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UNITED STATES GENERALIZED SYSTEM OF PREFERENCE (US GSP)

On 23 March 2018, US President Donald J. Trump signed the Omnibus Spending Bill which include the reauthorization/renewal of the US GSP program through 31 December 2020.  The renewal includes a mechanism for refund of tariffs paid from 1 January 2018 through the reinstatement date of the program. The US GSP is designed to promote economic growth and development in the developing world through preferential, duty-free entry to the US market for products coming from 122 designated beneficiary countries (BDCs) and territories, including the Philippines and many of the world’s poorest countries.  The trade benefits, however, are tied to conditions, including intellectual property rights protection, and upholding of workers’ rights and protection against child labor.  The GSP program was instituted on 2 January 1976 and authorized under the US Trade Act of 1974 for 10 years. It has been renewed periodically since then by the US Congress. The program covers a total 5,057 products or tariff lines or roughly 47.7% of the 10,600 total US tariff lines:  3,500 of which are open for all BDCs while an additional 1,500 products are given to the least-developed beneficiary countries.  Effective 1 July 2017, a total of 23 travel goods articles were added to the program.The GSP program includes most dutiable manufactures and semi-manufactures, and selected agricultural, fishery, and primary industrial products.  Certain articles are prohibited by law from receiving GSP treatment. These include most textiles, watches, footwear, handbags, luggage, flat goods, work gloves, and other leather apparel. In addition, any other articles determined to be import-sensitive cannot be made eligible for GSP such as certain products of steel, glass, and electronics.

Philippine Utilization of US GSP

2016-2020 US GSP (Data from USITC Dataweb)

 

YEAR

TOTAL PH EXPORTS TO US (USD Million)

PH EXPORTS TO US UNDER GSP

(USD Million)

US GSP

UTILIZATION RATE OF PH

TOTAL ELIGIBLE PRODUCTS

GSP CLAIMED

 

2016

10,031.442,076.361,490.5772%

2017

9,661.052,217.021,491.5267%

2018

10,623.002,414.341,727.6472%

2019

12,886.582,524.591,870.3574%

2020

11,208.812,094.391,557.2974%
      
The Philippines saw a steady to increasing utilization rate of the US GSP, with an exception in 2017 due to the increased export of unclaimed GSP eligible products. Following that year, successive increase of utilization was recorded in 2018 and 2019 attributed to the expansion of additional duty-free treatment for twenty-three tariff lines of certain travel goods. While value of products which claimed US GSP decreased in 2020 at USD 1,557,286,518, mainly due to the pandemic, utilization rate remained at 74%.In 2019, PH top exports under the US GSP includes:
  • new pneumatic tires of rubber (radial) (USD 106.11M);
  • handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather (USD 64.58M);
  • Insulated electric conductors (USD 63.97M);
  • Travel, sports and similar bags with outer surface of MMF textile materials (USD 61.08M);
  • Other cane sugar, raw, in solid form, w/o added flavoring or coloring (USD 59.27M);
  • Electrothermic hairdressing apparatus other than hair dryers (USD 57.44M);
  • Telescopic sights for rifles not designed for use with infrared light (USD 47.96M);
  • Nonalcoholic beverages excluding fruit or vegetable juices of heading 2009 (USD 41.31M)
  • Electrothermic hair dryers (USD 38.43M); and
  • Handbags, with or without shoulder straps or without handle, with outer surface of sheeting of plastics (USD 37.96M).
In 2020, the Philippines ranked 5th globally among the beneficiary developing countries in terms of total claimed US GSP value, only behind Thailand, Indonesia, Brazil, and Cambodia.

For more details, contact the Bureau of International Trade Relations-Bilateral Relations Division (BITR-BRD) at brd@dti.sdrsc.com.