APPENDIX 1

Understanding the U.S. GSP Scheme

The purpose of this appendix is to present a simplified understanding of the U.S. GSP scheme in terms of its evolution, requirements, coverage, implementation, and usefulness as of 1 September 1988. It is noted that with effect from 1 January 1989, the Tariff Schedules of the United States (TSUS) was replaced by the Harmonized System (HS) tariff nomenclature. The HS is a new uniform international tariff nomenclature which the United States has negotiated with its major trading partners to facilitate international trade by eliminating problems resulting from each country's use of a different classification system. The conversion from TSUS to HS has ensured “trade neutrality”, with no change to GSP coverage. The information for this appendix is drawn heavily from the Handbook on the Scheme of the United States of America (UNCTAD/TAP/163/Rev. 12).

Evolution

The United States offers under its GSP, preferential duty-free entry to approximately 4,100 products from 136 designated beneficiary countries. The programme was instituted on 1 January 1976 for a ten-year period, and renewed through 4 July 1993 by the Trade and Tariff Act of 1984. The new law, completed on 2 January 1987, introduced important changes including a mandatory General Review of the U.S. GSP.

How to qualify

The importer makes the request for GSP treatment. The product must be included in the GSP list and be from a designated beneficiary country, satisfying the value-added requirements. The sum of the cost or value of materials produced in the beneficiary country plus the direct cost of processing must equal at least 35 per cent of the appraised value of the article at the time of entry into the United States. Imported materials can be counted towards this 35 per cent value-added requirement if they are “substantially transformed” into new and different constituent materials of which the eligible article is composed.