INSIGHT: US House lifts tariffs on key chemical imports

22 July 2010 15:29  [Source: ICIS news]

By Joe Kamalick

WASHINGTON (ICIS news)--In a rare display of bipartisanship, the US House of Representatives this week passed a tariffs reduction bill that was hailed by chemical makers and a broad spectrum of other manufacturers.

The House approved by a vote of 378-43 the Miscellaneous Tariff Bill (HR-4380) to suspend or reduce import duties or tariffs until the end of 2012 on a wide selection of chemicals, polymers and derivatives along with multiple non-chemical finished products.

The common denominator among the more than 200 items is that they are not produced domestically but are used in production of, or as end-product components in, US manufactured goods and materials.

Those voting in favour of the tariff reductions or suspensions included 249 Democrats and 129 Republicans. Only 42 Republicans and one Democrat voted against the measure.

Such a solid and heavy majority in favour of any legislative measure is especially rare at a time when Republican and Democrat members of Congress usually are split along strict party lines on any issue more controversial than naming a post office building.

It also marks an unusual advance on an international commerce matter when Democrat leaders in Congress have been sitting on three long-pending US free trade agreements with Colombia, Panama and South Korea.

Lawrence Sloan, president of the Society of Chemical Manufacturers and Affiliates (SOCMA), said the Miscellaneous Tariff Bill (MTB) will “help create and preserve thousands of US chemical manufacturing jobs”.

He said the measure cuts domestic chemical manufacturing costs by suspending or reducing duties on raw materials imported into the US, substances that in many cases are vital to end products.

“This legislation assists chemical manufacturers of all sizes to import production components that are not available in the US,” SOCMA noted.

“The cost-savings achieved by the MTB will allow small and mid-sized batch chemical manufacturers to maintain competitive operations, invest in new facilities, retrain workers and preserve our industry base,” Sloan said.

The broad-based National Association of Manufacturers (NAM) also hailed House passage of the bill.

NAM president John Engler said the measure “will cut the costs of doing business in the US and boost American manufacturing exports”.

“In fact, studies show that if enacted, these provisions would increase US domestic production by $4.6bn [€3.6bn] and support almost 90,000 jobs,” Engler said.

NAM, whose 14,000 member firms include many chemical and plastics producers, noted that “manufacturers of all sizes use these vital tariff suspensions to obtain raw materials, proprietary inputs and other products that are not available in our nation”.

“Without them, the costs of these companies’ products would inevitably increase, forcing them to pass these costs on to consumers,” Engler said, adding: “This hinders competitiveness and translates into lost jobs for American workers.”

Among other trade groups, the American Apparel & Footwear Association (AAFA) also welcomed the bill’s approval, saying that it will benefit hundreds of US manufacturers across the country.

AAFA spokesman Scott Elmore noted that there had been some opposition to the bill among House Republicans on grounds that the measure violated a Republican ban on so-called “earmarks”.

Earmarks are special spending measures that House members of both parties have traditionally - and quietly - inserted in larger appropriations bills. Typically, earmarks provide funds for special interests - also known as “pork barrel projects” - that likely would not get approval if put to a stand-alone vote.

“The provisions in this bill are not earmarks,” Elmore said. “They eliminate or reduce unnecessary and outdated taxes for US manufacturers and other US companies on inputs and other products no longer made in the United States.”

Among the more than 100 chemicals, catalysts and polymers cited in the tariffs reductions measure are acrylic synthetic staple fibres, 1,3-propanediol polymer, sodium salt hydrates, propanoic acid, ortho-nitro-phenol, powdered ion exchange resins, neodymium oxide, certain imaging colorants, didecanoyl peroxide, squaric acid, mixtures of polyvinyl alcohol and polyvinyl pyrrolidone, some herbicides and chemicals used in the production and dyeing of textiles.

The Miscellaneous Tariff Bill now heads for the Senate where - given its lopsided bipartisan support in the House - it is expected to pass.

($1 = €0.78)

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By: Joe Kamalick
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