trade preference programs, such as AGOA or the Caribbean Basin Initiative (CBI). First, certain products, such as most textile and apparel products, are designated as "import sensitive" and therefore ineligible for duty-free treatment. Allow some import-sensitive products to receive preferential access. Increase flexibility of rules of origin requirements.
The U.S. Generalized System of Preferences (GSP) program provides nonreciprocal, duty-free tariff treatment to certain products imported from designated beneficiary developing countries (BDCs). The United States, the European Union, and other developed countries have implemented similar programs since the 1970s. Congress first authorized the U.S. program in Title V of the Trade Act of 1974, and most recently extended it until December 31, 2020 in Division M, Title V of the Consolidated Appropriations Act, 2018 (P.L. 115-141).The GSP program was also retroactively renewed for all GSP-eligible entries between December 31, 2017 (the previous expiration date), and April 22, 2018, the effective date of the current GSP renewal reauthorization.
Currently, 121 developing countries and territories are GSP beneficiary developing countries (BDCs). The GSP program provides duty-free entry into the United States for over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-free status to an additional 1,500 products from 44 GSP beneficiaries additionally designated as least-developed beneficiary developing countries (LDBDCs). In 2017, products valued at about $21.2 billion (imports for consumption) entered the United States duty-free under the program, out of total imports from GSP countries of about $220 billion. Total U.S. imports from all countries amounted to about $2.3 trillion in 2017.
In recent years, Members of Congress have held a range of views on whether or not to continue to include emerging market developing countries (e.g., India, Brazil) as beneficiaries, or to limit the program to least-developed countries. Duty-free access for products deemed "import sensitive" has caused some controversy, as well as concerns about certain beneficiaries' compliance with GSP eligibility requirements based on alleged violations of worker rights, failure to protect intellectual property, and other practices. In October 2017, the U.S. Trade Representative (USTR) announced that it would initiate closer reviews of beneficiaries' compliance with GSP eligibility criteria on a triennial basis, beginning with Asian and Pacific Island countries. Other country practice reviews, as requested by U.S. interested parties, are ongoing.
GSP is one of several trade preference programs through which the United States seeks to help developing countries expand their economies. Other U.S. trade preference programs are regionally focused, including the African Growth and Opportunity Act (AGOA) and the Caribbean Basin Initiative (CBI, includes preference programs for Haiti). U.S. implementation of GSP requires that developing countries meet certain eligibility criteria, such as taking steps to maintain internationally recognized worker rights and protect intellectual property rights, among other things. GSP rules of origin require that at least 35% of the appraised value of the product be the "growth, product, or manufacture" of the BDC. Certain "import sensitive" products (e.g., most textiles and apparel) are specifically excluded, and limits are placed on the quantity or value of any one product imported from any one country under the program (except for products from LDBDCs and AGOA countries). GSP country and product eligibility are also subject to annual review.
This report examines, first, recent legislative developments, along with a brief history, economic rationale, and legal background leading to the establishment of the GSP. Second, the report describes U.S. GSP implementation. Third, the report briefly analyzes the U.S. program's effectiveness and stakeholders' views, and discusses possible options for Congress.