ITC Releases Public Report on 4 Possible GSP 2010 CNL Waivers

(The investigation, “Advice Concerning Possible Modifications to the U.S. Generalized System of Preferences, 2010 Review of Competitive Need Limitation Waivers”, was requested by the U.S. Trade Representative (USTR) on December 22, 2010 as part of the 2010 GSP Annual Review.)

Evaluates Impact of Granting CNL Waivers for 4 Country/Tariff Combinations

As requested, the ITC has provided confidential advice as to the impact of granting CNL waivers for the following country/tariff number combinations:

• lysine and its esters from Brazil (HTS subheading 2922.41.00);
• pneumatic tires from Sri Lanka (HTS subheading 4011.93.80);
• certain rubber gloves from Thailand (HTS subheading 4015.19.10); and
• calcium silicon ferroalloys from Argentina (HTS subheading 7202.99.20).

No Official USTR Announcements on Products Until GSP Renewed

If GSP authorization were in effect, these four country/tariff number combinations would be at risk of losing their GSP eligibility on July 1, 2011 if the CNL were exceeded and a waiver was not granted.

However, USTR stated in a frequently asked questions document on the GSP’s expiration that while GSP authorization is not in effect, there will be no public hearings and no requests for public comments on ongoing GSP country and product petitions, including petitions for waivers of competitive need limitations. In addition, there will there be official announcements with respect to final disposition of these petitions.

(See ITT’s Online Archives or 04/29/11 news, 11042926, for BP summary of USTR Kirk announcing that the Administration was considering GSP renewal and other trade agenda items in the context of moving forward the pending free trade agreements.)

Public Version of Report Does Not Have Economic Impact

This report is the public version, and therefore all confidential national security and business information, including the ITC's findings regarding probable economic effect, has been removed. The report does, however, contain detailed product descriptions and uses, profiles of the U.S. industry and market, and the GSP import situation for each product. (The ITC notes that the data in its report covers the period 2006-2010.)

Industry Profile, Import Situation of Products Being Considered for CNL Waivers

The following are highlights of the product information, industry profiles and import situations for each of the country/HTS tariff number under review:

Lysine and its esters from Brazil. Lysine is an amino acid that is primarily used as an additive in livestock feeds. Brazil and Indonesia are the largest suppliers of GSP-eligible imports of lysine into the U.S. Though Brazil accounted for 61% of GSP-eligible imports in 2010, it did not surpass the CNL that year. ITC anticipates that future export levels to the U.S. will exceed the CNL. The U.S. industry consists of three large producers of feed-grade lysine and two small producers of lysine for laboratory and pharmaceutical use. The demand for lysine in the U.S. depends on the output of swine and poultry producers as well as on the price of soybean meal, which is a substitute for corn/lysine mixes because it is higher in lysine than corn.

Pneumatic tires from Sri Lanka. The subject tires are new specialty pneumatic off-the-road (OTR) rubber tires of a type used on vehicles and machines used in construction and industrial materials handling. In 2010, there were six producers of the subject tires in the U.S. In 2010, U.S. imports of the subject tires from GSP-eligible countries accounted for 60% of total U.S. imports and 45% of U.S. consumption. Sri Lanka was the U.S’ leading import supplier as well as its principal GSP-eligible supplier of the subject products in 2010, accounting for 55% of total U.S. imports, 91% of GSP-eligible imports, and 41% of U.S. domestic consumption. Sri Lanka is not eligible for a de minimis waiver and exceeded the CNL in 2010.

Certain rubber gloves from Thailand. The subject seamless rubber gloves are made of natural rubber, usually latex, and may be either disposable or nondisposable. They are used for personal and hand protection by those working with electrical hazards, chemicals, and nuclear wastes in a variety of industries. There are at least four U.S. companies producing the seamless rubber gloves that are the subject of this investigation. In 2010, Thailand accounted for 32% of total U.S. imports and 68% of total imports of the subject gloves from GSP-eligible countries. Thailand exceeded the competitive need limitation in 2010.

Calcium silicon ferroalloys from Argentina. Calcium-silicon is a ferroalloy used in the production of certain high-grade steels. There is no production of calcium-silicon powder or lump in the U.S. There is, however, an industry made up of four firms producing calcium-silicon cored wire using imported calcium-silicon powder. U.S. imports of calcium-silicon from GSP-eligible countries accounted for 58% of total imports in 2010, with imports from Argentina comprising 86% of imports from GSP-eligible countries. Overall, imports from Argentina made up 50% of total U.S. imports of calcium-silicon in 2010. Based on full-year 2010 import data, Argentina is not eligible for a de minimis waiver for 2011.

¹Competitive need limits represent the maximum import level of a product that is eligible for duty-free treatment under the GSP. Once the limit is reached, trade is considered "competitive," benefits are no longer needed, and imports of the article become ineligible for GSP treatment, unless a waiver is granted.

There are two types of CNLs - the value CNL (which is $145 million for 2010) and the 50% CNL (equal to or greater than 50% of the 2010 value of total U.S. imports of the tariff number from all countries). The USTR has previously explained that the President has the authority to waive both the value and 50% CNLs for country/tariff number combinations if an interested party petitions for a waiver before the country/tariff number combination exceeds a CNL.

(See ITT’s Online Archives or 01/11/11 news, 11011115, for BP summary of ITC’s initiation of its investigation.)

ITC press release, dated 04/29/11, available here.