With the increasing globalization of commerce, Dykema clients import specialized materials and parts from all over the world. Often, however, significant import tariff duties reduce the efficiencies gained through global sourcing. To further enhance efficiency, many firms seek and obtain special tariff relief from Congress. The relief is not limited to U.S.-headquartered firms, nor to a single product or product category. Some companies have obtained tariff relief for more than twenty types of imports.
Each year, Congress entertains thousands of requests to eliminate tariffs imposed on unique materials that are not currently manufactured here. In response, a member of Congress often will introduce a targeted piece of legislation to provide tariff relief for a period of one or two years to a firm employing residents in the member's state or congressional district. The House and Senate trade committees roll these bills into a larger piece of legislation called a Miscellaneous Tariff Bill (MTB).
There are three criteria that Congress looks for when considering a tariff relief proposal. First, no U.S. company manufacturing the imported product or a competitive product objects to the tariff abatement. The U.S. International Trade Commission administers a thorough vetting process to uncover any potential opposition. The process includes a search for any U.S. firm that may manufacture the product, and Congress provides potential competitors with the opportunity to comment publicly on the proposed legislation. Second, the total amount of duty that would be collected on the specific import, in the absence of abatement, must be less than $500,000 per year. And, finally, the abatement must be administrable, which means, among other things, that U.S. Customs must be able to identify the product at the port of entry and distinguish it from other, similar products that are not covered by the tariff abatement. In many cases, companies craft the tariff abatement provisions around the specific characteristics of their products to establish the uniqueness of their products and qualify for MTB treatment.
In 2010, Congress passed and the President signed into law MTBs creating, modifying or extending tariff duty suspensions on over 900 items covering a wide range of imports. The trade committees that administer the process are preparing to develop a new MTB this year.
Companies importing any unique products or materials that are subject to U.S. tariffs, even if the amount of annual duty exceeds $500,000, should consider their potential eligibility for tariff abatement through the MTB process. Clients with competitors who might be seeking a tariff abatement also should know what these competitors are advocating in Washington and may want to consider intervening to stop or limit a tariff abatement that would harm the firm's business.