House Passes Bill to Extend Generalized System of Preference/Andean Trade Promotion

A Good Time to Remind Clients of Their Reasonable Care Responsibilities for Duty Free Programs

The Generalized System of Preferences program (GSP) which extends duty-free treatment to certain products that are imported from designated developing countries, is set to expire on December 31, 2009 for most eligible countries unless renewed by Congress.

Also set to expire at the same time unless renewed are the Andean Trade Preference Act/Andean Trade Promotion and Drug Eradication Act (ATPA/ATPDEA) for Colombia, Peru, and Ecuador.

On December 14, 2009, the GSP/ATPA extension bill, H.R. 4284, was passed by the House on a voice vote. It now goes to the Senate, which is also expected to pass the measure.

If passed by the Senate and signed by the president, GSP and the Andean trade preference programs would be extended for a period of 1 year, to December 31, 2010.

The House Ways and Means Committee Chairman, Representative Levin (D), has stated that the next step is to undertake a comprehensive review of all preference programs, to evaluate how well existing eligibility criteria are working and what improvements or additions are needed. The next report from the US Trade Representative on the ATPA/ATPDEA has been moved up to June 30, 2010.

This is a good time for brokers to remind all clients of their responsibilities under the Mod Act for proper recordkeeping and accurate assessment of eligibility for the special trade programs, which continue to provide fertile ground for Customs auditors to mine for duties and penalties.

Refer your clients to the rules in General Note 4 of the HTSUSA which sets forth strict requirements for direct importation, and for calculation of the cost or value of the materials produced in the beneficiary developing country to be no less than 35% of the appraised value of the articles. Many importers improperly claim duty free treatment when these requirements are not met.