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CBP Says MPF Exemption for Preference Program Goods Still Requires Direct Importation

Monday, February 10, 2014
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection issued Feb. 6 a notice clarifying that imports from free trade agreement partner countries must still be imported directly to qualify for exemption from the merchandise processing fee.

In a Jan. 3 notice, CBP stated that General Statistical Note 3(c) had been updated in the 2014 Harmonized Tariff Schedule of the U.S. to indicate that goods of a country with which the U.S. has an FTA that provides for an MPF exemption, when marked or eligible to be marked with their country of origin, can be imported free of MPF by using each FTA’s special program indicator. This note was also updated to indicate that goods imported under the Agreement on Trade in Civil Aircraft, the Agreement on Trade in Pharmaceutical Products or the Uruguay Round Concessions on Intermediate Chemicals for Dyes, that are marked or eligible to be marked the product of a country with which the U.S. has an FTA that provides the MPF exemption, can be imported free of MPF by adding the “#” symbol after the respective SPI (C, K or L) in the entry documentation. FTA partners to which this exemption applies include Canada, Mexico, Chile, Singapore, Australia, Israel, Bahrain, Oman, Peru, Korea, Colombia, Panama, Costa Rica, El Salvador, Honduras, Nicaragua, Guatemala and the Dominican Republic.

CBP indicated in its Jan. 3 notice that this MPF exemption applies even if the FTA’s more stringent origination rules and imported directly rules are not met. However, CBP now states that with respect to a preference program that provides the MPF exemption to originating goods, in order to claim such exemption in addition to the Civil Aircraft Agreement, Pharmaceutical Agreement or Intermediate Chemicals for Dyes Agreement, a good must meet the preference program’s origination requirements, including any “imported directly” requirement. With respect to a preference program that provides the MPF exemption to goods that meet the lesser “product of” standard, as defined in each agreement, the same “product of” standard and “imported directly” requirements apply when using SPIs C#, K# and L# to obtain the MPF exemption.

CBP also notes that the update to GSN 3(c) unintentionally omitted other special trade regimes that provide for MPF exemption, such as products of U.S. insular possessions, beneficiary countries under the Caribbean Basin Economic Recovery Act, and least-developed beneficiary countries under the Generalized System of Preferences. A complete list of MPF exemptions can be found in 19 CFR 24.23 (c). .

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