Tufted Rugs To Be Impacted By GSP Expiration

The following alert and analysis was prepared by Brenda Jacobs of Sidley Austin LLP for the ORIA. The Generalized System of Preferences program (GSP), which provides duty-free treatment to selected products of designated beneficiary developing countries, is set to expire in less than six weeks.  The current legislative authorization for the program expires on July 31, 2013.  To date, the U.S. Congress has taken no steps toward reauthorizing the program, largely because there is a strong interest in first making substantive changes to the program.  In particular, Members of Congress want to address the criteria used to determine which countries should be designated as beneficiary developing countries (BDC).  More specifically, Members question whether countries like India should continue to be considered a BDC.   Because the Congress does not appear to be interested in simply rolling over the current program before considering reforms, it is almost certainly guaranteed that GSP benefits will lapse, perhaps until sometime next year. This will be at least the ninth time Congress has allowed GSP to lapse in the last 20 years.  Most recently, there was a lapse that lasted almost one year, in 2011, with the program ultimately retroactively re-authorized and extended  for only another 18 months, through July 31, 2013. There is a lobbying campaign by U.S. companies that rely upon GSP to obtain duty-free inputs for their manufacturing operations, as well by wholesale and retail businesses that rely upon the program lower the cost of consumer goods.  A number of beneficiary countries also have written to Congressional leaders urging action.  However, specifically with respect to India, indications are that unless India comes forward with some significant changes in its trade policy, such as eliminating or reducing “localization” requirements that impair the ability of U.S. companies to get a foothold in the India market, and/or showing more flexibility in a number of international negotiations currently on going (in the World Trade Organization), where India is viewed as delaying the process, the Congress will focus on rewriting the rules for GSP before renewing the program. Notably, another impediment to prompt action on GSP renewal may be that the Congress does not see renewal as particularly pressing.  That is because with each prior lapse Congress has reinstated the program retroactively, thereby effectively making impacted U.S. companies “whole.”  Thus, because importers have been able to obtain refunds of the duties they were required to pay to U.S. Customs and Border Protection (CBP) at the time of entry, Congress presumes that harm to U.S. importers is limited. It is also worth noting that Congress typically has packaged several trade measures into a single legislative vehicle, rather than...

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Tufted Carpets Lose GSP Benefits

ORIA’s Washington legal counsel, Ms. Brenda Jacobs has reported that the U.S. Government announced a list of products that lost their GSP benefits as of July 1, 2012, and one of those products is Indian Tufted Carpets that come into the U.S. under HTSUS 5703.10.20. This change is effective immediately; therefore, any carpets from India that are presented for entry or withdrawn from warehouse for consumption as of July 2, 2012 under HTSUS 5703.10.20 are subject to duty.  The duty rate is 6...

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