Last week, the House of Representatives passed H.R. 4521, known as the America COMPETES Act of 2022. The legislation now goes to the Senate which passed a similar bill and the two texts must be reconciled for final passage before being sent to the President’s desk for his signature.
The COMPETES act is focused on a number of notable items that would strengthen America’s independence for things like semiconductors and chips, shortages of which have caused heartburn in consumer goods and automotive supply chains during the pandemic.
Along with this, importers and exporters are taking note of the provisions which directly impact their bottom lines, including GSP reauthorization, the MTB process and the contentious de minimis threshold and eligibility.
GSP Reauthorization:
The GSP program expired on December 31, 2020. Imports eligible for reduced or duty-free entry under GSP as provided in the Harmonized Tariff have been subject to the column 1 ad valorem duty rates for the past fourteen months.
As written, GSP would be reinstated through December 31, 2024, and retroactive refunds would be provided to importers who continue to file with the “A” indicator on their entry summary transmission to Customs. If reinstated, CBP will automatically liquidate eligible entries with refunds.
Miscellaneous Tariff Bill:
The MTB is a process by which companies can apply for duty suspensions or reductions on goods that are not readily available from a domestic producer. If passed, the legislation would include these reductions or exemptions through December 31, 2023, and reauthorizes the process for two cycles, 2022 and 2025.
De Minimis:
In conference, this will likely be one of the most contentious issues to resolve. In 2015, the Trade Facilitation and Trade Enforcement Act (TFTEA) raised the de minimis amount to $800 per individual per day and has led many companies to significantly change their supply chains to take advantage of this threshold. The version of the COMPETES Act which passed the house would specifically eliminate the use of Section 321 entry for products entering the U.S. from countries that are non-market economies and are on the USTR’s priority watch list for Intellectual Property Rights (IPR) violations. Yes, this means China.
It also requires CBP to collect more information on de minimis and add enforcement provisions for violators who abuse the program.
We will continue to monitor the legislation as it goes to conference with the Senate and whether or not any of these three items are substantially altered or stripped from the final text of the bill.
Importers who have an interest or inquiries about any of these programs, whether or not the changes will impact them or who are seeking opportunities to legally take advantage of the savings they offer are encouraged to contact our offices today to learn more.
