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Congress Introduces Legislation to Reform Process for Selecting Temporary Tariff Suspensions or Reductions

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On April 13, 2016, the U.S. House Ways and Means and Senate Finance Committee (the "Committees") introduced corresponding legislation to reform the process of selecting temporary tariff suspensions or reductions for consideration in a miscellaneous tariff bill ("MTB") package, to be called the "American Manufacturing Competitiveness Act of 2016" (the "Act").

MTBs are legislative proposals to reduce or temporarily suspend tariffs or duties on certain imports, many of which are imposed on imports that are used as components in American manufacturing and not produced in the United States. The last MTB expired in December 2012, and since then, Congress has declined to act pending resolution of the issue of whether such duty suspensions violate the House of Representatives' ban on earmarks. Previous MTBs were initiated by Members of Congress submitting legislation to propose specific duty suspensions or reductions on behalf of their constituents.

Under the proposed legislation, the International Trade Commission ("ITC") would be required by October 15 to publish a notice inviting the U.S. business community to submit requests for duty suspensions or reductions. Companies would then have 60 days to submit a petition (the "Petition Date") for a duty suspension or reduction, which must include the following information:

  • the company's name and address;
  • whether the company's petition provides for an extension of an existing duty suspension or reduction or provides for a new duty suspension or reduction;
  • a certification that the company is a likely beneficiary of the proposed duty suspension or reduction;
  • an article description for the proposed duty suspension or reduction to be included in the amendment to subchapter II of chapter 99 of the Harmonized Tariff Schedule of the United States ("HTSUS") (Temporary Reductions in Rates of Duty);
  • to the extent available:
    • a classification of the article for purposes of the amendment to subchapter II of chapter 99 of the HTSUS; 
    • a classification ruling of the U.S. Customs and Border Protection ("CBP") with respect to the article; and
    • a copy of a CBP entry summary indicating where the article is classified in the HTSUS;
  • a brief and general description of the article;
  • a brief description of the U.S. industry that uses the article;
  • an estimate of the total value of imports of the article for each of the five calendar years after the calendar year in which the petition is filed, including an estimate of the total value of such imports by the company submitting the petition and by any other importers, if available;
  • the name of each company that imports the article, if available;
  • a description of any domestic production of the article, if available; and
  • any other information that the ITC may require.

Within 30 days of the Petition Date, the ITC must then publish a list of the petitions for duty suspension or reduction (the "List Date"), and the public would then have 45 days to comment on the petitions. Concurrently, the U.S. Department of Commerce, in consultation with CBP and other relevant federal agencies, would have 90 days following the List Date to issue a report on each such petition to the ITC and the Committees. Such reports would provide Commerce's determination as to whether domestic production of an article that is the subject of a petition exists and, if so, whether the domestic producer objects to the petition.

Within 150 days after the List Date, the ITC must then submit a preliminary report to the Committees (the "Report Date") that would provide lists of petitions for duty suspensions and reductions:

  • that meet the requirements of this Act without modification;
  • for which the ITC recommends technical corrections to meet the requirements of the Act with the correction specified;
  • for which the ITC recommends modifications to the amount of the duty suspension or reduction that is the subject of the petition to comply with the requirements of the Act;
  • for which the ITC recommends modifications to the scope of the articles that are subject of such petitions to address objections by domestic producers to such petitions with the modification specified;
  • that the ITC has determined do not contain the information required above or that the petitioner is not a likely beneficiary; or
  • that the ITC does not recommend for inclusion in a MTB.

Within 60 days following the Report Date, the ITC, after considering any information submitted by the Committees in response to the ITC's preliminary report, would then be required to issue a final report on each petition for duty suspension or reduction. For each such petition, the final report would provide ITC's determination as to whether (1) the duty suspension or reduction can be administered by CBP; (2) the estimated loss in revenue to the U.S. from all importers due to the duty suspension or reduction does not exceed $500,000 per calendar year; and (3) the duty suspension or reduction is available to any person importing the article that is the subject of the duty suspension or reduction.

Finally, within 90 days after the issuance of the ITC final report, the Congress would then consider a MTB package, taking into account the recommendations of the ITC and members of Congress.

Please contact one of the authors  below or your Baker Botts relationship attorney with any questions.

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