On April 13, 2016, the House Ways and Means Committee introduced the American Manufacturing Competitiveness Act of 2016 which has now passed the House. This act will create transparency for all manufacturers, consumers, and the entire legislation and grant the ability to effectively compete in the global market, create more jobs, and improve the total economy.
The Committee’s Trade Subcommittee held a hearing on the Act on April 14. The following is my submission in support of the Act sent to be included in the hearing record.
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515
I am providing these comments in support of the American Manufacturing Competitiveness Act of 2016. They are not submitted on behalf of any clients, but instead reflect my own views after 35 years as an international trade attorney, including over 5 years at the U.S. International Trade Commission, and 21 years as an adjunct professor at George Mason University.In my private law practice I have represented a number of domestic manufacturers, most of them small businesses that rely on imported materials for their production activities. While some of them were able to take advantage of the traditional tariff suspension process and some were not, all found it to be cumbersome and confusing. The absence since 2012 of even this flawed process has saddled such companies with unnecessary, additional costs.
The American Manufacturing Competitiveness Act provides a vastly improved procedure for temporary suspension of anti-competitive tariffs. It addresses the two chronic problems in the previous ad hoc approach: unpredictability, and the perception of undue political influence in choosing the beneficiaries of legislation.
That a tariff suspension process is appropriate is noncontroversial. While tariffs serve both protective and revenue-raising purposes, the former does not apply when there is no domestic production of a product competitive with imported items. This puts U.S. manufacturers that must import materials at a cost disadvantage, with no concomitant benefit to a domestic industry.
There are two features of the Harmonized Tariff Schedule that must be taken into account in devising an effective suspension process:
- Tariff rates on parts and materials tend to be higher than on finished goods.
- Tariff provisions, while detailed in coverage, generally are broader in scope than the specific item that a manufacturer needs to import.
Additionally, to ensure that the tariff relief is beneficial to domestic producers, the process must provide mechanisms to:
- Permit importers to apply and demonstrate their eligibility.
- Confirm there is no domestic production of the item for which suspension is sought.
- Make certain that the importer receiving the benefit will in fact use it in domestic production activities.
H.R. 4923 meets each of these requirements. The International Trade Commission has the investigative and research capability to serve as a gatekeeper and evaluate the merits of each application. It also has the tariff expertise to craft appropriate classification provisions that are administrable by U.S. Customs and Border Protection. Armed with the Commission’s disinterested advice, Congress will be in a position to weigh the merits of proposed suspension measures.
For these reasons, I support enactment of H.R. 4923.
Very truly yours,
George W. Thompson