GSP Set To Expire December 31, 2020

Dec. 28, 2020

Generalized System of Preferences (GSP) is the oldest and largest U.S. trade preference program, with 119 designated beneficiary countries and territories participating. Through GSP, many of the world’s poorest countries access U.S. trade opportunities to grow their economies. GSP promotes economic development by eliminating duties on thousands of products imported from a designated beneficiary country.

Unfortunately, GSP (also identified as special program indicator (SPI) “A,” “A+,” and “A*”) will expire on December 31, 2020 if Congress does not pass legislation in time to renew the program. We expect the program to expire. Assuming GSP does expire, it is important to remember that when GSP has expired in the past renewals were retroactive, meaning duties paid by importers for GSP eligible imports were refunded. In fact, the latest guidance from CBP seems to anticipate that exact scenario.

CBP’s guidance (CSMS #45244051) informs importers that without a GSP renewal from congress, GSP eligible goods will be subject to the “General” (column 1) duty rates effective January 1, 2021. However, CBP wants importers to continue to flag these GSP eligible importations with SPI “A,” “A+,” or “A*” even though they will still be required to pay duties on these entries.

CBP is directing importers to continue to flag GSP eligible imports because CBP has programming in place to automate the duty refund process if GSP is renewed with a retroactive refund clause. It is worth noting that, without mentioning a possibility of retroactive renewal, CBP states they will not allow post-importation GSP claims made via post summary correction or protest after the expiration of GSP, for importations made after expiration. The simplest way to preserve GSP claims in the event the program expires is to pay the effective duties and continue to flag the entries as GSP eligible with SPI “A,” “A+,” or “A*” and wait for CBP to automatically issue refunds.

If you have any questions regarding GSP renewal or GSP eligibility, do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.