The Miscellaneous Tariff Bill (MTB) offers importers the opportunity to eliminate or reduce duties assessed on imported raw materials and intermediate products that are not produced in the United States or are unavailable domestically.
The MTB’s goal is to aid U.S. manufacturers by reducing duties on inputs (raw materials, parts, etc.), thereby cutting domestic production costs and increasing the competitiveness of U.S. manufacturers. However, MTB duty benefits have also been granted to imported finished goods. For example, the last MTB granted duty benefits to certain shopping bags, basketballs and sports footwear. Duty savings for U.S. manufacturers under the MTB are anticipated to exceed $700 million annually.
Interested importers should not miss the Dec. 12, 2016, deadline to take advantage of these cost savings opportunities.
What opportunities are offered by Miscellaneous Tariff Bill?
Importers may apply under the MTB to eliminate or reduce import duty on raw materials and intermediate products that are not produced or available domestically. From 1982 to 2010, Congress passed two-year MTBs providing duty benefits for over a thousand different products. The last MTB expired Dec. 31, 2012. Due to concerns in the Senate that the MTB duty reductions were prohibited “earmarks,” the legislation was not renewed until May 20, 2016, when the president signed the American Manufacturing Competitiveness Act of 2016 creating a new MTB process.
Jennifer Jin, Notre Dame 2008, provides compliance, audit defense, and litigation services to companies relating to taxes and international trade as a member of Husch Blackwell’s Technology, Manufacturing & Transportation team in Milwaukee.
Robert Stang, George Washington University 1984, is a partner at Husch Blackwell in Washington, D.C., practicing in customs and international trade law.
Just like the old MTB process, under the new MTB process duty reductions are intended to:
1). Be limited to noncontroversial goods (i.e., goods with insufficient or no domestic availability and no opposition from domestic producers), and
2). Result in estimated duty relief with an annual impact of less than $500,000 in duties per MTB line item. In other words, the total duty reduction for all goods anticipated to be entered by all importers under a particular MTB line item must be estimated at less than $500,000 annually.
The new MTB process differs from that previously used because petitions will now be filed directly with the International Trade Commission (ITC) and will not require sponsorship by a member of Congress. The ITC has dedicated a webpage to the MTB process.
As a result of the new legislation, the ITC has begun the process of gathering petitions for proposed MTB benefits from numerous entities, analyzing and vetting the information, and putting together a new MTB for submission to Congress. The new MTB process started Oct. 14, 2016, and will be completed in the fall of 2017. Importers of qualifying goods should start to see corresponding duty savings shortly thereafter. In the past, products covered a wide range of goods including chemicals, certain shopping bags, containers for various products, certain manicure/pedicure sets, various erasers and certain decorative plates, plaques and sculptures, among other items.
The New MTB Process
On Oct. 14, 2016, the ITC opened a portal on its website enabling companies to submit petitions to include particular goods in the MTB. Petitioners have a 60 day window (from Oct. 14, 2016, until Dec. 12, 2016) to submit their petitions to the ITC. The window for submitting petitions to get goods into the MTB will close after Dec. 12, 2016.
Thereafter, the ITC will issue a public report providing the public with an opportunity to comment on the various petitions. After the comment period closes, the ITC will release a final report, incorporating its own analysis of the petitions and its recommendations as to whether the submitted goods should qualify for inclusion in the MTB.
In addition to the ITC’s analysis, a number of other government agencies will be involved in the vetting process. The U.S. Department of Commerce will review each submission and establish a position on each proposed product’s MTB eligibility. U.S. Customs and Border Protection will determine if the language describing the proposed goods is administrable for imports. Also, the U.S. State Department, the U.S. Trade Representative and possibly other affected government agencies will have an opportunity to review the proposed legislation and comment accordingly.
After the various agencies analyze the proposed legislation and supporting materials, the ITC will gather the successful products into a single bill (the MTB with individual line items, each describing a specific product or product group), which will go to Congress–the House Ways and Means Committee and the Senate Finance Committee–for final review. Committee members will not be able to add any products to the list of proposed MTB goods (a significant departure from the past process), but may exclude a product for virtually any reason: a recommendation by the ITC, domestic opposition or an objection by a member of Congress.
After the MTB is reported out of committee, Congress will vote whether or not to pass the legislation (the new MTB) in its entirety without any amendments. Assuming that Congress passes the MTB legislation, the bill will go to the president for his or her signature and shortly thereafter, will become effective.
The following timeline provides companies with an overview of the expected key action items and anticipated dates for a successful outcome.
How to Submit a Petition to Get a Product Included in the MTB
In order for a product to be accepted for consideration as part of the MTB, the petitioner must create a web account on the ITC website. Using that web-based account, an entity will submit a petition to the ITC, requesting a certain product to be considered as part of the new MTB.
For more details, please see Before You File from the U.S. International Trade Commission, which includes the ITC checklist that identifies the information and documents required. As previously stated, members of Congress can have a product removed for virtually any reason, so garnering the support of elected representatives still makes sense.
If You Are Interested in Adding Goods to the MTB
Think strategically. How narrowly or broadly should you describe the proposed goods? How should you describe the industry? How will you collect the necessary data and information? The answers to these questions may be the difference between a successful petition resulting in substantial duty relief versus a petition that is rejected due to opposition or incompleteness.
Can you participate as part of a group or industry association? Not only will this decrease the workload for individual companies, but it will increase access to needed industry information and provide additional political support guarding against a political or domestic industry objection.
The elimination of congressional participation in the upfront phases of the MTB process creates a procedure that is less susceptible to short-term political pressures while remaining consistent with House and Senate rules (including those prohibiting earmarks).
The MTB offers the potential for significant duty savings for many U.S. importers and manufacturers. With the deadline to submit petitions quickly approaching. Importers interested in applying under the MTB should reach out to their trade attorney for guidance regarding the process.