Duty-Free Import Changes May be Sought in Annual GSP Reviews

Tuesday, March 26, 2019

Sandler, Travis & Rosenberg Trade Report

Importers, foreign governments, and others have until April 18 to request changes to the lists of products and countries eligible for duty-free treatment under the Generalized System of Preferences. The Office of the U.S. Trade Representative has launched its annual review of GSP and is accepting petitions seeking to add, preserve, or remove GSP benefits. USTR will announce which petitions have been accepted and a schedule for hearings and comments at a later date.

For more information, or for assistance in preparing and submitting petitions for this review, please contact Nicole Bivens Collinson at (202) 730-4956.

Product Review. Interested parties, including foreign governments, may submit petitions seeking the following.

– designation of additional articles as eligible for GSP benefits, including when imported only from (a) least-developed beneficiary developing countries or (b) beneficiary sub-Saharan African countries under the African Growth and Opportunity Act

– withdrawal, suspension, or limitation of the application of GSP duty-free treatment with respect to any article

– waiver of the competitive need limit for individual BDCs with respect to specific articles (see below; petitions should indicate whether there was production of a like or directly competitive product in the U.S. during the period 2016 to 2018)

– continuation of CNL waivers for products that have had a waiver for five years or more and have exceeded 150 percent of the CNL threshold or 75 percent of total U.S. imports

– denial of de minimis CNL waivers for products otherwise eligible for them

– redesignation of products currently excluded from GSP eligibility

Articles eligible for a de minimis waiver are automatically considered for one and petitions for such waivers are therefore not required.

To aid companies in determining whether to file such petitions USTR has posted to its website the following lists.

– GSP-eligible articles that exceeded a CNL in 2018 by having an import value greater than $185 million or 50 percent of the total U.S. import value for that year (these will be removed from GSP eligibility as of Nov. 1 unless the president grants a waiver)

– GSP eligible articles that exceed the 50 percent CNL but are eligible for a de minimis waiver since total U.S. imports of the product were less than $24 million

– GSP-eligible articles from certain BDCs that are not currently receiving duty-free treatment but may be considered for redesignation (products exceeding the 50 percent CNL may be considered if there was no U.S. production of a like or directly competitive product in the last three years)

– GSP-eligible articles that have had a CNL waiver for five years or more but have exceeded 150 percent of the CNL threshold or 75 percent of total U.S. imports (these will be removed from GSP eligibility as of Nov. 1 unless the president grants a continuation of the waiver)

Country Practices Review. Any interested party may submit a petition to review the GSP eligibility of any BDC with respect to any of the GSP designation criteria. Mandatory criteria include not withholding supplies of vital commodity resources from international trade, not providing preferential treatment to products of a developed country that harms U.S. commerce, and taking steps to afford internationally recognized worker rights. The president must also take into account the country’s level of economic development, preferential treatment from other major developed countries, and market access for U.S. goods.

President Trump announced recently his intent to terminate the GSP eligibility of India, due to concerns about market access, and Turkey, which has achieved a sufficient level of economic development. This competitiveness criterion was previously used to graduate Hong Kong, Malaysia, Russia, and other countries from GSP.

Timeline. USTR typically announces the petitions it will accept for review in May and conducts public hearings on those petitions in June or July. Any final decisions on actions to take as a result of the petitions accepted are generally effective as of Nov. 1.

© 2019, Sandler, Travis & Rosenberg, P.A. Originally published in the 03/26/19 issue of the Sandler, Travis & Rosenberg Trade Report. Reprinted by permission.

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