On December 31, 2017, GSP expired. The Generalized System of Preferences is a tariff preference program for developing countries that affords US importers the opportunity to enter eligible goods from these countries duty-free. The rules and participating countries and tariff numbers are published at the front of the Harmonized Tariff Schedule.
GSP-eligible goods must meet two primary criteria:
- A minimum of 35% regional value content (RVC) from the beneficiary country.
- The goods are exported directly to the United States.
An example of a non-eligible product would be an item manufactured in Germany which was shipped to India only for packaging and then sent to Taiwan where it sat in a warehouse for a few months before being shipped to the United States.
GSP expiring is not a new phenomenon, but it adversely impacts the cash flow of companies who do not make a provision for including duty disbursements as part of their landed costs. In the past, what importers and their brokers have done is to continue to flag the entries with the “A” or “A*” indicator on the entry summary and when GSP has been renewed by Congress, they have retroactively refunded duties that were paid and GSP claimed.
While we do not have a guarantee on if or when the program will be renewed, we will continue to proceed to file entries and claim GSP with the hope of reinstatement.
GSP is a huge break for companies around the United States and is also a huge benefit to developing countries looking to grow their manufacturing base and economy. If your company is interested in learning more about GSP as well as what you can do to renew the program, we recommend visiting the website of Renew GSP Today to find out the economic impact on your state and how to communicate with your Congressional representatives about reauthorizing this valuable, money-saving program.
