United States: Reauthorization Of GSP May Allow Refund Of Two Years Of Import Duties

On June 29, 2015, almost two years after it was allowed to lapse, President Obama renewed the Generalized System of Preferences (GSP) trade program. GSP allows duty-free imports into the United States of qualifying goods from over 120 designated developing countries through December 31, 2017. Importantly, in addition to providing for duty-free imports on future shipments, the renewed GSP will have retroactive effect to when it was allowed to lapse on July 31, 2013.

Under the renewed GSP, importers will be entitled to full refunds of applicable duties paid since August 1, 2013, on 5,000 different types of products from 122 designated beneficiary countries and territories. However, retroactivity will not apply to goods from countries that have been declared ineligible for GSP benefits during the lapse, including Russia, which President Obama formally graduated from the GSP program on October 4, 2014. The new law becomes effective on July 29, 2015.

Importers should be aware that unlike past reauthorizations of GSP, refunds are not automatic, and parties seeking refunds will have to submit a refund request to US Customs and Border Protection (CBP) within 180 days of the effective date of the GSP renewal or January 25, 2016.  CBP will be required to refund all duties paid on GSP eligible goods within 90 days of liquidation or reliquidation of the entries covered by the importer's refund request.

The GSP program has generally been thought of as a win-win, by providing the opportunity for developing countries to grow their economies through trade, and providing US importers access to duty-free goods.

Importers should review their imports during the 2013–2015 period to determine whether they imported GSP-eligible goods. If so, they should act quickly to recover the duties paid on those entries by submitting the refund request to CBP. CBP will likely be flooded with refund requests from affected importers. Importers that move quickly may be at the front of the line and receive their refunds more expeditiously. Importers should also review their GSP compliance procedures to ensure they are exercising reasonable care with respect to retroactive refund requests and future requests for GSP treatment.

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