Preferential Treatment: U.S. extends trade benefit program to South Sudan
6 min readBy Doug Palmer
WASHINGTON (Reuters) – President Barack Obama on Monday added oil exporter South Sudan to a U.S. trade program for developing countries, allowing the newly independent nation to ship oil and thousands of other goods to the United States without paying U.S. import duties.
“The GSP (Generalized System of Preferences) program is an important tool for helping developing countries to grow their economies through increased trade,” U.S. Trade Representative Ron Kirk said in a statement.
Kirk urged the young country to use the GSP program “to continue needed economic reforms.”
South Sudan seceded from its northern neighbour, Sudan, last year. The United States helped lay the groundwork for that move, which capped a 2005 peace deal that ended a long civil war.
The new country accounts for about 75 percent of the formerly united country’s oil output of roughly 500,000 barrels per day, the biggest share of which is bought by China.
Oil is the largest import under both the GSP program and a separate U.S. program known as AGOA (African Growth and Opportunity Act) that South Sudan also aspires to join.
Obama designated South Sudan as a “least developed” beneficiary country, which means nearly 4,900 products from South Sudan will be eligible for duty-free treatment under the U.S. Generalized System of Preferences program once the presidential action takes full effect.
Current U.S. tariffs on oil range from 5.25 cents to 52.5 cents per barrel, depending on the type of petroleum.
GSP eligibility is a prerequisite for AGOA membership, so Obama’s decision on Monday is “an important step” toward South Sudan joining the broader program, Kirk said.
Andrea Mead, a spokeswoman for the Kirk’s office, said South Sudan’s oil reserves “were not a factor” in the administration’s consideration of trade benefits for the country.
Several newly independent countries, such as East Timor, Montenegro and Kosovo, requested and receivedGSP benefits shortly after independence, she said.
“We want to help strengthen the economy of this new nation and help its government bring jobs and greater prosperity to the South Sudanese people,” Mead said.
The U.S. Treasury Department’s Office of Foreign Assets Control in December eased sanctions to allow investment in South Sudan’s oil sector.
Senior congressional Democrats welcomed Obama’s decision to add South Sudan to the GSP, and called for action on a bill to add the country to the AGOA program and renew a textile provision of the AGOA legislation set to expire soon.
“African producers tell us that, due largely to uncertainty about this provision’s renewal, importers began to shift their orders out of Africa during the second half of 2011,” said Democratic Representative Charles Rangel.
“I will continue to push my Republican colleagues to pass the non-controversial bill renewing the third-country fabric provision and adding South Sudan as a possible AGOA beneficiary as soon as possible,” he said.
(Reporting By Doug Palmer; editing by Mohammad Zargham)
http://www.euronews.com/newswires/1456894-us-extends-trade-benefit-program-to-south-sudan/
U.S. Trade Representative Ron Kirk Comments on Presidential Actions Related to the Generalized System of Preferences
South Sudan Added to Program, Argentina’s Eligibility Suspended
Washington, D.C. – United States Trade Representative Ron Kirk issued the following statement on today’s presidential proclamation that designates the Republic of South Sudan as a new beneficiary of the Generalized System of Preferences (GSP) program and suspends the GSP eligibility of Argentina:
“The GSP program is an important tool for helping developing countries to grow their economies through increased trade,” said Ambassador Kirk. “The President’s designation of the Republic of South Sudan as a GSP beneficiary country provides an opportunity for this newly independent nation to use trade to boost its economic development and, we hope, will encourage it to continue needed economic reforms. The President’s action is also an important step toward consideration of South Sudan’s eligibility for trade benefits under the African Growth and Opportunity Act (AGOA). We look forward to working with Congress on near-term passage of legislation extending AGOA’s third-country fabric provision, which is crucial for continued success of the program.”
The designation of South Sudan as a GSP beneficiary country follows a request by the Government of South Sudan for such designation and a subsequent interagency U.S. Government review of South Sudan’s GSP eligibility, based on the criteria set forth in the GSP statute. The President also designated South Sudan as a least developed beneficiary developing country, which means that once the presidential action takes full effect, nearly 4,900 products from South Sudan will be eligible for duty-free treatment upon entry into the United States. GSP eligibility is a prerequisite for consideration of a country’s eligibility for trade benefits under AGOA.
“The suspension of Argentina’s GSP eligibility is based on a finding that the country is not in compliance with the statutory GSP eligibility criteria set by Congress,” said Ambassador Kirk. “Specifically, the Argentine government has failed to pay two longstanding arbitral awards in favor of U.S. companies. We urge the Government of Argentina to pay the subject awards. This would allow us to consider reinstating Argentina’s GSP eligibility and promote the growth of a mutually beneficial U.S.-Argentina trade and investment relationship.”
The GSP action on Argentina, which becomes effective 60 days after the publication of the presidential proclamation in the Federal Register, follows an interagency U.S. Government review of two separate petitions submitted by U.S. companies. The petitions sought the removal of Argentina from GSP eligibility based on the Government of Argentina’s failure, in contravention of the GSP statutory eligibility criteria, to act in good faith in recognizing as binding and enforcing arbitral awards in favor of U.S. companies rendered under the United States-Argentina bilateral investment treaty and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). The subject awards, totaling about $300 million plus interest, were rendered by ICSID arbitral tribunals in 2005 and 2006 and were subsequently upheld against challenge by Argentina in ICSID annulment proceedings. The Government of Argentina has not paid the awards, despite repeated requests to do so by the two petitioners and the United States Government. In 2011, U.S. imports from Argentina benefiting from GSP treatment totaled $477 million (about 11 percent of total imports from Argentina), making Argentina the ninth-ranking source of imports under the GSP program last year.
Congress created the GSP program in the Trade Act of 1974 to help developing countries expand their economies by allowing certain goods to be imported to the United States duty-free. Under the GSP program, 129 beneficiary developing countries, including 42 least-developed countries, are eligible to export up to 4,881 types of products to the United States duty-free. In 2011, the total value of imports that entered the United States duty-free under GSP was $18.5 billion. For more information on the GSP program, please visit the GSP page.
The African Growth and Opportunity Act (AGOA) was established in 2000 to provide eligible sub-Saharan African countries with duty-free access for a broader variety of products than is available under GSP, including apparel, footwear, and some agricultural and processed food products. AGOA’s third-country fabric provision allows most sub-Saharan African AGOA beneficiaries to use fabric from any source in the production of qualifying duty-free apparel subject to duty-free treatment when imported into the United States. This provision is scheduled to expire on September 30, 2012. For more information on AGOA, visit the AGOA page.
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