[author: Clint Long]

On June 29, President Obama signed the Trade Preferences Extension Act of 2015 and extended key preferential trade programs with many of the world's developing economies. These programs include the Generalized System of Preferences (GSP) and the African Growth and Opportunity Act (AGOA). Developing countries and U.S. companies both will benefit from the renewal of these programs.

As we reported last month, the Trade Preferences Extension Act provided a long-awaited extension to the GSP program, which had lapsed in 2013. As extended, GSP will provide reduced duties or duty-free rates to a number of imported goods from developing countries through December 31, 2017. The preferential rates went into effect on July 29, 2015, which means that U.S. importers currently can claim these preferences on eligible goods. Although GSP expired on July 31, 2013, the Trade Preferences Extension Act gives U.S. importers the opportunity to retroactively claim GSP benefits for imports that occurred after the program lapsed. In other words, as U.S. Customs & Border Protection explains, importers can claim duty refunds for "[g]oods entered between July 31, 2013 and July 29, 2015 . . . as though they had entered before the program expired."

In addition to the clear advantages that GSP will provide for developing countries, U.S. companies also will benefit from GSP's renewal. Citing a study by the U.S. Chamber of Commerce, the U.S. Trade Representative (USTR) states that "moving GSP imports from the docks to U.S. consumers, farmers, and manufacturers supports tens of thousands of jobs in the United States." Furthermore, USTR points out that GSP "boosts American competitiveness by reducing costs of imported inputs used by U.S. companies to manufacture goods in the United States." Finally, the GSP program "is especially important to U.S. small businesses, many of which rely on the program's duty savings to stay competitive."

The Trade Preferences Extension Act also extended AGOA and a preferential duty treatment program for Haiti until 2025. According to USTR, AGOA's trade preferences "allow virtually all marketable goods produced in AGOA-eligible countries to enter the U.S. market duty-free." As Congress considered extending AGOA, however, some members warned that South Africa may be excluded from AGOA eligibility. South Africa has imposed antidumping duties on imports of poultry meat from the United States since 2000, and members of Congress questioned the compliance of these duties with South Africa's World Trade Organization commitments. They argued that "we will need to consider strengthening AGOA to prevent South Africa from benefitting from duty preferences while continuing to discriminate against U.S. goods, specifically poultry."

In anticipation of the extension of AGOA and the possibility that South Africa would be left out, South Africa and the United States reached an agreement in early June through which South Africa will exempt 65,000 tons of chicken imports from the United States from duties in exchange for inclusion in the AGOA renewal. The Trade Preferences Extension Act included a provision, however, that requires USTR to conduct a review of South Africa's eligibility for AGOA. This review, which USTR initiated on July 21, includes assessing South Africa's "elimination of barriers to U.S. trade and investment." If USTR's review of South Africa's eligibility is favorable, South African companies and U.S. poultry producers should benefit from the poultry agreement and the extension of AGOA.