GSP Issues in Customs Law

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Generalized System of Preferences

The GSP allows duty-free benefits to products imported from certain beneficiary developing countries (BDCs). but only so long as those BDCs are approved by the USTR, and the goods are eligible under GSP requirements. Establishing GSP eligibility and claims may require numerous documents including: GSP declarations, bills of materials, invoices, purchase orders, production records kept in the ordinary course of business, payroll information to document labor costs, factory profiles, and affidavits with supporting documentation. These records may be requested from the importer, exporter, or both and must be kept in the ordinary course of business for five years.

GSP Enforcement by CBP (CF28s and Audits)

The enforcement of trade requirements by U.S. Customs and Border Protection has increased with the Trump administrations focus on fair trade, and with CBP being able to better target shipments using improved data systems (ACE) and improved organizational approaches (such as the CEEs).

CBP is often chooses to scrutinize GSP claims by issuing a CF 28 (Request for Information) to seek appropriate documentation for a representative shipment. The importer’s response to this CF 28 is critical, because if it is deemed insufficient, then CBP could take action to first, rate advance all similar unliquidated entries, followed by initiation of a 1592 negligence action against all liquidated entries within the past 5 years. GSP reviews can also come up in the course of customs audits performed by Regulatory Audit. Importers are advised to seek professional assistance to respond completely and competently to all CBP inquiries.

GSP Product Reviews

The GSP covers certain product categories, and interested persons will hold various windows of time during the year in which to advocate for the continuation of benefits for these products, or their addition/removal, from the GSP. If your company is interested in this process, an experienced trade law firm can help ensure that these comments are filed on time and on target.

GSP Renewals and Refund Process

The GSP legislation is not permanent and requires periodic renewal by Congress. Due to political issues, renewal of the GSP legislation is often subject to delay and lapses. During the lapse, importers are required to tender duties at the general rate, but may later receive refunds if/when Congress eventually passes renewal legislation with retroactive effect. CBP is not always perfect in the refund process. Clients may wish to engage with an experienced law firm that is able to audit/monitor the renewal & refund process.

GSP Country Reviews

In 2017, the U.S. Trade Representative announced the regular process of reviewing each BDC’s compliance against the programs 15 GSP eligibility criteria every three years. This process arose from concerns that several BDCs were non-compliant with those criteria, but still continued to receive GSP preferences.

As a result, the termination of GSP was announced in early 2019 (effective in may) for India (over its lack of market access) and Turkey (due to economic development).


Curated News about GSP:

March 25, 2019: USTR: Petition Deadline: GSP Product/Country Review (April 18, 2019).

March 4, 2019: USTR: Indian and Turkey to be terminated from GSP after 60 days.

August 8, 2018: USTR: Seeks WTO permission to impose up to $350 million in annual tariffs against Indonesia for their exclusion of U.S. beef and other products from their markets.  (The U.S. won the case-in-chief on the merits way back in Nov. 2017, after having complained about the ban in May 2014).  Meanwhile, continues to review Indonesia's eligibility for GSP in light of Jakarta's imposition of many trade and investment barriers (coated paper, biodiesel, poultry, etc.)

August 6, 2018: USTR: review of Turkey’s GSP Eligibility announced (in Response to Retaliatory Tariffs)

April 19, 2018: Customsl: Federal Register: GSP renewal and retroactive refunds.  Detailed information on the GSP refund process here.