TRALAC - Trade Law Centre

US extends trade benefit programme to South Sudan

Tuesday, 27 March 2012

Source: Independent Online

President Barack Obama on Monday added oil exporter South Sudan to a US trade programme for developing countries, allowing the newly independent nation to ship oil and thousands of other goods to the United States without paying US import duties.

“The GSP (Generalised System of Preferences) programme is an important tool for helping developing countries to grow their economies through increased trade,” US Trade Representative Ron Kirk said in a statement.

Kirk urged the young country to use the GSP programme “to continue needed economic reforms.”

South Sudan seceded from its northern neighbour, Sudan, last year. The United States helped lay the groundwork for that move, which capped a 2005 peace deal that ended a long civil war.

The new country accounts for about 75 percent of the formerly united country's oil output of roughly 500 000 barrels per day, the biggest share of which is bought by China.

Oil is the largest import under both the GSP programme and a separate US programme known as AGOA (African Growth and Opportunity Act) that South Sudan also aspires to join.

Obama designated South Sudan as a “least developed” beneficiary country, which means nearly 4 900 products from South Sudan will be eligible for duty-free treatment under the U.S. Generalised System of Preferences programme once the presidential action takes full effect.

Current US tariffs on oil range from 5.25 cents to 52.5 cents per barrel, depending on the type of petroleum.

GSP eligibility is a prerequisite for AGOA membership, so Obama's decision on Monday is “an important step” toward South Sudan joining the broader programme, Kirk said.

Andrea Mead, a spokeswoman for the Kirk's office, said South Sudan's oil reserves “were not a factor” in the administration's consideration of trade benefits for the country.

Several newly independent countries, such as East Timor, Montenegro and Kosovo, requested and received GSP benefits shortly after independence, she said.

“We want to help strengthen the economy of this new nation and help its government bring jobs and greater prosperity to the South Sudanese people,” Mead said.

The US Treasury Department's Office of Foreign Assets Control in December eased sanctions to allow investment in South Sudan's oil sector.

Senior congressional Democrats welcomed Obama's decision to add South Sudan to the GSP, and called for action on a bill to add the country to the AGOA programme and renew a textile provision of the AGOA legislation set to expire soon.

“African producers tell us that, due largely to uncertainty about this provision's renewal, importers began to shift their orders out of Africa during the second half of 2011,” said Democratic Representative Charles Rangel.

“I will continue to push my Republican colleagues to pass the non-controversial bill renewing the third-country fabric provision and adding South Sudan as a possible AGOA beneficiary as soon as possible,” he said. - Reuters