Bipartisan Complaints on MTB Products Could Prevent Renewal
Democrats and at least one Republican in the House have objected to products included in the next Miscellaneous Tariff Bill, a lobbyist interested in MTB told International Trade Today, complaining about both inputs and consumer goods. Many of the petitions that drew objections were in textiles and apparel, he said. He said he's seen “a couple dozen” items that members want removed, but said he doesn't know if there are more objections.
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It's not clear whether Democratic senators also oppose any items in the 3,442-long petition list. A spokesman for Senate Finance Committee's ranking member, Ron Wyden, D-Ore., did not respond to questions on the MTB.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told International Trade Today that he asked any senator with an objection to speak up by Dec. 2, and that there were none from Republicans. Democratic trade staffers “told me their team would let me know what their position is soon,” he said. Because the spending bill that could be a vehicle for MTB isn't going to be voted on this week, that gives Congress “more time to deal with it,” Grassley said.
The lobbyist said he's not sure whether the objections are “the prelude to getting something that would be acceptable to everyone,” or whether they will prevent renewal by the Dec. 31 deadline. Congress was supposed to comment on the petitions to the International Trade Commission months ago (see 2006090038), when it received the draft report, but last-minute objections to MTB items are common. At the last renewal, some items were stripped out even after the House had passed its version (see 1806200043).
The lobbying arm of law firm Mintz Levin, ML Strategies, also said MTB is facing challenges and may be pushed into next year. "Despite the potential delay, there is a high degree of confidence on Capitol Hill that even if they don’t finish MTB this year, it will be completed early next year," it said in a blog post. "This is also the last MTB under the current statute, so Congress will likely pass another MTB authorization bill in the 117th Congress."
In order to qualify for MTB, goods are not supposed to be manufactured domestically at a quantity sufficient to supply U.S. demand. The last time MTB came up for renewal, it was expired for eight months before finally getting renewed in September 2018. Importers had to apply for refunds.
Chemicals are by far the largest category in the MTB, and the lobbyist said none of those have been objected to. Astro Chemicals CEO Chris Diamond said in an interview that 25% of the chemicals his Springfield, Massachusetts, company sells are imported, and the molecules that qualify for MTB represent about 10% of their business. Of those, glyoxal is the most important. It's used for making wrinkle-free shirts, but its most common use in the U.S. is to give wet strength to paper, such as in paper towel manufacturing. Astro imports it from France; most supply is from France, Germany or China.
Astro, which has 80 employees, has been sourcing from France for about 30 years, but only has benefited from MTB for three years. The former domestic producer of glyoxal applied for the product to join MTB; Diamond said the older plant in Louisiana that used to produce it needed updating, and it wasn't economically feasible to renovate it, given the excess capacity outside the U.S. and the size of the domestic market for the chemical.
Diamond said the total market for glyoxal is $20 million annually, and even to make that much, you have to buy $15 million worth of inputs. “Even if they put a 10% tariff on glyoxal, the market’s just not big enough to support” building a plant, he said. “Listen, I’m all for American manufacturing,” he added, and if American companies needed $40 million worth of glyoxal, he'd be interested in investing in a new plant alongside others. Astro imports about 20% of the U.S. sales, and before the chemical was added to MTB, it was paying 3.8% on those imports, or about $175,000 annually. Once the tariff went away, the company hired one person to manage that segment, but passed most of the savings to customers. “Every American paid half a penny less for a roll of paper towels,” Diamond said.
Astro has tried to stock up and import more in December, in case MTB expires, but has also warned customers it will be raising prices to cover the tariff next year. Diamond's representative is House Ways and Means Chairman Richard Neal, D-Mass., the member with the most power to get MTB moving. He said Neal has visited his company, and that he sent a letter urging for renewal.