USTR announces suspension of some of Thailand’s GSP benefits

Overview

The United States Trade Representative (USTR) announced October 25 that President Trump is suspending $1.3 billion in trade preferences for Thailand under the Generalized System of Preferences (GSP), citing Thailand’s failure to adequately provide internationally recognized worker rights. The USTR further announced that President Trump is restoring some GSP benefits for Ukraine following passage of legislation aimed at addressing shortcomings in its intellectual property (IP) regime. 

The USTR also announced that it is opening new GSP eligibility reviews for South Africa and Azerbaijan, as well as closing GSP eligibility reviews with no loss of GSP eligibility for Bolivia, Iraq, and Uzbekistan.

For prior coverage of GSP developments, see PwC Insights, President Trump terminates India’s preferential status under the GSP program, June 10, 2019.

The takeaway

American companies engaging in business with Thai manufacturers may experience significant duty exposure when Thailand’s GSP eligibility terminates on April 25, 2020. Affected US businesses should prepare for the increased exposure by taking inventory of their current stock and reassessing supply chains on the basis of potential duty exposure and overall cost. 

Companies also might wish to examine their business models and evaluate potential opportunities or risks in light of the USTR’s restorations of, and new process for reviewing, GSP eligibility in several beneficiary countries.