CBP corrects GSN 3(c) guidance - List of agreements allowing MPF exemption 

February 7: U.S. Customs and Border Protection (CBP) corrected and updated prior guidance concerning the Harmonized Tariff Schedule of the United States (HTSUS) General Statistical Note 3(c) to clarify the merchandise processing fee (MPF) exemptions available for goods imported under certain trade agreements.

Background

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.

Clarification

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:


Douglas Zuvich

(312) 665-1022


Andrew Siciliano

(631) 425-6057


John L. McLoughlin

(267) 256-2614


Todd R. Smith

(949) 885-5617


Luis A. Abad

(212) 954-3094


Amie Ahanchian

(202) 533-3247


Or your local KPMG Trade & Customs professional.




©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

TaxNewsFlash-Trade & Customs by year