President Suspends Argentina's GSP Eligibility, Adds South Sudan, Etc.

Suspends Argentina's Designation as GSP Beneficiary

The President has determined that it is appropriate to suspend Argentina's designation as a GSP beneficiary developing country because the Argentine government has failed to pay two longstanding arbitral awards in favor of U.S. companies¹, pursuant to the Trade Act of 1974. The U.S. urges the Government of Argentina to pay the subject awards, which would allow the U.S. to consider reinstating Argentina's GSP eligibility. This action will take effect 60 days after the publication of the Presidential Proclamation in the Federal Register.

(Note that 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.)

Adds South Sudan as GSP Beneficiary, also as LDBC

The President has also determined that the Republic of South Sudan should be designated as a GSP beneficiary country, effective 20 days after the date of the proclamation. The President has also designated South Sudan as a least-developed beneficiary developing country, which means that, once in effect, nearly 4,900 products from South Sudan will be eligible for duty-free treatment upon entry into the U.S. This 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.

South Sudan became an independent nation July 9, 2011. USTR said this designation provides an opportunity for the nation to use trade to boost its economic development and encourage it to continue needed economic reforms. As GSP eligibility is a prerequisite for consideration of a country's eligibility for trade benefits under AGOA, USTR notes that this designation is an important step toward consideration of South Sudan's eligibility for trade benefits under the African Growth and Opportunity Act (AGOA).²

(USTR also noted that it looks 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.)

HTS Changes Made by the Proclamation

To reflect the suspension of Argentina's status and the designation of South Sudan as a GSP beneficiary, the President has determined it appropriate to modify General Note 4 of the Harmonized Tariff Schedule (HTS).

The proclamation also makes a number of other changes to the HTS, including modifications for DR-CAFTA and Mexico; CBTPA apparel; Korea Free Trade Agreement (FTA) apparel; and technical corrections. These changes are contained in the annex to the Proclamation, which is expected to be published along with the proclamation, in the Federal Register.

¹Argentina’s suspension 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 Argentine Government’s failure to "act in good faith in recognizing as binding and enforcing" arbitral awards in favor of U.S. companies rendered under the U.S.-Argentina bilateral investment treaty and the ICSID (Convention on the Settlement of Investment Disputes between States and Nationals of Other States). 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 Argentine Government has not paid the awards, despite repeated requests to do so by the two petitioners and the U.S. Government.

²As provided for in section 502(b)(2)(E) of the Trade Act of 1974 (19 USC 2462), which is available here.

USTR press release is available here.

Presidential Proclamation is available here.

Presidential memoranda on Argentina available here, on South Sudan here.