CBP Directs Ports to Reject Protests Filed to Claim Duty Preferences
Importers will no longer be able to use protests to claim duty preferences under free trade agreements and trade preference programs after liquidation, said CBP in a letter to ports dated Aug. 11. Instead, importers will only be able to claim duty preferences after importation through 1520(d) post-importation claims for some FTAs, and by filing post-summary corrections (PSCs) or post-entry amendments (PEAs) for all others, including preference programs like the African Growth and Opportunity Act (AGOA) and Generalized System of Preferences (GSP). CBP is making the policy change to comply with recent court decisions, it said.
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The change applies to FTAs and preference programs not specified in 19 USC 1520(d). Section 1520(d) claims have always been the only way to claim preferences after importation for NAFTA, the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), and FTAs with Chile, Colombia, South Korea, Oman, Panama and Peru.
But up until now, CBP had allowed importers to claim duty preferences after importation using either PSCs, PEAs, or protests for the following FTAs and programs with no statutory post-importation mechanism: AGOA, GSP, the Caribbean Basin Economic Recovery Act (CBERA), the Caribbean Basin Trade and Partnership Act (CBTPA), the Civil Aircraft Agreement, Insular Possessions, Intermediate Chemicals for Dyes, the Pharmaceutical Products Agreement, and FTAs with Australia, Bahrain, Israel, Jordan, Morocco and Singapore. As CBP has now done away with the post-liquidation protest mechanism, only pre-liquidation PSCs and PEAs will now be allowed for these agreements.
CBP had already said it would continue to allow PSCs and PEAs, but declined to shoot down speculation that it would prohibit protest claims (see 14072801). The agency cites a pair of decade-old cases from the U.S. Court of Appeals for the Federal Circuit as the reason behind the policy change. In each, CAFC found the importer (Xerox and Corrpro, respectively) could not file a protest to claim NAFTA duty preferences because no 1520(d) claim had been filed and therefore no protestable event had occurred. A ruling issued by CBP in 2012, HQ H193959, applied that logic to the Singapore FTA and found the importer couldn’t protest because it hadn’t made a valid preference claim at entry.
The guidance now directs ports to reject protests filed to claim duty preferences by indicating “rejected as non-protestable” in block 18 of CBP Form 19. CBP says the guidance supersedes any conflicting guidance in existence, including instructions for trade agreements, the FTA guidelines, and side-by-side FTA comparisons. The CBP Office of International Trade “will be revising all internal and external guidelines applicable to preference programs to reflect the judicial decisions described above,” it said.
Email ITTNews@warren-news.com for a copy of the letter.