With the recent plethora of new tariff measures aimed at imports of steel, aluminum, solar panels, aircraft, and a wide array of products from China, tariffs are affecting the bottom lines of American companies in a way not seen in decades. For importers seeking tariff mitigation options, a window of opportunity has just opened. In a notice published in October 11’s Federal Register, the U.S. International Trade Commission (“ITC” or “Commission”) has issued its triennial notice soliciting petitions for duty suspensions and reductions for consideration during its Miscellaneous Tariff Bill (“MTB”) 2019 petition cycle. Through this process, mandated by the American Manufacturing Competitiveness Act of 2016 (the “Act”), an individual product may receive a reduced or suspended duty if that product does not directly compete with a product made in the United States and the lost tariff revenue is less than $500,000 per year.
The MTB addresses normal most-favored-nation (“MFN”) tariffs, not antidumping, countervailing duty, Section 301, or other trade remedy tariffs. Although the average U.S. MFN import tariff rate is quite low (under 2%), the United States maintains MFN duty rates on a number of products that either are not made in the U.S. or are made in only small quantities insufficient to meet demand. From a policy standpoint, the United States can use these tariffs as bargaining chips in multilateral and bilateral trade negotiations, where they can be offered in exchange for tariff reductions that benefit U.S. exporters. As long as the tariffs remain in effect, however, they impose a cost on U.S. manufacturers and consumers with little or no benefit to U.S. economic interests. Suspending them can provide importers with some modest relief in the current trade environment.
For many years, Congress offered temporary relief to U.S. importers from such tariffs through the MTB. After 2010, the MTB process ground to a halt—a victim of the House of Representatives’ move to ban earmarks. Because individual MTBs tend to benefit only one or a handful of U.S. producers, they were swept up in the general definition of earmarks, making it impossible for Congress to take up new MTBs. In passing the Act, Congress solved the earmark problem by delegating responsibility for assembling MTBs to the ITC.
Under the new procedures, interested parties have an opportunity every 3 years to submit to the ITC petitions for duty suspensions or reductions. The ITC undertook its new MTB process in October 2016, and as a result Congress enacted the Miscellaneous Tariff Bill Act of 2018. Congress authorized duty suspensions and reductions on 1,655 products. All duty suspensions and reductions under the Miscellaneous Tariff Bill Act of 2018 will expire on December 31, 2021.
Parties seeking a duty suspension or reduction in the 2019 MTB cycle—including a renewal of a suspension or reduction from the 2016 MTB cycle—must file a petition through the Miscellaneous Tariff Bill Petition System available on the ITC’s MTB website. All duty suspensions and reductions from the 2016 MTB cycle must be renewed or otherwise will expire. Parties may request renewal of a provision even if they were not the original petitioner in 2016. Petitions in this cycle must be filed by December 10, 2019.
Petitions must include detailed descriptions of the product, its tariff classification, its uses in the United States, the identity of any U.S. producers and all known importers, and an estimate of the likely total value of imports of the product by the petitioning party for the next 5 calendar years. The ITC will publish all petitions on its website and provide for public comments. The ITC will then submit a preliminary report to the Ways & Means and Finance Committees, indicating for each proposed duty suspension or reduction whether there is domestic production of the article (and, if so, whether any domestic producer objects to the duty suspension) and providing an estimate of the loss of revenue.
The ITC will advise the Committees which petitions meet the requirements of the Act, which may be modified to comply with the Act or to overcome domestic objections, and which it does not recommend for inclusion in the MTB. A final report will follow, including revenue loss projections. The Congressional Committees retain the right to exclude from an MTB any duty suspension request that is the subject of an objection from a Member of Congress, that is for an article where there is domestic production, or that the Committees oppose for other reasons. All suspensions recommended for inclusion by the ITC and not excluded by the Committees will be included in MTB legislation, which will then be submitted for approval by Congress at the end of 2020 or early 2021.