The Generalized System of Preferences (GSP) trade program is scheduled to expire on July 31, 2013. Under GSP, thousands of products originating in over 100 developing countries are eligible for duty-free entry into the United States.
Since its inception in 1976, GSP has been renewed periodically by Congress. However, there have been a number of instances in which the program has been allowed to lapse, meaning that Congress failed to renew the program prior to the expiration date. Most recently, this occurred at the end of 2010 when Congress allowed GSP to expire. In that case, GSP was not renewed for ten months. The GSP renewal bill passed in October 2011 extended the program through July 2013.
In prior instances where GSP has been allowed to expire, Congress has subsequently passed renewals that have been effective retroactively, meaning that importers were entitled to duty refunds for entries made during the period that GSP was not in effect. However, Congress is under no obligation to include a retroactivity provision. In the event that GSP is allowed to expire, U.S. Customs will likely issue guidelines for importers on how to flag otherwise-eligible goods to enable Customs to liquidate such preference claims with a refund should the GSP program be reauthorized retroactively.
Unless Congress renews GSP prior to July 31, customs duties will be required on merchandise that was previously eligible for duty-free entry under GSP, beginning on August 1. Since Congress will be in recess for five weeks beginning August 5, a lapse in GSP would likely run for at least six weeks.
EACCNY Member Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP is closely monitoring the legislative developments. Should you have any questions, please contact Joseph M. Spraragen.