Can It Be True? "GSP" To Be Renewed!

April 27, 2015

Yes, after two years of waiting, Congress is poised to renew the duty preference program known as the “Generalized System of Preferences” or “GSP.”

GSP is a trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries (“BC”) and territories.  GSP was instituted on January 1, 1976, by the Trade Act of 1974, but authorization for the program lapsed in 2013.  Duty-free status is generally available to qualifying goods from qualifying countries if the BC content is 35% or more of the appraised customs value.

During an April 22 markup, the Senate Finance Committee amended and sent to the Senate floor all four major trade bills: Trade Promotion Authority, Trade Adjustment Assistance, Customs Reauthorization and a preference package that contains renewals for the Generalized System of Preferences and the African Growth and Opportunity Act (“AGOA”).  All were approved with decisive margins.  Among the new provisions added as amendments are a temporary extension of an increase to the Merchandise Processing Fee, Miscellaneous Tariff Bill reform legislation, and tariff changes for performance outwear and athletic footwear.

The AGOA Extension and Enhancement Act of 2015 would allow for the retroactive renewal of the Generalized System of Preferences (GSP) program, through December 2017. According to the Coalition for GSP, American companies have paid nearly $2 million per day in taxes since GSP expired on July 31, 2013.

Requests for liquidation or reliquidation may be made with respect to an entry only if a request is filed with U.S. Customs and Border Protection (“CBP”) not later than 180 days after the date of the enactment of the Act and contains sufficient information to enable CBP to locate the entry; or to reconstruct the entry if it cannot be located.  Refunds will be paid without interest.  As in the past with GSP renewals, when the legislation is passed, CBP will issue specific instructions to the Broker and Trade community on how to claim refunds for qualifying goods.

The program is fully offset by provisions extending the merchandise processing fee (MPF) until January 22, 2022 and the Consolidated Omnibus Budget Reconciliation Act (COBRA) fee until January 29, 2022.  It also increases the amount of the required installment of estimated tax due in 2019 for certain corporations and reduces the amount due in following periods by the corresponding amount.

If you would like to know more about the status of the GSP renewal legislation, about whether your products will be eligible for duty refunds, or if you have any questions about these or other customs matters, please contact George R. Tuttle, III, via e-mail or at (415) 986-8780.

George R. Tuttle, III, is an attorney with the Law Offices of George R. Tuttle in San Francisco.

The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright © 2015 by Tuttle Law Offices.

All rights reserved.  Information has been obtained from sources believed to be reliable.  However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.



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