We wanted to remind you about an upcoming opportunity to reduce your duty spend on qualifying products.
As you may recall, after a several year hiatus, Congress restarted the Miscellaneous Tariff Bill (MTB) process back in 2016. MTB provides an opportunity for companies to request temporary (2-year) tariff suspension for qualifying products. In general, in order to qualify, the product must not be produced domestically and the loss of revenue to the government as a result of the tariff suspension should not be more than $500,000 a year.
The process created by the American Manufacturing Competitiveness Act of 2016 involves filing a petition with the U.S. International Trade Commission. Petitions should explain why the product qualifies for a temporary tariff suspension (or reduction) and include proposed tariff language that would cover the subject product. After a public comment period, the ITC prepares a report to Congress with its analysis and recommendations on which products should be granted the temporary tariff benefit. Based on the ITC’s input, Congress drafts a MTB including the approved petitions. If the MTB passes Congress and is signed into law by the President, the tariff suspensions/reductions are included in Chapter 99 of the Harmonized Tariff Schedule of the United States. It is important to note that the MTB only impacts the Column 1, General rate of duty (i.e., the Most Favored Nation/Normal Trade Relations rates). The MTB does not change or otherwise impact Section 232, Section 301 or other additional duties; those still apply.
The MTB petition process runs on a 2-year cycle. The next petition cycle is scheduled to open no later than October 15, 2019. It will remain open for only 60 days. This process will cover new petitions, as well as renewals for petitions granted during the last cycle.
Given the unexpected tariff increases most companies are (or will be) facing as a result of various U.S. trade actions (e.g., Section 232 steel and aluminum duties, Section 301 China duties, loss of GSP benefits for products of India, potential increased duties due to the WTO dispute on large commercial aircraft, or a Section 232 action on autos/auto parts), it is important to not overlook this opportunity to reduce your MFN duty exposure.
We are assisting numerous clients prepare petitions and would be happy to discuss this opportunity with you further. If you would like to do so, just let us know.