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Argentina Suspended from American Trade Preferences

President Barack Obama suspended Argentina's benefits under the nation's Generalized System of Preferences (GSP) this week. When the suspension takes effect in 60 days, Argentina will no longer be able to take advantage of the GSP program, which aims to help developing countries expand their economies by allowing certain goods to be imported to the U.S. duty-free.

Argentina's refusal to pay $300 million in awards, plus interest, to U.S. companies that invested in the country led to their removal from the program. Part of the GSP eligibility criteria requires Argentina to act in good faith in recognizing as binding arbitral awards in favor of U.S. companies. In this case, two companies brought cases against the Argentine government and were awarded $300 million between them. Payment on those awards has yet to arrive. "We urge the government of Argentina to pay the subject awards," said U.S. Trade Ambassador Ron Kirk. "This would allow us to consider reinstating Argentina's GSP eligibility and promote the growth of a mutually beneficial U.S.-Argentina trade and investment relationship."

Until its suspension, Argentina was the ninth-largest beneficiary under the GSP program.

"Argentina's actions are unjustified, and they should not receive GSP benefits while refusing to pay American investors what they are owed," said House Ways and Means Committee Chairman Dave Camp (R-MI). "I have personally pressed Argentina to resolve my grave concerns about the direction of Argentina's trade policy. I again urge Argentina to live up to its commitments, which would benefit Argentina, the United States and the international trading system."

In the same proclamation that suspended Argentina, President Obama also designated the world's youngest country as a new GSP beneficiary. South Sudan, which became an independent nation in July, was added to the GSP list, offering the new country an opportunity to use trade to boost its development by allowing 4,900 products to be imported into the U.S. from the country duty-free. GSP compliance is also a prerequisite for other trade benefits under the African Growth and Opportunity Act (AGOA), which could provide South Sudan with other trade advantages further down the road.

Jacob Barron, CICP, NACM staff writer