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GSP Enforcement to be Focus, Self-Initiated Reviews Possible, Officials Say

Tuesday, July 04, 2017
Sandler, Travis & Rosenberg Trade Report

Trump administration officials recently said they plan to tighten enforcement of duty-free imports under the Generalized System Preferences. Importers are advised to carefully review their use of GSP and ensure that all of the requisite eligibility criteria are being met.

GSP is scheduled to expire Dec. 31, 2017, and Congress would have to enact legislation for it to be extended. After the program’s last expiration it remained unauthorized for two years, costing importers millions of dollars. There has been some concern that a similar lapse could follow the upcoming expiration, particularly in light of the Trump administration’s emphasis on “free and fair” trade and “reciprocity” in trade relations.

The GSP proclamation Trump issued June 29 made changes that were largely favorable to importers, but trade officials made clear that they will be closely reviewing how well GSP beneficiaries are meeting the program’s requirements. One possible tool is a self-initiated eligibility review, which the proclamation announced for Bolivia based on allegations of child labor violations. The administration might also utilize audits conducted under the Trade Facilitation and Trade Enforcement Act to gauge how well beneficiaries are “playing by the rules.”

Importers who utilize GSP are therefore well-advised to undertake their own reviews to avoid a potential disruption. For example, companies should make sure that goods imported under GSP meet the requirement that at least 35 percent of a product’s value be imputed by materials produced by, or processing conducted within, the beneficiary country. Source countries should also be carefully tracked, as major producers like China and Vietnam are not GSP beneficiaries.

In addition, companies interested in renewing GSP should act now to make their voices heard in Congress and help build support for a seamless renewal by the end of the year.

For more information or assistance with conducting GSP reviews or contacting congressional representatives, please contact Nicole Bivens Collinson at (202) 730-4956.

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