Trade Compliance Flash: Q&A on the 2019 Miscellaneous Tariff Bill (MTB) Petition Process – A Duty-Saving Opportunity for U.S. Companies
On October 11, 2019, the U.S. International Trade Commission (ITC) will begin accepting petitions for duty suspensions or reductions under the Miscellaneous Tariff Bill (MTB). Under the MTB, U.S. importers may achieve duty savings of up to $500,000 on products that are not produced in the United States, for a three-year period. This Q&A explains the MTB process and sets forth key takeaways for importers.
Our Customs and Trade Policy advisors can help with all facets of the MTB process, including identifying eligible products, preparing petitions for duty relief, drafting comments (either in support or opposition) of petitions submitted by other companies, and interacting with the relevant U.S. government agencies and Congress to advocate for a favorable outcome.
What is the MTB?
The MTB is legislation that temporarily reduces or suspends customs duties on products that are not produced in the United States (or, if such production exists, there must be no opposition from a U.S. producer). To qualify for the tariff benefit, the estimated loss in revenue to the U.S. government from the duty suspension or reduction on each product must be less than $500,000 in a calendar year.
How Does the MTB Petition Process Work?
The MTB petition process begins with companies filing a formal petition to the ITC. The process for the submission and consideration of petitions is described in the MTB Regulations (19 C.F.R §220) and summarized below:
- ITC Requests Petitions: On October 11, 2019, the ITC will publish a notice in the Federal Register requesting petitions from the public on duty suspensions or reductions under the MTB for a 60-day period.
- Petitions are Filed: Once the ITC begins accepting petitions on October 11, parties will have 60 days to file their petitions (until December 10, 2019) on the MTB Portal. A separate petition must be filed for each eligible product.
- Public Comment Period: No later than 30 days after the petition request period expires, the ITC will publish the submitted petitions on their website and publish a notice in the Federal Register requesting comments from members of the public for a 45-day period.
- ITC Issues Report to Congress: No later than 210 days after releasing the list of petitions, the ITC will submit a final report to Congress listing all products that satisfy the MTB criteria. The ITC's report will be based on a review of all petitions and public comments submitted as well as input from Congress, U.S. Customs and Border Protection (CBP), the U.S. Department of Commerce, and other appropriate federal agencies.
- Congressional Approval of MTB: After reviewing the ITC's report, the House and Senate will prepare MTB legislation to amend Chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS) – a chapter of the U.S. tariff reserved for that purpose. Congress can include only those products approved by the ITC, but Congress may also exclude any qualifying product. The duty savings will become effective on a date that will be specified in the new MTB bill, which may occur as soon as the fourth quarter of 2020.
What Goes into an MTB Petition?
As set forth in 19 C.F.R. § 220.5, each petition must contain the following information:
- Petitioner Information: The petitioner's name, telephone number, postal and email address, and, if appropriate, the petitioner's representative in the matter. It is important that the contact listed is someone who can speak to the substance of the petition.
- Product Description: A description of the product that lists its discernable physical characteristics, with any units of measurement expressed in metric terms. For example, the current MTB includes products such as "[b]oxing and mixed martial arts gloves, of leather or of composition leather" and "[s]toneware ceramic slabs each measuring at least 320 cm in length by 144 cm in width."
- HTSUS Classification: The eight-digit HTSUS subheading describing the product in its condition when imported into the United States.
- Duty Rate Requested: A statement about whether the petitioner is seeking a suspension or a reduction of the duties on their product. If the petitioner is seeking a reduction, the petition must state the requested reduction amount.
- U.S. Industry Information: A brief description of the industry in the United States that uses or processes the product, paying special attention to U.S. manufacturing operations.
- Import Sources: A list of the countries from which the product is imported.
- Import Data: Estimates of the value of the imports, both total and dutiable, for the product at issue, covering the calendar year preceding the year in which the petition is filed, the calendar year in which the petition is filed, and for the subsequent five calendar years after the petition is filed.
- Other U.S. Importers: The names of other companies that import the product, if available.
- Classification Verification: To the extent available, a classification ruling from CBP demonstrating CBP's classification of the product at issue and copies of other CBP documentation indicating where said product is classified in the HTSUS.
- Certifications: The petitioner must certify (1) that it is a likely beneficiary of the petition; (2) that the requested relief is available to any importer (if not, an explanation about why it would be unavailable to other importers must be submitted), and (3) that the information provided is complete and correct.
Who May File an MTB Petition?
Petitions may be filed by members of the public who can demonstrate that they are likely beneficiaries of duty suspensions or reductions. A member of the public for these purposes would generally be a firm, importer of record, a manufacturer that uses the imported article, or a government entity at the U.S. federal, state, or local level.
Does the MTB Apply to Finished Products as Well as Inputs?
Yes. The current MTB, which is in effect through the end of 2020, includes finished products such as certain household appliances (e.g., coffee makers, microwave ovens, irons), sports equipment (e.g., golf clubs, racquets, swim goggles, bicycles, bicycle speedometers, fishing rods), instruments (e.g., oscilloscopes, multimeters, signal generators), home furnishings (e.g., pillows, cushions, desk lamps), and footwear/apparel.
Does the MTB Mitigate the Effect of Tariffs Paid Under Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, or Any Other Tariffs?
No. The MTB affects only the "regular" customs duties (i.e., the most favored nation (MFN) rates). For example, China-origin products classified in HTSUS subheading 8540.79.2000 are currently subject to MFN duties of 3.7 percent and Section 301 tariff of 25 percent. A temporary tariff suspension for a product classified in HTSUS subheading 8540.79.2000 would result in zero MFN duties, but the product would still be subject to the 25 percent Section 301 tariff.
What Can Companies Do to Explore Potential Duty Savings Under the MTB?
- Review the company's import data (e.g., ITRAC or ACE reports) and identify products on which the company pays customs duties. U.S. importers may request a record of all their import transactions for a period of up to five years – known as ITRAC data – from CBP for a marginal fee. Companies that have an Automated Commercial Environment (ACE) account can run import data reports for free.
- Research whether there is U.S. production of the potential MTB candidates. This step may involve internet research and conversations with the company's sourcing and sales departments and its suppliers.
- Think creatively when exploring potential candidates for duty relief. It is incumbent upon a company to define a product that is potentially eligible for the tariff benefit as specifically as possible. By defining a product narrowly, an importer may gain a competitive advantage over other importers of a similar but not identical product that falls under the same HTSUS subheading. A narrowly defined product is also less likely to exceed the $500,000 annual limit on duty reductions or suspensions.
Preparing a petition may be time-consuming, as it will likely require input from employees in multiple divisions (e.g., product managers, procurement, trade compliance, legal, etc.), suppliers, and even U.S. Customs, if ITRAC/ACE data is requested. Miller & Chevalier's Customs and Trade Policy Advisors can help with all facets of the MTB process and would be pleased to discuss how this opportunity could benefit your company.
For more information, please contact:
Richard A. Mojica, email@example.com, 202-626-1571
Nicole Gökçebay, firstname.lastname@example.org, 202-626-1488
Claire Rickard Palmer**
P. Welles Orr***
*Former Miller & Chevalier law clerk
**Former Miller & Chevalier consultant
***Former Miller & Chevalier advisor
The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.
This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.