New Bipartisan Act Will Simplify the Temporary Tariff-Reduction Process
- The American Manufacturing Competitiveness Act of 2016, recently passed by Congress and signed by President Obama, will overhaul the process of developing a Miscellaneous Tariff Bill (MTB).
- Companies no longer need to ask their congressional representatives to submit bills for temporary duty reductions or suspensions.
- Instead, the U.S. International Trade Commission will solicit petitions for temporary duty reductions or suspensions from businesses directly, then compile them into a report for Congress to review.
President Obama signed the American Manufacturing Competitiveness Act of 2016 (the Act) into law on May 20, 2016, to overhaul the process of developing a Miscellaneous Tariff Bill (MTB). Under this Act, companies will not need to request their congressional representatives to submit bills for temporary duty reductions or suspensions. Instead, the U.S. International Trade Commission (Commission) will solicit petitions for temporary duty reductions or suspensions from businesses directly and compile these petitions into a report for Congress to review.
The Act, which was passed by the U.S. House of Representatives on April 27 and by the Senate on May 10, also provides a timeline for the MTB process. The Commission will publish a notice requesting petitions for duty reductions or suspensions no later than Oct. 15 of each year, starting in 2016. Congress then will consider an MTB not later than 90 days after the Commission issues a final report on such petitions. The Act also requires the Commission to assess the economic impacts of the MTB no later than 12 months after an MTB is enacted. The Commission can then solicit recommendations on permanent duty suspensions or reductions accompanying the impact assessment.
An MTB refers to a bill introduced by either House of Congress that contains only duty suspensions and reductions for a period of less than three years, along with related technical corrections. Congress has periodically passed MTBs to help American manufacturers and consumers by temporarily reducing tariffs on items where there is no, or insufficient, domestic supply. The most recent MTB expired on Dec. 31, 2012. Previously, to prepare an MTB, businesses had to lobby members of Congress to submit individual bills requesting tariff cuts. These bills were ultimately aggregated into an omnibus bill. The new Act aims to reduce the burden on businesses in participating in the MTB process.
New Process for MTB
Under the new Act, businesses will submit their petitions directly to the U.S. International Trade Commission within 60 days after the release of a notice by the Commission to request petitions. The Act spells out detailed instructions on what information should be submitted in such a petition, including: 1) name and address of the petitioner; 2) whether the petition is for an extension of an existing duty suspension or reduction, or for a new one; 3) a certification that the petitioner is a likely beneficiary of such a duty suspension or reduction; 4) descriptions of the item covered by the duty suspension or reduction; 5) classification of the item under the Harmonized Tariff Schedule of the United States (HTSUS) and relevant documentation; 6) descriptions of the U.S. industry that uses the item; 7) an estimate of the total value of imports of the item for each of the five calendar years after the petition is filed; 8) the name of each person that imports the item, if available; and 9) descriptions of any domestic production of the item, if available.
A petitioner must submit a "Commission disclosure form" that contains contact information of known importers, along with certifications that the duty suspension or reduction is available to any importer of the item, and that the petitioner is a likely beneficiary.
Public Comment and Preliminary Report
At the end of the 60-day petition solicitation period, or in any case no later than 90 days after the solicitation notice by the Commission, the Commission shall publish the petitions that meet the requirements as well as corresponding Commission disclosure forms for public comments. The period for public comments is 45 days. If practicable, after 75 days from the end of the commenting period, but in any case no later than 105 days, the Commission shall submit a preliminary report to the House Ways and Means Committee and the Senate Finance Committee. The preliminary report will verify the information pertaining to each petition and group the petitions by the degree of modification needed. The Commission is required to publish rejected petitions in a separate list. However, the congressional committees have the right to move rejected items to the approved list.
No later than 60 days after the submission of the preliminary report, the Commission shall submit a final report on each petition specified in the preliminary report. In addition, the final report will also contain the Commission's evaluations on whether 1) the proposed duty suspension or reduction can likely be administered by U.S. Customs and Border Protection; 2) the estimated loss in tariffs arising from duty cuts for an individual item does not exceed $500,000 in a calendar year; and 3) the duty cuts are available to any importer of such an item. The congressional committees are authorized to exclude any petition, particularly if there is an objection from a congressional representative or if domestic production of the item does exist. The congressional committees could also adjust the amount of a duty to ensure that the estimated loss in tariff revenue does not exceed $500,000 in a calendar year.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.