Tariff Savings Opportunity Process Officially Open but Companies Must Act By December 10th
Kelley Drye Client Advisory
On October 11, 2019, the U.S. International Trade Commission (ITC) officially began accepting 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. Importantly, enacted petitions may be used by any importer, not just the petitioner.
In the last round of MTB petitions, tariffs were suspended or decreased on about 1,700 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).
Which Companies Should Participate?
Companies that import products, whether in some raw or intermediate form for further manufacturing, or as a finished good, may be interested in and benefit from this process. Generally, most companies that utilize the MTB process are manufacturers, but a number of retail importers have also been successful. Companies interested in obtaining duty relief will need to act quickly, as the deadline to file petitions closes on December 10, 2019.
Domestic companies that compete with imported products may be also be interested in the MTB, but from a defensive perspective. The process includes a public comment period to allow interested stakeholders to oppose or support a petition. The comment period will open after the petition filing deadline when the ITC posts all accepted petitions beginning early January, 2020.
Timeline and Process
- The ITC will accept duty suspension petitions between October 11 and December 10, 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.
Who Can Apply For MTB Tariff Relief?
Any U.S. manufacturing company that imports input products or any company that imports products for other purposes can apply for a duty suspension provided the products for which the duty suspension is sought are: (1) not produced in the United States or opposed by a domestic producer; and (2) the 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. To learn more about the process, you can watch a recording of our recent webinar How U.S. Companies Can Seek Savings Under New Miscellaneous Tariff Bill.