USTR Expected to Launch GSP Competitive Need Limitation Review, Say Lobbyists
The Office of the U.S. Trade Representative is readying to launch a review on competitive need limitations (CNLs) in the Generalized System of Preferences, said lobbyists with GSP expertise in recent interviews. The process will include a request for industry stakeholder input, expected in the coming weeks, the lobbyists said. President Barack Obama signed GSP renewal into law on June 29 and the retroactive renewal will take effect a month after that date. Congress put language in that legislation (here) to require USTR to conclude the CNL review by Oct. 1. Importers have 180 days after the date of enactment to submit filings retroactively for reliquidation.
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The White House evaluates GSP imports annually, while the program is in effect, to determine if GSP imports exceed certain thresholds, which may then lead the White House to revoke GSP eligibility for those products, according to a CBP description (here). Imports from a specific GSP beneficiary that exceed 50 percent of the total value of imports to the U.S. for a given product, or those that surpass a “statutorily-set dollar value,” are considered competitive, and therefore the product eligibility from that particular county may be revoked. That dollar value is now at roughly $165 million for calendar year 2014, although the lobbyists said it's unclear whether that number will be impacted by the GSP lapse over the past two years. The value increases by $5 million annually. GSP expired on July 31, 2013 (see 13080110).
The CNL review will be separate and distinct from the annual GSP review, which the White House will need to conclude by July 1, 2016, said the lobbyists. The annual review includes more comprehensive investigations into product and country eligibility in the GSP program. In past years, USTR has solicited petitions from stakeholders simultaneously for both the CNL and annual reviews (see 13072614). The White House often grants waivers for imports that exceed the CNL thresholds. Those waivers are based on industry petitions and de minimis eligibility (see 13062820).
The CNL process normally includes an International Trade Commission investigation (here). The White House faces a tight deadline on the conclusion of the CNL review, but GSP lapses over recent years have likely prepared USTR and the ITC to tackle this process efficiently, said American Apparel and Footwear Association Executive Vice President Steve Lamar. “This is a little more expedited, but I think they’ve been aware of it and they’ll handle the review process well in order to achieve the findings they need,” said Lamar. “GSP has gone through these short-term extensions for so long that these longer-term reviews have been disrupted.”
The administration typically takes about six months to conduct the entire CNL review process, but the limited window this year isn’t likely to pose a real challenge, said David Olave, a lobbyist with Sandler Travis & Rosenberg. “This statute is mandating USTR to make a decision on waivers on Oct. 1 for the 2014 calendar year,” said Olave. “That’s not a difficult thing for USTR to review; that’s just looking up import statistics and making assessments.” USTR didn’t respond for comment.
This review is poised to focus on re-designations of CNL waivers, de minimis waivers and “super CNL” waivers, said Olave. The super CNL status refers to waivers, which have been in effect for five or more years, that the White House aims to revoke because imports of the product exceeded more than 150 percent of the dollar value limit or more than 75 percent of the total value of imports of the product into the U.S. “In addition there will be a review of products from that may have breached the 2014 CNL and may petition for a waiver,” said Olave. “We understand there are only a couple of products on that latter list so USTR should have time to complete the review by Oct. 1.”