Path Forward on MPF Changes Required by TPP Largely Unclear on Capitol Hill
Provisions of the Trans-Pacific Partnership that may force the U.S. to make major changes to how it assesses the merchandise processing fee (MPF) is getting attention on Capitol Hill, a Congressional staffer said. Article 2.15 of the recently agreed text, which still requires approval from Congress, provides that "no party shall levy fees and charges on or in connection with importation or exportation on an ad valorem basis." MPF, which is currently charged at an ad valorem rate of 0.3464% on formal entries, with per entry minimums and maximums, would have to be converted into a flat fee in order to comply, said one staffer.
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MPF is the only U.S. fee or charge to which this provision will apply, according to a footnote in the TPP text (here). The provision would take effect three years after implementation, it said. A congressional staffer said in an interview that the administration “did not have congressional blessing” to insert the language into the pact, even though Congress is responsible for defining and overseeing the fee’s implementation.
Congressional staff and administration officials are exchanging information on a bipartisan basis to confront the new hurdles, but a concrete proposal on how the provision would be implemented is yet to surface. While CBP has comprehensive information about who pays what range of fees, the agency has not yet provided it to Congress, the staffer said. Converting MPF to a flat fee would be complicated not just be revenue concerns, but also by the difficulty of ensuring no importer is worse off under the new system. “I think CBP is going to have to come up with some kind of proposal that we consider, but we don’t have the wherewithal,” the staffer said. “We don’t even have the data."
Another concern is the potential for other requests for MPF changes, which was an issue when drawback reform was included in the House-passed customs reauthorization package (see 1512110029). “Whenever you open up one of these provisions … you do see that there are a lot of interested parties who have sort of a flood of suggestions about how to tweak things in their own financial interest, and I think there is a concern that this will be a very burdensome process in terms of actually figuring out how to convert it, and then handling what could be imagined as innumerable requests for tweaks here and there on behalf of particular groups,” the staffer said.
Industry associations are also beginning consideration of the changes required by the provision. The U.S. Chamber of Commerce, currently focused on customs reauthorization, will shift its attention to MPF "in the new year," said Adam Salerno, the Chamber's director of national security and emergency preparedness. The topic is "very much under discussion" at the Express Association of America, though as an issue for TPP implementing legislation, it's "probably a year away," said Mike Mullen, EAA executive director. USTR and CBP did not comment, but USTR told the National Customs Brokers & Forwarders Association of America that CBP is "hard at work now to find an alternate path to retaining this revenue," the association said.