More than 1,000 petitions seeking temporary duty suspensions and reductions pursuant to the American Manufacturing Competitiveness Act of 2016 (the Act) have been filed with the U.S. International Trade Commission (ITC). As reported in a prior client alert, the Act reinstitutes the Miscellaneous Tariff Bill (MTB) program, which allows Congress to eliminate or reduce duties up to $500,000 per year for a period of up to three years on imported articles not otherwise available in the United States. The last MTB program expired on December 31, 2012.
Likely beneficiaries of the MTB program include manufacturers that use imported raw materials or other articles that must be imported because they are not available domestically. Although some materials already can be entered duty free, in most cases, import duties have to be paid at the time of importation. Congress recognizes that these additional duties ultimately add to the costs of the imported materials and, when such materials are not available domestically, the increased costs to import the merchandise affect the ability of companies around the United States to maximize their investments and hire additional employees.
The ITC Is Taking Its Enhanced Role Seriously
The Act’s bipartisan drafters sought to provide enhanced transparency. Historically, potential MTB beneficiaries lobbied individual Members of Congress to introduce tariff suspension legislation. The new approach relies more heavily on the expertise of the non-partisan ITC. The ITC is an independent Federal agency with broad investigative and advisory responsibilities on matters of trade.
Consistent with its statutory function, the ITC recently issued guidance to potential MTB petitioners regarding article descriptions. The guidance explains that ITC “staff members have noticed that many of the petitions filed to date contain article descriptions that are deficient and that may not be administrable by U.S. Customs and Border Protection.” ITC staff also prepared additional guidance for crafting an article description which contains examples of deficient article descriptions with suggested corrections. This guidance is important because the ITC anticipates a surge in the number of petitions filed in the closing days of the filing window. The agency warns that it may not be able to review petitions and advise petitioners of possible deficiencies in time for a corrected petition to be filed.
MTB Petitions Must Be Filed Via The ITC’s Web Portal By December 12, 2016
To benefit from reduced or eliminated import duties under the new MTB program, interested parties must electronically file petitions to obtain duty relief for imports of specifically defined products with the ITC. Interested parties have until December 12, 2016 to file. As noted above, however, ITC staff have urged potential applicants to file “well before” that date. Filing in advance of the deadline “may, if time and resources permit,” enable ITC staff to contact petitioners regarding potential deficiencies in their submission (i.e., article description). Importantly, the only way for petitioners to modify a potentially deficient article description is to withdraw the original petition and file a new petition with a corrected article description.
The ITC created an Internet-based MTB portal for submission of all petitions and related public comments. The ITC anticipates that up to 5,000 petitions and 14,000 comments will be filed. The ITC has released interim regulations and has disseminated detailed public guidance on preparing and filing MTB submissions. This highlights the importance of ensuring that any filings comply with all legal and technical requirements. The fact that the ITC has only received slightly more than 1,000 petitions to date suggests that a significant volume of filing activity will occur in the final days of the petition-filing window.
Petitioners and commenters are permitted to request non-disclosure of confidential business information (CBI) included in MTB submissions. Importantly, failure to claim CBI treatment for appropriate information will be treated as a waiver of the right to claim CBI protection, meaning the submitted information may be made available to the public. This reinforces the need to consult with experienced legal advisors in preparing and filing MTB petitions and comments.
Public Comments
Petitions properly filed via the ITC’s MTB portal will be available for inspection on the ITC website. The ITC will publish a notice in the Federal Register requesting members of the public to submit comments on the petitions. The deadline for filing public comments will be 45 days from the date of the Federal Register notice. Public comments will also be made available on the ITC website. Public comments allow interested parties to support, object to, or otherwise comment on a petition. As one example, public comments are likely to be filed by domestic producers who assert that they maintain U.S. production capacity to make the product in commercial quantities.
ITC Reports To Congress
The Act requires the ITC to issue preliminary and final reports to the House Ways and Means and Senate Finance Committees (the Relevant Committees). The reports must analyze the petitions and the article for which duty relief is being sought, the industry in the United States that uses the article, historical import data, and whether domestic production of the article occurs in the United States.
The ITC’s preliminary report must identify those petitions that the agency does not recommend for inclusion in an MTB. The ITC’s final report must provide updated information (if any) associated with each of the petitions. The ITC also must assess whether each petition would result in less than $500,000 in duty loss during a calendar year (a threshold requirement of the Act). Thus, companies also should consider consulting with an experienced legal advisor to maximize any duty relief (e.g., by properly defining and researching the product) and to ensure that the company’s petition(s) satisfy the petitioning requirements. Any relief granted under the MTB ultimately will remain in effect for three years, unless renewed.
The Congressional Role
After the ITC phase concludes, the new MTB process shifts to Congress. The Relevant Committees may exclude petitions from any MTB for a variety of reasons, including (1) an objection from a Member of Congress, or (2) when there is domestic production of the article in question. Importantly, however, the Act prevents Congress from including a petition that the ITC has determined to lack required information, that the ITC found to have been filed by a petitioner not likely to be a beneficiary, or that the ITC did not recommend for inclusion in the MTB. Congress also is precluded from adding articles that were not vetted during the review process at the ITC. In addition, Congress must ensure that duty suspension or reduction for a particular article does not exceed $500,000 in a calendar year. For a company that obtains relief on many imported materials, the duty savings could be substantial.
Potential Timeline
The ITC has made clear that there will be no exceptions to the December 12 filing deadline, and the agency will not accept any new or refiled petitions after 5:15 p.m. on December 12. This is the required first step in a process that requires the ITC to complete its work by mid-2017. Thus, Congress could take up MTB legislation as early as the second half of 2017. The actual sequence of events will depend on the political environment and the post-election makeup of Congress.
