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New Miscellaneous Tariff-Cutting Process Takes Shape

In a notice published in Friday’s Federal Register, the U.S. International Trade Commission (ITC or Commission) has issued interim rules implementing the new miscellaneous tariff bill process mandated by Congress in the American Manufacturing Competitiveness Act of 2016.  The rules create a new pathway for U.S. manufacturers to seek temporary suspension or reduction of tariffs on imported inputs for which there is no or inadequate U.S. domestic supply.

Although the average U.S. import tariff rate is quite low (under 2%), the United States maintains import tariffs on a number of products that either are not made in the U.S. or are made in only small quantities insufficient to meet demand. From a policy standpoint, the United States can use these tariffs as bargaining chips in multilateral and bilateral trade negotiations, where they can be offered in exchange for tariff reductions that benefit U.S. exporters.  As long as the tariffs remain in effect, however, they impose a cost on U.S. manufacturers and consumers with little or no benefit to U.S.  economic interests.

For many years, Congress offered temporary relief to U.S. importers from such tariffs through a mechanism that came to be known as the “Miscellaneous Tariff Bill” (MTB). An importer seeking a tariff suspension or reduction would approach his Congressman or Senator to introduce a duty suspension bill.  Every two years, the House Ways & Means and Senate Finance Committees would each assemble a collection of such bills.  Based on advice from the ITC and other agencies, they would weed out any proposed tariff suspensions that raised objections from domestic producers of competing goods or for which the likely revenue loss exceeded $500,000.  The remaining bills would be bundled into a single legislative package and typically passed both houses of Congress in uncontested votes.

The MTB process ground to a halt a few years ago — a victim of the House of Representatives’ move to ban earmarks. Because individual MTBs tend to benefit only one or a handful of U.S. producers, they were swept up in the general definition of earmarks, making it impossible for Congress to take up new MTBs.  The duty suspension included in the last MTB to pass Congress expired at the end of 2012.  According to the National Association of Manufacturers, the lack of an MTB process has cost U.S. manufacturers almost $750 million in duties annually since that time.

In the American Manufacturing Competitiveness Act (the “Act”), Congress solved the earmark problem by delegating responsibility for assembling MTBs to the ITC. Under the new procedures, interested parties will have an opportunity every 3 years to submit to the ITC petitions for duty suspensions or reductions.  Petitions must include detailed descriptions of the product, its tariff classification, its uses in the United States, the identity of any U.S. producers and all known importers, and an estimate of the likely total value of imports of the product by the petitioning party for the next 5 calendar years.  The ITC will publish all petitions on its website and provide for public comments.  The ITC will then submit a preliminary report to the Ways & Means and Finance Committees, indicating for each proposed duty suspension or reduction whether or not domestic production of the article exists and, if so, whether any domestic producer objects to the duty suspension, and providing an estimate of the loss of revenue. The ITC will advise the Committees which petitions meet the requirements of the Act, which may be modified to comply with the Act or to overcome domestic objections, and which it does not recommend for inclusion in the MTB.  A final report will follow including revenue loss projections.  The Congressional Committees retain the right to exclude from an MTB any duty suspension request that is the subject of an objection from a Member of Congress, is for an article where there is domestic production, or for other reasons.  All suspensions recommended for inclusion by the ITC and not excluded by the Committees will be included in an MTB that will then be submitted for approval by Congress.

Comments on the ITC’s interim procedures must be filed by November 29, 2016. The Commission will publish a notice in the Federal Register no later than October 15, 2016, soliciting the first round of duty suspension petitions, with a second such notice to follow in October 2019.

© 2022 Covington & Burling LLPNational Law Review, Volume VI, Number 277
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About this Author

Shara Aranoff, Intellectual property attorney, Covington
Of Counsel

Shara Aranoff helps clients in technology, life sciences, and manufacturing use intellectual property and international trade enforcement tools to compete in U.S. and global markets.

Prior to joining the firm, she was a Commissioner and Chairman of the U.S. International Trade Commission (ITC), where she was a decision-maker in hundreds of Section 337, antidumping, countervailing duty, and safeguard investigations. Drawing on her 20 years of experience in the executive and legislative branches of the U.S. government, she develops legal and public policy strategies...

202.662.5997
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