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A recent change in practice by U.S. Customs and Border Protection is limiting the right of importers to claim preferential treatment under certain free trade agreements and the Generalized System of Preferences. A CBP public guidance document on this issue is expected in the near future, but in the meantime the change could result in unexpected costs for importers.
Until the recent change, importers could obtain a refund of duties paid for approximately one year and four months after importation by raising a new claim for preferential treatment. Importers would file a post-entry amendment before liquidation or submit an administrative protest after liquidation. This is consistent with 19 USC 1514, which gives importers the legal right to make post-importation changes to their entries.

Now, however, CBP ports of entry are denying post-importation claims made pursuant to GSP and the U.S. FTAs with Singapore and Australia. Other programs that will likely be affected include the U.S. FTAs with Bahrain, Israel (including the Qualifying Industrial Zones program), Jordan and Morocco as well as the African Growth and Opportunity Act. Imports under agreements mentioned in 19 USC 1520(d), such as NAFTA, CAFTA-DR and the U.S.-Korea FTA, are not impacted.

The reality of today’s global trade environment is that the information necessary to substantiate eligibility for trade preferences or FTA benefits is often not available at the time of entry. With CBP’s new policy, many importers will be placed in the impossible position of choosing between foregoing the duty savings to which they are entitled or risking penalties from CBP for claims made at entry using incomplete data.

ST&R will continue to keep the trade informed regarding CBP’s actions and is available to provide guidance to importers that:

(1) have filed post-entry claims that have been denied based on CBP’s practice change;
(2) have filed post-entry claims that remain open but are vulnerable under CBP’s practice change; or
(3) intend to file post-entry claims on related entries in the near future.

For more information, please contact Larry Ordet at (305) 894-1003 or Emily Simon at (202) 734-3934.