USTR Lists the Country/Tariff Number Pairs That May Lose/Regain GSP Benefits Effective July 1, 2006

The Office of the U.S. Trade Representative (USTR) has published a notice which provides four lists of interim 2005 import statistics (based on the first 10 months of 2005) relating to the Generalized System of Preferences (GSP) Competitive Needs Limitations (CNLs) for certain country/tariff number pairs.

(There are two CNLs - the value CNL (which is $120 million for 2005) and the 50 percent CNL. Exceeding either could result in the loss of GSP for a country/tariff number pair, while falling below them could make a pair that is currently ineligible for GSP, eligible to be considered for redesignation. In addition, one or both CNLs may be waived by the President for a country/tariff number pair in certain situations, which could result in the pair retaining or regaining GSP benefits.)

These four lists provide advance notice of articles that exceed or may exceed the CNLs for 2005, in order to inform the public of which country/tariff number pairs will lose, or may lose, GSP duty-free treatment on July 1, 2006.

This advance notice also affords the public an opportunity to comment on possible CNL waivers or redesignations (see below) that could allow a country/tariff number pair to retain or regain GSP duty-free treatment.

(The USTR adds that decisions on these CNL GSP changes will be based on full calendar year 2005 import statistics.)

Written comments on the available waiver/redesigation opportunities are due by 5 p.m., on January 27, 2006.

1. Country/Tariff Number Pair Expected to Lose GSP on July 1, 2006, Etc.

List I shows those country/tariff number pairs that have already exceeded one or both of the CNLs based on 10 months of data. According to List I, the following pair is expected to lose GSP duty-free treatment on July 1, 2006:

(No waiver of the CNLs for this pair was requested in the 2005 GSP Annual Review; as a result this pair has no waiver opportunity, and is expected to lose its GSP duty-free treatment. See ITT's Online Archives or 08/23/05 news, 05082307 for BP summary of USTR's notice on the 2005 GSP Annual Review which lists the 2005 CNL waiver requests.)

(In addition, the following List I country/tariff number pair, which is currently excluded from GSP, is the subject of a CNLs waiver request in the 2005 General Review. If the President decides to issue a waiver, its GSP duty-free treatment would be reinstated:

Over 130 Country/Tariff Number Pairs to Lose or Retain GSP on July 1, 2006

List II contains approximately 180 country/tariff number pairs which are approaching the value CNL or are close to or above the 50% CNL. Of these, approximately 130 pairs³ currently receive GSP duty-free treatment. If final calendar year 2005 import data indicates any of these 130 pairs exceeded one or both CNLs, the pair will lose its GSP duty-free treatment, unless (1) a CNLs waiver for the pair was requested in the 2005 GSP Annual Review that is subsequently granted by the President, or (2) the President issues a de minimis waiver of the 50% CNL for the pair (see below) and the pair is below the value CNL.

List III, which is a subset of List II, shows that 140 of the 180 pairs may be eligible for a de minimis waiver of the 50% CNL, depending on final 2005 statistics. The President has the discretion to issue a de minimis waiver of the 50% CNL if the value of total imports of the article from all countries during calendar 2005 did not exceed the applicable de minimis amount for that year ($17.5 million for 2005). De minimis waivers are automatically considered by the President, without the need for a petition or waiver request, and public comments may be submitted on the List III pairs.

WIth respect to List II, only the following three country/tariff number pairs (which are not on List III) were the subject of CNLs waiver requests in the 2005 General Review, and will be considered for a CNLs waiver by the President. These three pairs are currently excluded from GSP eligibility². If a CNLs waiver is granted for any of the three, its GSP duty-free treatment will be reinstated:

Over 200 Ineligible Country/Tariff Number Pairs May be Eligible for Redesignation on July 1, 2006

In addition, List IV contains over 200 country/tariff number pairs that are currently not receiving GSP duty-free treatment but have import levels below the CNLs (based on 10 months' data) and may therefore be eligible to be considered for GSP redesignation, depending on final calendar year 2005 import data.

Recommendations to the President on redesignations are normally made in with any recommendations resulting from the annual review, and public comments may be submitted.

¹ GSP duty-free treatment restored effective 07/01/05. See ITT's Online Archives or 07/05/05, 05070512 for BP summary of Proclamation 7912.

² GSP duty-free treatment removed effective 07/01/05. See ITT's Online Archives or 07/05/05, 05070512 for BP summary of Proclamation 7912.

³ The balance of approximately 50 pairs currently do not have GSP duty-free treatment.

USTR Federal Register notice on CNLs and announcement on availability of four CNL lists (FR Pub 12/29/05) available at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/E5-8075.pdf

USTR's CNL lists available at http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Interim_2005_Import_Statistics_Relating_to_Competitive_Need_Limitations.html

BP Note on GSP's Two Competitive Needs Limitations

According to the notice and USTR sources, a GSP beneficiary developing country that is subject to the CNLs test will lose GSP duty-free treatment for an eligible tariff number if exports of that tariff number from the country to the U.S. during a calendar year meet either of the following two CNLs (and no waivers are granted):

1. exports of the tariff number have a value in excess of the applicable amount for that year ($120 million for 2005) (the "value CNL"), or
2. exports of the tariff number have a value equal to or greater than 50% of the value of total U.S. imports of that tariff number from all countries (the "50 percent CNL").

(Pursuant to 19 USC 2463(c)(2)(D), the CNLs do not apply to least-developed beneficiary developing countries (LDBDCs) or beneficiary AGOA GSP countries.)