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Effect on Revenue
Enactment of this legislation would have the net effect of discouraging the blending and reconstituting operations and will result in an increase in revenue as a result of the application of the higher tariff to a larger volume of orange juice. The magnitude of revenue increase is difficult to predict, as the current level of reconstituted and blended volumes is difficult to determine with any degree of certainty. However, assuming that all imported not concentrated citrus fruit juice in 1982 was made from concentrated orange juice, and thus would be dutiable under proposed item 165.29, the total potential gain in customs revenues may amount to about $465,000 annually.
The U.S. Trade Representative will not support enactment of H.R. 4296.
The International Trade Commission submitted an informative report.
On June 27, 1984, the Subcommittee on Trade ordered H.R. 4296 favorably reported to the full Committee on Ways and Means by voice vote, with minor technical amendments including a change in the effective date to 15 days after the date of enactment.
A companion bill, S. 1636, was introduced in the Senate by Senator Hawkins of Florida.
SUMMARY OF TESTIMONY ON H.R. 4296
U.S. Trade Representative: H.R. 4296.
Will not support enactment of
Enactment of this legislation would likely subject the U.S. to claims for compensation in the form of reductions of U.S. tariffs on other products or retaliation in the form of increased tariffs affecting U.S. exports. There are other administrative remedies available, such as section 201 of the Trade Act of 1974, which USTR prefers be taken.
Statements for the Record
The Honorable de la Garza, M.C. (Tx): H.R. 4296 is a corrective legislative measure. It does not significantly change the tariff schedule for orange juice--it only clarifies the current tariff classification for pure and concentrated juice by separating them into two distinct sections. Separate classifications for concentrated and not concentrated (fresh) juice is the equitable thing to do.
Flordia Citrus Mutual: Florida Citrus Mutual is a cooperative association of citrus growers and processors, which represents more than 90 percent of the orange, grapefruit, and other citrus growers of Florida. The bill would correct an inequitable development in tariff classification which has resulted from manipulation of imported orange juice concentrate in circumvention of the intended classification and duty rate applicable to concentrated orange juice.
American Farm Bureau Federation: The new category classifications will clarify the existing classification so as to prevent entry of concentrated orange juice into a free trade zone for dilution to single strength juice to be entered into the United States at teh lower "not concentrated" rate.
McDermott, Will & Emery: Imports of reconstituted orange juice are de minimis. They pose no threat to the domestic industry. The current classification is bound under the 1947 GATT concession and cannot be changed without creating a GATT compliance problem. Reconstituted orange juice has been recognized in the TSUS since 1963. Administrative remedies, such as section 201 of the 1974 Trade Act, are the preferred methods available under U.S. trade laws to aid domestic producers faced with unfair or injurious competition from imports.
Holiday Juice Ltd.: The current tariff is bound by GATT; the bill effect is negligible; the proposed legislation should be restricted to the specific abuse at which is aimed, namely the bulk importation of orange juice; and the legislation would disregard the recent 40 percent reduction by Canada of the duty of U.S. juice products exported into Canada and would confer, in both the U.S. and Canadian markets, one more significant, and unnecessary, advantage on U.S. juice processors vis-a-vis their Canadian counterparts.
Introduced by: Mr. Frenzel (MN)
To amend the Tariff Act of 1930 regarding same condition drawbacks and same kind and quality drawbacks, and for other purposes.
Summary of the Provision
H.R. 4316, if enacted, would amend the Tariff Act of 1930 to allow for substitution, for drawback purposes of merchandise (whether imported or domestic) commercially identical to the imported merchandise.
Section 1 of H.R. 4316, if enacted, would amend section 313 (j) of the Tariff Act of 1930 (19 U.S.C. 1313(j)) by inserting a new paragraph which would provide that 99% of the duty, tax or fee paid on certain imported merchandise shall be refunded as drawback even though only part, or none, of the imported merchandise may be actually exported or destroyed under Customs supervision. Drawback is provided if the same person requesting drawback, subsequent to importation and within three years of importation of the merchandise, exports from the United States or destroys under Customs supervision fungible merchandise (whether imported or domestic) which is commercially identical to the merchandise imported. In order to be eligible for drawback, the merchandise for which drawback is claimed shall not have been used within the United States before such exportation or destruction; it must have been in the possession of the person claiming drawback under this paragraph; and it must have been in the same condition at the time of exportation or destruction as was the imported merchandise at time of importation. Further, in no case may the refunded duty under this or any other section of law, exceed 99 percent of the duties paid on the imported merchandise.
Background and Justification
This legislation provides for the substitution of merchandise of a commercially identical nature to expedite merchandise handling and inventory control. Subsection (j) currently provides that imported merchandise on which duty is paid is eligible for drawback if such merchandise is exported or destroyed under Customs supervision in the same condition as when imported, within 3 years after importation, unless such merchandise has been used within the United States. This legislation would clarify the principle of substitution by allowing merchandise of an identical commercial nature to be substituted for the merchandise being imported for purposes of drawback as long as the merchandise being exported or destroyed has not been used within the United States.
Comparison with Present Law
See discussion above.
Effect on Revenue
The impact on revenue as a result of this legislation cannot be determined.
The International Trade Commission submitted an informative
The Department of Commerce has no objection to enactment of H.R. 4316.
On June 27, 1984, the Subcommittee on Trade ordered H.R. 43.6 favorable reported to the full Committee on Ways and Means by voice vote, with an amendment classifying the language in the bill.
A companion bill (S. 1972) was introduced by Senator Roth.
Department of Commerce: No objection to enactment of H.R. 4316.
The Honorable Bill Frenzel, M.C. (Minn.): The bill allows the use of "substitution" under the Same Condition Drawback law. Substitution would allow companies to co-mingle inventories to avoid the necessity of keeping imported goods separataed from fungible or commercially identical goods produced in this country.
DuPont: The bill will increase the profitability of exporting surplus inventory or goods needed to complete a freign order, will probably lead to increased U.S. employment and will lead to an increase in operations to be done in the United States on goods which are imported and will be reexported.
The Joint Industry Group: The bill would benefit exporters by eliminating cost of maintaining separate inventories. A difference of view exists for packaging operations performed in the U.S. upon imported or domestic merchandise, and the term "incidental operations" is not defined clearly in the existing
The National Committee on International Trade Documentation: United States commercial activities related to import/export operations, as well as the United States itself, benefit from the importation of merchandise which may be exported in its same condition.