Making the New Miscellaneous Tariff Bill ("MTB") Process Work for You

4 min

On May 20, 2016, the American Manufacturing Competitiveness Act (the "MTB Law") was signed into law, substantially changing the historic process of obtaining temporary duty suspensions or reductions for crucial imported goods that cannot be sourced domestically. Previously, the first step for importers was to garner a lawmaker's support and introduce tariff reduction bills, after which reports were submitted by the International Trade Commission ("ITC") as to the merits of the bills. This process was widely criticized as creating personal, legislative "earmarks for favored constituents." As a result, the last MTB bill expired at the end of 2012. Now, under the new MTB Law, Congress is eliminated from initiating these tariff changes. The ITC is tasked with a first review of “Petitions for Duty Suspensions and Reductions” (Petitions) submitted by U.S. importers via a newly established vetting process. The ITC will conclude by posting the petitions on its website for public comment, followed by releasing a preliminary report for comment and then sending the final report to Congress for review.

So how can importers successfully take advantage of the MTB Law?

Get Involved and Watch for Deadlines. The MTB process is streamlined and scheduled to be on a tight turnaround during 2016-17. On June 15, the ITC issued its Miscellaneous Tariff Bill (MTB) Petition Submission and Comment Forms, asking importers to evaluate the form and substance, as well as the burden and means of submission of Petitions that will be submitted to the ITC. Information regarding the proposed data elements and form of the Petitions can be found here. Comments are due by August 16, 2016, and are an important first step for the industry to get involved in the new process. This is also a good time to make initial contact with the relevant Members of Congress to appraise them of your efforts.

The MTB Law sets out a timeline with important submission, review and comment dates starting on October 15, 2016. What used to be a relatively open window for the submission/amendment of materials is now a statutory time table. Don't miss a deadline! The first important time frame is October 15 – December 14, 2016, which is the 60-day period in which applicants may file a Petition with the ITC for proposed duty suspensions or reductions. It is important to note, however, that the ITC may open the Petition process earlier than October 15th, thus initiating the 60-day petition period at that earlier date.

Do Your Homework. As noted, while the process has changed, the substantive requirements largely remain the same. The information required for importers to demonstrate that a product is eligible for tariff cuts reflects the prior MTB process. Each Petition must demonstrate that the product satisfies the same three (3) general criteria:

  1. No domestic production of the proposed MTB product (or if some production, no objection from the competing US company);
  2. Cost of estimated revenue loss may be no greater than $500,000 in a calendar year; and
  3. Inclusion of the product must generally be considered "noncontroversial" (i.e. no member of Congress objects).

Due to suspension of MTB legislation over the past several years and the new Petition process, it is expected that the ITC may receive a large number of Petitions. And, it is not clear how much, if any, opportunity there will be to amend a Petition once submitted. Moreover, the MTB Law allows that Congress may not insert new products to the list of eligible products assembled by ITC and recommended to Congress (but may exclude products that are on the ITC list). It is therefore essential to make your Petitions as detailed, comprehensive and responsive as possible.

Stay Proactive. As before, the House Ways and Means and Senate Finance Committees will review the ITC's recommendations and prepare the final MTB legislation accordingly. Importantly, there is no deadline in the MTB Law for introduction/enactment of the actual MTB legislation – which would be the date on which any duty reductions would become effective. Based on the MTB Law's timeline, duty suspensions / reductions may be enacted as soon as mid to end of 2017. Thus, proactively tracking the progress of your company's Petition and meeting with relevant Congress members remains an essential part of the process.

While there are still critics of the MTB Law, the general consensus is that it provides structure and deadlines for Congress where there had previously been none. However, it is a new process and thus importers should be prepared for potential hiccups, supplemental requests, timeline changes, etc. It has been reported that the ITC may divide Petitions into separate categories based on whether the product had been part of a prior MTB tariff reduction. It is unclear however, whether other categories, for example where "corrections" to the HTS code are also requested, will require additional materials.