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Customs Reauthorization Bill Conference Delayed Until Fall

Monday, August 03, 2015
Sandler, Travis & Rosenberg Trade Report

Implementation of a long-awaited customs bill to strengthen trade facilitation and enforcement will have to wait a bit longer after the House and Senate failed to hold a conference to resolve differences in their respective versions of the measure before leaving Washington for their annual summer recess. These differences include how to combat currency manipulation and the evasion of antidumping and countervailing duties, the possible restoration of the miscellaneous trade bill process, and changes to the recently-passed trade promotion authority bill.

In the meantime, industry groups have been active in communicating to lawmakers which provisions they do and do not want included in a final bill.

MTB. In a July 13 letter to the leaders of the House Ways and Means and Senate Finance committees, organizations representing tens of thousands of small, medium and large manufacturers, retailers and other businesses called on lawmakers to include an MTB reform provision approved by the Senate. The MTB suspends duties on imported inputs and products for which there is no or insufficient domestic production and availability, the organizations said, and a transparent, objective, predictable and regularized process for Congress to consider and enact MTBs is thus needed to boost the competitiveness of U.S. industries. Since the last MTB expired at the end of 2012, the letter noted, U.S. businesses in industries such as agriculture, electronics, textiles, chemicals and others “have faced an annual $748 million tax increase on manufacturing and the U.S. economy has suffered a $1.875 billion economic loss.”

One of the primary roadblocks to reauthorizing the MTB has been that some lawmakers view it as an earmark, a form of government spending that benefits only a few and is thus increasingly untenable in the current fiscal environment. The Senate-passed version of the customs reauthorization bill seeks to address that concern by eliminating the requirement for each proposed duty suspension to be introduced as a separate bill. Instead, individual measures would be reviewed by the International Trade Commission, with input from the White House, before being assembled into a final MTB package that Congress would then consider.

Enforcement. In a July 24 letter to the House and Senate members who will participate in the forthcoming conference, a dozen major trade associations supported inclusion of the PROTECT Act but opposed inclusion of the ENFORCE Act.

According to the letter, the PROTECT Act would ensure an effective and modern trade enforcement policy to combat the evasion of antidumping and countervailing duties by focusing government efforts on preventing, investigating and remedying efforts by companies intentionally seeking to break the rules and strengthening the government’s ability to investigate and prosecute those instances where circumvention occurred. The letter asserts that this measure promotes effective enforcement without creating unnecessary or confusing bureaucratic processes or decreasing incentives for public-private partnerships on trade.

Conversely, the letter adds, the ENFORCE Act creates confusing new procedures and denies law-abiding importers the transparency and due process that are hallmarks of U.S. trade remedy laws. In particular, its definition of “evasion” encompasses situations where no fraud is involved and creates within CBP an administrative process that treats all importers, even those designated as trusted traders, as evaders.

Corrections and Clarifications. In a July 24 letter, the American Apparel and Footwear Association said that in addition to the MTB a final customs reauthorization bill should include (1) corrections to several provisions in the recently enacted law reauthorizing the Generalized System of Preferences concerning the separation of outerwear classifications in the Harmonized Tariff Schedule of the U.S., (2) the removal of a requirement for reimportations of textiles and apparel sent abroad that have not been advanced in value or improved in condition from the original import entries to identify the original manufacturer, and (3) a clarification that comingling of imported goods that are exported, repackaged and reimported is also permitted when the comingled items include articles that were subject to minor alterations abroad.

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