Lawmakers Mull Options for MTB Process Reform But Path Forward Still Unclear

Many observers expect Trade Promotion Authority to surface on Capitol Hill soon and MTB supporters are targeting that legislation as a vehicle. Capitol Hill staffers have indicated TPA will probably advance initially as a standalone bill, so MTB-related provisions would likely be tacked on through a weeks-long amendment process. MTB lapsed at the end of 2012. Republicans on Capitol Hill have since resisted making the program law again because some of the tariff suspensions likely qualify as earmarks, according to the language of the Republican moratorium, said lawyers and lobbyists.

The Senate Republican caucus renewed its ban on earmarks in December 2014 (here). The House hasn’t yet done so this Congress. The moratorium includes a prohibition against “limited tariff benefits,” defined as when ten companies or less import a product authorized for tariff cuts, observers said. The International Trade Commission, as well as the Commerce Department, reviews the specific suspension requests, and ultimately determines, along with a range of data, the number of companies likely to take advantage of the tariff cut, lawyers and lobbyists said. The vetting process is meant to help avoid potentially hurting domestic manufacturing.

The government is nearly incapable of precisely determining how many companies import a specific product, such as a chemical or other input, said Sandler Travis lobbyist David Olave in an interview. “You really can’t know at times if it’s more than 10, or if its 12 for instance or maybe 5,” said Olave. But “a large majority of these bills wouldn’t be considered limited tariff benefits.”

Sens. Rob Portman, R-Ohio, Claire McCaskill, D-Mo., and Pat Toomey, R-Pa., floated the Temporary Duty Suspension Process Act, S-260, in late January, and that legislation is the only bill lawmakers have proposed to modify the MTB submission process since the underlying bill's expiration. That legislation would allow industry to submit requests for specific tariff suspensions directly to the International Trade Commission or through their representatives on Capitol Hill.

Currently, the MTB process requires industry to route their requests through lawmakers only. The Senate bill wouldn’t remove the suspensions for limited tariff benefit products, but putting the ITC at the beginning of the process may allow lawmakers to skirt the earmark moratorium, some observers have said. However, lawmakers may not even be focusing on addressing the limited tariff benefit obstacle, said two lobbyists.

House Ways and Means Chairman Paul Ryan, R-Wis., recently told reporters that the Senate legislation falls short of the reforms needed to get the underlying bill back on track, although the legislation is serving as model to assess options moving forward (see 1502160005). Ryan, who declined to comment on whether the House will unveil a reform proposal, has repeatedly expressed support for the MTB program (see 1502050019).

U.S. manufacturers champion the merits of the MTB program often as well, arguing the tariff suspensions give U.S. industry a critical boon. “It helps Americans grow their businesses here in the United States as much as possible,” said National Association of Manufacturers trade expert Linda Dempsey in an interview. “So when companies are paying duties on inputs that aren't produced domestically, we’re shooting ourselves in the foot, in terms of our competitiveness.” There’s broad support on Capitol Hill for the MTB program as a whole, said Dempsey.

The failure to resolve the MTB impasse is leading some to believe no MTB provisions will end up in a final, TPA-led trade package, however, said one lobbyist. Lawmakers are working to ensure the package includes African Growth and Opportunity Act renewal, the Generalized System of Preferences (GSP) and Customs Reauthorization, said the lobbyist. "Lawmakers still haven’t resolved the big questions around MTB, so it may not move forward," the lobbyist said. "Many Republicans may not be on board with the Portman-McCaskill bill." But lawmakers and U.S. industry are targeting other changes to the legislation on top of earmark-related process reforms, such as more general transparency and reliability, said others. Those improvements might make the MTB program more appealing to Republicans on Capitol Hill, those interviewed said.

The program would benefit from lengthening the amount of time industry is given to respond to a congressional launch of the MTB suspension request process, said Olave. House Ways and Means and Senate Finance leadership traditionally send the word out to lawmakers to notify constituent industry, and then only 30 days later lawmakers must relay their preferred MTB tariff suspensions (here). “That’s too much of a hurry,” said Olave. “Once the bill comes out in the end, some lawmakers then realize they made mistakes. That creates the headaches that Portman and McCaskill are trying to address.”

Congress is also generally underequipped to handle the industry evaluation necessary to make the most informed decisions on the specific MTB suspensions, so the Senate legislation may help maximize the potential of the program, said Olave. In the past, some lawmakers and stakeholders have criticized the solicitation process for serving only select companies with lawmaker relationships, a practice some argue falls into the same vein as earmarks, said one industry lobbyist.

Some MTB proponents in industry also want MTB reform to help ensure lawmakers actually vote on MTB renewals. Attempts to advance MTB failed in the 113th Congress. Bills didn’t make it through committee and lawmakers never had an opportunity to pass the MTB program back into law. “I want Congress, after these bills in the MTB have been vetted, to have the ability to fast track a vote,” said Olave. “For instance, Congress would have to vote on this within 60 days. The precedent for that would be TPA.” TPA limits debate time, cuts the amendment process and requires an up-or-down vote in a certain amount of time for all trade agreement implementation bills.

Many beneficiaries of the MTB program aren’t supporting any specific reform proposal outright, said Dempsey. Instead, those companies just want to strengthen transparency and reliability in the submission and voting process, she said. “The process needs to meet business needs,” said Dempsey. “Companies put in a lot of work in the collection of information on the products and the import figures, and all this data that is being researched, only to have a bill sit out there and have no real movement on it for more than two years … They just want to move forward with a bill and get a vote on it in both Houses of Congress.”

There's some uncertainty as to the specific effects of such MTB reform. American Association of Importers and Exporters President Marianne Rowden said her members are still determining what the impacts of the Senate legislation would be, so the association hasn't yet made up its mind on the bill. "I think where everybody is very worried is, just like GSP, it’s taking so long to actually move an MTB bill," said Rowden. "The business world can’t wait for this nonsense. This is a great example of the dysfunction in D.C."

Despite some indications on Capitol Hill that there’s more commitment to tackle the stagnant MTB, industry is frustrated that lawmakers are still exploring reform options now, after more than two years of MTB expiration, said Olave. “There is nothing new on the table since these conversations first started 30 months ago, in terms of public proposals that we can look at and analyze,” he said. “Ryan may be coming up with something more concrete, something [Former Ways and Means Chairman Dave] Camp failed to do or could not do two years ago.”

If Ryan proves to have a better relationship with Republican Speaker of the House John Boehner than his predecessor, Camp, that could also influence more conference-wide Republican support for MTB renewal, said Olave. Lawmakers haven't yet decided if they'll try to move an MTB bill, alongside MTB process reform, in a TPA package, lobbyists said. The Senate process reform legislation would force the ITC, within 120 days of that bill becoming law, to solicit, investigate and process all the MTB duty suspensions into one package, and then submit it to Congress.