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Trump Adjusts Which Countries Will Get GSP Benefits and Which Won’t

In the review of countries’ eligibility for trade privileges with the United States and the promise to toughen up on the criteria for that eligibility, President Trump has decided to suspend privileges for some and open them up for others.

A statement from the Office of the U.S. Trade Representative Wednesday said the U.S. will suspend some of Ukraine’s benefits under the Generalized System of Preferences Program (GSP), and restore Argentina’s eligibility. The Gambia and Swaziland will see their preferences restored under the African Growth and Opportunity Act (AGOA).

“President Trump has sent a clear message that the United States will vigorously enforce eligibility criteria for preferential access to the U.S. market,” U.S. Trade Representative Robert Lighthizer, said. “Beneficiary countries choose to either work with USTR to meet trade preference eligibility criteria or face enforcement actions. The Administration is committed to ensuring that other countries keep their end of the bargain in our trade relationships.”

USTR said Ukraine’s partial suspension comes as a result of its failure to provide adequate protection for intellectual property rights (IPR)—an issue that’s gotten China in hot water with the U.S. too. Trump has given Ukraine a 120-day heads up about the issue, saying it has a “viable path to remedy the situation.” Argentina’s reinstatement comes as a result of its improved market access, but its restoration of benefits won’t apply to all products, also owed to some IPR hangups.

When it comes to AGOA, USTR said The Gambia lost its eligibility in 2015 over human rights abuses and a deteriorating rule of law. The country has since had democratic elections and made progress in the areas of earlier concern. Swaziland lost its eligibility over issues related to restrictions on peaceful assembly and association. The U.S. outlined benchmarks that would see Swaziland get its benefits back, and the country met the last of the three benchmarks in November.

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AGOA has been under review as the U.S. looks into all of its trade deals and preference programs to determine whether they’re working to the benefit of the U.S. Rwanda, Tanzania and Uganda are under an ongoing eligibility review based on their ban on imports of used U.S. clothing, which the U.S. claims is negatively impacting domestic jobs.

As trade law firm Sandler, Travis and Rosenberg pointed out, however, the proclamations on which countries will see privileges and which won’t, hold little weight at the present moment.

“The GSP changes will have little immediate practical effect because GSP itself expires Dec. 31, 2017,” the firm said in a statement Wednesday.

The trade privilege program is expected to be renewed, but if Congress doesn’t extend GSP before the current authorization expires, the Coalition for GSP said companies could be forced to pay more than $2 million per day in extra taxes.

In a letter to leaders of the House Ways and Means and Senate Finance Committees in November, the Coalition said, “American companies worry about a repeat of the last reauthorization process. Despite broad bipartisan support, GSP benefits lapsed for two years and companies were forced to lay off workers, freeze new hires, cut wages and benefits, and delay capital investments. Congress eventually renewed the program retroactively, but much of the damage could not be undone.”

Companies like Nike, Target and Walmart joined in signing the letter, urging Congress to move forward with a timely renewal.

“GSP supports American manufacturing by reducing costs of imported inputs, machinery and equipment, and helps American families make ends meet by lowering the costs of consumer goods imported duty free. The GSP program saved American companies nearly $730 million in import duties in 2016 and is on track to save even more in 2017,” the letter said.