GSP Program: Still Lapsed, and Why You Should Keep Flagging Entries

The Generalized System of Preferences expired on 31 December 2020. It has not been renewed since, which as of August 2026 makes the lapse more than five and a half years long. Any guidance describing the GSP program as active, temporarily suspended or about to be reauthorised is out of date, and importers relying on it are paying duty they have not budgeted for.

The lapse has an unusual feature that makes it worth understanding properly rather than writing off. Congress has historically renewed GSP retroactively to the date of expiry, and CBP has a standing mechanism to refund duties automatically on entries that were flagged correctly while the programme was dormant. Flagging costs nothing. Not flagging forfeits the refund. That asymmetry is the single most valuable thing an importer of formerly eligible goods can act on today.

The Current Status, Stated Plainly

GSP was authorised under Title V of the Trade Act of 1974, codified at 19 U.S.C. 2461 through 2467. Authorisation lapsed at the end of 2020 and no renewal has been enacted since.

Bills have been introduced. In the 118th Congress, H.R. 4276 would have run the programme through December 2026 with added human rights, environmental and governance criteria, and S. 4915 was a parallel effort. None was enacted. The pattern of repeated introduction without passage is itself the reason importers should plan on the lapse continuing rather than on imminent renewal.

The cost of the lapse has been substantial. Estimates put duties paid on formerly GSP-eligible goods at more than three billion dollars across 2021 to 2023 alone. Those are duties that did not exist in the same importers’ budgets two years earlier, and for anyone still carrying that exposure the recovery routes are the ordinary ones: correct classification, a preference programme that is actually in force, or duty deferral through a customs bonded warehouse.

What Importers Pay in the Meantime

Goods that would have entered free under GSP are dutiable at the Column 1 General rate, which is the ordinary MFN rate. There is no partial benefit and no transitional relief. The preference simply is not available to claim.

For many formerly eligible articles that is a manageable few percent. For others it is not, and the categories that were most valuable under GSP are frequently the ones where the ordinary rate is high enough to change sourcing decisions.

The position has become materially worse for several major former beneficiaries. The Section 301 forced-labour action that took effect on 24 July 2026 applies at 10% to a list that includes Bangladesh, Cambodia, India, Indonesia, Pakistan and Sri Lanka. Goods from those origins now carry the MFN rate plus 10%, with no preference programme available to offset either. An importer who has not revisited sourcing since 2020 is carrying both changes at once.

Keep Flagging Entries With SPI A, Even Though There Is No Benefit

CBP instructs filers to continue flagging eligible entries with the Special Program Indicator A, A* or A+ as a prefix to the HTS number, while paying the MFN duty. It looks pointless and it is not.

GSP has been renewed retroactively after every previous lapse. When that happens, formal and informal entries filed electronically through the Automated Broker Interface carrying SPI A are processed for refund automatically by CBP, with no further action required from the filer. That automatic path is the whole reason the flag exists during a lapse.

Entries that were not flagged are in a different position. They require a separate claim, and they are exposed to the finality of liquidation, which can close the door entirely on older entries before any renewal passes. The difference between an automatic refund and a time-barred claim is a data field that costs nothing to populate.

This is worth raising with whoever files your entries. A licensed customs brokerage should already be flagging as standard practice, but the instruction is easy to drop from a template during a five-year lapse, and the omission does not surface until it is too late to fix.

• Flag with SPI A, A* or A+ and pay the MFN duty as normal.
• Filed through ABI with the flag: refund processed automatically if renewal is retroactive.
• Filed without the flag: separate claim required, and liquidation finality may bar it.
• Confirm your broker has not dropped the flag from entry templates during the lapse.

Who and What Qualified, for When It Returns

Country eligibility under 19 U.S.C. 2462 turned on a list of statutory criteria including recognition of arbitral awards, not having expropriated US property, not aiding terrorism, taking steps to afford internationally recognised worker rights, providing adequate and effective intellectual property protection, and implementing commitments to eliminate the worst forms of child labour.

Article eligibility turned on two tests. The 35% value content rule required that the cost or value of materials produced in the beneficiary country plus the direct costs of processing there equal at least 35% of the appraised value of the article. The imported directly requirement governed the routing.

Several categories were excluded by statute regardless of origin, and the list is worth knowing because it explains why GSP never covered the goods importers most often ask about. Most textiles and apparel subject to textile agreements were out, along with watches, import-sensitive footwear, handbags, luggage, flat goods, work gloves, leather apparel and certain steel and glass products.

The 35% test is a value-content calculation of the same family as the ones used elsewhere in trade preference work, and importers who maintain that discipline for USMCA rules of origin already have the costing infrastructure a GSP claim would need.

Competitive Need Limitations and How Countries Lost Coverage

GSP had a built-in graduation mechanism. Under 19 U.S.C. 2463(c)(2), a beneficiary lost eligibility for a specific product if in a calendar year it supplied more than 50% of total US imports of that product, or exceeded a dollar-value threshold that rose by five million dollars annually and stood at 195 million dollars in 2020, the last full year before the lapse.

Waivers were available, including de minimis waivers where total US imports of the article were small. Products exceeding 150% of the value limitation or 75% of total US imports were removed outright and were not waiver eligible.

Two large beneficiaries were removed before the lapse for reasons unrelated to the limitations. Turkey lost eligibility effective 17 May 2019 on the ground that it was sufficiently economically developed. India lost eligibility effective 5 June 2019 for failure to assure equitable and reasonable market access. Both removals were announced by USTR in March 2019 and implemented by presidential proclamation.

If renewal comes, those removals do not automatically reverse. An importer planning around a future GSP should be checking the beneficiary list as it stands at renewal rather than as it stood in 2019.

What to Do Now

Pull a list of your entries over the last five years that would have been GSP eligible, and check whether they were flagged. If they were not, the exposure is quantifiable and the remedy for future entries is immediate.

Then treat the flag as a permanent line item in your entry instructions rather than something to switch on when renewal looks likely. Renewals have historically been enacted with little notice and applied retroactively, which means the window to start flagging is always before the announcement rather than after it.

Finally, rerun the sourcing arithmetic on origins that carry both the loss of GSP and the new forced-labour duty. Where the combined change is large enough to move a decision, the alternatives are usually a different origin, a preference programme that is actually in force, or a duty deferral structure. Those trade-offs are landed cost questions rather than duty questions, and they belong in a full landed cost comparison before a supply agreement is retendered.

Frequently Asked Questions