After a recent ruling by the Court of International Trade, U.S. Customs and Border Protection appears to be preparing to allow post-liquidation preference claims under a wider range of free trade agreements and preference programs. In addition, some such claims previously rejected by CBP could be revived.
In August 2014 CBP issued a guidance letter to the ports that, without the statutorily required notice and comment, changed a long-standing practice relating to the filing of certain post-liquidation preference claims. In this guidance CBP concluded that protests could not be used to make an initial claim under the Generalized System of Preferences, the African Growth and Opportunity Act, or any free trade agreements not subject to the special rules found in 19 USC 1520(d), which include FTAs with Singapore, Australia, Israel, and Jordan. This change had no effect on imports under the agreements listed in 520(d), for which post-entry claims can (and must) be filed within one year from the date of importation.
CBP claimed that the August 2014 change was necessitated by two earlier court decisions, both of which concerned post-entry claims made under NAFTA. CBP suggested that the one-year time frame specified in 520(d) was not a limitation on the importer’s right to file a post-entry claim but was instead a grant of privilege that was therefore not available to programs or FTAs not mentioned in 520(d).
In a recent court decision (Zojirushi America Corp. v. United States) the Court of International Trade rejected CBP’s rationale and questioned its focus on NAFTA, which is only one of several agreements, along with CAFTA-DR and the U.S.-Korea FTA, named in 520(d). However, the CIT ultimately did not render a decision in the underlying case due to jurisdictional issues (namely, that CBP had not yet denied the protest at issue, which it had improperly rejected as not protestable).
While CBP has not revoked its August 2014 guidance, either formally or informally, it appears headed in that direction. In the meantime, importers should be able to file initial claims under GSP, AGOA, and other programs and FTAs not named in 520(d) via post-liquidation protests, although caution should be used until the issue is formally addressed by CBP. In addition, certain previously rejected protest claims (those found to be not protestable by CBP) could be revived.