Statement by Assistant to the President for Press Relations Fitzwater on Amendments to the Generalized System of Preferences

January 29, 1988

Because of their remarkable advancements in economic development and their recent improvements in trade competitiveness, President Reagan today has decided to remove four participants from the trade preference program that permits certain imports from developing economies to enter the United States duty free. Effective January 2, 1989, Hong Kong, the Republic of Korea, Singapore, and Taiwan will be graduated from the Generalized System of Preferences (GSP), a move that will affect nearly $10 billion in imports.

Since its inception in 1976, the Generalized System of Preferences has been a program of temporary incentives rather than permanent tariff advantages. Through the years we have regularly reviewed the 3,000 products from 141 beneficiaries that are eligible for GSP treatment and removed benefits from those products that no longer needed preferential treatment to compete in the U.S. market. Today's action is in keeping with the original intent of the program and with its operation during the past 12 years.

Over the past decade, Hong Kong, the Republic of Korea, Singapore, and Taiwan have made such tremendous strides in their economic development that they can now compete effectively in the United States without preferential treatment. Indeed, they have successfully fulfilled the objectives of the program. Last year nearly 60 percent of GSP benefits went to these four beneficiaries, a disproportionate amount for such advanced economies. Their graduation will open additional opportunities for the remaining beneficiaries -- those most in need of the program.

This move should not be interpreted as penalizing any of the beneficiaries being graduated from the program. On the contrary, it reflects the great economic successes they have had. All four are good friends and valued trading partners. But the Generalized System of Preferences is a development program, and when GSP beneficiaries no longer need the program benefits, they should be graduated. America's relationship with these four advanced developing economies has entered a new phase, one that is characterized by greater equality. The United States admires their economic achievements and their advancement toward full partnership in the international trading system. We look forward to continued friendship and even closer economic ties in the years ahead.