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Policy

New tariff relief law will benefit chemical manufacturers

Obama signs legislation that will allow suspension of import duties on many raw materials

by Glenn Hess, special to C&EN
May 25, 2016 | A version of this story appeared in Volume 94, Issue 22

Photo shows three men wearing suits and ties sitting around a table.
Credit: Jenny Gaines/SOCMA
Tom Becker, left, of SOCMA member company Iofina Chemical, meets with Rep. Thomas Massie (R-Ky.), right, and his legislative assistant David Silvers to discuss the tariff relief bill.

President Barack Obama on May 20 signed legislation that will provide tariff relief to U.S. chemical producers that import raw materials and intermediate products.

“With 80% of specialty chemical manufacturers importing raw materials for which there is no domestic source, this bill is a huge deal,” says William E. Allmond IV, vice president of government and public relations at the Society of Chemical Manufacturers & Affiliates (SOCMA). This industry group represents mainly small and medium-sized chemical companies.

The legislation, called the American Manufacturing Competitiveness Act, lays out a new process for compiling what is called a miscellaneous tariff bill, a massive duty-cutting measure.

In the past, lawmakers would combine hundreds of duty suspension bills they introduced at the request of home-state manufacturers to create a single miscellaneous tariff package. The noncontroversial legislation would routinely pass with little or no opposition.

But that practice ended when Republicans in the House of Representatives began a moratorium on earmarks in late 2010. Duty suspensions were treated as earmarks because they generally benefit only a few companies.

The last miscellaneous tariff bill passed by Congress expired at the end of 2012. Since then, many chemical makers, along with other U.S. manufacturers, have been paying substantially higher import tariffs on essential inputs.

“Right now, we would have more than $5 million in duty savings from expired and new duty suspensions,” says Steve Schmidt, vice president at Sun Chemical.

The new law gets around the ban on earmarks by requiring companies to submit waiver proposals to the U.S. International Trade Commission rather than lobby individual members of Congress for tariff relief.

The independent agency will vet the requests to ensure there is no domestic manufacturer of the imported product before sending its recommendations to Capitol Hill. Lawmakers will then draft a miscellaneous tariff bill, which can exclude agency-recommended products but cannot add new ones.

The new process is expected to be in place by October.

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