Officials Discuss HTS Tariff Changes due to WCO, U.S. Law, Etc.
At a recent trade event, U.S. officials commented on the ways the Harmonized Tariff Schedule can be changed, both temporarily and permanently. Officials stated that two proclamations to permanently amend the HTS on U.S.-Chile rules of origin and Chapter 64 rubber-soled footwear are pending Presidential signature. They also discussed the types of changes that cause the HTS to expand, and noted that the ITC wants to discontinue printing the HTS.
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The following are highlights of their remarks:
Most Enacted Tariff Legislation Is Temporary, Such as MTBs
Most enacted legislation that affects the HTS is temporary (lasting two to three years) and deals with temporary duty suspensions or reductions in HTS Chapter 99. Such miscellaneous tariff bill (MTB) legislation used to be passed on a fairly regular basis with little controversy; however, passage of MTBs has become more problematic due to the perception that MTBs are earmarks1.
While two large MTBs were passed in 2010, setting 500-700 provisions of the HTS, officials are not sure about future enactments due to the current political environment.
ITC Has Given Advice on Permanent Tariff Legislation, like Pending Footwear Bill
Permanent legislation can be introduced in Congress, for which the International Trade Commission is asked to provide technical support. For example, the ITC has provided technical support for the Affordable Footwear Act (S. 108), which was introduced on January 25, 2011 and is pending congressional action. Officials stated that this bill would provide duty-free treatment to certain footwear and would constitute a permanent change to the HTS.
Officials note that Congress may be unwilling to pass the Affordable Footwear Act, due to the state of the economy. As the average collected duties on imported footwear are among the highest of any product sector, totaling approximately $1.9 billion during 2006, providing duty-free treatment for these products would constitute a loss in customs revenue for the government.
Some HTS Changes Are Proclaimed, Such as WCO Changes, FTAs
The U.S. is obligated to amend the HTS to reflect changes in the World Customs Organization’s international Harmonized System (HS). The next set of WCO-recommended changes, at the fourth and sixth digit levels, will take effect on January 1, 2012. (See ITT's Online Archives or 09/14/11 news, 11091404, for BP summary of officials discussing the 2012 HS changes and stating that industry can still request changes for the 2017 HS.)
There are also two proclamations pending Presidential signature -- one on rubber-soled footwear in HTS Chapter 64 and the other on rules of origin changes for the U.S.-Chile FTA. Also, if the implementing legislation is enacted for the Korea, Panama, and/or Colombia free trade agreements, the President will issue proclamations to amend and expand the HTS for these FTAs. (See ITT's Online Archives or 07/20/11 and 08/09/11 news, 11072016 and 11080919, for BP summaries.)
Statistical HTS Changes Are Decided by the 484(f) Committee
Tariff numbers at the statistical suffix level (9th and 10th digits) are the only part of the HTS that can be amended without direct congressional action. The 484(f) Committee2 gets requests to amend the HTS at the statistical suffix level from U.S. Customs and Border Protection, other agencies, and the private sector. Changes for statistical breakouts are administratively incorporated into the HTS when new or revised editions are released.
Most HTS Growth Comes from FTA Rules of Origin, Statistical Breakouts
According to the officials, the HTS is most significantly expanded by FTAs. The three pending FTAs with Korea, Colombia and Panama would contribute about 70 to 100 pages of rules of origin to the HTS if proclaimed by the President. Another reason the HTS expands is the addition of statistical suffixes. The officials noted there were about 15,000 statistical suffixes compared to 5,000 HTS codes.
ITC Would Like to Discontinue Printing HTS
The officials added that the ITC is currently interested in changing the law so that it doesn't have to print the paper, subscription-based HTS anymore, due to its large size. Officials state that sales of the printed version of the HTS have dropped from about 10,000 to 2,500 last year.
1The House Rules Committee defines a congressional earmark as a provision or report language included primarily at the request of a member that provides, authorizes, or recommends a specific amount of discretionary spending authority for a contract, loan, loan guarantee, grant, or other expenditure with or to an entity or targeted to a specific State, etc. other than through a statutory or administrative formula-driven or competitive award process.
2The 484(f) Committee is an interagency group that is responsible for considering government and private sector requests for statistical changes at the 9th and 10th digit level for tariff numbers, their unit of quantity, and/or written description. Interested parties may request changes to the statistical annotations of the HTS through this Committee. Requests should be submitted no later than April 1 for changes to be effective July 1 the following year, and no later than August 1 for changes to be effective January 1 the following year.
(See ITT's Online Archives or 02/07/11 and 08/04/11 news, 11020727 and 11080411, for BP summaries of the Affordable Footwear Act being introduced.
See ITT's Online Archives or 03/28/11 news, 11032810, for BP summary of ITC's recommended changes in its addendum recommendations in its 1205-8 report on certain Chapter 64 footwear.)