So far, we have focused on how the GSP program benefits the United States, whether we’re talking about American jobs, families, or manufacturing. But we need to remember the primary purpose of GSP: to provide developing countries with a way to sell their goods to U.S. buyers. So today we talk about the positive impact GSP has on developing countries.
GSP works by offering duty-free access to the U.S. market instead of direct aid. GSP covers about 3,400 products from 130 developing countries. Forty-three “least-developed” countries – including South Sudan, the world’s newest country – receive GSP benefits for an additional 1,450 products. All totaled, U.S. companies bought nearly $20 billion worth of GSP products in 2012.
To ensure that GSP maintains its development goals, countries automatically “graduate” from the program if their per capita income rises to a level deemed to be “high income” by the World Bank. According to the latest data, the high-income threshold is $12,476 – about a quarter of the per capita income in the United States. Typically, the top GSP beneficiaries fall well below this threshold.
For example, per capita income for India, the top GSP beneficiary, is just $1,420. Thailand, the second largest beneficiary in terms of U.S. imports under the program, has a per capita income of $4,420. Indonesia and Philippines, which ranked 4th and 6th in imports under the program in 2012, both have per capita incomes between $2,000 and $3,000.
GSP makes exports from these countries more competitive in the U.S. market. In doing so, it supports good-paying jobs that allows workers – and their families – to escape poverty. By offering access instead of direct aid, the GSP program offers a hand up, not a handout, to the benefit of all.