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Changes To Duty Preference Program May Have Financial Effects On Your Company

Friday, June 28, 2013
STR Client Advisory

Companies sourcing goods from abroad should take note of several recent and potential changes to a U.S. duty preference program that could have an effect on their bottom lines. A presidential proclamation issued June 27 adds a number of goods to, and removes some from, eligibility for duty-free treatment under the Generalized System of Preferences. In the coming months the Obama administration will also decide whether to add or remove entire countries from GSP, which itself will expire July 31 unless reauthorized by Congress. Businesses affected by these changes are urged to make their voices heard in Washington.
The Office of the U.S. Trade Representative released June 27 the results of its 2012 annual review of GSP, which include new duty-free benefits for additional products and countries as well as the removal of preferences for other goods. One of the most noticeable changes is the suspension of GSP eligibility for all products from Bangladesh, but there are a number of other changes that could affect your company’s sourcing decisions. For example, beginning July 1, tires classified under HTSUS 4011.10.10 imported from Indonesia and corn classified under HTSUS 1005.90.40 from Brazil will no longer be eligible for GSP treatment. A decision on whether to extend GSP treatment to roses (HTSUS 0603.11.00), broccoli (0710.80.97) and artichokes (HTSUS 2005.99.80), which was requested by Ecuador but would apply to all GSP beneficiaries if granted, has been deferred. 

There are other potential changes to GSP that are expected over the next several months. Congressional authority for this program is scheduled to expire July 31, only a month from now. Based on past experience, there is reason to be concerned that GSP will be allowed to lapse, leaving companies to pay duties on otherwise eligible products starting Aug. 1 and until Congress votes to renew the program. Further, USTR is considering petitions to add Laos and Burma as GSP eligible countries and to remove Ecuador, with decisions possible before the end of the year. Ecuador could suffer an additional hit if Congress fails to renew the additional trade benefits it enjoys under the Andean Trade Preferences Act, which are currently scheduled to expire July 31. 

Public input can be effective in influencing decisions on GSP reauthorization and eligibility. Sandler, Travis & Rosenberg’s International Trade and Government Relations team can help you make sure your concerns reach the right people. For more information about GSP and how to make it work for you, contact David Olave, or Nicole B. Collinson, at 202-216-9307. 

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