Miscellaneous Tariff Bill — Opportunity for Tariff Relief

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.

Section 301 — List 4 Official Notice

Further to our earlier post, attached is an advance copy of the notice that will be published in the Federal Register implementing the additional 10% duty on List 4. Notice_of_Modification_(List_4A_and_List_4B)

A few points to note:

* the September 1st date is the date of import (entered, or withdrawn from warehouse, for consumption); not the date of export from China;

* you should check the annexes attached to this notice and not rely on the versions posted on the USTR website earlier this week (in particular, focus on Annex A and Annex C for the HTS classifications subject to the additional duty); and

* the notice clarifies that the articles subject to the additional 10% duty on September 1st are those “where China’s share of U.S. imports from the world is less than 75 percent for each subheading.”  The articles subject to the additional 10% duty on December 15th are those “where China’s share of U.S. imports from the world is 75 percent of greater for each subheading.”  In short, the Administration is recognizing that it may take U.S. companies longer to shift sources of supply for products where China accounts for 75% or more of the total U.S. imports of that article.

We hope that this helps.  If you have any questions, please let us know.

Potential Duty Savings Opportunity

Dear Friends:

I am writing to let you know about a favorable tariff classification ruling we recently obtained from U.S. Customs and Border Protection for one of our clients that may be of benefit to you.

U.S. Customs determined that certain surgical microscopes satisfy the legal requirements of a special classification provision set out in Chapter 98 of the HTS, and are thus eligible for duty-free treatment upon importation into the United States.  The provision at issue, subheading 9817.00.96, HTS, provides in relevant part for “articles specially designed or adapted for use or benefit of the blind or other physically or mentally handicapped persons.”

In short, we were successful in establishing that the microscopes, which are used to perform ear, nose & throat (ENT) and dental surgery, are specially-designed for the benefit of “physically handicapped persons,” a term defined in the tariff as “any person suffering from a permanent or chronic physical or mental impairment which substantially limits one or more major life activities . . . .”  U.S. Customs agreed that the microscopes are specially-designed and principally used for the benefit of the handicapped (specifically, persons suffering permanent/chronic physical conditions that require surgery), and that, if left untreated, those medical conditions substantially limit a person’s ability to hear, breathe, sleep and/or eat.

This special classification provision has been interpreted broadly by U.S. Customs over the years.   As a result, if you import dutiable healthcare products, it may be worthwhile considering whether any would potentially qualify for duty-free treatment under subheading 9817.00.96, HTS (i.e., whether they are specially-designed for the benefit of persons suffering from permanent/chronic and substantially life-limiting conditions).

We have a great deal of experience advising clients on tariff classification issues.  If you have any questions about the ruling discussed above, or if you would like to discuss whether any of your products can potentially qualify for duty-free treatment, please let us know.

Best regards,

Ted