The American Manufacturing Competitiveness Act of 2016 (the “AMCA”) makes prospective importers eligible for reduced or suspended tariffs on specific articles for up to three years. Literally any item for which there is insufficient domestic supply may qualify for a reduction or suspension. The last miscellaneous tariff bill (“MTB”) provided relief to importers of items as diverse as camel hair, reusable grocery bags, synthetic staple fibers and a variety of chemical and organic compounds, such as copper oxychloride and didecanoyl peroxide. See Public Law 111–227, 111th Congress, §§ 1192, 1004, 1011-54, 1076, & 1091, respectively.

The program is specifically designed to help American manufacturers who generally can’t obtain sufficient quantities of raw materials domestically at any price. Eligible manufacturers must simply apply through a newly created MTB Petition System on the website of the U.S. International Trade Commission (“ITC”). Such petitions must be filed by Dec. 12, 2016, however, so entities planning to take advantage of this program should begin preparing such filings immediately.

The only monetary limit placed on these reductions and suspensions is that the cost to the government — the loss in total tariff collections across all importers — may not exceed $500,000 per year for each specific article. Manufacturers who import scarce raw materials not typically produced domestically stand to gain from the MTB that is planned for 2017. The online petition system is a major change from past MTBs, which required importers to directly petition members of Congress or the Senate, thereby drawing the ire of congressional earmarks critics. After the petition system closes on Dec.12, 2016 at 5:15 p.m., the ITC will have 30 days to publish the petitions it collects online and in the Federal Register, at which time members of the public will have 45 days to comment on the petitions. Once the notice and comment period ends, the ITC will have 105 days to submit a preliminary report to the House Ways and Means Committee and the Senate Finance Committee (the “congressional committees”). A final report will be due to those committees 60 days later. The ITC provides a timeline explaining the MTB process up until submission to Congress, which is included below and may be accessed here.

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Most of the uncertainty about timing resides in the final congressional approval stage. The congressional approval process envisioned by the AMCA is as follows:

  1. The congressional committees may exclude any petition for several reasons, including if a member of Congress from either house objects or if the petition seeks a reduction or suspension of tariffs on an article for which there is domestic production. AMCA, § 3(b)(3)(F)(i)-(iii).
  2. The congressional committees may adjust the amount of a proposed duty suspension or reduction based on Congressional Budget Office estimates of revenue loss to the government. AMCA, § 3(b)(3)(G).
  3. The AMCA specifically states that “Congress should, not later than 90 days after the [ITC] issues a final report on petitions for duty suspensions and reductions ... , consider a miscellaneous tariff bill.” § 2(b). Assuming Congress stays true to its word, we estimate a final MTB will be considered, and hopefully passed by both houses, in the third or fourth quarter of 2017. It is unclear whether the final MTB would take effect immediately or if there would be a significant delay.

Information That Importers Should Collect if Submitting a Petition

The AMCA directs the ITC to collect certain information from petitioners. Importers considering filing a petition should begin gathering this information immediately. The information requested is probably information an importer already possesses, as it primarily consists of details about the article to be imported and the market for production and importation of that article. A preview of the online form requesting this information may be found here and a list of the information required under the AMCA is included below:

  1. The name and address of the petitioner.
  2. A statement as to whether the petition provides for an extension of an existing duty suspension or reduction or provides for a new duty suspension or reduction.
  3. A certification that the petitioner is a likely beneficiary of the proposed duty suspension or reduction.
  4. 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.
  5. To the extent available:
    1. A classification of the article for purposes of the amendment to subchapter II of chapter 99 of the Harmonized Tariff Schedule of the United States.
    2. A classification ruling of U.S. Customs and Border Protection with respect to the article.
    3. A copy of a U.S. Customs and Border Protection entry summary indicating where the article is classified in the Harmonized Tariff Schedule of the United States.
  6. A brief and general description of the article.
  7. A brief description of the industry in the United States that uses the article.
  8. An estimate of the total value, in United States dollars, 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 person who submits the petition and by any other importers, if available.
  9. The name of each person that imports the article, if available.
  10. A description of any domestic production of the article, if available.
  11. Such other information as the commission may require.

AMCA, § 3(b)(2)(A)-(K).

Issues for Manufacturers to Consider Prior to Applying

The AMCA provides procedures concerning the protection of confidential business information in relation to the publication of the petitions. If an importer/manufacturer is concerned about the public release of proprietary information, it may wish to seek additional legal help prior to submission of a petition as to whether or not the procedures provided under the Tariff Act of 1930 are sufficient to protect those interests. A list of MTB petition questions may be found here.

In addition, the AMCA is designed to help American manufacturers who generally can’t obtain sufficient quantities of raw material domestically. If it is abundantly clear that there is sufficient domestic U.S. production of products a manufacturer imports into the U.S., it may be a waste of the manufacturer’s time to apply.

This law update was authored by Taft attorney Russell Menyhart, with contributions from Taft’s Tony Busch.