India to Be Removed from the Generalized System of Preferences as of June 5th

On May 31, 2019, President Trump issued a Proclamation “To Modify the List of Beneficiary Developing Countries under the Trade Act of 1974” that will effectively remove India as a beneficiary developing country from the Generalized System of Preferences (GSP) as of June 5th. 

The GSP is a unilateral preferential trade program that was enacted by the United States as part of the Trade Act of 1974. It entered into force in 1976 and is intended to assist in the economic growth of designated developing countries—such countries are listed in General Note 4(a) of the Harmonized Tariff Schedule of the United States. The GSP program provides duty-free access to the U.S. market for qualifying merchandise from beneficiary countries.

In order to be eligible for GSP benefits, a product imported from a GSP beneficiary developing country must be wholly the growth, product, manufacture or assembly of that country. Alternatively, products may qualify for the GSP if the sum of the cost or value of the materials produced in a beneficiary country, plus the direct cost of processing operations performed in a beneficiary country or countries, is not less than 35% of the appraised value of the article at the time of entry into the U.S. The cost or value of materials imported into a beneficiary country from a non-beneficiary country may be counted toward the 35% value-added rule if the materials are first substantially transformed into new and different articles of commerce and are then used as constituent materials in the production of the eligible article. In addition, merchandise imported under the GSP must be shipped directly to the United States from the beneficiary country.

Per Section 502(d)(1) of the Trade Act of 1974, the President has the authority to remove, suspend or limit the application of the GSP to any beneficiary developing country for a variety of reasons. In the Proclamation, President Trump stated that his decision to remove India as a GSP beneficiary country was based on India’s failure to provide assurances that U.S. goods will be given equitable and reasonable access to its markets.  The Trump Administration notified Congress of its intent to remove India as a GSP beneficiary developing country in March 2019.

As a result, imports of products from India will no longer be eligible for duty-free treatment upon their importation into the United States under the GSP as of June 5, 2019. In addition, the Presidential Proclamation also stated that solar cells and washing machines imported into the United States from India will become subject to Section 201 safeguard duties as of June 5th as well.

If you have any questions pertaining to India’s removal from the GSP or other international trade issues, please contact Miller Proctor Law PLLC (https:www.millerproctorlaw.com).