U.S. importers currently benefit from a number of free trade programs that allow their imported products to enter the U.S. either duty free or a reduced duty rate. Three of the free trade programs are facing possible changes and importers may lose these benefits in the near future.
Negotiations continue between the U.S., Canada and Mexico concerning the North American Free Trade Agreement (NAFTA). Under NAFTA products from Canada or Mexico can enter the U.S. duty-free, and U.S. made products can enter those countries duty-free as well. NAFTA has been around since 1993 but it now faces its most serious test and there is a growing risk that the program will be either greatly revamped or possibly even eliminated.
Trade between the NAFTA partners is sizable, and any changes to NAFTA could have severe consequences for many industries. More information should be available in the coming months and importers and exporters who benefit from NAFTA should pay close attention to the ongoing negotiations.
The Generalized System of Preferences (GSP) program is the oldest free trade agreement, established in 1974. The program allows certain products from designated countries to enter the U.S. duty-free, and hundreds of millions of dollars in imports enter the U.S. under this program.
The GSP program must be renewed by Congress on a regular basis and the next renewal date is January 1, 2018. Considering the current environment in Congress there is a great likelihood that the program will not be renewed on time and the duty-free benefits will likely expire.
In the past when the program expired Congress ended up renewing it retroactively but there is no guarantee of that happening this time. Importers who benefit from GSP should make contingency plans now and be prepared to pay duties on products that may now be entering the U.S. duty-free.
Again, keep your ear to the news to see what happens with this beneficial import program.
The U.S. - Korea Free Trade Agreement (KORUS) is also being renegotiated and changes are likely in the coming months. The program may continue in a modified form or it may be terminated - at this time it is difficult to predict how the negotiations will end. Importers who benefit from KORUS should closely monitor the negotiations for further news.
International trade is likely to see a number of changes in the coming months and importers would be well advised to pay attention to the news regarding these changes. If you would like to sign up for our FREE monthly newsletter please click HERE.
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