H.R. 3983 Page 2 Since the Customs Service is responsible for approving applications to operate bonded warehouses, including the stores, and since there is often limited available space for new operations, there have been numerous disputes over operating rights--involving Customs, existing stores, public authorities, and prospective stores. Public authorities (State or local port authorities, etc.) which own or control facilities may require a potential operator to obtain a concession (a grant by the government entity of specific privileges, usually in return for a payment and/or a share of revenues); however, the Customs Service reviews applicants to see if they will comply with Customs regulations, not on the basis of possession of a concession. Thus, an applicant having such grant may fail to be approved by Customs, while one not holding a concession may receive Customs' permission to operate a warehouse or store. The proposed legislation would effectively terminate the movement of bonded merchandise into any duty-free sales enterprise for sale and export unless State and local approval has been given. Comparison with Present Law New provision. Effect to Revenue The effect on future customs revenue cannot be determined. Subcommittee Action Agency Reports The International Trade Commission submitted a informative report. Markup On June 27, 1984, the Subcommittee on Trade ordered H.R. 3983 favorably reported to the full Committee on Ways and Means by voice vote, without amendment. Administration SUMMARY OF TESTIMONY ON H.R. 3983 We have heard of no objection. H.R. 3983 Page Three Statements for the Record Supports Honolulu Airlines Committee: Enactment of this bill would help retain the current revenues used to maintain the state airport systems. Duty Free Shoppers Group Ltd.: Enactment of this bill would give express statutory recognition to duty-free shops as a special type of customs bonded warehouse and permit ony authorized concessionaires to operate duty-free shops at international exit points. To suspend temporarily the duty on a certain chemical intermediate. Summary of the Provision H.R. 4035, if enacted, would suspend the duty on (6R,7R) 7-[(R)-2-Amino-2-phenylacetamido]-3-methyl-8-oxo-5-thia-1azabicyclo [4.2.0]oct-2-ene-2-carboxylic acid disolvate through December 31, 1986. Section-by-Section Analysis Section 1 of H.R. 4035, 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 906.51 to suspend the column 1, MFN, duty on (6R,7R)-7-[(R)-2-Amino-2-phenylacetamido] 3-methyl-8-oxo-5-thia-1-azabicyclo[4.2.0]oct-2-ene-2-carboxylic acid disolvate ("Antibiotic Intermediate"), provided for in item 406.42, part 1B, schedule 4, through December 31, 1986. Section 2 makes the processes effective on or after the 15th day after the date of the enactment of this Act. Background and Justification The purpose of this bill is to suspend the duty for a temporary three-year period on a high-technology organic chemical intermediate used in the manufacture of a semi-synthetic antibiotic. The semi-synthetic antibiotic is used domestically and also is widely exported to countries such as Japan and other foreign markets for the treatment of infectious deceases. Comparison with Present Law As a result of the Trade Agreements Act of 1979, this intermediate chemical is currently classified in TSUS item 406.42 (other heterocyclic compounds). Item 406.42 has a column 1 and an LDDC duty rate of 13.5 percent ad valorem. The column 2 rate of duty is 7 cents per pound plus 52 percent ad valorem. The column 1 rate of duty is not scheduled for annual staged reduction within the framework of the Tokyo round. Imports of the chemical are not eligible for duty-free entry under the Generalized System of Preferences (GSP). H.R. 4035 Effect on Revenue It is estimated that the future loss to revenue as a result of the enactment of this legislation would be $5.0 million annually based upon estimated annual imports of the product of about 140,000 kgs per year. Subcommittee Action Agency Reports The Department of Commerce has no objection to enactment of H.R. 4035. The International Trade Commission submitted an informative report. Markup On June 27, 1984, the Subcommittee on Trade ordered H.R. 4035 favorable reported to the full Committee on Ways and Means by voice vote, with an amendment changing the effective date to 15 days after the date of enactment. SUMMARY OF TESTIMONY ON H.R. 4035 Administration Department of Commerce: No objection to enactment. To provide for a three-year suspension of the duty on B-naphthol. Summary of the Provision H.R. 4087, if enacted, would provide for a three-year suspension of the duty of B-baphthol until June 30, 1986. Section-by-Section Analysis Section 1 of H.R. 4087, if enacted, would amend subpart B of part 1 of the Appendix of the Tariff Schedules of the United States (19 U.S.C. 1202) by inserting in numerical sequence a new TSUS item 907.06 to provide for the temporary suspension of duty on B-naphthol (provided for in item 403.29, part 1B, schedule 4) until June 30, 1986. Section 2 provides that the temporary duty suspension would be effective on and after the 15th day of enactment of this Act. Background and Justification The synthetic organic chemical, B-naphthol, is derived from naphthalene. Currently, this chemical is principally used as an intermediate in the production of pigments and dyes. Previously, the main use was as an antioxidant in synthetic rubber; however, this use has declined in the past few years. It is also used in the production of fungicides, pharmaceuticals, perfumes, and as an antiseptic. There are no significant differences in the quality of the domestic and foreign products. In 1981, imports of B-naphthol, by quantity, were 2.9 million pounds. The majority of these imports were from Poland, Italy and West Germany. Smaller amounts were also imported from Taiwan and the People's Republic of China. The imports from Italy were primarily shipped to Montedison USA, Inc., while imports from West Germany were shipped to American Hoechst Corporation. It is believed that there are approximately 8-10 importing firms in addition to the two just mentioned which import this product. There were no imports from column 2 sources. |