Recent Trade & Tariff Perspectives

February 9, 2022  |  Ivana Gavroski  Manager, U.S. Customs Compliance

What the America COMPETES Act Could Mean for Your Supply Chain

The U.S. House of Representatives recently passed the America COMPETES Act of 2022—the House’s response to the Senate’s U.S. Innovation and Competition Act (USICA) that was passed in June of 2021. Both bills aim to increase U.S. economic competitiveness with China and address the global semiconductor shortage.

However, several differences between the bills—ranging from strict import restrictions to reinstatement of duty exclusions—still need to be reconciled before a final bill can be signed into law. To understand the impact these provisions could have on your supply chain, a closer look is needed.

Renewal of the GSP program

Both USICA and the America COMPETES Act would renew the Generalized System of Preferences (GSP), a program that eliminates duties on certain products from low-income countries.

Importers would be retroactively refunded for the duties paid on GSP-eligible products since the previous GSP expired on December 31, 2020. While the America COMPETES Act renews GSP until January 1, 2024, USICA renews GSP until January 1, 2027.

The House bill also adds new eligibility criteria on the environment, human rights, rule of law, poverty reduction, and anti-corruption. It further allows interested persons to petition at any time for a review of a beneficiary country’s compliance with the eligibility criteria.

The bill would require country eligibility reviews every three years in addition to a study on rules of origin, women’s economic empowerment, and GSP utilization rates to help least-developed countries receive more program benefits.

Renewal of the MTB program

Both bills would also renew the Miscellaneous Tariff Bill (MTB) program, which provides temporary tariff reductions and suspensions on certain U.S. imports.

The MTB program would be renewed through December 31, 2023, retroactive for four months before the bill’s enactment. The American Manufacturing Competitiveness Act of 2016 (AMCA) would also be reauthorized for two more MTB cycles through 2027.

The House bill, however, excludes finished products from future MTBs authorized under the AMCA.

Restrictions to the de minimis exemption

One provision not contained in the USICA is the Import Security and Fairness Act recently introduced by U.S. Representative Earl Blumenauer (D-OR), chairman of the House Ways and Means Trade Subcommittee.

The current de minimis value in the United States is $800, which means one can import shipments valued at $800 or less without paying duties, taxes, or fees. This includes exemption from punitive tariffs, such as the Section 232 and 301 tariffs, along with less stringent reporting requirements to Customs and Border Protection (CBP).

According to Blumenauer, “The number of packages we receive in the United States has skyrocketed…and will only climb in the coming years. As long as foreign companies that sell their goods in America are splitting up their shipments to evade tariffs and oversight, American businesses will continue to be put at a competitive disadvantage cost-wise.

“This loophole also makes it easier for people to import illegal goods and harmful products, because there is virtually no way to tell whether these packages contain products made through forced labor, intellectual property theft, or are otherwise dangerous.”

This legislation proposes that the United States:

• Prohibits goods from countries that are both non-market economies, such as China, and on the United States Trade Representative's (USTR) Watch List from using de minimis benefits
• Prohibits goods subject to enforcement actions (e.g., Section 301 tariff measures) from using the program
• Closes de minimis loopholes for offshore distribution or processing facilities
• Requires CBP to collect more information on all de minimis shipments to prohibit the use by bad actors

USICA and the Section 301 China Tariff exclusions

Unlike USICA, the America COMPETES Act does not contain any provisions to reinstate previous duty exclusions to the Section 301 China Tariffs.

The USICA, as it is currently written, would reinstate tariff exclusions on a go-forward basis and retroactively reinstate a considerable number of exclusions back to January of last year. Passage of the USICA would result in millions of dollars in duty refunds and substantial savings on certain imports from China going forward.

Uncover potential duty refunds, save time, and see what USICA could mean for your business by using our U.S. Tariff Search Tool.

Steps you can take now

Lawmakers will need to go to conference and reach a compromise on the differences between the bills before a final bill can go to President Biden’s desk for signing.

Take advantage of this time to consider the following:

• Review your imports for GSP and MTB eligibility
• Evaluate shipments currently benefiting from the de minimis exemption
• Use our U.S. Tariff Search Tool to see what impact USICA may have on your imports

Stay informed on developments

C.H. Robinson continues to closely monitor this legislation. Subscribe to our Client Advisories and Trade and Tariff Insights to be notified when changes take place. Connect with one of our trade policy experts to learn more. 

Resources

• Chairman Blumenauer Unveils New Legislation to Fix Import Loophole, Level Playing Field, and Boost Oversight – January 18, 2022 Press Release
• Generalized System of Preferences
• GSP-Eligible Products
• H.R. 4521 – The America COMPETES Act of 2022
• H.R. 4923 – American Manufacturing Competitiveness Act of 2016
• H.R. 6412 – Import Security and Fairness Act
• Miscellaneous Tariff Bill – International Trade Commission
• Non-Market Economy Countries List – International Trade Commission
• Section 321 Programs – U.S. Customs and Border Protection (CBP)
• The America COMPETES Act of 2022