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Thursday, January 20, 2011

Tariff Modifications: Miscellaneous Tariff Bills

Vivian C. Jones
Specialist in International Trade and Finance

Importers often request that members of Congress introduce bills seeking to suspend or reduce tariffs on certain imports on their behalf. The vast majority of these commodities are chemicals, raw materials, or other components used as inputs in the manufacturing process. The rationale for these requests, in general, is that they help domestic producers of the downstream goods reduce costs, thus making their products more competitive. In turn, these cost reductions can be passed on to the consumer.

In recent congressional practice, House Ways and Means and Senate Finance Committees, the committees of jurisdiction over tariffs, have combined these duty suspension bills and other technical trade provisions into larger pieces of legislation known as miscellaneous tariff bills (MTBs). Before inclusion in an MTB, the individual legislative proposals introduced by members are reviewed by trade subcommittee staff and several executive branch agencies to ensure that they are noncontroversial (generally, that no domestic producer objects) and relatively revenueneutral (revenue loss of no more than $500,000 per item).

Late in the 109
th Congress, the House passed H.R. 6406, a trade package that included suspension of duties on about 380 products until December 31, 2009. The legislation was inserted into H.R. 6111, a previously House-passed tax extension package. The Senate approved H.R. 6111, including the duty suspensions, and the bill was signed by the President on December 20, 2006 (P.L. 109-432). Tariff suspensions on about 300 other products had been previously inserted into H.R. 4, The Pension Protection Act of 2006 (P.L. 109-280).

In the 110
th Congress, congressional ethics and earmark reform legislation also targeted “limited tariff benefit[s],” defined as “a provision modifying the Harmonized Tariff Schedule of the United States in a manner that benefits 10 or fewer entities.” This legislation amended House and Senate rules to make it out of order to consider bills containing earmarks, limited tax benefits, or limited tariff benefits unless certain disclosure and reporting requirements are met by the member proposing the legislation and the committees of jurisdiction. Even though a November 2007 House Ways and Means Trade Subcommittee advisory called for House members to submit legislative proposals for inclusion in a proposed MTB by December 14, 2007, no omnibus bill was introduced in either House.

In the 111
th Congress, the United States Manufacturing Enhancement Act of 2010 (P.L. 111-227) was signed by the President on August 11, 2010. As enacted, the law temporarily suspends or reduces for three years (through December 31, 2012) duties on over 600 products, many of which renew duty suspension or reductions that were already in place. On December 15, 2010, H.R. 6517, a bill that, in part, sought further duty suspensions on approximately 290 products, passed in the House. On December 22, 2010, the Senate passed an amendment in the nature of a substitute of H.R. 6517 that did not contain the duty suspension measures. The House passed the amended version of the bill on the same date (P.L. 111-344). Legislation could emerge in the 112th Congress proposing the duty suspensions originally included in H.R. 6517 and other duty suspensions.

Date of Report: January 11, 2011
Number of Pages: 15
Order Number: RL33867
Price: $29.95

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