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Legislative Update: MTB, Supply Chain Security, Port Funding, Patent Infringement, China

Friday, April 15, 2016
Sandler, Travis & Rosenberg Trade Report

MTB. Bipartisan legislation to reform the process of developing and enacting miscellaneous trade bills, which suspend duties on imported inputs and products for which there is no or insufficient domestic production and availability, was introduced April 13 in both the House (H.R. 4923) and Senate (S. 2794). The House Ways and Means Committee held a hearing on the House bill April 14 and is expected to mark it up during the week of April 18.

Under these bills, the MTB process would begin exclusively through petitions made by U.S. businesses to the International Trade Commission rather than via legislation introduced by members of Congress. The ITC would analyze these petitions, taking into account comments received from the public and the White House, and then issue a public report to Congress with its recommendations regarding those products that meet the MTB standards. The Ways and Means Committee would then examine the ITC’s recommendations and draft an MTB, which could exclude products recommended by the ITC but could not add products that were not recommended. The committee would have to certify that there are no spending earmarks and publish a list of any limited tariff benefits (tax cuts that benefit ten or fewer businesses). The House and Senate would then consider the MTB within existing rules.

The ITC would be required to initiate this revised process by soliciting petitions no later than Oct. 15, 2016 and repeat it no later than Oct. 15, 2019. The bills provide deadlines for other steps in the process as well.

Border Security. The House of Representatives approved April 13 the Border and Maritime Coordination Improvement Act (H.R. 3586), which includes the following provisions.

- includes exporters among the entities eligible to apply to participate in the Customs-Trade Partnership Against Terrorism

- requires the Department of Homeland Security to, at least 30 days before signing an arrangement with a foreign government providing for mutual recognition of certain supply chain security practices that might result in the utilization of benefits offered to Tier 1, Tier 2 or Tier 3 C-TPAT participants, notify Congress of the proposed terms of such arrangement and determine that such government's program provides security comparable to that provided by C-TPAT

- requires DHS to continue to provide Congress with an update of its strategic plan to enhance the security of the international supply chain every three years

- repeals certain provisions of the Security and Accountability for Every Port Act of 2006, including those requiring a report on the security of ports in the Caribbean Basin and establishing a one-year pilot program to improve the security of empty containers

- requires U.S. Customs and Border Protection to establish a program to ensure that the electronic interchange system for the collection of advance electronic information for cargo required by section 343 of the Trade Act of 2002 has the capacity to collect information pertaining to cargo being imported by air at the earliest point practicable prior to loading

- allows CBP to enter into an unlimited number of public-private partnerships for customs, agricultural processing, border security and immigration related matters at U.S. ports of entry or other CBP facilities

New Bills Introduced. The Harbor Maintenance Trust Fund Reform Act (S. 2729, introduced March 17 by Sen. Murray, D-Wash.) would ensure that all of the money collected through the HMT is returned directly to ports to improve infrastructure and keep ports competitive. Murray said that among other things this bill would address the issue of cargo diversion by enabling donor ports to provide rebates to shippers and importers transporting cargo through their ports.

The Trade Protection Not Troll Protection Act (H.R. 4829, introduced March 22 by Rep. Cardenas, D-Calif.) aims to protect U.S. companies from abusive litigation at the International Trade Commission by patent assertion entities (sometimes called patent trolls). This bill would require PAEs to have a vested interest in the patents they assert, including development of the products described. It would also give the ITC more flexibility to ensure that an investigation is in the public interest at any time during a case, not just when making a final determination. Further, the bill would codify the 100-day pilot project established by the ITC in 2013, which allows for expedited fact-finding and an abbreviated hearing.

The China Market Economy Status Congressional Review Act (H.R. 4927, introduced April 13 by Rep. DeLauro, D-Conn.) would require congressional approval of determinations to revoke the designation of China as a nonmarket economy country for purposes of trade remedy law.

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