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Before the Trade Agreements Act of 1979, these products were competitive with similar domestic products and were subject to a special basis of valuation for customs purposes known as the "American selling price" (ASP). When the conversion was made to an ad valorem equivalent (AVE) following the Trade Agreements Act of 1979, the higher duty was imposed on these products even though in 1982 there no longer was domestic production of the product.
Effect to Revenue
It is estimated that the future loss of revenue as a result of the enactment of this legislation would be $0.5 million annually in 1984 and would decline slightly in subsequent years due to the staged rate reduction in duty.
The Department of Commerce has no objection to enactment of H.R. 3445.
The International Trade Commission submitted an informative
On June 27, 1984, the Subcommittee on Trade ordered H. R. 3445 favorably reported to the full Committee on Ways and Means by voice vote, with a minor technical amendment.
A companion bill (S. 2022) was introduced by Senator Moynihan.
Department of Commerce: No objection to enactment of H.R. 3445.
Statements for the Record
Mobay Chemical Corporation:
Enactment would reduce manufacturing cost and help the U.S. tire industry become more competitive in world markets.
Rubber Manufactures Association: This bill would temporarily eliminate an unnecessary economic burden and thereby enhance the competitive position of the U.S. rubber industry.
To extend the existing suspension of duty on natural graphite until January 1, 1988.
Summary of the Provision
H.R. 3709, if enacted, would extend the temporary suspension of duty on natural crystalline flake graphite for an additional three years until January 1, 1988.
Section 1 of H.R. 3709, if enacted, would amend item 909.01 of the Appendix to the Tariff Schedules of the United States (19 U.S.C. 1202) by inserting the date 12/31/87 in lieu of 12/31/84 in the date column. This would effectively extend the temporary suspension of duty on natural crystalline flake graphite for an additional three years until January 1, 1988. Natural graphite is provided for in items 517.21 and 517.24 of part 1E, schedule 5.
Section 2 establishes the effective date of the legislation as December 31, 1984, when the current temporary extension expires. Background and Justification
Natural graphite is divided into two commercial classes-crystalline and amorphous. Natural crystalline graphite is marketed as flake, lump, chip and dust. Amorphous graphite, which is duty-free, is marketed in sizes ranging from fine powder to lumps the size of walnuts. It is common industry practice to blend different graphites in order to obtain a final product having the desired physical and chemical properties for specific uses. In many instances the composition of these blends is a trade secret.
Crystalline flake graphite has been deemed essential to the national defense and has been designated as a strategic material. Comparison With Present Law
Under existing law, natural crystalline flake graphite, crude and refined (not including flake dust), is provided for in TSUS items 517.21 and 517.24 of part 1E, schedule 5. The column 1 (MFN) rate of duty for item 517.21 (value not over 5.5 cents per pound) is 5.3 percent ad valorem. The LDDC rate of duty is 3 percent ad valorem, and the column 2 rate of duty is 1.65 cents per pound. The duty on item 517.21 is scheduled to be reduced to 3% ad valorem by 1987 as a result of the Multilateral Trade Negotiations (MTN).
The column 1 (MFN) rate of duty for item 517.24 (value over 5.5 cents per pound) is 0.3 cents per pound. The column 2 rate of duty is 1.65 cents per pound.
The duty on these two items have been under suspension since October 22, 1975, and under current law the suspension is scheduled to continue until December 31, 1984. These graphite products are eligible for duty-free treatment under the Generalized System of Preferences (GSP).
Effect on Revenue
Based on the 1982 level of imports from non-GSP countries of the natural graphite covered by this legislation and the applicable rates of duty, the ITC estimates that enactment would result in a loss of customs revenue of about $26,000 in 1983.
The Department of Commerce has no objection to enactment of H.R. 3709.
The International Trade Commission submitted an informative report.
On June 27, 1984, the Subcommittee on Trade ordered H. R. 3709 favorably reported to the full Committee on Ways and Means by voice vote, without amendment.
SUMMARY OF TESTIMONY ON H.R. 3709
Department of Commerce: No objection to enactment of H.R. 3709.