NAFTA is not the only important trade issue on Congress’ radar this Fall

by Dentons


The US trade policy conversation has been dominated by the NAFTA renegotiations, the Trump administration’s resurrection of Section 232 national security investigations on aluminum and steel, Section 201 safeguard investigations on solar panels and washing machines and high-profile dumping and subsidy cases involving softwood lumber, aircraft and newsprint. While these contentious issues garner much of the attention, Congress will also have renewal of the Generalized System of Preferences (GSP) and possibly a Miscellaneous Tariff Bill (MTB) on its radar for the already packed Fall 2017 legislative calendar.

Generalized System of Preferences to expire December 31, 2017

The GSP was last reauthorized in 2015 and is currently due to expire on December 31, 2017. The GSP is a unilateral trade preference program that was first adopted in the 1970s to promote growth in developing countries by providing them preferential duty-free treatment. The GSP provides preferential treatment for a wide range of products from over 120 designated beneficiary countries.

What to do when the GSP lapses

In the past, when the GSP expired, Congress has provided for retroactive reauthorization that allowed importers to claim refunds on prior importations. US Customs and Border Protection (CBP) has issued guidance encouraging importers to continue to flag GSP-eligible imports after the GSP expires, so that if Congress reauthorizes the GSP with retroactive effect, importers will be able to claim refunds of those duties.

The GSP expiration does not affect non-textile goods imported under the African Growth and Opportunity Act (AGOA) preference program, which does not expire until September 30, 2025. Merchandise processing fee (MPF) exemptions afforded to goods from least-developed beneficiary developing countries (LDBDCs) will remain in place.

Miscellaneous Tariff Bill

Another duty reduction mechanism on the congressional docket this Fall could be the MTB.

The current MTB petition cycle is complete, with 3,162 petitions1 and 1,844 comments2 submitted to the US International Trade Commission (ITC). The ITC issued a final report on August 8, 2017, with its recommendations on these petitions.

MTB is the process through which importers request temporary duty suspensions or reductions for imported goods that cannot be sourced domestically. Pursuant to the American Manufacturing Competitiveness Act of 2016 (AMCA),3  companies submit a petition for duty suspension and reduction to the ITC. The ITC places each petition into one of six categories:

  1. Petitions that meet the AMCA requirements
  2. Petitions that need technical corrections to meet the AMCA requirements
  3. Petitions that need requested duty reduction or suspension amount modified to meet the AMCA requirements
  4. Petitions that need scope modifications to address domestic producer objections
  5. (a) Petitions that lacked information required by the AMCA
    (b) Petitions where the petitioner was not a likely beneficiary
  6. Petitions that the ITC does not recommend for inclusion in an MTB

The ITC then provides recommendations for each category.

According to the ITC’s final report, there were 144 Category I petitions, 1,287 Category II petitions, 392 Category III petitions, 4 Category IV petitions, 29 Category V(aa) petitions, 25 Category V(bb) petitions and 643 Category VI petitions. The ITC made affirmative determinations for the petitions in Categories I–IV (1,827 petitions total). If passed, the MTB could result in duty reductions or suspensions for more than 1,800 products.

Pursuant to the AMCA, Congress should consider an MTB no later than 90 days after the ITC issues its final report.

1. 638 withdrawn.
2. 59 withdrawn.
3. Public Law 114-159.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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