Generalized System of Preferences (GSP) in US: All you must know
New Delhi : The India government may face tough time in terms of trading as the US President Donald Trump intends to end India's GSP programme that allows USD 5.6 billion worth of the country's export to enter the United States duty free. To inform, the decision has been taken after India unveiled new rules on e-commerce that restrict the way Amazon and Walmart backed Flipkart do business.
India is the world's largest beneficiary of the GSP programme in US and doing so would be the strongest action against the country in the Trump ruling period. It’s worth mentioning that the 'Generalized System of Preferences' or GSP is meant for the economic growth of the developing countries. It’s a US based trade program which provides preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. We have listed down everything we know about GSP in US. You may take some time to read the following valuable points:
- GSP was established on January 1, 1976, by the Trade Act of 1974.
- The Generalized System of Preferences (GSP) provides duty-free treatment to goods of designated beneficiary countries.
- Under this program, a wide range of industrial and agricultural products originating from certain developing countries are given preferential access to US markets.
- In case of India, GSP enables duty-free entry of 3,500 product lines in US markets, which benefits exporters of textiles, engineering, gems and jewellery and chemical products.
- The GSP program runs on dates scheduled by legislation and therefore, demand periodical reauthorization in order to remain in effect.
- Importers of GSP-eligible products may seek reimbursement for tariffs paid during the lapse in GSP coverage.
- Importers who filed their entries electronically use appropriate special program indicator for GSP. For instance, "A" or "A+" for a product
- Importers get automatic refund as paid duty on GSP-eligible goods.
- The total US imports under GSP in 2017 was $21.2 billion, of which India was biggest beneficiary with $5.6 billion.
- The US Congress in March 2018 had voted to renew GSP through 2020
To add further, on March 23, 2018, the President signed into law under the “Consolidated Appropriations Act, 2018,” which in addition to providing full-year federal appropriations through September 30, 2018, extended GSP with retroactivity, for goods entered or withdrawn from warehouse for consumption from January 1, 2018 through December 31, 2020.
The new law, effective April 22, 2018, also provided for the retroactive refund of all interest-free duties to the importer of record (IOR) on GSP-eligible goods entered during the January 1, 2018 through April 21, 2018 lapse period.