China Focused Legislative Package Offers Tariff Relief With Renewal Of GSP And MTB | Faegre Drinker Biddle & Reath LLP


On May 27, 2021, the US Senate voted to amend the United States Innovation and Competition Act (the Law), formerly the Endless Frontier Law, a bill that began as an effort to increase the United States’ competitive advantage in the world through investments in research and technology, but has grown into a broad, China-centric legislative package dealing with trade and other matters. The package includes a amendment, the 2021 Trade Law, which would allow, among other things, tariff relief via a multi-year renewal of the Generalized System of Preferences (GSP) program until January 1, 2027, and a miscellaneous tariff bill (MTB) with tariff suspensions valid until December 31, 2023.

The larger bill has had some delays and will be considered when the Senate returns to Washington on June 8. If it is passed by the Senate, the House of Representatives must adopt its version of the bill, and then the two chambers will have to agree. any difference in order to finalize the text. Below our team details some key points of the amendment as it was originally tabled regarding SPG and MTB.

Generalized System of Preferences (GSP)

The GSP is a unilateral tariff preference program that allows the duty-free importation of certain imports from designated beneficiary developing countries (BDCs) as long as those countries meet certain market access criteria and otherwise meet the requirements. GSP qualification (i.e. a product is significantly last processed in the GSP country, local content requirements have been met, and the product is shipped directly to the United States).

Since its expiration on Dec.31, 2020, the SPG program – which maintains strong bipartisan support on Capitol Hill – has been the subject of legislative wrangling, with lawmakers arguing that potential reforms must be paired with a long-term extension. The renewal of the proposed SGP includes:

  • Six-year extension: It extends the GSP program until January 1, 2027 and includes a retroactivity provision that allows importers to obtain duty refunds on GSP eligible products that have been deposited after the program expires on December 31, 2020.
  • Increased eligibility conditions: It adds new country eligibility criteria, including mandatory criteria related to human rights and environmental protection and discretionary criteria (which the president should consider when appointing a BDC) related to environmental protection, women’s economic empowerment, rule of law and digital commerce, among other considerations.
  • Reviews and additional reports: It also requires triennial country reviews and includes additional transparency requirements for program administration. Under the legislation, the United States International Trade Commission (USITC) is also required to review GSP usage rates, rules of origin, and item eligibility rules.

Consistent with previous GSP renewal legislation, the bill specifies that retroactive, interest-free duty refunds will be available if a duty refund request is filed with US Customs and Border Protection (CBP) within 180 days. days following the promulgation of the law. Where entries made in 2021 requested GSP rights preferences at the time of entry through the appropriate special program flag, it is expected that CBP will automatically process duty refunds after the law is enacted.

Assuming that the GSP renewal is signed into law, importers should consider the best method to timely request GSP duty-free treatment on entries made after December 31, 2020, if they have not been requested. at the time of entry, either by administrative protest in the event of liquidation, or after the summary. correction (PSC) if not liquidated. For all GSP tariff preference requests, importers must ensure that all qualification supporting documents are available or accessible from the foreign supplier at the request of CBP.

Miscellaneous tariff bill (MTB)

In addition to the tariff relief offered by the renewal of the GSP, the legislation also proposes to allow the reduction or suspension of duties on certain imported products recommended for inclusion by the USITC through the MTB process. Highlights of the MTB provisions of the amendment include:

  • USITC Authority: The 2016 U.S. Manufacturing Competitiveness Act (AMCA) established new procedures for MTBs, according to which companies seeking a reduction or suspension of duties must have submitted a petition to the USITC, following which the USITC compiled and reviewed the petitions collective in accordance with AMCA requirements (including criteria related to administrability, loss of income and national production capacity). The USITC submitted its report to the US House Ways and Means Committee for review, and the committee compiled the MTB to implement the tariff reductions and suspensions it chose to accept. Under the proposed legislation, the power of the USITC to continue to lead and oversee the MTB petition and recommendation process is re-authorized for two additional cycles (the first cycle starting in 2022 and the second cycle starting in 2025).
  • Three-year extension: With a more immediate impact, however, the bill provides for duty relief, regardless of the liquidation status of the underlying entry, on manufacturing inputs and other imports that have been accepted for reduction. or a tariff suspension by the USITC in the most recent MTB cycle and will be implemented under Chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) (detailed in sections 74011-75461 of the draft bill). Duty reductions and suspensions are available to all importers who import the identified products and will remain in place until December 31, 2023, followed by a new MTB process as outlined above.
  • Retroactive impact: The MTB tariff relief will apply retroactively to declarations made up to 120 days before the enactment of the Law.
  • Deadline for requests for reimbursement of rights: Importers must file duty refund requests for eligible imported products through PSC or administrative protest with CBP within 180 days of enactment of the law.

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