PH exports to US lose GSP privileges

Philippine exports to the US are now subjected to general tariffs imposed after the preferential US Generalized System of Preferences (GSP) expired last Dec. 31, 2020.

In an advisory, the Philippine Embassy in Washington D.C. said Philippine exports that are eligible for duty-free or preferential tariff under the US-GSP scheme will now pay the most-favored nation (MFN) rates.

The US Customs and Border Protection (CBP), however, 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.

Hence, Philippine exporters of US GSP eligible products are advised 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 US Congress last renewed the GSP in March of 2018 with expiration date set for December 31, 2020.

“Never was it never renewed,” said Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. stressing there is no need for exporters to worry about their refund.

Even with the change in the US administration, Ortiz-Luis said the USGSP will be renewed although it may take long. “There is no politics in the GSP, but the USAID is,” he said.

Philippine GSP exports to the US in 2019 totaled $1.6 billion. Top exports under these trade privileges include coconut oil, pineapples, crab meat,, although an estimated $654 million worth of exports that could have been duty-free did not avail of the privilege.

In 2017, GSP exports accounts for 17.6 percent of Philippine exports to the US, valued at US$ 1.492 billion. Leading GSP exports include tires, sugar, electronics, and fruit and vegetable juices.

The US GSP also extended the duty-free treatment to travel goods such as suitcases; vanity and attaché cases; handbags; backpacks; travel, sports and similar bags and cases.

The US-GSP provides nonreciprocal, duty-free tariff treatment to certain products imported into the US from designated beneficiary developing countries (BDCs). Currently, 119 developing countries and territories are GSP beneficiary developing countries. The GSP program provides duty-free entry into the US for over 3,500 products (based on 8-digit U.S. Harmonized Tariff Schedule tariff lines) from BDCs, and duty-free status to an additional 1,500 products from 44 GSP beneficiaries additionally designated as “least developed beneficiary developing countries” (LDBDCs). In 2019, products valued at about $21.0 billion (imports for consumption) entered the United States duty-free under the program, out of $235.1 billion worth of total imports from GSP countries. Total US imports from all countries (including GSP) amounted to about $2.5 trillion in 2019.