Requirements for Duty-Free Status of Articles Imported From U.S. Insular Possessions

Pursuant to a congressional request, GAO discussed the comparative differences in the duty exemption provisions covering imports from U.S. insular possessions and those from developing countries in the Caribbean Basin area. GAO also discussed the differences in verifying duty exemption qualifications.

GAO found that the primary difference in the exemption provisions is that the provisions covering articles imported from foreign countries are very specific as to what the percentage of foreign content can be as well as what makes up that percentage. Provisions covering imports from insular possessions are specific as to what the percentage of foreign materials can be, but silent as to the composition of those materials. Concerning verifying procedures, GAO found that Customs Service import specialists review entry documentation of articles from insular possessions and can request an audit or investigation of a company's operations or records to verify any questions concerning an article's exemption status. In contrast, import specialists only review foreign importers' documentation to verify its accuracy because Customs does not have the authority to investigate the operations of a foreign company.