The Trump administration announced a new round of trade restrictions: Imports from Turkey and India will no longer be given preferential duty free entry on thousands of goods under the US GSP rules.
Although shipments from Turkey and India will no longer benefit from preferential duty free entry to the USA, incredible e-commerce opportunities remain .
The headlines of no longer allowing preferential duty free access of goods from India and Turkey belie the reality of low general duties and duty free access for e-commerce parcels sent direct from from India and Turkey.
The removal of India and Turkey from preferential treatment is viewed by some not as a new trade restriction but a recognition of India and Turkey's economic development. The duty free status is meant for developing economies and - once developed - there is no longer a need for preferential duty free treatment.
Jet Worldwide assists large and small e-commerce merchants to set up secure high volume duty free parcel clearance processes to the US via ECCF, Section 321, single importer of record and Canadian cross border clearance.
What is The Generalized System of Preferences - GSP?
The Generalized System of Preferences (GSP) is a U.S. trade program that gives preferential duty-free entry for thousand of products from over 100 “developing countries/ ” The GSP is a legislation that requires period reauthorization giving the executive branch the power to add/ update and revoke GSP privileges.
Under GSP program, developing countries can ship items to the USA with free of duty. The list of GSP countries includes most of the world's developing economies such as Iraq, Albania, Chad, Egypt, Guyana, Haiti, Ukraine, Mongolia, Paraguay and Zambia. Turkey and India are now large diverse economies that are out of place amongst the GSP list of developing countries.
“Free Trade” versus “Fair Trade” ?
INDIA EXPORTS TO THE USA:
Over $5 billion (US) of goods are entered duty free under the GSP provisions. India is by far the largest beneficiary of GSP program. The Trump administration has frequently criticized India for placing high tariffs on goods imported from the US.
Removal of India from The GSP program will take effect in 60 days
The government of India has said they do not plan to retaliate as the benefit of the program resulted in a relatively small savings of around $200 million US (around 4%).
International trading is a complex mix compelled by self interest. In the case of lifting GSP provisions for imports from India, the action is related to negotiations on access of US made medical equipment. India caps the amounts that can be charged for medical items considered critical. US medical device interests are pushing to allow for greater pricing control over their own products to able to profit more from the Indian market. The US dairy interests are also pushing for greater access to India.
TURKEY EXPORTS TO THE USA:
Turkey was also notified that it would be removed from the GSP agreement, with the administration by citing that the fact that Turkey should no longer be considered a “developing country.”
The administration justified this action by explaining that Turkey’s impressive growth and diversification in the 4 decades no longer needed beneficial access to US markets. However, international trade agreements are not about being right or being fair, it is about protecting and promoting a countries self interest. Turkey has responded to the GSP action by adding tariffs to US metals. The hope for free traders is for continued dialogue as free trade - or less restrictive trade - is in everyone's self interest.
Importing to the USA: Free Trade access
Political rhetoric aside, the US actually remains one of the most open economies in terms of import duties and processing.
As India confirmed (see above), the average duty rate to the USA is only 4%. Furthermore, the import processing has never been easier with the new higher de minimis and express consignment processing.
Even with no longer having preferential duty free access, the tremendous e-commerce opportunity from India and Turkey to The US remains.
E-Commerce shipments To the US
What is rarely mentioned in all the headlines is the openness of the US to e-commerce shipments ordered from international websites. E-commerce orders from Indian and Turkish websites can that are valued under $800 USD (+95% of all orders) can be sent to the USA duty free and without H.S. Codes.
Is $1.06 per shipment too much?
For most logistics professionals dealing with imports to their country, they would dream of having to pay only $1.06 (US) per shipment to gain duty free access, express pre-clearance or cleared within hours of arrival, duty free with no H.S. code. To the US, this is a reality. In fact, there is even ways to avoid the $1.06 “CBP ECCF reimbursement fee” - but with longer clearance times.
Section 321 and ECCF clearance
Incredible opportunity from India and Turkey
Clearance of the $800 de minimis shipments is under Section 321 informal entry provisions that can be found in Part 128 of the Code of Federal Regulations. To take advantage of express clearance processes, the goods must be designated to an Express Consignment Clearance Facility (ECCF) or a Container Freight Station (CFS) that has a link to US Customs for individual house waybill clearances.
Direct Order- Cross Border E-Commerce
The talk of trade, such as the GSP, is shifting from large bulk/ commodity/ ocean container type of trade to direct order online e-commerce. Goods made in India and Turkey, for example, can be easily ordered online from a US consumer. Those individual online orders can then be sent direct air freight from Istanbul, Delhi, Mumbai - for example - to Express Consignment Facilities in major US gateways.
USPS labeling direct from overseas.
Large online merchants in India and Turkey can integrate directly with the US Postal service via their Global Direct Entry program. Direct order / cross border e-commerce:
- Online order from US consumer
- Processing order
- Labeling and data integration with USPS
- Sending manifest data for clearance
- Sending direct airfreight
- Delivery in 2-5 business days to most of USA