On June 30, the Office of the U.S. Trade Representative (USTR) announced a major expansion of trade preferences that stands to bring significant benefits to Cambodia. Under the new changes to the U.S. Generalized System of Preferences (GSP), Cambodia and other Least Developed Beneficiary Developing Countries (LDBDCs) as well as African Growth and Opportunity Act (AGOA) countries producing travel goods such as luggage, backpacks, handbags, and wallets will be able to export those products to the United States duty free. The GSP expansion will not only give Cambodia preferable access to the $10 billion U.S. import market in travel goods; it will also encourage further development of Cambodia’s textile industry into profitable new areas of production.
“This announcement by the USTR has the potential to open up an entirely new market for Cambodian exporters and to create thousands of jobs for Cambodians,” says U.S. Ambassador to Cambodia William Heidt. “We encourage Cambodian manufacturers to take advantage of this new opportunity, which would help to diversify Cambodia’s economic base, spur economic growth, and alleviate poverty.”
GSP is a 40-year-old trade preference program under which the United States provides duty-free treatment to many imports from beneficiary developing countries and additional products for LDBDCs. According to U.S. Trade Representative Michael Froman, “We have used these programs to give some of the poorest countries in the world a vital leg up vis-à-vis more advanced competitors.”
Background on GSP Program
Under the GSP program, approximately 5,000 products from 122 beneficiary developing countries and territories, including 43 least-developed countries, are eligible for duty-free treatment when exported to the United States, Nearly 1,500 of these products are reserved for duty-free treatment for LDBDCs only. In 2015, the total value of imports that entered the United States duty-free under GSP was $17.4 billion.
The Trade Preference Extension Act (TPEA) of 2015 gave U.S. President Barack Obama the authority to add certain travel and luggage goods products to GSP, subject to the regular, petition-driven review process. The 27 Harmonized Tariff Schedule (HTS) subheadings cited in the TPEA included luggage, handbags, backpacks, and pocket goods (such as wallets).
As part of the GSP 2015/2016 Annual Review, an interagency committee led by USTR (the GSP Subcommittee of the Trade Policy Staff Committee) received and considered requests seeking to:
1) Add or remove products from the list of those eligible for duty-free treatment under GSP;
2) Waive product exclusions for certain countries based on statutory requirements related to competitiveness (CNLs); and
3) Withdraw or limit a country’s eligibility for GSP trade benefits based on statutory eligibility criteria, including whether a country is taking steps to afford internationally recognized standards for worker rights, whether it provides important investor protections including enforcement of arbitral awards, and the extent to which a country adequately and effectively protects intellectual property rights.
For those petitions accepted for review, the USTR-led committee holds public hearings, solicits public comments, and – in the case of product petitions – reviews analyses prepared by the U.S. International Trade Commission of the economic impact of product eligibility decisions on domestic industries and consumers. Any change to the lists of products or countries eligible for GSP benefits requires a presidential determination.
For more information on the GSP program, visit the GSP page on the USTR website.