President Reagan yesterday removed duty-free import privileges from a wide range of products from emerging Third World nations as part of his policy to wean them from trade preferences as they gain economic strength.
He removed $839 million worth of goods from the duty-free list because they had accounted for more than half the U.S. imports of the product, and refused to reinstate another $2.4 billion in goods as part of his "graduation" policy.
Hardest hit were the Pacific Rim trade giants of Taiwan, Hong Kong, South Korea and Singapore, as well as Mexico, which is suffering from the twin economic shocks of heavy debt and tumbling oil prices.
Together, those five lost duty-free privileges for $2.8 billion worth of products that had been granted under the Generalized System of Preferences (GSP), a 10-year-old program to help Third World nations in their economic development.
"These changes reflect the dynamic nature of the U.S. GSP program," said U.S. Trade Representative Clayton Yeutter. "As the advanced beneficiary countries become competitive enough in particular products to compete in the U.S. market without GSP benefits, we are graduating their products from the program."
Developing countries, however, have opposed Reagan's program of graduation from GSP. They assert that, despite impressive economic performances in some areas, they remain underdeveloped and need the trade preferences to catch up with the industrialized world.
That argument has become increasingly hard to sell to Congress and the administration as many of the Third World recipients of GSP -- especially the "four tigers" of the Pacific Rim and debt-burdened countries such as Mexico -- have piled up large trade surpluses with the United States, mostly in manufactured goods.
Twelve countries lost GSP privileges for products whose sales were so successful in the United States that they took more than half of all imports of those items. Those cuts, required by law, covered $839 million worth of imports. Taiwan and South Korea were the biggest losers, with $495 million in the products affected by the ruling.
As a result of having to pay duty after being removed from the list, some products lost their share of imports to the United States last year. Reagan decided against using his discretionary authority to reinstate those products to the GSP list. These amounted to $2.4 billion in imports.
Among the products that did not regain GSP were copper from Chile, Peru and Zambia, whose imports have been attacked by the battered U.S. industry.
The president, however, did reinstate five products worth $167 million to the GSP list. Among them was $64 million in electronic switching panels that went back on GSP at the request of an American company, Allied Signal Corp., that was buying them, trade officials said.
Last year, the president placed imports worth $246 million back under GSP while refusing to reinstate $1.8 billion in overseas sales.
In another trade action, Reagan took duty-free privileges away from ethanol because the Brazilian product competed with American-made gasohol, which gets U.S. tax benefits.
Along with the United States, 19 other industrialized nations maintain GSP programs. While they are popular with the Third World recipients, they have come under increasingly harsh scrutiny from a Congress that is concerned with America's record trade deficits.
The United States currently grants duty-free treatment to about 3,000 products from 140 developing countries.
Although there have been recent cutbacks, the amount of products covered by GSP has grown consistently since the program was founded, from $3.2 billion in 1976 to $13.3 billion last year.