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H.R. 3330

Introduced by: Mr. Archer (TX)

Date: June 16, 1983

To amend the Tariff Act of 1930 to exempt from duties, equipments and repairs to certain vessels and for other purposes.

Summary of the Provision

H.R. 3330, if enacted, would exempt any U.S. flag vessel that is away from a U.S. port for at least two years from the 50% ad valorem duty on repairs and equipment purchases provided the repairs or equipment purchases were not made within 6 months of departure from a U.S. port and the vessel did not depart from a U.S. port for the purpose of obtaining overseas repairs.

Section-by-Section Analysis

Section 1 of H.R 3330, if enacted, would amend section 466(e) of the Tariff Act of 1930 (19 U.S.C. 1466(e)) to provide that any vessel referred to in subsection (a) of section 466 that arrives in the United States two or more years after its last departure shall pay applicable duties only with respect to 1) fishnets and netting, and 2) other equipments, parts and materials purchased and repairs made during the first 6 months after the last departure from the U.S. This exemption from duty would not apply if the vessel is designed and used primarily for transporting passengers and property and the vessel departed the U.S. for the sole purpose of obtaining such equipment, parts, materials or repairs.

Section 2(a) would make the amendment applicable to entries made in connection with arrivals of vessels on or after the 15th day after the date of the enactment of the Act.

Section 2(b) would provide retroactive applicability for: 1) entry made before the 15th day after date of enactment but not liquidated as of January 1, 1983, or 2) entry made before the date of enactment but which is the subject of an action in a court of competent jurisdiction on the date of introduction of the Act. This is provided that proper notifications are made on or before the ninetieth day after the date of enactment of the Act and provided there would have been no duty if the amendment made by the first section of the Act were implemented.

Background and Justification

U.S.-flag vessels engage in three types of trade: (1) domestic trade (trade carried out only between U.S. ports); (2) U.S./foreign trade (trade carried out between U.S. and foreign ports); and (3) foreign/foreign trade (trade carried out only between foreign


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U.S.-flag vessels engaged in foreign/foreign trade compete directly with foreign-flag vessels and usually operate at a competitive disadvantage due to foreign operators' lower wages and lower shipyard maintenance and repair costs. Since U.S.flag vessels engaged in foreign/foreign trade are not eligible for subsidies, exempting these vessels from duties on foreign repairs and equipment would lower their operating costs and enhance their competitive posture in maritime trade.

A second category of vessels which are intended to be affected by this legislation consists of a myriad of small vessels, usually less than 500 DWT, who are engaged in the offshore supply vessel industry. It is believed that the world fleet is comprised of about 4,000 vessels with about 2,000 of them owned by U.S. firms. The vessels in this category consist of a variety of vessels including crew, tug, supply and combination-use vessels.

It is believed that about 400-500 of the total 2,000 U.S. owned vessels are currently in overseas service. The purpose of these vessels is to provide a logistical support system to offshore service and supply operations necessary to support the worldwide offshore oil exploration and production operation. This is a valuable resource to the United States maritime and industrial sectors. The ability to compete the worldwide environment in this business is of extreme importance as United States industry expands its search for national resources around the world. This legislation will enhance the ability of this sector of the maritime industry to compete in the world marketplace for services.

Comparison With Present Law

The duty applicable to foreign-made equipment, parts, and materials for, and to repairs which are made in foreign ports upon, U.S.-flag vessels is provided for in section 466 of the Tariff Act of 1930. The prescribed rate of duty under the Act is 50 percent of the cost of such equipment or repairs in the foreign country and is assessed on the vessel's first arrival in a U.S. port. However, the duty may be remitted or refunded if the repairs are made or the equipment was purchased under emergency conditions, if the equipment was manufactured in the United States and the labor to make the necessary repairs was performed by U.S. residents or members of the regular crew of the vessel, or if the equipment, materials, or labor was used for dunnage or temporary protection for cargo.

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Currently, shrimp boats and "special purpose" craft such as certain barges, certain tugs, oil drilling rigs, and oceanography vessels that remain away from U.S. ports for 2 or more years are exempt from duty on foreign equipment and repairs. The proposed legislation is intended to broaden those exemptions, added in Public Law 91-654 of January 5, 1971, to include U.S.-flag cargo and passenger vessels and offshore supply vessels which remain away from U.S. ports for 2 or more years and did not depart from the United States for the sole purpose of obtaining such equipment or purchases. Fishnets and netting would not be eligible for exemption under the terms of this legislation.

The following tabulation presents the total number of transactions and the total revenues received from duties on foreign repairs and equipment on U.S.-flag vessels during fiscal years (October 1 September 30) 1977-82.

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The unusually large increase in 1981 and 1982 duties collected reflects large amounts of uncollected billings from previous years which were collected.

The retroactivity provided in this legislation provides that if formal court proceedings challenging the payment of this duty have been initiated prior to the introduction of the bill, then the exemption would cover those cases. Currently, Customs proceedings which apply to ship repairs have a provision for making a formal protest of duty assessment which is frequently used for these matters. If the party is not satisfied with the Customs action, he may then commence formal court action for relief.

Effect on Revenue

The average annual Customs revenue loss from enactment of this legislation is estimated to be $4.8 million, based on 1977-82 revenue figures. However, the bill, as drafted with the retroactivity clauses, could result in an estimated first year revenue loss of $12.0 million, and each year thereafter could result in a revenue loss of about $4.0 million.

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Subcommittee Action

Agency Reports

The Department of Commerce does not object to enactment of H.R. 3330 if the retroactive provision is deleted.

The International Trade Commission submitted an informative



On June 27, 1984, the Subcommittee on Trade ordered H.R. 3330 favorably reported to the full Committee on Ways and Means by voice vote, with a technical amendment providing for an effective date 15 days after date of enactment.



Department of Commerce:

Objects only to retroactive provision,

otherwise does not object to enactment of H.R. 3330.

H.R. 3445

Introduced by: Mr. Conable (NY)

Date: June 29, 1983

To suspend temporarily the duty on diphenyl guanidine and di-ortho-tolyl guanidine.

Summary of the Provision

H.R. 3445, if enacted, would suspend the duty on diphenyl guanidine and di-ortho-tolyl guanidine until the close of June 30, 1987. Section-by-Section Analysis

Section 1 of H.R 3445, if enacted, would amend subpart B of part 1 of the Appendix to the Tariff Schedules of the United States (19 U.S.C. 1202) by inserting a new item 906.50 to suspend the column 1, MFN, duty on diphenyl guanidine and di-ortho-tolyl guanidine, provided for in item 405.52, part 1B, schedule 4, until the close of June 30, 1987.

Section 2 makes the provision effective on or after the fifteenth day following the date of enactment of the Act.

Background and Justification

DPG (diphenyl guanidine) and DOTG (di-ortho-tolyl guanidine) are two synthetic organic chemicals produced, in part, from benzene and toluene derivatives and used as intermediates in the U.S. rubber industry. Both chemicals are used as curing accelerators for synthetic and natural rubbers which are ultimately used in the production of automobile tires and shoe soles. The major users of DPG and DOTG are the U.S. tire manufacturers, such as: Goodyear, B.F. Goodrich, Uniroyal, Firestone and General Tire.

There is no known U.S. producer of these materials.

Comparison with Present Law

DPG and DOTG are classified under TSUS item 405.52, other nitrogen function compounds and their derivatives, found in schedule 4, part 1, subpart B of the Tariff Schedules of the United States (TSUS). The current column 1 rate of duty is 18 percent ad valorem. The column 2 rate of duty is 7 cents per pound plus 61 percent ad valorem. The LDDC rate is 15 percent ad valorem. Imports are not eligible for duty-free treatment under the Generalized System of Preferences (GSP).

This item is eligible for staged rate reductions under the Tokyo round of the MTN and the column 1, MFN, rate of duty will be reduced to 15 percent ad valorem on January 1, 1987.

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