# Presentation: 201170

## Expanding Ukraine’s Export Opportunities through GSP  

**U.S. Department of State**
**Office of the U.S. Trade Representative**
**May 2006**

## Today’s Discussion

- Ukraine’s current exports to the United States
- Ukraine and the U.S. Generalized System of Preferences (GSP) Program
- How to increase Ukraine’s use of GSP duty-free opportunities

## Ukraine’s Top Exports to the U.S. (by value in 2005)

- Anhydrous ammonia (fertilizer)
- Certain semifinished products of iron or nonalloy steel
- Certain nonalloy pig iron
- Coke & semicoke of coal, lignite or peat
- Certain hot-rolled flat-rolled iron/nonalloy steel products
- Certain iron or nonalloy steel, seamless casing pipe
- Certain alloy and iron/nonalloy steel bars and rods
- Urea & ammonium nitrate mixtures
- Certain distillate & residual fuels
- Women’s or girls’ overcoats of wool or fine animal hair

## Ukraine and the U.S. GSP Program

- Ukraine was redesignated as a GSP beneficiary country on January 23,  2006.
- What does that mean?
- Ukraine can export 3,400 products ***duty-free*** to the United States.
- GSP duty-free treatment gives certain exports from Ukraine a competitive edge in the U.S. market because importing companies do not pay tariffs of between 1% and 16% (for current exports).

## U.S. Generalized System of Preferences (GSP) Program

- Creates economic opportunities in developing countries and expands choices of U.S.  industries and consumers.
- Provides duty-free treatment for 3,400 products from 136 developing countries.
- $26.7 billion in U.S. GSP imports in 2005.
- Not allowed are most textiles, watches, footwear, handbags, luggage, gloves & leather apparel.
- GSP program expires December 31, 2006.  President Bush has requested a five-year reauthorization.

## Which Products from Ukraine Qualify for Duty-free Treatment under GSP?

- Must be a GSP-eligible product noted as “A” or “A*”
- Must be imported into the U.S. directly from Ukraine or pass through another country in a sealed container.
- Must be growth, product, or manufacture of Ukraine.

## Which Products from Ukraine Qualify for Duty-free Treatment under GSP?

- 4. First GSP value-added requirement (“Rule of Origin”):
- The sum of the cost or value of the materials produced in Ukraine, plus the direct costs of processing, must equal at least 35% of the product’s value when the product is sold for export into the United States.

## Which Products from Ukraine Qualify for Duty-free Treatment under GSP?

- 5. Second GSP value-added requirement (“Rule of Origin”):
- Imported materials can count toward 35% value-added requirement.
- BUT, they must be “substantially transformed” in Ukraine into new and different constituent materials, which are then used to produce or manufacture the eligible article to be exported.
- “Substantially transformed” means the U.S. would classify them as different items.

## Obtaining Duty-free Treatment for Your Product under GSP

- 6. It is important for the manufacturer or producer to know (and ensure that the importer knows):
- The importer must request the product’s duty-free treatment under GSP by placing an “A” or “A*” before the HTSUS number on form 7501, which is U.S. Customs’ shipment entry documentation form.

## Ukraine’s GSP Exports to the U.S. (Jan 23-Feb 28, 2006)

- Pigments & preparations based on titanium dioxide (6% tariff), HTS 320611
- Chocolate and other cocoa preparations for wholesale use (6%), HTS 18069090
- Unworked human hair and human hair waste (1.4%), HTS 0501
- Swords, bayonets and similar arms, sheaths, and scabbards (2.7%), HTS 9307
- Certain ready-to-eat sugar confections or sweetmeats - not of cocoa (5.6%), HTS 17049035
- Non-threaded iron and steel articles - rivets, washers (2.8%), HTS 731829
- Vegetables preserved by vinegar or acetic acid (9.6%), HTS 20019038

## How to Increase Imports from Ukraine That Enter U.S. Duty-free Under GSP

- 1.  Ensure that GSP treatment is claimed for  eligible products currently imported from Ukraine.
- 2.  Identify GSP-eligible products that Ukraine is exporting to other markets and consider exporting them to the U.S. duty-free.
- 3.  Export eligible products under other countries’ GSP programs.

## Ensure GSP Treatment is Claimed for Eligible Products

- Of $11.5 million in GSP-eligible products that U.S. imported from Ukraine between Jan. 23-Feb. 28, 2006, just $122,800 of those imports received GSP duty-free treatment.
- GSP utilization rate, therefore, for initial period of Ukraine’s restored GSP eligibility was very low (1.1 percent).

## Ensure GSP Treatment is Claimed for Eligible Products

- Also - for all but one of the products that received GSP duty-free treatment, not all of the products’ shipments entered duty-free under GSP.
- For example, more than half ($112,000) of GSP-eligible titanium dioxide pigment and preparation imports were assessed a
-     6% tariff.
- Imports’ cost to U.S. user was $6,720 more than it could have been, or the exports’ revenue to producer was $6,720 less.

## Ensure GSP Treatment is Claimed for Eligible Products

- January-February imports charged tariffs that were likely duty-free under GSP included:
- $4 million in radial tires of construction or industrial vehicles and machines @ 4% tariff =$160,000
- $3.3 million in railway/tramway locomotives or cars @ 0.4% tariff=$132,000
- $747,000 in rare gases (not argon) @ 3.7% tariff = $27,639
- $285,000 in certain gallium and gallium powders @ 3% tariff =$8,550*
- $269,000 in sports gloves and mittens @ 2.8% tariff = $7,532

## GSP-eligible Products Not Claimed

- $187,000 in boron carbine @ 3.7% =$6,919
- $180,000 in downhill snow skis @ 2.6% tariff =$4,680
- $131,600 in inflatable pleasure or sports vessels @ 2.4% tariff = $3,158
- $116,000 in coloring matter of vegetable or animal origin @ 3.1% tariff =  $3,596
- $113,800 in optical telescopes @ 8% tariff =$9,104*****
- $110,000 in titanium oxides @ 5.5% tariff =$6,050

## Ensure GSP Treatment is Claimed for Eligible Products

- 66 categories of GSP-eligible imports (11.3 million) paid tariffs in Jan-Feb. Why?
- Shipments could have already occurred.
- It has been _five years_ since Ukraine’s exports have been eligible for GSP duty-free preferences.
- Ukraine’s utilization of GSP will improve. Ways to do so include...

## Ensure GSP Treatment is Claimed for Eligible Exports

- Translate GSP information into Ukrainian. Put both versions on government’s web-portal.
- Get word out about GSP to Ukraine’s producers, manufacturers, and business/industry associations.
- Have exporters ensure that their importers mark the customs form correctly.
- Hold GSP seminars in key cities.

## Seek GSP Duty-Free Treatment for More Exports to the United States

- Identify GSP-eligible products that Ukraine exports to other markets:
- To EU?
- To OECD countries?
- Consider exporting them duty-free to the U.S. under GSP.

## Utilize the Benefits of Other Countries’ GSP Programs  

- Australia
- Belarus
- Bulgaria
- Canada
- Czech Republic
- Estonia
- European Union
- Hungary

- Japan
- New Zealand
- Norway
- Poland
- Russian Federation
- Slovak Republic
- Switzerland
- Turkey

## For Further Information

- Office of the U.S. Trade Representative Website:
-      GSP guidebook and lists of GSP eligible and
-      not eligible products:
- _[http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html](http://www.ustr.gov/Trade_Development/Preference_Programs/GSP/Section_Index.html)_
- Department of Homeland Security: Customs & Border Protection:        _[http://www.customs.gov/xp/cgov/import/](http://www.customs.gov/xp/cgov/import/)_
- CUSTOMS FORM 7501: _[https://forms.customs.gov/customsrf/getformharness.asp?formName=cf-7501-form.xft](https://forms.customs.gov/customsrf/getformharness.asp?formName=cf-7501-form.xft)_
- _[http://www.customs.treas.gov/xp/cgov/toolbox/](http://www.customs.treas.gov/xp/cgov/toolbox/)__ __publications__/_

## For Further Information 

- U.S. Tariff Schedule:
- _[http://www.usitc.gov/tata/hts](http://www.usitc.gov/tata/hts)_
- U.S. Department of Commerce Trade Information Center:
- _[http://www.trade.gov/td/tic/](http://www.trade.gov/td/tic/)_
- email counseling: tic@ita.doc.gov

## Other GSP Programs

- _[http://www.unctad.org/Templates/Page.asp?intItemID=1418&lang=1](http://www.unctad.org/Templates/Page.asp?intItemID=1418&lang=1)_
- _OR_ go to _[http://www.unctad.org](http://www.unctad.org/)__ and type in “GSP” in the search window in the top right corner of the home page._