No Policy Change Underway for Post-Entry FTA Preference Claims Before Liquidation, Says CBP
CBP has no plans to change policy regarding post-entry free trade agreement (FTAs) preference claims filed before liquidation, despite some industry speculation otherwise, said the CBP Office of International Trade. A recent publication from law firm Drinker Biddle said CBP headquarters is in the process of changing policy to discontinue the use of some post-import preference claims. According to Drinker Biddle lawyers James Sawyer and Beata Spuhler (here), CBP "has indicated that the ability to file Protests, and potentially [Post Entry Amendments (PEAs)], in order to claim eligibility under certain Free Trade Agreements (FTAs) may be prohibited due to a policy change within the agency."
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At issue are FTAs that lack specific provisions for making post-import claims though petitions within a year of import. While several FTAs, including NAFTA and CAFTA-DR, contain specific mechanisms for post-import claims -- spelled out in 19 U.S.C. Section 1520(d) -- a number of other FTAs are not explicitly mentioned. For those other FTAs, which include Israel, Jordan, Singapore, Australia, Bahrain and Morocco, importers can currently claim preference after entry by filing either post-entry amendments before liquidation or protests after. However, "based upon a recent policy change that CBP Headquarters officials have indicated is underway, pending and future Protests to claim FTA eligibility and duty refunds under the Israel, Jordan, Singapore, Australia, Bahrain and Morocco FTAs will likely be denied," the law firm said. The firm points to a 2012 CBP ruling (here) that found an importer couldn't claim preference under the Singapore FTA by filing a protest. The ruling cited two decisions from the Court of Appeals for the Federal Circuit regarding NAFTA claims as support for its holding that CBP can't decide a protest on duty preferences if no FTA claim has ever been filed. "CBP appears to be stretching the holding in these cases to support its departure from longstanding administrative practice," said the publication.
Citing a policy of not commenting on agency rulings, CBP did not address the ability to file a post-liquidation protest to claim preference. CBP did say it planned to continue to allow PEAs and Post Summary Corrections (PSCs) before liquidation. "The article suggests that CBP is planning to implement a change in policy under which the only way to make a valid preference claim would be at the time of entry," it said. "We would like to set the record straight that for preference programs that have a post-importation provision, a 1520(d) post-importation claim remains an appropriate mechanism to seek preference when not claimed at the time of entry. For programs that do not contain a 1520(d) provision, CBP will continue to allow unliquidated entries to be amended by filing a Post-Entry Amendment (PEA) - or Post Summary Correction (PSC) for ACE filers - prior to liquidation."
The Drinker Biddle lawyers note there's been some differing signals from CBP on the issue. "While certain CBP officials have stated that the PEA (and PSC) mechanism will remain a viable option for making post-importation claims under the non-520(d) FTAs (Israel, Jordan, Singapore, Australia, Bahrain and Morocco), other CBP officials have insinuated that PEAs and PSCs may not be accepted going forward either," it said. CBP may send out a CSMS message "advising companies of these policy changes within the next few weeks, which will presumably outline the agency’s next steps concerning use of the Protest mechanism, as well as PEAs and PSCs to make post-importation FTA claims for the non-520(d) FTAs.," the firm said.