US GSP Reform Act proposes to reauthorise programme until Dec 31, 2030

The legislation proposes the largest reforms to the programme since inception, permanently bans China, and sets new country eligibility for participation to ensure fair treatment for US agricultural exports; fair digital and tax treatment of US companies and workers; democracy, good governance and anti-corruption standards; and US national security and foreign policy interests, which include removing the growing military and economic ties of countries with China.

The legislation also includes reforms related to the criteria affecting product eligibility for the GSP programme.

These include amendments to increase the GSP rule of origin (ROO) from 35 to 50 per cent over time while incentivising additional US content in GSP products, according to a summary of the Act posted on the official website of the US House Committee on Ways & Means by committee chairman Jason Smith.

These changes are designed to ensure both developing beneficiary counties and the United States benefit from the programme, and not third countries like China.

The amendments include updates to GSP’s competitive needs limitations (CNLs), increasing the dollar threshold from $215 million to $500 million and indexing to it inflation, to improve the program’s usefulness to incentivise supply chain shifts out of China.

A new economic analysis for Congress from the International Trade Commission regarding potential changes to products eligible for duty-free treatment under the GSP programme is also part of the Act.

GSP is the largest and oldest US trade preference programme. Initially established by the Trade Act of 1974, GSP seeks to promote both the competitiveness of US companies and economic development throughout the world by eliminating duties on a set list of products, not generally produced in the United States in commercially meaningful quantities, when imported from one of 119 designated beneficiary countries.

Applauding the Act, the American Apparel & Footwear Association expressed its support for renewal of the GSP.

“GSP has always had bipartisan support, and the record long lapse has been unexplainable and damaging to American businesses, American workers, and beneficiary countries alike, all while handing a huge trade win to China. This retroactive renewal is far more effective at making our trusted partners more competitive than misapplied tariffs will ever be. This GSP program is also helpful to mitigate the costs faced by our nation’s supply chains during this time of continuous disruption," said Steve Lamar, president and chief executive officer of the association.

Fibre2Fashion News Desk (DS)