On June 29, 2015, Congress and President Obama reinstated the Generalized System of Preferences (GSP), which provides duty-free treatment for selected goods from “beneficiary developing countries.”  The GSP had previously expired on July 31, 2013.

The new legislation provides for retroactive refunds of duties paid on GSP-eligible goods for the two years the program had lapsed.  

H.R. 1295, the Trade Preferences Extension Act of 2015 (“the Act”), renews GSP through December 31, 2017 and also extends the African Growth and Opportunity Act (AGOA) and duty preferences for Haiti[1].

Retroactive Refund Provisions

The Act states that notwithstanding section 1514 (19 U.S.C. 1514) or any other provision of law, any entry of a covered article eligible for preferential treatment under title V of the Trade Act of 1974 that was made after July 31, 2013 and before the effective date of the Act which is July 29, 2015, shall be liquidated or reliquidated as though such entry occurred on the effective date of the Act. The enactment date for purposes of the Act is June 29, 2015 and the effective date is 30 days after which is July 29, 2015[2]. 

Section 201(b)(B) of the act indicates that  a specific written request must be made for retroactive GSP refunds within 180 days after the effective date of the act, i.e., on or before December 26, 2015.  The request must contain sufficient information to enable Customs –

(i)              To locate the entry; or

(ii)            To reconstruct the entry if it cannot be located.

As of this date, Customs has not issued a directive or procedure for making such refund claims. In previous administrative messages, (CSMS 14-326 and 14-286)  Customs has indicated that importers could continue to use Special Program Indicator (SPI) “A” to claim GSP on their entries,  so that in the event of a retroactive renewal, CBP could process refunds automatically.  However, it is not yet known what procedure will be used for refund claims.  We will alert clients when the new procedure is known.

The law provides that refunds of duty deposits will be paid, without interest, within 90 days after liquidation or reliquidation of GSP-eligible entries, so an entry-by-entry liquidation or reliquidation scheme is clearly contemplated.

Amendments to GSP

The Acts also  amends GSP to allow the designation of certain cotton articles as eligible articles, but only if made in “least developed developing countries” (LDDCs). The affected provisions are HTSUS Subheadings 5201.00.18, 5201.00.28, 5201.00.38, 5202.99.30, or 5203.00.30, as GSP eligible, but only if made in “least developed developing countries” (LDDCs). 

Moreover, the law authorizes the President to designate certain luggage and travel articles as GSP-eligible, specifically items classified under HTSUS Subheadings 4202.11.00, 4202.12.40, 4202.21.60, 4202.21.90, 4202.22.15, 4202.22.45, 4202.31.60, 4202.32.40, 4202.32.80, 4202.92.15, 4202.92.20, 4202.92.45, or 4202.99.90, and articles classifiable under statistical reporting number 4202.12.2020, 4202.12.2050, 4202.12.8030, 4202.12.8070, 4202.22.8050, 4202.32.9550, 4202.32.9560, 4202.91.0030, 4202.91.0090, 4202.92.3020, 4202.92.3031, 4202.92.3091, 4202.92.9026, or 4202.92.9060. As of this writing, no such designations have been made.

GSP Reviews

As a consequence of reinstatement of the GSP, the United States Trade Representative (USTR) will need to undertake an expedited review of “competitive need limitation” removals and waivers for the GSP, with results due by October 1, 2015. The competitive need limit provides for articles to lose GSP eligibility when certain import volumes are reached. The President has power to waive these limitations, and allow products to continue as GSP eligible, under certain conditions.

USTR will also undertake its statutory annual review of GSP, accepting petitions to designate new articles as eligible, or remove articles from eligibility. The final results of this review will be due on July 1, 2016.

Conclusion

Pending receipt of Customs’ instructions on how retroactive refunds should be applied for, companies  will want to identify any records which might be necessary for Customs to locate or reconstruct subject entries so that retroactive refunds can be claimed once the GSP re-authorization takes effect.  Our firm will be happy to make these applications on your company’s behalf.

Please do not hesitate to contact us if you have any questions.

[1] The law also reauthorizes Trade Adjustment Assistance programs, and makes technical changes to the antidumping and countervailing duty laws.

[2] This means that Customs will not accept duty free entries for GSP-eligible items until July 29, 2015.