The House Ways and Means Committee recently released the text of the Generalized System of Preferences Reform Act ahead of a planned markup this week.  The bill provides a long-term extension of the GSP through to December 31st, 2030 and is fully retroactive to January 1st, 2021 with several modifications to the program.  With the help of our friends at Sorini Samet & Associates LLC, we’ll share a synopsis: 

Country Eligibility 

• China has been added to the list of ineligible countries 
• Violations of human rights has been added as a criterion for ineligibility 
• Adds factors for consideration by the President when determining eligibility for beneficiary developing countries (BDCs): 

• access for U.S. agriculture 
• a country’s openness for the construction of military bases by a covered nation 
• the country’s progress toward rule of law 
• economic policies to reduce poverty, corruption, equitable tax treatment to U.S. entities 
• whether the country engages in activities to undermine U.S. national security or foreign policy interests 
• the existence of digital trade barriers 

• Adds that the President shall consider the likely impact of actions on workers and populations,  and take “all available steps to facilitate continued duty-free treatment for products to which the imposition of duties is likely to have an adverse effect on meeting the criteria or result in severe economic harm.”

Competitive Needs Limitations 

• The act modifies the CNL dollar threshold, increasing the base amount to $500 million for 2024 with an annual rise of 2.5% 
• This is significant as the current CNL stands at $215 million for 2024 
• This amount will now rise annually by 2.5%, meant to better reflect inflation 
• This will give greater certainty to key GSP sectors such as travel goods, and products like backpacks from Indonesia 
• Originally, the statute language in the act stated that the President “may” redesignate products that fell back below the CNL threshold in the previous year.  This now states that the President “should” redesignate those products, thus clarifying to USTR that products should be redesignated when they fall below the thresholds and make it easier to add products back into the program 
• The act modifies de minimis waiver amounts, rising from $13 million to $50 million for 2024, with annual raises of 2.5% 

• The Super CNL language, which stipulates that products that exceed 75% of total imports have their waivers revoked, will not apply to products with a ‘Not Produced in the United States (NPUS) waiver.’ This is an item of particular importance to the U.S. RV industry 

 Rules of Origin Changes  

• The rules of origin (ROO) under the program will be modified on a gradual basis. Articles entered before January 1st, 2027, will remain at the 35% ROO level. Articles entered on or after January 1st, 2027, and before January 1st, 2029, will have a 40% ROO level. For articles entered on or after January 1st, 2029, and before January 1st, 2031, a 45% ROO level will apply. And for articles entered on or after January 1st, 2031, the ROO will be 50% 
• The update allows for 15% U.S. content  
• USTR shall report on the impact of GSP ROO changes by January 1st, 2026 
• The report will also include recommendations on new regional associations eligible for treatment as one country and recommend updates to ROOs that would better maximize content from BDCs and the U.S. 
• The gradual raising of the ROO requirements as well as the report will give time for those using the program to adapt to the changes and to give input into the process. 

 Processes for Expedited Review, New Product Coverage 

• No later than 20 days after enactment, the President shall provide a list of each article for which duty-free treatment was suspended, determine which products are sensitive and require a review, and restore duty-free treatment for the remaining items 
• For those articles requiring review, a determination must be made within a year and reported to Congress. This process is an opportunity to get products back into the program in a rapid manner 
• The bill also puts in place an expedited product coverage petition process. 90 days after enactment, the ITC must open a petition process to add or remove headings or subheadings to the program. A report is due no later than one year after the date of enactment of the bill. This process will be a key opportunity for input into product coverage under the program and get new products added such as certain types of footwear, travel goods and wood products 

These are a lot of updates and your business may be affected for the better or the worse.  Speak with Alba’s team to understand the impact these updates might have on your business and what steps can be made to minimize consequences and maximize benefits.