The House of Representatives passed the America COMPETES Act of 2022 earlier this month. This bill is the House version of the US Innovation and Competition Act which passed the Senate last summer. The two chambers will name conferees who will work together to harmonize the two bills into a single bill which will be presented to both chambers for a vote and, if passed, will head to the President’s desk for his signature.
Both bills have notably drawn attention from the wider public for their planned action to take steps to reduce America’s reliance and vulnerability to supply chain hiccups in key areas like semiconductor manufacturing as has been on display in the last 18 months or so of the pandemic. Beside this very important provision, the House bill includes language addressing three very key areas for importers that when the bill goes to conference will attract significant attention.
First, the Generalized System of Preferences, or GSP, lapsed on December 30, 2020. Unfortunately, the history of the program is that it expires and some period of time later, legislators reauthorize it for an additional number of years and is retroactive to the previous date of expiration. Companies importing GSP eligible merchandise have been paying ad valorem duties in hopes that the program will be renewed as it has every time in the past.
The House bill includes language that would reinstate GSP retroactive to the expiration date and through December 30, 2024. The Senate’s bill extends it through 2027. There are other key details that you can see compared and contrasted here.
The second notable item is the Miscellaneous Trade Bill, or MTB. The MTB is meant to create exclusions that are reviewed and approved by the USITC and Commerce and then by Congress to create HTS numbers and reduced or duty-free treatment of certain imports which are not available for domestic purchase. The process is laid out in great detail here, but for our purposes, the House language has authorized two cycles of MTB reviews in 2022 and 2025.
Certainly not the last – but definitely the most notable – is the language of the House’s version of the bill as it pertains to the eligibility of use of Section 321 low-value entries, most widely known as “de minimis”. Recall that the de minimis level was raised by the Trade Facilitation and Trade Enforcement Act (TFTEA) in 2015 from $200 to the current threshold of $800. Many companies have moved to take advantage of this and reorient their supply chains to both make them more competitive and legally sidestep many Section 301 duties imposed on imports from China during the Trump Administration.
Inserted by Rep. Blumenauer, Chairman of the House Ways & Means Trade Subcommittee, the House bill would exclude from the Section 321 program any countries with non-market economies and on the USTR’s Priority Watch List. China is a non-market economy. There will be tremendous pressure on conferees to alter, water down or strip out this provision.
Alba Wheels Up will continue to monitor the legislation and provide both updates and opportunities to take action and communicate with Representatives and Senators throughout the process.
