ITC Issues Final Report on Proposed HTS Changes for January 1, 2007 (Part I)
The International Trade Commission (ITC) has issued a final report to the President in connection with its investigation of proposed modifications to the Harmonized Tariff Schedule (HTS). This report is entitled, Proposed Modifications to the Harmonized Tariff Schedule of the U.S.
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(The ITC instituted this investigation (Inv. No. 1205-6) in September 2004, in conjunction with the third review cycle of the International Convention on the Harmonized Commodity Description and Coding System (HS), pursuant to section 1205 of the Omnibus Trade and Competitiveness Act of 1988 (1988 Act), which requires the ITC to keep the HTS under continuous review and recommend appropriate modifications to the President whenever amendments to the HS are recommended by the WCO for adoption and as other circumstances warrant.)
This is Part I of a multi-part series on the ITC's final report and provides an overview of the proposed amendments. See future issues of ITT for additional summaries.
HTS Changes Scheduled to Take Effect January 1, 2007
According to the ITC, the modifications proposed in this report would implement in U.S. law the amendments to the Harmonized System nomenclature that were recommended for adoption by the World Customs Organization (WCO) in June 2004, to become effective as of January 1, 2007, and certain Harmonized System Committee (HSC) decisions that are necessary and appropriate to ensure uniform application of the nomenclature.
Proposed HTS Modifications Affect Certain Sections, Most Chapters, Etc.
The ITC states that the bulk of the recommended modifications are based upon decisions taken by the HSC during its October 1999 through May 2004 sessions.
(The ITC states that the proposed modifications contain several hundred amendments affecting 83 chapters and more than 240 headings throughout the nomenclature. These changes are intended to update the nomenclature or clarify the classification of particular goods.)
Proposed HTS Modifications Required to Ensure Substantial Rate Neutrality, Etc.
The ITC's report indicates that Section 1205(d) of the 1988 Act provides that the ITC cannot recommend a modification to the HTS unless the change: (1) ensures substantial rate neutrality, (2) is consistent with the HS Convention or any amendment thereto recommended for adoption, and (3) is consistent with sound nomenclature principles. Moreover, any modification that would change a rate of duty must be consequent to, or necessitated by, recommended nomenclature changes. Finally, the recommended modifications must not alter existing conditions of competition for the affected U.S. industry, labor, or trade.
The ITC states that in cases where a proposed new HTS subheading represents the combination of two or more present HTS subheadings with differing column 1-general (normal trade relations) duty rates, the proposed general rate is derived from the existing subheading which accounts for the preponderance of the trade in the proposed new subheading.
HTS Changes Must be Proclaimed by President Before They Can Take Effect
The ITC states that Section 1206 of the 1988 Act authorizes the President to proclaim modifications to the HTS on the basis of ITC recommendations under Section 1205, if he determines that the proposed changes are in conformity with U.S. obligations under the HS Convention and do not run counter to the U.S.' national economic interest.
In addition, such modifications can only be proclaimed after the expiration of a 60 legislative day period that begins on the date the President submits a report to the House Ways and Means Committee and the Senate Finance Committee enumerating the proposed modifications and the reasons for making them. ITC sources state that they have not yet received official word as to whether the USTR has delivered the report to these committees on behalf of the President.
(The ITC's most recent prior review cycle was Investigation No. 1205-5, the final report of which was published in June 2001. See ITT's Online Archives or 07/20/01 news, 01072010, for BP summary of the final report.)
(See ITT's Online Archives or 04/25/05 and 04/26/05 news, 05042505 and 05042610, for Parts I and II of BP summary on the ITC's preliminary report.
See ITT's Online Archives or 08/30/05 news, 05083005, for BP summary of ITC's request for proposals to amend the international HS in 2012.)
ITC Final Report (Inv. No. 1205-6 (Final), USITC Publication 3851, dated April 2006) available athttp://hotdocs.usitc.gov/docs/tata/hts/Pub3851.pdf