GSP Special Tariff Status To Expire At End Of 2020

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U.S. Customs and Border Protection (“CBP”) issued a notice announcing the lapse of the Generalized System of Preferences (“GSP”) special tariff program, effective December 31, 2020, unless renewed by an act of Congress.  The GSP is the oldest U.S. trade preference program and was established by the Trade Act of 1974.  GSP effectively promotes the economic development of countries by eliminating duties on thousands of products when imported from one of 119 designated beneficiary countries and territories.

This specialized tariff treatment status is denoted by “special tariff program indicators” (“SPI”) “A,” “A+,” and “A*” in the Harmonized Tariff System of the United States (“HTSUS”). Under the GSP, the symbol “A” indicates that all GSP countries are eligible for duty-free treatment, “A*” indicates that certain GSP countries are ineligible for duty-free treatment, and “A+” indicates approximately 1,500 additional tariff items for which only the “Least Developed Beneficiary Developing Countries” are eligible for duty-free treatment.  As a result of the lapse, GSP eligible goods entered or removed from warehouse for consumption will be assessed “General” or “Column 1” duty rates as of January 1, 2021.

CBP encourages importers to instruct their broker to flag entries of GSP eligible items with SPI “A” until further notice, starting on January 1, 2021, but importers may not file SPI “A” without paying normal duties at the time of entry.  On post-importation GSP claims, CBP states the following: “CBP will continue to allow post-importation GSP claims made via post summary correction (PSC) and protest (19 USC 1514, 19 CFR 174) subsequent to the expiration of GSP, for importations made while GSP was still in effect. CBP will not allow post-importation GSP claims made via PSC or protest subsequent to the expiration of GSP, for importations made subsequent to expiration.”

The GSP program has been reauthorized 14 times since it was originally scheduled to expire in 1985, but only 4 of those reauthorizations occurred prior to the expiration of the program.  The most recent extension of GSP by Congress was part of the Consolidated Appropriations Act of 2018, which extended the GSP program until December 31, 2020.  With the economic stimulus negotiations currently dominating the discussion in Congress, it is currently unclear whether GSP reauthorization will be included in any year-end legislation, though GSP reauthorization last passed the House and Senate in 2018 with strong bipartisan support.  It is possible that the next Congress will renew the GSP program with retroactive effect, which has been done several times in the past.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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