GSP provision extends duty-free tariff treatment to 132 countries Title V of the Trade Act of 1974 establishes a Generalized System of Preferences (GSP) for U.S. imports from developing countries. It authorizes the President to extend dutyfree treatment to eligible products from beneficiary developing countries for a 10-year period. Under the GSP provisions in the trade bill, the President designates which countries are "beneficiary developing countries" eligible for duty-free tariff treatment. However, he must notify both the Senate and the House of Representatives before making his choices. And the President must take into account the extent to which a developing country is providing the U.S. equitable and reasonable access to its markets and basic commodity resources. The act excludes several groups of countries from consideration. Among them: communist countries, other than those that already receive most-favored-nation treatment, are members of GATT (General Agreement on Tariffs and Trade), and are not dominated by
international communism; members of OPEC (Organization of Petroleum Exporting Countries) and members of other OPEC-like cartels; countries that have expropriated U.S. property without adequate compensation; countries that have not taken adequate steps to prevent narcotics traffic to the U.S.; and countries that have not taken steps to eliminate "reverse tariff preferences" by Jan. 1, 1976. So far, the President has designated 132 countries and territories of other nations as eligible. Another 24 countries are being considered for duty-free tariff treatment. The act covers a wide range of manufactured, semimanufactured, and primary products. However, certain "import sensitive" products are excluded. These include certain textile and apparel products, watches, electronic articles, steel products, footwear, glass products, and other articles that the President determines to be import sensitive. Products that are subject to import relief action, trade adjustment assistance cases, or national security
dyes and intermediates plants there. most chemical companies aren't too Some are being expanded. In his testi- concerned about that threat now. mony next week, however, he also will One country on the eligibility list point out the possible threat of duty- that most chemical companies have free imported intermediates from Tai- overlooked is Mexico. And some trade wan and South Korea. Japanese com- experts concede that Mexico may be panies figure to build more intermedi- the most significant name on the list. ates plants in these countries as Last year, the U.S. imported almost environmental and health regulations $88 million worth of chemicals from become more of a problem in their Mexico, the most of any country on the homeland. "Naturally we are con- list. Mexico has a raw material base, a cerned about this problem," says substantial chemical industry, and is Brady. "We make these products." just across the border from the U.S. More and more chemical companies market. Several other countries in may become concerned as they analyze Latin America and the Caribbean also the countries eligible or under consid- are substantial chemical exporters to eration for GSP tariff treatment. the U.S. Even Spain and Portugal are OPEC (Organization of Petroleum Ex- among the countries being considered porting Countries) countries, for in- for GSP privileges. stance, are among those still being One of the primary concerns about considered, even though these countries GSP is that foreign competitors from now are specifically excluded in the other industrialized nations may build trade bill. plants in developing countries eligible When the trade bill was passed last for GSP in order to gain duty-free acyear, it created a furor in Latin Ameri- cess to the U.S. Some of the safeguards ca because OPEC members Ecuador written into the act, however, make and Venezuela were not eligible for this tactic less attractive. For instance, GSP. Several bills now are pending be- there is a limit of $25 million per year fore Congress that will make these on the imports of any one product. countries eligible. Other bills would Even some U.S. companies may conput Iran, Nigeria, and Indonesia back sider investing in these countries and on the eligibility list. A recent bill exporting back to the U.S. "We [multiwould put all OPEC members back on national companies] have a certain the list except those Arab countries flexibility and we may be forced to do that participated in the oil embargo some of this," says one chemical comagainst the U.S. pany spokesman. Should this become a Because of their oil and natural gas trend, however, labor unions are certain position for petrochemical feedstock, to renew their cries about exporting U.S. the OPEC countries could become sig- jobs. Protectionist legislation such as nificant chemical exporters to the U.S. the old Burke-Hartke bill will reappear But the threat is a long-range one and with a vengeance.
provisions also are excluded under the act. In addition, the act provides certain safeguards to prevent abuse of the GSP privilege. For instance, developing countries must provide at least 35% of the value added to the exported product. Members of a free trade area or a customs union may be aggregated in applying the local-content requirement. In addition, eligible countries are limited to exporting no more than $25 million worth of any one product in any calendar year. A product is defined as any five-digit item in the tariff schedules of the U.S. An escalator clause, however, provides for an annual percentage increase in the $25 million figure equal to the percentage increase in the U.S. gross national product. Under certain circumstances, such as if no directly competitive article is produced in the U.S., these ceilings may be waived. The President must give Congress and the beneficiary country 60 days' advance notice if he decides to terminate GSP privileges. Before the ITC hearings end, more people in the chemical industry may consider GSP to be more of a problem than they think it is right now. As one analyst put it, "More may be involved than a few chemicals coming in from Swaziland, Upper Volta, and Pitcairn Island." Earl V. Anderson, C&EN New York
Japan adopts tough auto exhaust rules Tighter auto exhaust limits came into effect in Japan this month as 1975 vehicle emission standards were enforced on schedule. Often referred to in Tokyo as the "Japanese Muskie Act," the new standards are indeed patterned on the U.S. Clean Air Act amendments of 1970, which were also scheduled originally for 1975 enforcement. The Japanese ceilings on hydrocarbon and carbon monoxide emissions now are about 10% of previously allowable levels for most new-model autos (based on testing of warm engines) and about 55% of the previous figure for nitrogen oxides. In the U.S., meanwhile, the Muskie act standard for nitrogen oxides alone has been applied on schedule, auto makers being allowed milder interim limits on carbon monoxide and hydrocarbons for at least this year and next. Has Japan succeeded then in applying stricter clean air standards to auto production than has the U.S.? The answer is a qualified yes. Japanese and U.S. engine testing procedures are someApril 28, 1975 C&EN
15
what different. Comparison is further complicated by differences in how the limits are applied in practice. But it's clear that by mid-1976 virtually all autos rolling off Japanese assembly lines will meet emission standards for carbon monoxide and hydrocarbons markedly stricter than U.S. federal standards. The Japanese nitrogen oxides ceiling, though, may be as much as 20% higher in practice than the U.S. federal standard allows. To measure a vehicle's exhaust emissions, both U.S. and Japanese test procedures simulate typical driving patterns statically, using a chassis dynamometer. Both include a test run from a cold start and one from a hot start. Exhaust gas samples are collected and analyzed by the same methods. But there the resemblance ends. The U.S. procedure runs cold-start and hot-start tests in a single sequence, separated by a 10-minute wait. The two tests, each simulating a 7.5-mile trip, follow the same cycle of speed changes and stops. Average speed is 19.7 mph. Cold-start and hot-start results are combined into a single set of emission readings, based on a typical driver's ratio of cold and hot starts per day. The Japanese tests, by contrast, are run separately and the results are not combined. The cold-start test, begun after 25 seconds' idling, simulates a 2.5-mile trip at 19-mph average speed. A 15-minute warmup precedes hotstart testing, which follows a different driving pattern. It averages about 12 mph for just over 2 miles. The Japanese hot-start test is designed to typify driving in a major city, whereas the cold-start test simulates a trip from the outskirts into the city center.
As a first cut at comparing the U.S. and Japanese test procedures as to stringency, the Environmental Protection Agency has run two U.S. autos—a 1971 Chevrolet Vega (2759-lb test weight) and a 1971 Ford Galaxie (4500 lb)—through both sets of tests. Both autos were tested five times by each procedure. Correlations derived from the results led EPA to these conclusions: • An auto that exactly meets 1975 Japanese hot- and cold-start limits would show about 8 grams per mile carbon dioxide, 1 gram hydrocarbons, and 3.7 grams nitrogen oxides by the U.S. test sequence. This means CO emissions within the 1975 California standards (which are stiffer than federal limits), hydrocarbons just over those standards, and NO x almost 20% above the current federal standard. • An auto that exactly meets the 1975 federal limit on NO x would show about 3.6 grams per mile NO x by the Japanese cold-start test and 1.1 grams on the hot-start test—well within both Japanese limits. • An auto that exactly meets the original Muskie act limits on CO and hydrocarbons (now postponed to 1977 and possibly later) would show emissions substantially below Japan's 1975 limits for all three pollutants in both cold-start and hot-start testing. Thus Japan's 1975 emission standards, EPA tentatively concludes, are about as strict as current California limits (and thus stricter than federal standards) on CO and hydrocarbons, but less strict on NO x than is the current federal standard. Data released by Japan's Ministry of Transport, on the other hand, suggest that Japanese test-
Comparisons are hard, but Japanese auto emission limits for CO, hydrocarbons are tighter than in U.S. Carbon monoxide
Grams per mile maximum
JAPAN HOT-START TEST" Models in production prior to April 1975 Models introduced after April 1, 1975 (All models in production after Dec. 1) Models introduced after April 1,1976 (All models in production after March 1, 1977) JAPAN COLD-START TEST" Models introduced after April (All models in production after Models introduced after April (All models in production after U.S. FEDERAL0 1975/76 1977 CALIFORNIA0 1975/76
1, 1975 Dec. 1) 1, 1976 March 1, 1977)
Hydrocarbons
Nitrogen oxides
41.8 4.35
6.11 0.63
4.83 2.58
4.35
0.63
1.35l>
33.5
3.74
4.33
33.5
3.74
3.15b
15 3.4
1.5 0.41
3.1 2.0
9
0.9
2.0
a Figures are maximum allowable emissions. Japanese production runs also must meet stricter limits based on three-month averages, b For autos up to 1 ton weight. Nitrogen oxides ceiling for heavier autos is 43% higher for hot-start test, 12.5% higher for coldstart test, c Figures in U.S., California standards are weighted averages of hot-start and cold-start tests. EPA proposes delaying 1977 federal CO and hydrocarbon limits to 1982 model year, substituting current California standards during 1980 and 1981. Sources: Environment Agency (Japan), Environmental Protection Agency
16
C&EN April 28, 1975
ing itself is more severe than the U.S. test sequence. Test results for a range of vehicles showed generally lower CO and hydrocarbon readings for a given engine by the U.S. test than by the Japanese hot-start test. This despite the fact that cold-start operation (included in the U.S. sequence) contributes substantially more CO and hydrocarbons than does hot-start operation. EPA notes that substantially more testing is needed—using autos fitted with catalytic converters in particular —to make possible a precise comparison of the standards of the two countries. All these emission standards are maximum allowable values. But the new Japanese standards back up the emission ceilings with a stricter set of mean limits. Ikuo Kobayashi, who heads the automotive pollution control division of Japan's Environment Agency, explains the difference. "The maximum standards are used in certifying a vehicle and in day-to-day checking of autos from the assembly line. But the mean of daily test results for each quarter must not exceed our mean limits." (About 1% of production will be tested.) The 1975 hot-start mean standards are 3.38 grams per mile for CO, 0.4 for hydrocarbons, and 1.93 for NO x . The mean limit for NO x will be further reduced in 1976 to 0.96 gram per mile for autos up to 1 ton, 1.37 grams for heavier cars. Application of Japan's new standards, though, will be gradual. Although the 1975 ceilings are in force, they concern only models introduced after April 1 and won't apply to all production until December. (Trucks, buses, and diesel-powered vehicles are covered by other standards.) The still tighter 1976 NO x ceiling, likewise, affects only newly introduced models between next April and extension of coverage to all production from March 1977. Assembly of many existing models—covered by much less stringent 1973 standards—likely will continue through most of this year, followed by introduction of models that meet the 1976 NO x limit as well as the 1975 standards for other pollutants. Five auto makers, however, already are turning out models that meet the 1975 standards. Toyo Kogyo marketed both its rotary-engine Mazda Luce AP2 and two lines of qualifying reciprocating-engine autos as early as 1973. By that year's end Honda Motor was selling its Civic 1500 fitted with a stratified-charge engine. Mitsubishi Motors last autumn introduced two qualifying models of its Colt Galant that rely on a thermal converter and partial exhaust recycling. Japan's Big Two auto makers—Toyota and Nissan—are moving more slowly, starting earlier this year with low-volume luxury models. Both are expected to equip most of their lines with catalytic converters as the year goes on. Michael K. McAbee, C&EN Tokyo
