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Going forward, the GSP renewal
extends until December 31, 2017 and per-
mits retroactive claims going back to August
1, 2013. It also broadens certain categories
of
potentially
GSP-eligible goods (subject to
presidential approval), most importantly the
“travel goods” category including purses,
handbags, backpacks, wallets and similar
products.
How do importers claim GSP duty-free
status for their goods going forward?
Importers claiming GSP duty-free entry
for their goods should comply with the fol-
lowing four steps:
Step 1: The product must be GSP-eligible
in the tariff (the HTSUS).
A GSP-eligible
product in the tariff (the HTSUS) has the
designation A, A+ or A* in the “Special” col-
umn next to the product’s 10-digit tariff
code. (You can find the HTSUS on the U.S.
International Trade Commission’s website,
www.usitc.gov, or the Customs and Border
Protection (CBP) website, www.cbp.gov.)
Step 2: The product must be imported
directly into the United States.
Ensure that
the product is imported directly into the U.S.
from the GSP-eligible country where it was
produced. Do not let the product enter the
commerce of any third country en route to
the U.S.
Step 3: Ensure the product meets the
GSP’s 35-percent value-added and country
of origin requirements.
Ensure that at least
35 percent of the value of the product is
attributable to the sum of (1) the cost or
value of the materials produced in the BDC,
plus (2) the direct costs of processing opera-
tions performed in the BDC. That BDC
must also be the country of origin of the
imported product.
Step 4: Make the GSP claim to Customs.
The importer has to make the GSP duty-free
claim on the entry documents when the
goods are imported. Usually, this requires
placing the A, A+, or A* GSP indicator on
the Entry Summary (CBP Form 7501)
and/or the Entry (CBP Form 3461) next to
the line item covering GSP-eligible goods.
If the importer fails to provide this notice
at the time of importation then the importer
might be able to amend the entry or notify
Customs of the GSP claim before the entry
liquidates. (After the entry liquidates, an
importer can file a protest against Customs’
denial of a GSP claim already made, but can-
not use a protest to make the initial claim.)
How do I claim GSP duty-free status
retroactively?
To claim GSP duty-free status retroac-
tively for goods imported during the lapse
period (August 1, 2013 – July 28, 2015) the
importer must meet the above four require-
ments, but there is one important additional
element:
Importers have until December 26,
2015 to make a retroactive GSP claim [typically,
A, A+ or A*) for GSP-eligible goods that entered
during the lapse period.
Many importers and
customs brokers put the GSP indicator on
the entry documents during the lapse period
as a precaution, and for those companies no
further action is necessary. However, if the
GSP indicator for GSP-eligible goods
entered during the lapse period was not put
on the entry documents, then
don’t wait
. File
the GSP claim as soon as possible.
Follow these helpful GSP tips.
If your goods are just under the 35-percent
value-added requirement, don’t give up, but if
your goods are just at the 35-percent require-
ment, don’t cut it too close.
If you believe you
may have a GSP claim but the goods are just
under the 35-percent value-added require-
ment, check with a GSP expert (your cus-
toms broker, a customs consultant or your
customs attorney) and review the Customs’
GSP audit guide. You might be surprised at
costs permitted in this calculation which are
oftentimes overlooked. For example, there are
certain fringe benefits, insurance, engineering,
quality control, facility maintenance, waste
and payroll taxes to name a few. But if you
are at or just above the 35-percent require-
ment, this creates a red flag and there’s no
margin for error. In this case, we strongly
suggest consulting GSP compliance experts
to understand the risks and ensure a cushion
if any costs or calculations change.
The list of GSP-eligible products and GSP-eligi-
ble countries changes:
The GSP is not static;
the list of eligible goods changes and the list
of countries change. For example, Russia and
Bangladesh used to be GSP-eligible; now
they’re not. The law used to exclude travel
goods (wallets, purses, backpacks, etc.); now
the door is open for these products to become
GSP-eligible. There are dollar limits on how
much of a particular item can enter the U.S.
as GSP duty-free goods (also called a
Competitive Need Limitation or CNL), but
the President has the discretion to waive
CNLs. Bottom line: Make sure you’re up to
date on what products and countries are
GSP-eligible and make sure you’re using up-
to-date materials.
GSP engineering is OK, but be compliant:
Some importers rely on the GSP for prof-
itability. They structure their purchases and
manufacturing carefully to ensure the fin-
ished product is GSP-eligible. They purchase
raw materials from a GSP-eligible manufac-
turer. They ensure that non-BDC raw mate-
rials are “substantially transformed” into an
intermediate component that can be counted
as part of the finished product’s 35-percent
value-added requirement in the BDC. They
analyze and track their costs in the BDC
carefully. All of this is fine and even encour-
aged; however, GSP importers should antici-
pate that Customs may require substantia-
tion for the GSP claim. Requests for infor-
mation and supporting documents for GSP
claims are not usual. Customs has also been
known to audit importers for GSP compli-
64 •
PPB
• NOVEMBER 2015
THINK
Tune In
Increase your knowledge and
understanding of the GSP by
watching an on-demand webi-
nar presented by Robert Stang.
The 60-minute presentation is
free to PPAI members and non-
members. Find it under
Education on the e-Learning
page at
www.ppai.org.
Practical Guide To Generalized
System of Preferences (GSP)
Presented by Robert Stang
Recorded September 10, 2015
60 Minutes
Free