ITC Reports on Allowing 735 More Pharmaceuticals, Chemicals to be Duty-Free
The International Trade Commission has released the results of its investigation providing information and advice to the President concerning approximately 735 pharmaceutical products and chemical intermediates for which the Administration is proposing to eliminate duties.
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The investigation, "Pharmaceutical Products and Chemical Intermediates, Fourth Review: Advice Concerning the Addition of Certain Products to the Pharmaceutical Appendix to the HTS," was requested by the U.S. Trade Representative in May 2010.
The ITC notes that when this fourth update is completed, the Pharmaceutical Appendix1 will include more than 10,000 products.
Proposed Additions are Used Primarily for Production of Pharmaceuticals
The pharmaceutical products and chemical intermediates for which the Administration is proposing to eliminate duties are used primarily for the production of pharmaceuticals.
ITC Provides Product Descriptions, Available Import/Export Estimates, Etc.
In its report, the ITC has provided:
- a summary description of the products contained in the existing Pharmaceutical Appendix and the modifications to be made to that Appendix;
- an explanation of the relationship between the various elements in the Appendix and the HTS (Harmonized Tariff Schedule); and
- an estimate of current U.S. imports and, where possible, current U.S. exports of the products included in the existing Pharmaceutical Appendix and the proposed additions to the Appendix.
ITC Estimates Effect on U.S. Imports and Exports
The pharmaceutical industry has estimated the effect on U.S. imports for only about 12 percent of the items proposed for inclusion in the Appendix. These items alone are expected to account for approximately $440 million of U.S. imports in 2010. ITC staff estimates that U.S. exports of the proposed items will reach or exceed $150 million in 2010 based on information submitted by the industry.
The ITC states that a more precise estimate of imports and exports of items included in this update is not possible for many reasons, including the level of aggregation of many of the HTS provisions, uncertainty about final regulatory approval for many of the drugs, and the high proportion of proprietary data in this industry.
WTO Talks Underway to Further Expand Pharmaceutical Appendix
World Trade Organization negotiations to further expand the duty-free Pharmaceutical Appendix are underway. According to the WTO, as of July 30, 2010, the U.S., Canada, the EU, Norway, Japan, Switzerland, China, and Macao have agreed that 718 new substances should be added to the Appendix. It was agreed that duty-free treatment for these substances would be implemented as soon as possible, bearing in mind the need for each Member to fulfill its domestic procedural requirements. See ITT’s Online Archives or 08/03/10 news, 10080343, for BP summary.)
1The Pharmaceutical Appendix was created as part of the Uruguay Round Agreements
Act (URAA) and already covers approximately 9,500 products. The U.S. and 21 other members of the WTO agreed during the URAA to eliminate duties on pharmaceuticals and to periodically conduct reviews to identify additional products to be covered by the initiative (the Pharmaceutical Zero-For-Zero Initiative).
(See ITT’s Online Archives or 06/10/10 news, 10061024, for BP summary of the ITC’s institution of this investigation.
See ITT’s Online Archives or 03/12/10 news, 10031215, for BP summary of the USTR’s request for comments on expanding the Appendix.)
(Press release dated 09/16/10, Inv. No. 332-520)
The full report is available here.