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08 July 2015

WASHINGTON, D.C. - United States President Barack Obama signed last week the Trade Preferences Extension Act of 2015 (H.R. 1295), which will reauthorize the U.S. Generalized System of Preferences (GSP) Program until 31 December 2017, at the same time renewing the African Growth and Opportunity Act and tariff preference programs for Haiti until 30 September 2025.

The GSP program, which is considered the U.S. largest and oldest trade preference facility, was established 41 years ago to promote economic development by eliminating duties on about 5,000 types of products when imported from 122 designated beneficiary developing and least developed countries and territories, including the Philippines. The program however, excludes textile, apparel, and footwear.

In a briefing before the Alliance of GSP Countries held on June 30, Mr. Bill Jackson, Deputy Assistant U.S. Trade Representative (USTR), announced, “The law will restore the GSP program effective 29 July 2015. It will also expand its coverage to include some 20 to 30 specific types of travel goods and will provide for retroactive refund of all duties paid by US importers from the time the Program lapsed on 31 July 2013.”

Philippine Ambassador to the United States Jose L. Cuisia, Jr. welcomed the announcement.

“The renewal of the GSP Program gives more Filipino exporters access to the U.S. market, which in turn, would create jobs at home, increase competitiveness of Philippine companies and improve the country’s overall trade position,” Ambassador Cuisia said.

What this means to the Philippines

The GSP program is a tool that helps an eligible country to expand its exports to the U.S. It directly benefits micro, small and medium enterprises (MSMEs) and is a major employment generator for many export–oriented agribusinesses and community based industries in the various regions of the Philippines.

Department of Trade and Industry (DTI) Senior Trade Representative and Philippine Embassy Commercial Counselor Maria Roseni M. Alvero explained, “The reinstatement of the program means that the Philippines could recoup its lost export share directly caused by program’s expiry in 2013. More importantly, it is also an essential incentive for investors, both foreign and local, as it boosts the competitiveness of products produced in the Philippines in the US market.”

“For instance, with the inclusion of travel goods in the program with such brands as Coach and Michael Kors which are made in the Philippines, we will be able to compete more  aggressively with China which currently dominates the US market for the products,” Alvero cited as an example.

As recommendation, former USTR Official and Consultant of the Alliance for GSP Countries Marideth Sandler stated, “Exporters are encouraged to touch base with their U.S. importers so that past and present relationships are maintained, especially under this new encouraging environment for exports.”

For her part, Commercial Counselor Alvero strongly suggested, “It is important that DTI and relevant agencies thereof and industry associations should boost training and seminars on GSP and GSP availment, especially in the regions and where the program can have the most impact which is to the MSME sector of the country.” ###