Get Moving on GSP for Travel Goods: How Importers Can Take Advantage of the Expanded Benefits

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1 Get Moving on GSP for Travel Goods: How Importers Can Take Advantage of the Expanded Benefits Hosted by United States Fashion Industry Association (USFIA) October 5, :00 P.M. Eastern/11:00 A.M. Pacific

2 Do you have a question? During the webinar, all attendees will be assigned to listenonly mode. Please use the Questions box on your dashboard to ask a question during the webinar.

3 10/5/2017 Get Moving on GSP for Travel Goods: How Importers Can Take Advantage of the Expanded Benefit For the United States Fashion Industry Association 3

4 GENERALIZED SYSTEM OF PREFERENCE GSP is the largest and oldest U.S. trade preference program. Established by the Trade Act of 1974, GSP promotes economic development by eliminating duties on thousands of products when imported from one of 120 designated beneficiary countries and territories.. 4

5 THROUGH THE YEARS.. GSP was allowed to expire at the end of Renewed in October of 2011, extending the program to July of 2013 GSP was allowed to expire in July of 2013 Trade Preferences Extension Act of 2015 June 29th 2015 Renewed GSP as of August 1st 2015 Extended GSP through December 31st, 2017 Gave the President the ability to designate certain luggage and travel articles as eligible from all beneficiary countries July 1st Major Expansion of Trade Preferences for Least Developed and African Countries under Obama administration. Adds new duty-free status for travel goods (including luggage, backpacks, handbags, and wallets) for Least Developed Beneficiary Developing Countries (LDBDCs) and African Growth and Opportunity Act (AGOA) countries June 29th, 2017-Trump Administration Approves GSP for Travel Goods Coming from All GSP Countries Effective on goods entered on and after July 1st 5

6 TRUMP ADMINISTRATION APPROVES GSP FOR TRAVEL GOODS COMING FROM ALL GSP COUNTRIES Trunks, suitcases, vanity cases, attaché cases, briefcases, school satchels and similar containers: , , , , Handbags, whether or not with shoulder strap, including those without handle: , , , , Articles of a kind normally carried in the pocket or in the handbag: , , , , Travel, sports and similar bags: , , , , , , , , , and Other:

7 GSP ELIGIBLE COUNTRIES 7

8 LEAST-DEVELOPED BENEFICIARY DEVELOPING COUNTRIES (LDBDCS) During times where GSP is expired, imports from LDBDCs still benefit from no Merchandise processing fee per CFR

9 GSP- ELIGIBLE REGIONAL ASSOCIATIONS 9

10 GENERALIZED SYSTEM OF PREFERENCES...A, A* OR A+ The symbol "A+" indicates that all least-developed beneficiary countries are eligible for preferential treatment with respect to all articles provided for in the designated provisions. The symbol "A" indicates that all beneficiary developing countries are eligible for preferential treatment with respect to all articles provided for in the designated provision. The symbol "A*" indicates that certain beneficiary developing countries, specifically enumerated in subdivision (d) of General Note 4, are not eligible for such preferential treatment with regard to any article provided for in the designated provision 10

11 IN ORDER FOR A GOOD TO QUALIFY FOR DUTY-FREE STATUS UNDER THE GSP: The product must be substantially transformed in the GSP country into a new and different article of commerce, and: According to the U.S. International Trade Commission, substantial transformation means that the item underwent a fundamental change (normally as a result of processing or manufacturing in the country claiming origin) in form, appearance, nature, or character, which adds to its value an amount or percentage that is significant in comparison to the value which the item (or its components or materials) had when exported from the country in which it was first made or grown. Usually a new article of commerce normally one with a different name is found to result from any process that Customs decides has brought about a substantial transformation in the pre-existing elements. The sum of the cost of materials originating in the GSP country, plus the direct cost of processing operations performed in the GSP country must equal at least 35% of the dutiable value of the article upon importation into the United States. If using materials imported from a non-gsp eligible country, the materials may count toward the 35 percent value if they meet a double substantial transformation requirement, and: Must be imported directly into the United States from the GSP country. 11

12 DOUBLE SUBSTANTIAL TRANSFORMATION Materials imported into the GSP eligible country could count toward the 35 percent requirement but only if they undergo a substantial transformation into a new and different article, which is then used to produce the eligible article. Double Substantial Transformation requires that intermediary step between the imported material and the finished GSP eligible article. IMPORTED DIRECTLY The merchandise may not enter the commerce of another country while en route from the BDC to the United States. Transshipment of the goods through a third country is permissible, provided the goods remain in continuous Customs custody, or do not enter the commerce of that country. 12

13 COMPLIANCE, COMPLIANCE, COMPLIANCE Have a self audit process in place with your vendors. Set up a response timeline for both you and your vendors. i.e. Your vendor will have 7 days to provide you the requested and necessary information. You will then have 7 days to review and ensure all information is provided and correct. Depending on the volume of goods you import, this should be done at least once a year, if not more, to ensure that your vendors are prepared, and even more importantly compliant. State your expectations of your vendors, make them known. Set up factory visits. Know your factories that you are doing business with. 13

14 WITH DECEMBER 31ST JUST AROUND THE CORNER When GSP was allowed to expire in both 2011 and 2013, Congress passed renewals that were effective retroactively; importers were entitled to duty refunds for entries made during the period that GSP was not in effect as long as the entries were cleared using the GSP SPI indicator. Although this has been the case, Congress is under no obligation to include the retroactive provision when and if the program gets reauthorized. In the event that GSP is allowed to expire, U.S. Customs will likely issue guidance to importers on how to process eligible shipments for clearance, should the GSP program be reauthorized retroactively. 14

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17 Thank you DANIELA CALIARI AND ERIN WILLIAMSON SENIOR TRADE COMPLIANCE ANALYSTS GEODIS 17

18 Q u e s t i o n s? Please use the Questions box on your dashboard on the right side of your screen. C o n t a c t u s a f t e r t h e w e b i n a r : info@usfashionindustry.com Phone: