Senate Process Requires Tariff Relief Bills Introduced by October 30, 2009

On October 1, 2009, the U.S. Senate Finance Committee announced the initiation of the process for Senators to introduce individual tariff suspension bills to be considered for inclusion in the new Miscellaneous Tariff Bill (MTB). The start of the Senate’s process provides companies with one more opportunity1 to seek inclusion of their imported products into the Senate version of duty suspension legislation, expected to be approved this 111th Congress. Senators must introduce bills by October 30, 2009. Please note that importers who currently benefit from existing duty savings under prior MTBs must have Senators reintroduce bills covering their products, as these have to go through the vetting process again. There will be no extensions or roll-overs for existing duty suspensions. Therefore, companies who have not engaged in this process should do so immediately, since it can take several weeks to draft legislation and secure the support of Senators to introduce it.

MTB Legislation

In each biennial Congress, 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 Miscellaneous Tariff Bills or MTBs.2 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.

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 duty suspension bills submitted, 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. A combined and approved congressional bill is eventually sent to the President for signature, and enacted into law.

The most recent MTBs that became law were enacted in the 109th Congress in 2006, and included suspension or reduction of duties until December 2009, on an estimated 680 commodities.3 The products currently benefiting from duty suspension or reduction must be reintroduced in an MTB bill in order to go through the vetting process again. Senate Finance Committee staff have confirmed that there will be no extensions or roll-overs of existing duty suspensions or reductions.

MTB Criteria 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; or
  • a technical correction to U.S. tariff laws.

Proposed duty suspension bills must also meet, at a minimum, the following two requirements:

  • be non-controversial (as the MTB is passed by unanimous consent).4 Typically means that there is no U.S. domestic production of the product at issue or at least no opposition from domestic interests.
  • amount to less than $500,000 in annual duty revenue loss (per individual bill).

A duty relief or suspension bill cannot reduce or eliminate tariffs retroactively, or those imposed on imported products as a result of trade remedy actions, safeguard measures, or retaliatory sanctions.

MTB Benefits

Duty suspensions may apply to any type of imported product: raw materials for manufacturing, capital equipment for a new plant, or components for assembly or distribution. Once duties are suspended, the suspension is frequently continued in future bills, so the benefit, once provided, may be extended. Benefits under current MTB legislation (enacted in 2006) are scheduled to expire at the end of December 2009, and importers interested in extending their current duty suspensions will have to secure the introduction of new bills in Congress via the Senate MTB process 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 Senate bill, even if a companion House bill has already been introduced via the House Ways and Means Committee process. 6 If no House bill has been introduced, it is imperative that a Senate bill be introduced in order to take advantage of this process.

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 Senators to introduce individual bills for the duty suspension treatment sought.