Political Pressure and the U.S. Generalized System of Preferences

The U.S. Generalized System of Preferences (GSP) provides preferential tariff treatment to imports from developing countries. This paper examines the political and economic criteria that determine which products are eligible for GSP treatment. Particular attention is paid to the role that domestic industries play in determining eligibility. The study finds that active opposition by domestic industries substantially reduces the probability that eligibility is granted. Because domestic opposition is more likely when expected increases in imports are large, this opposition limits the benefits provided by the U.S. GSP.