FACT: The U.S. Generalized System of Preferences program has been expired for nearly three years.

THE NUMBERS: Random sample of GSP imports, 2020 –

WHAT THEY MEAN:

Live now at 2 p.m. EST: PPI’s Ed Gresser is testifying at the House Ways and Means Trade Subcommittee. Watch the live stream.

Background: The Subcommittee’s hearing is on the revival of Generalized System of Preferences, or GSP, a program Gresser oversaw as a civil servant from 2015 to 2021.  This is a 50-year-old set of tariff waivers for 119 low- and middle-income countries, from small Pacific and Caribbean islands to big Brazil and Pakistan, for which Congress’ authorization lapsed at the end of 2020. The U.S. for the moment is the only developed country without such a system.

Some specifics: GSP tariff waivers apply to 3,616 of the U.S.’ 11,414 tariff “lines”* for all the countries on the list, and 5,138 “lines” for the 42 least-developed countries in the group.  Real-world cases, noted above, range from Ukrainian paint and Armenian jewelry, to Haitian mangoes, Thai orchids and mirrors, Fijian ginger candy, Mongolian pine nuts, South African citrus, Cambodian backpacks, and South Pacific yams and taro root. The tariff rates on these lines average about 4.8%, and peak at above 20% for backpacks and luggage. Balancing the additional bit of opportunity are 15 eligibility criteria — providing “reasonable assurance of access to markets” and “adequate and effective protection of intellectual property,” “taking steps to afford internationally recognized labor rights” — which Congress asks participating countries to meet.

During its last year in effect, depending on one’s point of view GSP trade made up (a) an impressive $17 billion in imports, or (b) a modest 11% of imports from the relevant countries (given some exclusions of products, the permanently duty-free status of most energy and resources, and some other factors ) or (c) a modest-almost-to-the-point-of-chastity 0.8% of that year’s $2.35 trillion in U.S. imports.  Two policy points for the Committee as Congress considers re-upping and revising it this fall:

1. Set clear priorities: If Congress’ main goals are encouraging supply-chain diversification and alternatives to Chinese sourcing, the GSP program’s benefits probably should be more significant and need to be pretty stable.  So: long new authorization; consider upgrading benefits either by adding products, revising the arcane ‘Competitive Need Limit’ system, or other options; and make sure removals of benefits on eligibility grounds are last resorts for severe non-compliance.  Alternatively, if the top goals are encouraging countries to work on particular policies through the eligibility criteria, think also about adding some value, and about limiting the number of new eligibility criteria and keeping them specific so that administration officials and GSP country governments can focus on the relevant topics.

2. Act with some urgency: GSP’s Congressional ‘authorization’ lapsed at the end of December 2020, and so the program has not provided benefits for three years. As we noted a couple of weeks ago with respect to the Solomon Islands and canned tuna, this means countries in the program, especially smaller and poorer ones, risk losing exports and employment as trade shifts back to larger and often non-GSP sources. At the same time, U.S. government hopes to use the program for particular policy goals, or to encourage diversification of sourcing and reduce China-reliance, remain on hold. So, act expeditiously.

* See the tweet below for an especially kooky real-life example of these “lines,” with a screenshot of the Borges-like list of wild animal tariffs on HTS pg. 12.

FURTHER READING

Live now, the Ways and Means Committee hearing page.

Gresser’s testimony.

And from 2022, Gresser on GSP Renewal: “Trade, the Poor, and America is Back”

Background:

The U.S. Trade Representative’s GSP Guidebook explains GSP program goals, product coverage, eligibility rules, and country participation.

The Obama administration (2016) evaluates U.S. trade preference programs (including GSP, the African Growth and Opportunity Act, and the Caribbean Basin Economic Recovery Act) and their records on development, poverty alleviation, and policy.

And some international comparisons:  

Japan’s Ministry of Foreign Affairs explains the Japanese GSP.

The European Union

Australia

China’s “least-developed country” tariff waiver.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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FACT: Humanity is “aging” three months each year.

THE NUMBERS: Median age* –

* Our World in Data

WHAT THEY MEAN:

Writing in retirement at Saladin’s court in 1185, the 90-year-old aristocrat ibn Munqidh goes in for some moping. In his youth, ibn M. recalls, he cheerfully rode off on weekends to spear Crusaders, political rivals, and charismatic megafauna.  Now he’s worn out by a bit of calligraphy:

When I wake up I feel like a mountain is on top of me
When I walk, it’s like wearing chains
I creep around with a cane in my hand …
My hand struggles to hold up a pen, when it once
Broke spears in the hearts of lions.

Yes, well, happens to us all these days.  In that era, and for most of human history, not so much.  Until the 19th century life expectancy at birth was about 30 — that is, only half the public got to 30 — and a 25-year-old expected (on average) to live to 50. Ibn M. was an extreme outlier, having avoided first the pre-1800 40% child mortality rate and then the high chance of getting carried off later on by plagues, accidents, predators, or competent enemies, and making it to his 10th decade.

Today, by contrast, the elderly demographic — already with 150 million people over 80 — is the world’s fastest-growing. This, plus the fact that birth rates have fallen by nearly half since the 1970s, means that humanity is aging. Our World in Data’s tabulation finds this year’s global “median age to be 30 1/2, meaning that (a) more than half of us are over 30, and (b) the person exactly in the middle was born in 1992. Our World’s figure is about ten years older than the 20-year median of 1970 and five years older than the 25-year median of 2000, and is projected to creep up by three months per year for the next half-century. The worldwide medians over the last 50 years, with a tentative estimate for 2050, look like this:

2050      36?
2022       30
2010       27
2000     25
1970       20

Worldwide averages, of course, conceal lots of variation.  Details by region below; but in general, East Asia and Europe are “old,” with median ages over 40; Japan is currently the “oldest” country* at 49.  Africa is “youngest” with a median age of 19 (and turbulent Niger is the world’s single “youngest” country at 14 and a half), with the Pacific islands second-youngest. The other regions are in the middle, with Latin America and the Caribbean exactly at the world’s 30-and-a-half-year average (but aging fastest of all), and South Asia, Southeast Asia, and the Middle East a bit below. The U.S. is above the world average at 39, but aging only about 2 and a half months per year, while Europe adds about 3 and a half months, Asia 4 months, and Latin America 5 months.

So: In Europe and East Asia especially, the next decades’ experience will probably be one in which people (whether or not they start wistfully putting down their spears) start getting tired as they push around the modern equivalents of calligraphy pens. Economists accordingly predict rising demand for health equipment and telemedicine services; labor shortages in western countries and East Asia, combined with lower GDP growth rates with which to pay the new workers; production and consumer booms in India, Africa, and parts of the Middle East; and politics increasingly dominated by arguments over how to pay for health and pensions. Still, as ibn Munqidh might reluctantly agree, better than any realistic alternative.

* Counting countries with populations above 100,000. The Vatican, with about 800 people, is technically the oldest country, with its various Cardinals, secretaries, and Swiss Guards at a median age of about 58.

FURTHER READING

Our World in Data’s interactive table of median ages by country, region, income group, etc., from 1950 to the present with projections to 2100.

The CIA’s World Factbook ranks countries by life expectancy.

The International Monetary Fund has thoughts on aging, growth rates, and finance,

The World Health Organization on new health challenges.

And Usama bin Munqidh on old age, medieval battle tactics, poetry, calligraphy, Crusaders’ odd gender habits and loony “trial-by-ordeal” and “trial-by-combat” legal theories, the mighty Saladin, etc.

Detail by region

Oldest: Europe is the world’s “oldest” region with a median age of 42 — that is, 12 years above the world median.  Italy, with a median of 47, has Europe’s oldest population with Portuguese, Germans, Greeks, and Bulgarians next at 45.  East Asia, at 40, is almost as venerable at Europe, and Japan is currently the world’s “oldest” country,* with a median age hitting 49 this year.  (Japanese also have the world’s longest lifespan, at 87.)  A bit north, Koreans are slightly more youthful at 43 but aging faster, with Korea likely to pass Japan by 2040 and hold the “world’s-oldest country” status for the rest of the 21st century. Mainland China’s median age of 38 — exactly equal to America’s — is the region’s youngest but rising fast. China is likely to catch Europe in the next decade and pass Japan somewhere around mid-century, as this fall’s Shanghai elementary schoolers begin contemplating retirement.

Youngest: If the median Asians and Europeans are middle-agers thinking about young children and home payments, the “median” African is a buoyant 19-year-old just starting a career.  In the world’s “youngest” country, the median Nigerien (hopefully steering clear of Niamey’s edgy military patrols last month) is a 14-and-a-half-year-old high school freshman born in the spring of 2008. Eight of sub-Saharan Africa’s 49 countries have median ages below 16, and 36 below 20. The Pacific Islands are just slightly “older” as the world’s second-youngest region, with the Solomon Islands and Vanuatu at medians of 19 years, and Samoa and Timor-Leste at 20.

Middle-aged: Other regions cluster closer to the world average. In South and Southeast Asia, median ages for India, Bangladesh, Indonesia, Malaysia, and Burma are all just a bit below the world average at 28 or 29. The Philippines and Pakistan are “young” at 24; Sri Lanka and Vietnam a bit older than average at 32. Singapore and Thailand are the region’s seniors, with the median Singaporean now 42 years old and the median Thai 40. In the Middle East and near neighbors, the age range is similar but skews a bit younger: median ages are in the teens in Yemen, the Palestinian territories, and Iraq; 28 or 29 in Egypt, Jordan, Israel, Morocco, and Lebanon; and 31 and 32 in Azerbaijan, Turkey, and Iran. Latin America and the Caribbean, finally, perfectly match the worldwide median at 30 and a half, with Cuba the “oldest” at 41 and Haiti and Honduras “youngest” at 23; Brazil is 32, Mexico 29, and Peru 28.

The United States: The U.S. can look quite young, or a bit “tempered by experience,” or right in the middle, depending on what group you put it in. Three options:

• As a “western” country joined with the EU, Canada, the UK, Switzerland, Japan, Korea, Taiwan, Australia, New Zealand, etc., the U.S. is very much on the youthful side. All the Asian democracies are “older” than the U.S.; and in Europe, only Albania, Iceland, Ireland, Armenia, and Georgia have lower median ages than the U.S., and none of them by much.
• As a “Western Hemisphere” country, the U.S. remains for now on the older side, eight years above the Latin/Caribbean average. Over the next 20 years, though, norteamericanos will age only gently while Latin America’s age at the world’s fastest pace. By 2040, the U.S./Latin age gap will be only four years, and Brazil, Colombia, and Costa Rica will all be “older” than the U.S.
• Finally, in an “Anglosphere” group with Canada, New Zealand, Australia, the U.K., and Ireland, the U.S. looks pretty much average. As of 2023, this group bunches closely together, in a range from New Zealand’s 36-and-a-half median to Canada’s 40-and-a-half, with the U.S. exactly in the middle. Projections to the 2040s find them even closer, all within 2.5 years of one another, with the U.S. “youngest.”

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007).  He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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