President Trump Suspends Preferential Trade Treatment for Thailand
On Friday, October 25th, the Office of the U.S. Trade Representative (USTR) announced that the United States will be suspending certain benefits for imports from Thailand under the United States’ Generalized System of Preferences (GSP) program for failure to “adequately provide internationally-recognized worker rights.” As a result, 573 U.S. Harmonized Tariff Schedule line items from Thailand, including all seafood, will no longer be subject to duty-free GSP treatment as of April 25, 2020. The removal of benefits for these imports affects approximately one-third of Thailand’s GSP trade, which totaled $4.4 billion in 2018. The GSP program, established by the Trade Act of 1974, is designed to promote economic development by eliminating duties on certain eligible products when imported from a beneficiary country or territory. The program involves an annual review process during which the USTR and other participating executive branch agencies, through a body known as the Trade Policy Staff Committee (TPSC), assess potential changes to countries and products eligible for duty-free treatment under the program. Private interested parties may petition for modifications to the list of countries and products eligible for GSP treatment. In addition, the TPSC undertakes a triennial assessment of each GSP beneficiary country’s compliance with the statutory eligibility criteria, and may self-initiate a full review of a country’s ongoing GSP eligibility if warranted. Factors for assessment include whether a country is providing workers with internationally recognized labor rights and to what extent the country is providing adequate and effective protection of intellectually property rights, among other factors. See 19 U.S.C. § 2462(c). Friday’s announcement to suspend GSP benefits for Thailand was the culmination of an eligibility review stemming from a 2015 petition by the AFL-CIO alleging Thailand’s shortcomings in the area of worker rights. The United States had been engaged with Thailand on labor issues in the years prior to the AFL-CIO petition as well. According to USTR, those engagement efforts have not been successful, resulting in the decision to suspend certain GSP trade benefits for Thailand. Also on October 25th, USTR announced the following: (1) The closing of reviews of GSP eligibility for Bolivia (worker rights), Iraq (worker rights), and Uzbekistan (intellectual property protections) without changes to those programs. (2) The reinstatement – effective October 30, 2019 – of one-third ($12 million trade value) of GSP benefits previously suspended for Ukraine in December 2017 due to Ukraine’s inadequate protection of intellectual property rights. (3) The initiation of GSP eligibility reviews for Azerbaijan (worker rights) and South Africa (intellectual property protections). USTR will announce future opportunities for public hearing and comment on these eligibility reviews. Please contact us with questions about these specific GSP changes or the GSP country/product review process.