IHS Chemical Week


Failure to Pass Miscellaneous Tariff Bill Would Place Tax on American Manufacturing


With the deadline to submit duty suspensions now passed, chemical manufacturers are awaiting resolution of a stalemate between the U.S. House of Representatives and the Senate to move these bills forward before they expire at the end of the year, when they would essentially levy a tax on American manufacturing, increase the cost of domestic production and decrease global competitiveness.

The Miscellaneous Tariff Bill (MTB), a compilation of individual duty suspension bills introduced by members of Congress on behalf of companies in their districts; or in case of a senator, their state; provides critical support to the U.S. manufacturing base. The bills request that a duty be suspended on a specific input into a manufacturing process; in our industry that would be a chemical. The MTB has a transparent vetting process. Multiple agencies and House and Senate committees review the bills, ensuring that no domestic manufacturers are being hurt by the bill and no domestic jobs are being misplaced.

The biggest obstacle for moving the duty suspensions forward this year revolves around some members of Congress continuing to categorize duty suspensions as limited tariff benefits, or earmarks. As a means to clarify the issue, Grover Norquist and 65 House freshmen published letters to explain that duty suspensions are not limited tariff benefits, but tax cuts that are widely available to anyone who imports the products. Disclosure forms for duty suspensions have also been modified to clarify the point.

But now it’s time for American manufacturers to bring the message home loud and clear: Duty suspensions are not earmarks. The benefits of duty suspensions are much broader than the companies that request them. The duty suspension doesn’t simply provide a limited tariff benefit to the company that seeks it; it benefits the entire supply chain by reducing input costs.

The MTB directly helps companies of all sizes – small, medium and large – allowing them to maintain employees and customers and continue to invest in their business through research and development expenditures. But it’s the small manufacturers that especially feel the pressure when the uncertainty of these duty suspensions is in limbo.

One company that attended Socma’s recent Washington Fly-In said duty suspensions mean two to three jobs per year for their business. And for a small facility with only 25 employees, that can be huge. It’s hard for these companies to spend research and development dollars when they’re unsure of what the long-term benefit would bring.

Today, businesses are faced with uncertainty about health care, taxes, R&D tax credits and regulatory issues. There is no room for uncertainty and excess costs in the manufacturing sector.

House Republicans are onboard to push the MTB forward, but the Senate, while supportive of the process and end goal, is hesitant to introduce bills on behalf of companies in fear of the earmark stigma. Unless a compromise can be reached, nothing is going to move forward, and the MTB runs the risk of not being renewed. But that’s nothing new for the MTB. The renewal process continually gets held up by Congress – something that needs to change. In the future, MTB renewals should become more of an administrative task than a legislative one, where it can provide businesses with more certainty. In the 111th Congress, Senators Jim DeMint and Claire McCaskill introduced a bill (S. 4003) that would be a move in that direction, but we would like to see more alternatives to fixing this ongoing problem.

As for this year, Congress needs to find a solution in order to pass the bills in this current round and attach a long-term solution that would serve as a compromise. Reach out to your members of Congress and educate them about duty suspensions. Invite them to your facilities, and encourage them to come together and pass this important legislation that is estimated to support more than 90,000 manufacturing jobs and $3.5 billion in GDP growth. It’s an important step to ensure that all American manufacturers maintain their competitive edge as they compete globally.

Lawrence Sloan became Socma's President in early 2010.

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