On October 14, the U.S. International Trade Commission (ITC) will start accepting petitions from companies seeking duty reductions or suspensions under the Miscellaneous Tariff Bill (MTB). The MTB provides temporary relief from ordinary import duties on goods that are not produced domestically to improve the competitiveness of U.S. companies. U.S. importers interested in having one or more of its products potentially included in the MTB will have a limited window of time to file a petition.
The MTB Process
The process for getting a product included in the MTB was recently changed under the American Manufacturing Competitiveness Act of 2016. Previously, companies had to work directly through a Member of Congress to introduce a bill for duty relief under the MTB. The prior system was viewed as providing earmarks, which led to political sensitivities that ground the process to a halt when the last MTB was up for consideration in 2012. Congress must still vote to approve the MTB under the new process; however, the ITC will independently review petitions and administer the MTB process.
The ITC will start accepting petitions for duty relief under the MTB tomorrow, and will remain open for a 60-day filing period, which means U.S. importers have only a limited window of time to seek duty relief under this process. If they miss this window, the next opportunity to file a petition to seek duty relief will not arise until at least October 2019.
In January 2017, the ITC will publish the MTB requests on its website. A 45-day notice and comment review period will follow this publication, during which members of the public may submit comments, including challenges to any assertions in the petitions. Once this review period is complete, the ITC will publish the products the ITC recommends for duty relief in a public report for Congress. In drafting the final legislation, the congressional committees may reject products proposed by the ITC, but they cannot add products which were not in the original report. Once the MTB proposal is drafted, Congress will vote on the bill in its entirety and submit to the president. The ITC is expected to make its report to Congress in mid-2017.
Getting the ITC to Approve Your Product
Draft a Petition
The ITC has adopted interim rules for the new MTB process, including rules on what information must be included in a petition. Successful petitions for the MTB must demonstrate that the product satisfies three main criteria for duty relief:
- There is no domestic production of the proposed product, or the domestic producers do not object to including the product in the MTB;
- Inclusion of the product in the MTB will result in less than $500,000 of lost duty revenue per year; and
- The product is "noncontroversial,” which means no member of Congress objects to including the product in the MTB.
Petitioners should take care to describe their products in such a way that U.S. Customs and Border Protection (CBP) can readily administer. It would be self-defeating to spend the time and money to seek duty relief under the MTB, only to find that an unclear or misleading product description in the resulting tariff schedules fails to capture the products in question or leads to arguing with CBP officials. Finally, importers should take advantage of the opportunity for advocacy in their petitions as the submissions should make overall economic benefits clear to the ITC and subsequent legislators. Applicants should take precautions to ensure submissions are fully supported insofar as there is only one opportunity to make a submission.
As noted above, filing the petition is only the first step. During the notice-and-comment period following publication of the petitions, any company that filed a petition should be vigilant to monitor and respond to potential public opposition to its request. After the applications have been submitted, the House Ways and Means Committee and the Senate Finance Committee will prepare the final MTB legislation based on the ITC's recommendations. As with the previous MTB process, it will be important to shepherd your application through the process including engaging the appropriate Congressional members as necessary.
Potential Cost Savings for Manufacturers
The MTB is intended to boost the competitiveness of U.S. manufacturers by cutting production costs associated with tariffs on products for which there is no competitive domestic alternative. When the MTB passes, the estimated savings for U.S. companies will be well over $700 million. Regardless of industry, any manufacturer or company that imports products on which duties have been suspended can benefit from the program.
Our team has successfully navigated duty suspension and reduction applications through the MTB process, from eligibility determinations for the initial petition through the subsequent administrative and legislative process. Should you have any questions concerning the MTB application process, please contact one of the Rock Trade Law LLC trade professionals.