House and Senate Committees require introduction of bills by 30 April 2012.
On 30 March 2012 the House Ways and Means Committee and the Senate Finance Committee announced the initiation of the process for members of Congress to introduce individual duty suspension bills to be considered for inclusion in the new MTB. The start of the congressional process provides companies with the opportunity to seek inclusion of specific products into the House and Senate versions of duty suspension legislation, expected to be approved be the 112th Congress.
Members must introduce duty suspension bills by 30 April 2012 to be included in the resulting MTB. Please note that importers who currently benefit from existing duty savings under prior MTBs must have duty suspension provisions reintroduced as bills covering their products, as these have to go through the vetting process anew, even if they were included in the 2010 version of the legislation. There will be no automatic extensions or roll-overs for existing duty suspensions. Therefore, companies who have not engaged in this process should do so immediately as it can take several weeks to draft legislation and secure the support of Senators to introduce it.
In most Congresses, a Miscellaneous Trade and Technical Corrections Act is introduced as a legislative package to address tariff issues that affect U.S. companies. These bills are often referred to as MTBs. The bill will temporarily remove or reduce tariffs (or other import restrictions) on specific imported products that are not available from U.S. sources. The period of relief is typically three years, but there are exceptions. The duty suspension provisions in the current law, which was enacted in 2010, expire at the end of 2012.
Members of Congress may request tariff suspension or reduction of duties on imports of specific products by introducing individual bills, which are referred to and vetted by the House Ways and Means Committee and the Senate Finance Committee. Both committees typically solicit public comments on the duty suspension bills submitted, which can number in the hundreds, then have the bills reviewed and vetted by the International Trade Commission, Department of Commerce, and Customs and Border Protection. The Office of the U.S. Trade Representative and the Congressional Budget Office also participate in the review of duty suspension requests. If a domestic firm objects to a particular bill, it can become “controversial” and excluded from the final package of legislation. Often, these objections can be worked out through negotiations.
For a bill to become eligible for inclusion in MTB legislation, it must fall under any of the following categories:
- A new temporary duty suspension or duty reduction on a narrowly defined product
- An extension of an existing temporary duty suspension or duty reduction on a narrowly defined product
- A reliquidation of specific entries in instances of customs error and for which no litigation is pending
- A technical correction to U.S. tariff laws
Proposed duty suspension bills must also meet, at a minimum, the following requirements:
- Be non-controversial (as the MTB is generally passed by unanimous consent). Most products therefore are not produced in the U.S.
- Revenue loss to the federal Treasury will not exceed US$500,000 per year (per individual provision)
- The description of the product must be capable of administration by Customs and Border Protection
A duty relief or suspension bill may not reduce or eliminate tariffs retroactively, or those imposed on imported products as a result of trade remedy actions (antidumping or countervailing duties), safeguard measures, or retaliatory sanctions.
Duty suspensions may apply to any type of imported product: raw materials for manufacturing, capital equipment for a new or refurbished plant, components for assembly or distribution, chemicals for processing, or pharmaceutical production. Once duties are suspended, the suspension is frequently continued in future bills, so the benefit, once provided, may last for a long time. Benefits under current MTB legislation (enacted in 2010) are scheduled to expire at the end of December 2012, and importers interested in extending their current duty suspensions will have to secure the introduction of new bills in Congress to cover their products currently benefiting from duty suspensions or reductions.
Importers interested in obtaining duty suspensions that are not currently covered by MTB legislation should seek introduction of a House or Senate bill. The House will likely take up the MTB first, because these are considered revenue bills which must originate in the House. A Senate bill can effectively reserve your place in the MTB, however.
Companies that are interested in obtaining duty suspensions for the first time should review their dutiable imported inputs, determine if these qualify for duty suspension treatment, and seek immediate support from relevant members of Congress to introduce individual bills for the duty suspension treatment sought.