Approximately $1.5 billion worth of exports to the United States have lost their duty-free privilege status effective Jan. 1, 2021.
Philippine exports under the US Generalized System of Preferences (GSP) now pay full duties following the scheme’s expiry last Dec. 31, 2020.
The Department of Trade and Industry’s Export Marketing Board (EMB) advised exporters of US GSP eligible products to coordinate with their US importers to classify those GSP imports under the Special Tariff Program Indicator (SPI) “A” to ensure that they are considered as GSP imports and will be subject to duty refunds once the program is re-authorized by the US Congress.
The EMB said the US Customs and Border Protection (CBP) has a program in place that, in the event that the GSP is renewed with a retroactive refund clause, CBP will automate the duty refund process.
In the notice, EMB said Philippine exports that are under the program will now be subjected to pay general or most-favored nation duty rates.
The GSP provides duty-free treatment to goods of designated beneficiary countries. The program was authorized by the Trade Act of 1974 to promote economic growth in the developing countries and was implemented on January 1, 1976.
As of December 2020, there were 119 developing countries, including 17 non-independent territories and 44 least- developed beneficiary developing countries (LDBDCs).
In 2019, the top five BDCs in terms of U.S. imports entering under GSP were Thailand, India, Indonesia, Brazil, and the Philippines.
GSP was first authorized for 10 years, until 1985. Since then, it has been reauthorized 14 times, with authorizations generally lasting 2 to 3 years. Congress most recently extended the program until December 31, 2020.
Over 5,000 products have enjoyed GSP under the scheme.
Products eligible to be imported under GSP must be found not to be “import-sensitive,” and before new products are added, the public has an opportunity to comment, hearings are held, and the ITC reports on the possible effects of the product’s GSP eligibility on the economy and US manufacturers.
The top five categories of GSP imports in 2019 were travel goods, handbags, and other cases of various materials; vehicle parts; jewelry; rubber pneumatic tires; and lamps and light fittings.
Total GSP imports in 2019 amounted to about $21 billion.