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GSP and MTB: Two ways for importers to save on ad valorem import duties

WASHINGTON, DC – MAY 12: Senate Finance Committee Chairman Ron Wyden (D-OR) makes an opening statement during a hearing on May 12, 2021 in Washington, DC. The hearing is being held to examine President Joe Biden’s 2021 trade policy agenda. (Photo by Pete Marovich-Pool/Getty Images)

The Generalized System of Preferences (GSP) and Miscellaneous Tariff Bill (MTB) are two legislative vehicles requiring authorization by Congress every few years. They are a way that importers can both seek sourcing opportunities in developing countries and petition for reductions or exclusions from ad valorem duty after a review and approval by the US government. Having lapsed for a period of time, the first signs of their reauthorization may be on the horizon.

 

GSP is normally ratified by Congress for multiple years at a time. GSP recognizes developing countries and their exports as a means to improve the overall quality and standard of life. Countries can “graduate” from the GSP list when they have sufficiently advanced their manufacturing sectors and economies. Taiwan, for instance, was once a GSP country.

 

Not all exports from a country are automatically GSP. Some well-developed industries in countries are excluded based on their sophistication and size. But for the most part, importers who are looking for an advantage of a few percentage points of duty have looked to GSP as a way to establish both an advantage and secure early manufacturing capacity and relationships as a country advances. The most current list of authorized countries and exclusions are found in General Note 4 of the Harmonized Tariff Schedule of the United States (HTSUS). (Hint: If you click the link and download it, it begins on page 11.)

 

The most recent reauthorization of GSP expired at the end of 2020. GSP has traditionally had broad, bipartisan support but the issue of how to pay for it has varied depending upon the party in power at the time of renewal.

 

Another vehicle is the Miscellaneous Tariff Bill. This vehicle operates differently because companies must submit a request for consideration which is then reviewed by government agencies before authorizing the relief in an omnibus bill incorporating all approved submissions over a period of time. Relief is granted based on capacity – or lack thereof – of domestic production for the item for which relief is sought.

 

The US International Trade Commission, one of the agencies with jurisdiction over the MTB, explains the process here. Several links do not work because the last MTB has expired and there is no active submission process available.

 

In the Senate, jurisdiction for both of these programs falls to the Finance Committee whose chairman Ron Wyden (D-OR) has signaled his intent to introduce legislation reauthorizing GSP through 2027 and the MTB through 2023. Both bills would need to begin in the House because of their responsibility for originating revenue legislation, but his intent to reauthorize both is a good sign.

 

Importers who have been paying GSP duties since the program lapsed are also hoping that as with every previous reauthorization, the duties they are depositing today will be refunded to them when signed into law. 

 

Individuals and companies who are interested in working with their House and Senate representatives can learn more about the Renew GSP Today coalition who swing into action at times like this. If and when MTB is reauthorized, RIM’s professional services team can help companies prepare and submit applications for relief as well.