VietNamNet Bridge - US President Donald Trump has proposed removing some countries from its GSP (generalized system of preferences) program. If this occurs, exports from countries to the US will bear higher tariffs.

Before Trump mentioned this on March 4, the America Studies Institute of the Vietnam Academy of Social Sciences cited news channels as warning that the US was planning to reconsider the GSP program to regain a ‘fairer playing field’ for US businesses.

GSP has been active for the last four decades. It is applied to 5,000 categories of products imported from many developing countries and territories. Vietnam has nearly 1,000 export items to the US and many of enjoy GSP.

With GSP, exports to the US have lower tariffs under MFN (most favored nation) policy. GSP does not include technical barriers and does not require reciprocity.

The USTR (US Trade Representative) has carried out review campaigns to find out if GSP trade partners are operating in a reasonable and fair way. In the past, USTR would only review if it received complaints from associations and social organizations about  child labor or human rights.

The problem of GSP is that it is unilateral, and there are no long-term commitments, which means the preferences could stop at any time.

The USTR (US Trade Representative) has carried out review campaigns to find out if GSP trade partners are operating in a reasonable and fair way. In the past, USTR would only review if it received complaints from associations and social organizations about  child labor or human rights. 

Of 10 countries which are the biggest beneficiaries from the US GSP program, India, Thailand, Brazil, Indonesia and Turkey are at the top.

The US believes that India can get the biggest benefit, with $5.6 billion worth of exports to the US, followed by Thailand and Brazil. This explains why India, Indonesia and Kazakhstan were named in the notice about GSP reconsideration released in April 2018.

Vietnam is currently enjoying a surplus in two-way trade with the US, with a trade surplus of $35 billion last year.

According to the General Department of Customs (GDC), Vietnam exported $41.6 billion worth of products to the US in 2017, while it imported $9.2 billion worth of products from the US. The US was the biggest market that Vietnam had a trade surplus with, valued at $32.4 billion.

Vietnamese enterprises would have bigger opportunities to sell products to the US if the products from other countries become more expensive as the result of the GSP removal.

An expert said that India now benefits from exports that are not Vietnam’s advantageous products. 

Meanwhile, textiles & garments, footwear and steel, key products of Vietnam, India and Indonesia, are not subject to GSP.

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H. Duy