GSP to renew? MTB?

Legislation has been introduced in the Senate that would reauthorize the Generalized System of Preferences (GSP), a popular agreement aimed at providing duty relief for products imported from developing counties. The bill would be retroactive to the December 31, 2020 expiration for the program and passage would trigger automatic refunds for excess duty collections. This legislation would add new eligibility criteria concerning environmental protection, human rights and rule of law for GSP member countries.  Also added in this legislation are changes to US oversight requiring regular country reviews, added transparency for administrative decisions, and more study from the ITC on rates and eligibility rules.

It has been widely expected that GSP would eventually be renewed but there has also been speculation that some updated language might be added to make the program easier to amend. Congress has a long history of allowing GSP to expire only to retroactively renew it at a later date. Customs rules allow importers to continue making the GSP claim when filing an entry even after the expiration date so that a future renewal results in an automatic refund for eligible products. It does make one wonder why it does not get extended earlier since it seems to be a foregone conclusion that a renewal will be passed.

The same legislation addresses a renewal of the Miscellaneous Trade Bill (MTB).  The bill was to be replaced in 2020 by a new MTB, but it was allowed to expire as of January 1, 2021.  The international Trade Commission (ITC) issued the final MTB report to Congress in August of 2020, but until now legislation has not moved forward. There are 2,500 products in the pending bill, up from 1600 in the expired bill that received a recommendation from the (ITC) for duty reductions.

 

The EU, UK and US are working on tariff reductions.

Earlier, the EU announced they would suspend a planned June 1 increase on tariffs covering some US imports.  Now, the UK is considering changes to tariffs on certain goods imported from the US as well. The tariffs were implemented in response to the Sec 232 tariffs on steel and aluminum imposed by the US and covering imports from nearly all counties including those in the EU, which at the time included the UK. After the Brexit split, the UK continued the tariffs they had implemented as a EU member.

The action taken by the EU suspended tariff increases on goods, such as motorcycles and bourbon, and also put off adding additional products to the existing tariff action. Similarly, the UK is considering suspending tariff increases, which they are entitled to implement in June. Unlike the EU where existing tariffs will remain, the UK is taking public consultations on modifying the tariffs already in place. The EU and UK are hoping to create a climate where the Section 232 tariffs and resulting retaliatory tariffs can be discussed.

The US government and European Commission agreed to hold discussions concerning the issue of global steel and aluminum overcapacity. Both sides have reached common ground in describing the glut as a “serious threat” driven largely by third parties including China. While there are still serious hurdles to reaching an accord, it is a positive sign that the tariff increases have stopped, at least for the time being.

 

Speaking of…

US Trade Representative Katherine Tai advocated for modernization of the Section 232 statute. Speaking before the Senate Finance Committee, Ms. Tai noted the discordance between the authority given under Section 232 and the “nature of the problem we are dealing with”. Section 232 grants broad authority to the President to take action to adjust the importation of specific goods if they are found to be a threat to national security. She characterized the problem with steel and aluminum imports to be overcapacity driven principally by China and stated that we need new tools for today’s challenges rather than “trying to retrofit tools” from 1962.

In a March 9 policy analysis, the Cato Institute took issue on the application of Section 232 for steel and aluminum products and called for reforms. Their paper recounted the economic cost to US  from the action including: retaliatory tariffs from our trading partners, the ensuing price increases, job losses, and reduced investment for US manufacturers. The paper recommended either a repeal of Section 232 or a number of reforms that could be taken up by Congress. Their policy analysis can be found here.

On May 18, the Congressional Research Service released an updated version of “Section 232 Investigation: Overview and Issues for Congress”.  This document presents a thorough overview of the issues and concerns raised by Section 232 investigations.

 

Sam McClure, LCB

Director of Compliance & Customs Services

 

 

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The CVI Exclusion Guide 2020 provides you with a link to original USTR exclusion announcements with a breakdown of each excluded product.

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Meet one of CVI’s Customs Brokerage & Compliance experts, Sam McClure:

Sam serves as Director, Compliance and Customs Services for CVI. He serves as CVI’s corporate compliance officer and is responsible for overseeing all aspects of our Customs related services, including growth.

Sam started his career in 1977 with Waters Shipping Company in Charlotte, NC. He began as a document runner, soon becoming a leader in operations and customer service for the branch. Sam, along with Linda Masten, founded Central Carolina Shipping Inc. in 1983 as an independent Customs Brokerage firm where he served as Vice President for 26 years. Sam and Linda grew Central Carolina into a successful and highly respected member of the Carolinas trade community. When Charlotte opened their local chapter of the IFFCBA Sam was part of the organizing group and he headed the Customs committee for several years. Sam obtained his Customs Brokers License in 1984 and remained with Central Carolina until the company was acquired by CVI in 2009.

At CVI, Sam has held several positions in both the operations and sales departments. As an expert in U.S. Customs regulations, Sam is often called upon on to provide guidance to importers on Customs compliance issues. He makes regular presentations on matters related to importation and broader regulatory compliance.

– Sam McClure, LCB, Director of Compliance & Customs Services, CVI
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