Congress and Agencies Seem to be 'In Agreement' on Tiered MPF Proposal
CBP and the Office of the U.S. Trade Representative haven’t heard “any bicker or pushback” from Congressional committees recently briefed by the agencies on potential changes to the merchandise processing fee, said an industry executive that is following the issue. As expected (see 1601280044), the proposal calls for a four-tiered approach to the fees, according to summary of the idea. The executive branch is working “hand-in-glove” with Capitol Hill staff to rejigger MPF’s structure to satisfy Trans Pacific Partnership provisions that prohibit ad valorem import fees, said the executive. “I think they’re very much in agreement,” he said.
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The Trans-Pacific Partnership requires that all member countries not maintain fees on an ad valorem basis (see 1512150082), yet the U.S. has until three years after TPP’s entry into force to put such changes in place. The government is likely to take the full range of time before implementation, said the executive. The Obama Administration intends to formally propose the MPF changes as part of Congressional TPP implementation legislation, which USTR has said it hopes to submit to lawmakers this year. CBP and USTR have said they will release more information pertaining to the MPF proposal in coming weeks.
MPF is currently assessed at a 0.3464 percent rate on formal entries, with per-entry minimums and maximums.The House Committee on Ways and Means leadership, which has recently worked behind the scenes with CBP and USTR to redefine the MPF, didn't comment. The Senate Finance Committee didn't immediately comment.
While the USTR didn't comment, the agency outlined the MPF idea during an off-the-record webinar on March 2. Under the proposed MPF structure, importers would pay $30 on entries valued between $2,500 and $20,000, $120 for entries valued between $20,001 and $55,000, $260 for entries valued between $55,001 and $130,000, and $500 for entries valued above $130,000, according to a summary of the proposal. These numbers will apply to all formal entries, according to the summary. Industry segments such as express couriers have ardently supported an increase in the de minimis level—a threshold under which no duties or fees, including MPF, are applied—from $200 to $800, which will occur on March 10. Recently enacted customs reauthorization legislation requires the raise (see 1602260049).
There would be no change in weekly entry processes under the new structure, and no changes to free trade agreements and preference programs exempt from MPF, according to the summary. But the TPP doesn’t absolve parties from paying the MPF, it said. For example, filings listing other FTAs would be subject to those respectively defined MPF terms, whereas TPP filings would incur MPFs as defined by the yet-to-be-ratified pact and different nations’ regulations.
USTR told stakeholders that under the new rules, 47 percent of importers will pay lower MPF fees, averaging $750 less on a yearly basis; while 53 percent of importers will pay higher fees, averaging $119 more annually, according to the summary. CBP and USTR approached the MPF analysis on the presumptions that the fee structure should be feasible for the trade industry and CBP to understand and initiate, and that assessed amounts should be similar to current MPF revenue on a yearly basis, it said. CBP didn't comment.
The agencies have conducted reviews of fiscal 2014 and 2015 formal entries, which revealed that entries subject to MPF comprised about 345 million lines of imports and $2.5 trillion in import value, according to the summary. The entry data analysis is critical to the process in order to ensure Congress that the MPF can be revamped in a revenue-neutral fashion (see 1601280044). “Overall, it does look like it's going to be revenue-neutral. I don't see it creating any winners or losers,” an executive said. “The question is: Will the other 11 members of the TPP accept it?” Australia’s current operation of a tiered MPF structure could mean that other countries will accept the U.S. proposal as well, yet USTR is “confident” the new fee proposal will meet TPP requirements, he said.
Coming cost-of-living increases to MPF aren't expected to complicate the issue (see 1512070011), said the executive. It’s “tough to argue” with tying a fee to the consumer price index, because prices of all products inflate, he said. “You can't keep these fees fixed forever" and "if inflation stays as low as it is, you can hope that the changes aren't going to be too big year to year. So you just have to live with it.”