Throughout the year agreements, laws, and programs will enact incongruence that will alter the state of things in the world of shipping. One such program renewed for the following year is the Generalized System of Preferences, or GSP, which will be repeated and will go back into effect on April 22nd. Let us go over what it is, and what this means for the U.S. shipping companies that this will have the most significant impact.
What is the GSP?
Established by the Trade Act of 1974 the Generalized System of Preferences (GSP) is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
What Does This Mean?
Economic Growth for the Developing World
The GSP will help developing companies by aiding in their diversity and growth of trade with the U.S. The program will reduce the costs these countries will have to pay on trade due to the duty-free entry of products.
Supports U.S. Jobs
By moving GSP imports from the docks to the U.S. consumers and manufacturers, it supports tens of thousands of jobs in the U.S. It is especially important to the small businesses, relying on the programs’ duty saving to help them stay competitive.
Promoting of Values
The GSP supports progress in these countries; it also promotes growth by beneficiary countries in affording worker rights to their people, enforcing intellectual property rights, and in helping the rule of law.
If Congress passes the new GSP bill, it will extend the GSP until December 31, 2020. The bill will also include a provision allowing Customs to apply GSP retroactivity to entries between December 31, 2017, and the date of the reauthorization. Currently, importers are allowed to flag entries as “GSP eligible” in anticipation of future reauthorization, despite these importers are paying MFN rates until reauthorizing GSP.