THE WASHINGTON TIMES | August 8, 2006
U.S. reviews duty-free access to market
By Jeffrey Sparshott
The Bush administration is considering ending trade concessions granted to India, Brazil and other fast-developing nations under a three-decade-old program meant to help poor countries.
The administration’s review comes as some lawmakers look to punish governments that opposed U.S. policies during World Trade Organization talks — especially a group of middle-income nations led by Brazil and India — by ending their preferences entirely.
More than 130 countries are given duty-free access to the U.S. market under the Generalized System of Preferences (GSP), which is set to expire at the end of the year. The U.S. imported $26.7 billion under the GSP program last year, with India and Brazil among the top beneficiaries.
President Bush’s trade envoy yesterday said the program should continue but acknowledged that it might need an overhaul because a handful of countries receive the most benefits.
"Our goal is for more countries to benefit from the program and use trade in support of their economic development," said Susan Schwab, the U.S. trade representative.
A U.S. trade official said the review was not punitive but rather part of a long-standing examination of the program to help set White House policy. The president has authority to limit or suspend trade benefits on a country-by-country basis under existing legislation.
But lawmakers may limit the White House’s options by eliminating the program entirely or writing some countries out of it.
"Let’s put it this way — as of now there is no GSP [renewal], especially not for Brazil and India and other countries that take the bulk of GSP benefits," Sen. Charles E. Grassley, Iowa Republican, said last month after WTO talks collapsed.
Mr. Grassley, chairman of the Senate Finance Committee, has been particularly irked by Brazil and India because those two countries were especially critical of U.S. proposals during WTO negotiations.
Congress created the GSP in 1974 to help poor countries boost exports and to allow U.S. manufacturers cheaper access to raw materials, parts and other goods used in finished products. GSP has since been renewed eight times. The most recent legislation, approved in 2002, expires at the end of this year. Lawmakers have to pass new legislation if the system is to continue.
"Prospects for [GSP] renewal are dim," said Douglas Jacobson, an international trade attorney at the Washington office of Strasburger & Price.
Mr. Jacobson, who represents clients that benefit from the GSP, said it has been important for U.S. manufacturers and consumers who do not have to pay the cost of duties.
Top imports under the program include crude oil, jewelry, auto and tractor parts, metals, industrial chemicals, building stone, and wire and cable.
The program saved importers more than $923 million in duties last year, according to a March analysis by the Trade Partnership, a Washington consulting firm that favors extending GSP benefits.