Post-Entry Preference Program Claims II

Dear Friends,

We wrote to you back in November about a development which was expected to expand the number of preferential duty claims that could be asserted for the first time via protest. 

U.S. Customs and Border Protection (CBP) has now issued updated guidance specifying that all preferential trade agreements for which post-importation refund claims were previously limited to post-entry amendments (PEAs) or post-summary correction (PSCs) may now also be raised for the first time via protest.  This includes preferential claims under GSP, AGOA, the Australia, Bahrain, Israel, Jordon, Morocco and Singapore FTAs, and the Pharmaceutical Products Agreement, among others.

As noted below, this is a significant development since it expands the period in which post-entry refund claims may be made under certain preference programs.  It also breathes new life into protests filed for such claims that were previously rejected as “non-protestable”.  We have been helping clients secure refunds from CBP on such protests and would be happy to discuss this with you further, if relevant.

We hope this is helpful.  If you have any questions about this issue, please let us know.

Best regards,
Ted

 

Post-Entry Preference Program Claims

Dear Friends,

There has been some recent developments in the world of post-entry preference program claims that we wanted to make sure you were aware of, as they could provide meaningful refund opportunities.  A recent decision by the U.S. Court of International Trade (CIT) raised serious concerns about the legality of U.S. Customs and Border Protection’s 2014 policy limiting the filing of post-importation claims for preferential tariff treatment under a number of programs, including GSP, AGOA, the US FTAs with Australia, Bahrain, Israel, Jordan, Morocco and Singapore, the Pharmaceutical Products Agreement, and others (“the 2014 Policy”).  It is now being reported that CBP may have abandoned the 2014 Policy altogether.

There are two key outcomes from this development.  First, post-entry claims under certain preferential duty programs may now be raised for the first time in a protest.  Second, for companies which have filed protests asserting such claims, there may be an opportunity to revive such protests and obtain the duty savings, regardless of how long ago such protests were filed.

Background

Preferential duty programs (such as free trade agreements, GSP and the like) can be grouped into two buckets when it comes to post-entry preference claims—the programs which explicitly authorize post-entry claims (e.g., NAFTA), and those which do not.  When it comes to asserting post-entry preference claims for the second bucket of programs, CBP has, since 2014, taken the view that such claims could only be made prior to liquidation.  In other words, for this second group of programs, a preferential duty claim could not be raised for the first time in a protest.  Once an entry was liquidated, the window for claiming a duty preference was closed.

In August, the CIT issued an opinion in a case captioned, Zojirushi America Corp. v. United States, which questioned the legality of CBP’s 2014 Policy.  The CIT said that the 2014 Policy was based on a misreading of two key Federal Circuit cases.  Both of those cases had addressed post-entry claims for NAFTA (which belongs to the first bucket of preferential duty programs), and according to the CIT, it was a mistake for CBP to try and apply the outcome of those cases to post-entry claims made under preferential duty programs falling in the second bucket. 

Zojirushi was dismissed by the CIT for lack of jurisdiction, because the Court found that the importer had not followed the appropriate course to get into court.  The importer claimed that it could not follow the traditional course for bringing a customs case at the CIT, because CBP would not deny its protests.  Instead, its protests had been “rejected as non-protestable”, leaving the protests in a state of limbo— having been neither allowed nor denied. 

The Court pointed out that there is a way to get your protest denied, even where CBP merely rejects them.  Namely, an importer can file a request for “accelerated disposition”.  Any such protest that is not granted within 30 days is deemed to be denied, thereby satisfying one of the prerequisites for getting into court.  Interestingly, there is no limit on the time for requesting accelerated disposition on a protest that has not been denied.  In other words, any protest that (1) has not been approved or denied, or (2) has been rejected as non-protestable, can be “revived” by filing a request for accelerated disposition.  At the very least, the request for accelerated disposition will trigger a deemed denial, which will in turn start the 180-day clock for filing a summons with the CIT.

Just this week, it has been reported that Zojirushi took the Court’s advice.  It went back to CBP and requested accelerated disposition for all of its rejected protests.  CBP could have denied the protests, or just waited 30 days until they were deemed denied, giving Zojirushi a path back to court.  Instead, we understand that CBP has relented with respect to its 2014 Policy, and has decided to allow these protests, rather than denying them.  While this change in policy by CBP has not been formally announced, we believe that a similar outcome is likely available to any importer with similar facts.

What To Do Now

(1)  Make a note of this change in the law.  If you need to make a post-entry preference claim under a preferential program in the second bucket (i.e., a program which does not include an explicit post-entry refund provision), you may now seek to do so by filing a protest, which extends the period available to file the claim.

(2)  Review your records to identify any protests that your company may have filed that were “rejected as non-protestable”, particularly protests that were rejected for the reasons set out in CBP’s 2014 Policy. 

*     *     *

We hope this is helpful.  If you have any questions on this potential refund opportunity, please let us know.

Best regards,
Ted

 

USTR Announces GSP Annual Product Review (2016-17)

Dear Friends,

We are writing to let you know that the United States Trade Representative (“USTR”) has announced its 2016-17 annual product review for the Generalized System of Preferences (“GSP”) trade preference program (see Federal Register notice).

As you know, the GSP program affords certain articles produced in specific developing countries preferential trade treatment upon importation into the United States.  Although GSP expired on July 31, 2013, as we reported last year, the President signed into law the Trade Preferences Extension Act of 2015 (“the Act”).  Title II of the Act authorized the renewal of the GSP through December 31, 2017.

As with the 2015-16 review, USTR announced that it will accept petitions to modify the list of articles eligible for duty-free treatment under the GSP program (i.e., designate additional articles as eligible for GSP benefits, suspend the application of GSP benefits for certain articles, or otherwise modify GSP coverage). 

Additionally, the USTR announced that it will now accept petitions seeking to add various travel goods, classified under heading 4202, HTS (e.g., handbags, briefcases, backpacks, suitcases, sports bags, camera cases, etc.) from “generally more advanced, beneficiary countries”.  As you recall, during the 2015-16 review the President designated various travel goods from least-developed beneficiary developing countries and AGOA beneficiary countries as eligible for duty-free treatment, but deferred the designation of travel goods from “generally more advanced, beneficiary countries”. 

Both petitions to modify the list of articles eligible for duty-free treatment, as well as petitions seeking to include certain travel goods under the GSP program for 2016-17 must be submitted by October 4, 2016.   

If you have any questions about this opportunity, or would like any assistance identifying products that may be eligible, please let us know.

Best regards,

Ted & Chris

 

Dear Friends,

Further to the below, we are writing to make sure you are aware of an additional duty-savings opportunity that has been made available under the recently-renewed Generalized System of Preferences (“GSP”) program.

As you know, GSP is a U.S. trade preference program that affords certain articles produced in specified developing countries preferential tariff treatment upon importation into the United States.  As part of its annual product review for 2015, the United States Trade Representative (“USTR”) announced that it will accept petitions seeking to add articles to the GSP program (see the attached Federal Register notice). This is a significant opportunity because the exclusion on certain articles from the GSP program was recently lifted by statute.  Thus, this is the first time that certain articles are eligible under the program.

More specifically, importers of various travel goods classified under heading 4202, HTS (e.g., handbags, briefcases, backpacks, suitcases, sports bags, camera cases, etc.) now have the opportunity to petition the USTR to have such goods designated as eligible for GSP program benefits (i.e., duty-free treatment for such goods imported into the United States that are produced in specified developing countries).  Because these travel goods often carry high duty rates (up to 20% ad valorem), the potential savings opportunities at issue here are significant.  Any company importing articles classified in heading 4202 from a GSP-eligible country should country should consider submitting a petition.

Petitions for inclusion of the abovementioned products in the GSP program must be submitted by October 16, 2015.

If you have any questions about this opportunity, or would like any assistance identifying products that may be eligible, please let us know.

Best regards,

Ted

Update – Renewal of GSP and Possible Duty Refund Opportunity

Dear Friends,

Further to the below, U.S. Customs and Border Protection (CBP) published its guidance on the refund issue earlier today (see here).  In short:

For entries filed through the Automated Broker Interface (ABI):

* If the importer deposited duties, but used the GSP Special Program Indicator (A, A+ or A*) upon entry, then the refund will be processed automatically.

* If the importer deposited duties, but did not use the GSP Special Program Indicator upon entry, then a separate refund request must be made in writing.

For entries not filed through ABI:

* A separate refund request must be made in writing.

All refund requests must be addressed to the Port Director and be received by CBP by December 28, 2015.  Additional information on what should be included in such requests is included in the notice.

Given the potential for refunds regardless of whether a claim was made at the time of importation, all companies should evaluate this opportunity.  If you imported dutiable merchandise from GSP-eligible countries during the period July 31, 2013-July 29, 2015, you should consider whether it would be worth pursuing eligibility (and ultimately refund claims) for some/all of that merchandise.

If you have any questions about this notice, or if you would like any assistance identifying amounts possibly eligible to be refunded, just let us know.

Best regards,

Ted

Renewal of GSP and Possible Duty Refund Opportunity

Dear Friends,

We are writing to make sure that those of you who utilize the Generalized System of Preferences (“GSP”) program are aware that it was recently renewed and that there is now a short window of time to claim refunds of duties paid during the 2 year period in which the program had lapsed.

As you know, GSP is the largest (and oldest) U.S. trade preference program, affording certain articles produced in specified developing countries preferential tariff treatment upon importation into the United States.  Although GSP expired on July 31, 2013, last month the President signed into law the Trade Preferences Extension Act of 2015 (“the Act”).  Title II of the Act authorizes the renewal of the GSP through December 31, 2017 and makes GSP retroactive to July 31, 2013.

The Act (and the restart of GSP) becomes effective on July 29, 2015 (i.e., 30 days after being signed by the President).  Once GSP restarts, U.S. importers will be eligible to claim refunds of duties paid on eligible imports entered between July 31, 2013 and July 29, 2015 (“the gap period”). The process to obtain refunds differs depending on whether a GSP claim was made upon entry or not.  If GSP eligibility was not claimed at the time of entry, U.S. importers must submit a formal request to CBP.  If GSP eligibility was claimed at the time of entry, CBP will automatically process these refunds.

While GSP refunds are technically required to be processed within 90 days of liquidation/reliquidation, the timing surrounding gap period refunds is a bit uncertain.  To that end, CBP has announced it will issue formal guidance on gap period refunds and refund processing later this month.

If you had any GSP eligible imports in the past two years, you should be looking to pull the relevant entry data together now so you are prepared to file a claim as soon as the formal guidance is announced.  If you have any questions about these refund opportunities, or if you would like a copy of CBP’s formal guidance once published, please let us know.

Best regards,

Ted