In January 2014, CBP issued CSMS #14-000003 (January 3, 2014) as notice that General Statistical Note 3(c) had been updated in the 2014 Harmonized Tariff Schedule of the U.S. (HTSUS). Specifically, one update indicated that goods of a country with which the United States has a free trade agreement that provides an exemption from the merchandise processing fee (MPF) can be imported free of MPF by using each agreement’s special program indicator (SPI).
Additionally, GSN 3(c) was updated to indicate that goods imported under the Civil Aircraft Agreement, Pharmaceutical Agreement or Intermediate Chemicals for Dyes Agreement (SPIs “C,” “K,” or “L,” respectively) that are marked or eligible to be marked the “product of” a country with which the United States has a free trade agreement that provides the MPF exemption, can be imported free of MPF by adding the “#” symbol after the respective SPI in the entry documentation.
CBP issued new guidance—CSMS #14-000077—to clarify that, with respect to a preference program that provides the MPF exemption to “originating” goods, in order to claim such exemption in addition to the Civil Aircraft Agreement, Pharmaceutical Agreement or Intermediate Chemicals for Dyes Agreement (SPIs “C#,” “K#,” or “L#,” respectively), a good must meet the preference program’s “origination” requirements—including any “imported directly” requirement.
With respect to a preference program that provides the MPF exemption to goods that meet the lesser “product of” standard (as defined in each agreement), the same “product of” standard and “imported directly” requirements apply when using SPI “C#,” “K#,” and “L#” to obtain the MPF exemption.
CBP noted that the update to GSN 3(c) “unintentionally omitted” other special trade regimes providing for MPF exemption—such as for products of U.S. insular possessions; beneficiary countries under the Caribbean Basin Economic Recovery Act; and least developed beneficiary countries under the Generalized System of Preferences.
For more information, contact a professional with KPMG’s Trade & Customs practice:
John L. McLoughlin
Todd R. Smith
Luis A. Abad
Or your local KPMG Trade & Customs professional.