ITC READIES NEW DUTY SUSPENSION PROCEDURE

Congress is preparing to give away money – millions of dollars’ worth – and qualifying importers need only step forward to ask for theirs.

Earlier this year, President Obama signed into law the American Manufacturing Competitiveness Act of 2016 (“AMCA”), which creates a new administrative procedure whereby importers and other interested parties may petition for temporary duty suspensions on imported goods.  Under this new procedure the United States International Trade Commission (ITC) will begin soliciting applications for temporary duty suspensions beginning October 15, 2016, and continuing 60 days thereafter.

Congress historically has acted to temporarily suspend or reduce Customs duties on a wide range of imported goods – products for which no domestic counterparts are available, and goods used in value-added manufacturing in the United States.  However, the last set of temporary duty suspensions and reductions expired at the end of 2012, after some in Congress asserted that they were “earmarks” and declined to enact any new measures.

The AMAC – also known colloquially as the “Miscellaneous Tariff Bill” (MTB) -- seeks to address this problem by creating a new administrative process for considering duty suspensions and reductions. The ITC will collect applications for tariff suspensions and reductions, evaluate them, and report a package of suspension/reduction measures to Congress for consideration. Members of Congress may delete individual items from the package, but may not add new items. The surviving duty suspension or reduction measures will then be voted on by Congress.

The AMAC formalizes an agency process for pursuing duty suspensions, which many firms may find easier than the old procedure of simply approaching individual members of Congress to sponsor suspension or reduction measures. There will be a single intake mechanism for potential temporary tariff measures; political elements will be removed, and advocates seeking to pursue tariff measures for clients will no longer be required to register as lobbyists.

 

Qualifying for a Temporary Tariff Break

To receive favorable consideration, duty suspension/reduction measures must be non-controversial. If a domestic manufacturer objects, a suspension or reduction bill is not likely to be enacted. In addition, they must have a limited revenue impact – no more than $500,000 in reduced duty revenues per year.

The ACMA creates a process by which importers may seek tariff relief.  No later than October 15, 2016 (with a second round of applications due October 15, 2019), the ITC must publish in the Federal Register a notice soliciting potential duty suspension measures from potential beneficiaries of such measures. Petitions must be filed within 60 days of such notice. 

No later than thirty (30) days after the petition period expires, the ITC will publish a list of petitions received and accompanying disclosure forms, and will also solicit public comments for 45 days.

No later than 90 days after the date of publication of the petitions, the Department of Commerce (“Commerce”) will submit to the ITC and appropriate Congressional committees a report on each petition for duty suspension or reduction.  For each petition submitted, Commerce will make a determination as to whether or not domestic production of the article in question exists, and, if such production does exist, whether or not a domestic producer of such article objects to the duty suspension or reduction.

The ITC will publish a Preliminary Report for review by Congressional Committees, and a final report 60 days thereafter.  Included in the Final Report will be conclusions as to whether the duty suspension or reduction proposed can likely be administered by Customs and Border Protection (CBP), the estimated loss of revenue to the United States from the suspension or reduction, and the conclusion as to whether that amount not exceed $500,000 in a calendar year.

Within the 90 day period after the Commission submits its final report, the Congress must consider the proposed duty legislation and determine whether or not to enact the measure. Individual members of Congress may remove items from the legislation, but may not add new measures to it.

It is anticipated that Congress will render its determinations in late 2017, with approved duty suspensions taking effect for imports entered on and after January 1, 2018.  The ACMA also provides for a second three-year round of duty suspensions, with petitions being submitted in 2019.

 

Now is the Time to Prepare

The economic impact resulting from the expiration of past duty suspension measures is estimated at more than $1.8 billion. Duty suspensions under the ACMA may save importers several hundred millions of dollars in duty each year. For firms interested in these savings, the time to begin preparing petitions is now.

Our firm is involved in the ACMA petition process, and stand ready to assist firms interested in pursuing duty suspensions or reductions under the new statute.