Generalized System of Preferences (GSP)
The Generalized System of Preferences (GSP) provides duty-free treatment to goods of designated beneficiary countries. The program was authorized by the Trade Act of 1974 to promote economic growth in the developing countries and was implemented on January 1, 1976.
On Friday, March 23, 2018, the President signed into law H.R. 1625 (Public Law 115-141), the “Consolidated Appropriations Act, 2018,” which in addition to providing full-year federal appropriations through September 30, 2018, extended GSP with retroactivity, for goods entered or withdrawn from warehouse for consumption from January 1, 2018 through December 31, 2020. The new law, effective April 22, 2018, also provided for the retroactive refund of all duties (without interest) to the importer of record (IOR) on GSP-eligible goods entered during the January 1, 2018 through April 21, 2018 lapse period.
GSP through April 21, 2018
Importers should continue to flag GSP-eligible importations with the Special Program Indicator (SPI) “A” and pay normal trade relations (column 1) duty rates until the effective date of the Act, April 22, 2018, at which time Automated Commercial Environment (ACE) programming will obviate the duty payment.
GSP Retroactive Refund
GSP-eligible formal and informal entries summaries filed electronically via the Automated Broker Interface (ABI) using SPI “A” as a prefix to the tariff number will be processed automatically by U.S. Customs and Border Protection (CBP) and no further action by the filer is required to initiate the refund process.
GSP-eligible Non-ABI filers, and ABI filers that did not include SPI “A” on the entry summary may submit a duty refund request to CBP no later than September 19, 2018. For more information on refund requests, see Post Summary Correction (PSC) instructions below.
To facilitate expeditious refund processing, importers should insure that their mailing address is up-to-date in ACE, to include the Automated Clearinghouse (ACH) number, for ACH program participants.
Phased GSP Refund Processing
CBP will be processing GSP claims in three phases, as follows:
- Phase 1: The Trade Transformation Office (TTO) will batch process all GSP entry summaries submitted during the lapse period with the SPI “A”. Barring unforeseen matters, importers should receive all such refunds by mid-July 2018.
- Phase 2: CBP HQ will distribute spreadsheets to Field personnel for the manual processing of those entry summaries that could not be batch processed (AD/CVD, Section 232, other). These spreadsheets will cover importations with the following characteristics:
- If AD/CVD and GSP are on the same line, then no GSP refund will be issued until the AD/CVD liquidation order has been issued.
- If AD/CVD and GSP are on different entry lines, then the GSP administrative refund should be processed manually by the field.
- If Section 232 duties and GSP are on the same entry line, then no GSP refund will be issued, issued since 19 USC 2463(b)(2) precludes GSP program benefits accruing to Section 232 goods (see below for more information).
- If Section 232 and GSP are on different entry lines, then the GSP administrative refund should be processed manually.
- Phase 3: Importer-initiated claims for which the SPI “A” was not flagged at entry summary, but requested in accordance with the following post-summary correction claim instructions, will be processed by Field personnel after the completion of Phase 1.
Post Summary Correction GSP Claims for Importations during the Lapse
- Importers have until September 19, 2018 to submit post-importation GSP claims for goods imported during the GSP lapse on which the SPI “A” was not transmitted at entry summary.
- GSP refund requests should be submitted as PSCs. If an entry has already liquidated, the refund request should be submitted as a protest.
- GSP refund requests for importations made during the lapse but submitted subsequent to September 19, 2018 will be denied.
- An importer’s failure to submit a post-importation GSP claim on or before September 19, 2018 will not be remediable via protest.
GSP Goods Subject to Section 232 (aluminum and steel)
- GSP and AGOA-eligible goods that are subject to Section 232 duties or quotas may not receive GSP or AGOA duty preference in accordance with 19 USC 2463(b)(2).
- Trade preference may be claimed for all preference programs with the exception of GSP and AGOA, as stated above. Importers making a trade preference claim under a program other than GSP or AGOA may continue to receive the preferential duty rate and any MPF exemption that may apply in accordance with 19 CFR 24.23(c). Section 232 duties must be paid on imports subject to Section 232 even if trade preferences apply.
Post-Importation GSP Claims on Importations Prior to Expiration
Importations made on or before December 31, 2017, remain unaffected by the aforementioned instructions. Importers may continue to make post-importation GSP claims in accordance with applicable PSC and protest procedures (19 USC 1514, 19 CFR 174).
GSP Mail Entry Refunds
The addressees on mail entries made during the lapse period must request a refund of GSP duties in writing, along with a copy of the CBP Form 3419A, to the appropriate International Mail Branch (address listed on bottom right hand corner of CBP Form 3419A). It is essential that a copy of the CBP Form 3419A be included, as this is the only means of identifying whether GSP goods have been entered and the estimated duties and fees paid.
African Growth and Opportunity Act (AGOA) and ACE Programming of SPI “A”
The expiration and subsequent reauthorization of GSP has no effect on goods entered under the African Growth and Opportunity Act (AGOA). Although ACE programming currently allows the submission of AGOA claims with either SPI "A" or "D," future ACE functionality will limit AGOA claims to SPI "D".
Contacts and Additional Information
Questions with respect to entry summary and refund processing, PSC, protest, formal or informal entries, should be directed to Commercial Operations, Revenue and Entry Division (CORE) at email@example.com.
Questions with respect to GSP or AGOA eligibility, and other questions with respect to this correspondence, should be directed to the Trade Agreements Branch at firstname.lastname@example.org.
Some 5,000 tariff items are eligible for GSP benefits—approximately 3,500 of which are available to all GSP countries and approximately 1,500 of which are available solely to Least Developed Beneficiary Developing Countries (LDBDCs).
In order to benefit from GSP, a good must be either wholly obtained or sufficiently manufactured in a GSP country. Sufficiently manufactured means that all 3rd-country materials have undergone a substantial transformation plus at least 35% of the good’s value has been added in the beneficiary country. Additionally, the good must be “imported directly”.
Eligible tariff items are identified by the symbols “A”, “A*” or “A+” in the “Special” sub-column of the HTSUS.
- The symbol “A” indicates that all GSP countries are eligible (HTSUS General Note 4(a))
- The symbol “A*” indicates that certain GSP countries are ineligible (HTSUS General Note 4(d))
- The symbol “A+” indicates approximately 1,500 additional tariff items for which only the LDBDCs are eligible (HTSUS General Note 4(b))
Competitive Need Limitations
The GSP program imposes quantitative ceilings called Competitive Need Limitations (CNLs) on GSP benefits for all tariff items and BDC. Under certain circumstances, these ceilings may be waived. For more information see the USTR-US Generalized System of Preferences Guidebook at https://ustr.gov/sites/default/files/IssueAreas/gsp/GSP_Guidebook-December_2019.pdf.
- 19 CFR 10.171 to 10.178 - GSP Regulations
- HTSUS General Note 4
- 19 USC 2462 - Designation of Beneficiary Developing Countries
- 15 CFR Part 2007 - Regulations of the U.S. Trade Representative Pertaining to Eligibility of Articles and Countries for the Generalized System of Preference Program
Resource Links on the 2018 Re-authorization of GSP
- H.R. 1625 – Consolidated Appropriations Act, 2018 (Title V)