On October 15, 2019, the US International Trade Commission (ITC) will begin accepting a new round of petitions to suspend/reduce tariffs under a process commonly known as the Miscellaneous Tariff Bill or MTB process. Under this process, tariffs can be suspended for three years on products not made in the United States for which the annual revenue loss to the government is not expected to exceed $500,000 per year.
In the last round of MTB petitions, tariffs were suspended or decreased on about 1700 imported products. All of those suspensions/reductions expire at the end of 2020.
Under the law, both petitions to extend existing suspensions/reductions
and create new ones
will be reviewed in a process led by the ITC and involving other agencies, including the Department of Commerce (DOC) and US Customs and Border Protection (CBP).
Under deadlines set in the 2016 law that created the current process – the American Manufacturing Competitiveness Act of 2016 – the ITC will accept duty suspension petitions between October 15 and December 15, 2019
. Thirty days after that window closes a 45 day public comment period will open during which time parties can comment on the petitions. Over the following 165 days the ITC and other government agencies will complete a review of all filed petitions. A final report to Congress from the ITC on the petitions recommended for approval is due on August 10, 2020
with the hope that legislation to implement those recommendations will be signed into law later that year.
The ITC is expected to release some procedural changes in the next few months to expedite/improve the MTB consideration process. But those perfecting steps cannot alter fundamental eligibility requirements or the timelines mentioned above as all those are set in law.
It is possible that the process for passing legislation to implement the MTB process could stretch beyond calendar year 2020. But President Trump did sign the last MTB legislation on September 13, 2018 and most MTB legislation considered by Congress over the past four decades have ultimately been made law.
Who Can Apply For MTB Tariff Relief?
Any US manufacturing company that imports input products or any company that imports products for other purposes can apply for a duty suspension provided that products for which the duty suspension is sought are: 1) the same product in not produced in the United States
, and 2) the cost of the suspension to the US government in lost tariff revenue does not exceed $500,000 per year.
The current MTB legislation suspended tariffs on products ranging from industrial chemicals to home/garden products.
All MTB suspensions currently granted will expire at the end of 2020. Companies/importers that want current MTB suspensions extended for an additional three years must again apply by petition
. Presumably the factors that led to the current suspension being granted suggest the chances for an extension are good, but it is not automatic. It is possible that increasing import volumes, new domestic producers/opposition, or a number of other factors could pose challenges for any proposed extension and/or require substantial revisions in the 2016 petition.
A number of the products granted MTB tariff relief under the current law are produced in China and many of those are now subject to an additional 25 percent duty aimed at opening the Chinese market/protecting US intellectual property. Those tariff sanctions are separate from the MFN revenue tariffs that are suspended by the MTB process. MFN tariffs – which typically are around 3 percent – are entirely separate from the 25 percent retaliatory tariffs. The MFN tariffs are permanent (subject to MTB suspension); the sanction tariffs are temporary and would likely be suspended if an agreement is reached with China on the current trade dispute. The MTB process will not suspend the 25 percent retaliatory tariffs, but if/when those sanctions are eliminate the permanent MFN tariffs will continue to be collected absent MTB action.
Kelley Drye & Warren Team
The team at Kelley Drye & Warren worked on dozens of MTB petitions in the last round of the process for clients importing products like table saws, animal hides, and lighting fixtures. We also worked with clients who had concerns with particular MTB petitions and sought to oppose them or limit the scope of proposed petitions. Team members have deep experience working with the ITC, Administrative agencies, and the Congress on MTB petitions and are preparing to work with existing and new clients on a new MTB round in the fall of 2019 and beyond.