A 60-day time frame for requests to suspend tariffs on qualifying imports opened on Friday, October 14 and run through Monday, December 12, 2016. During this period, requestors may submit petitions to the International Trade Commission (ITC) for consideration of temporary reduction or elimination of duties on products that are not made or available in the U.S., among other criteria. After this window closes, new petitions will not be accepted for three years, or until 2019.
Petitions may be submitted to suspend tariffs on any product for which: (1) there is no domestic production or opposition, and (2) the lost revenue to the government from suspending the tariff is not projected to be over $500,000 per year. ITC has released information that it asks be included in petitions on its website.
In the past, these suspensions were handled through legislation – known as the Miscellaneous Tariff Bill or MTB. Such legislation last passed in 2010, and Congress has been unable to extend tariff reductions that expired in 2013 (or enact new ones) due to political, earmark-related problems. The hope of Congress in establishing a new approach, based primarily upon administrative petitions, is that the process for suspending tariffs will be more regular and predictable, without unnecessary political delays. For companies that import substantial amounts of component parts or imports for other purposes, this could lead to major revenue savings. As a result, many observers are predicting a sharp rise in the number of tariff suspensions that are sought in 2016 compared to previous years, perhaps to as many as many as 5,000 new tariff suspension petitions.
Over the years, the MTB has benefited numerous industries. Any product, whether raw material or finished good, can qualify as long as it meets the criteria. In the practice, however, intermediate inputs – specifically specialty chemicals and components – have been the largest beneficiaries of these duty suspensions. Other items less frequently sought or considered include spare parts and one-time imports of capital equipment, which if properly timed and strategically planned, could result in significant duty savings.
Kelley Drye would be pleased to assist clients in the development of these petitions, but the time is of the essence. Depending upon the complexity, preparing a petition is likely to require 2-3 weeks of work. For those companies hoping to make use of tariff suspensions in 2016, the real deadline for action is only days or weeks away – if missed, the next opportunity is three years away.
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