The US House and Senate have introduced bipartisan legislation, dubbed the American Manufacturing Competitiveness Act of 2016, that would launch a new process by which companies could request temporary reductions or suspensions for tariffs on imported products. Through bills commonly known as miscellaneous tariff bills (MTB), ported products would receive tariff reductions or suspensions for up to three years. Following an approach similar to past MTB efforts, temporary duty reductions or suspensions would be approved, provided there was no opposition from a US producer or member of Congress and provided the total estimated revenue loss for each reduction or suspension was estimated at less than $500,000.
The legislation before Congress does not specify the method by which the amount of a duty reduction would be calculated. Historically, the anticipated revenue loss was calculated in a two-step process that involved the International Trade Commission (ITC) and the Congressional Budget Office. Under the new legislation, it is possible that the ITC’s calculation would yield larger estimates of the revenue loss than under the previous approach.
The legislation also introduces significant changes to the tariff reduction process. In the past, the process started and ended in Congress, with input and analysis from the ITC and other agencies. The new process is more structured and would begin with a formal petition to the ITC that would include extensive documentation. This Legislative Update summarizes and analyzes the proposed process. Note that the process described in the current draft of the bill is likely to be revised before the final bill is voted on or signed into law.
Unlike past MTB processes, the proposed process would begin at the ITC. As an initial hurdle, companies would be required respond to the ITC with a submission that demonstrates that the company is a likely beneficiary, with the filing of a formal petition and a completed disclosure form. The petition requirements can be found here.
In addition to the ITC process, the Department of Commerce would have a separate process that would not require explicit participation by the company. For each petition, the Department of Commerce report would include a determination as to whether there is domestic production of each article in the petition, whether domestic production exists, whether a domestic producer objects to the duty reduction or suspension, and any technical changes necessary to the article description.
The ITC’s preliminary report would contain data and analysis laying the foundation for determining whether a petition can be included in the MTB legislation. The required analysis and data for the preliminary report is summarized here. The required information and analysis for the ITC’s final report is summarized here.
Publication of the final ITC report would begin the legislative process in the House and Senate with the preparation of the MTB legislation. This process includes publication and reporting requirements necessary to meet anti-earmark requirements under House and Senate rules. The legislation does not mandate that the House and Senate introduce identical MTB bills, although companies should expect significant coordination between the House and Senate when preparing the MTB legislation.
Petitioners would be required to provide the following information:
To the extent possible, petitions would also be expected to provide:
For each article in a petition, the ITC’s preliminary report would include:
The ITC’s final report would include the following:
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