The following analysis comes by way of international trade attorney Yohai Baisburd, a partner in Denton's public policy and regulation practice in Washington, DC.
Trade agreements and tariffs have been center stage throughout the presidential campaign. While the candidates have been discussing the economic impact of lowering (or raising) tariffs, a new process has opened in Washington to potentially reduce tariffs on imported goods with no to limited US availability to promote US manufacturing competitiveness.
Since the early 1980s, Congress has periodically passed the so-called “Miscellaneous Tariff Bill” (MTB) to suspend/reduce import duties (e.g., taxes) on products with limited or no production in the United States.
In response to concerns that the traditional approach were “earmarks,” Congress passed the American Manufacturing Competitiveness Act of 2016 to create a new process where MTB requests would be submitted to the US International Trade Commission (ITC) for review and consolidation before being sent to Congress.
The ITC recently launched a website to gather petitions from importers duty suspension/reduction and comments from potentially impacted US manufacturers/producers. The ITC will eventually issue a report which will be the basis for Congress to pass a MTB. The expectation is that the MTB will be reviewed/renewed every three years.
Importers have until December 12, 2016 to make a request (technically file a petition) for a duty suspension/reduction for products that are not produced in the United States or produced in limited quantities. There are two significant limitations (1) the total duty suspension/reduction for any given product cannot exceed $500,000 per year and (2) the suspension/reduction would apply to anyone that imported the product. Here are some questions to help guide your internal analysis:
· Are we paying import duties on any product that we can't currently source from US producers in the quantity/quality demanded by us or our customers?
· Do we think others import that product too?
· Do we estimate that the total duties paid by all importers for that product are under $500,000 per year?
If you answer “yes” to all three questions, you should consider submitting a petition to reduce your duty costs.
US manufacturers also have a role in this process. By January 11, 2017, the ITC will open a 45 day comment period for challenging a petition. US manufacturers should review the petitions to see if any adversely impact their US operations.
