Greg Clemons should not have been dealing with import tariffs or fighting efforts by a United States senator to help one of his firm’s competitors.
But he found himself doing both three years ago because of a Miscellaneous Tariff Bill (MTB) - legislation introduced by members of Congress to waive import duties on products that supposedly are not made in the United States.
Clemons moved after Sen. John Barrasso, R-WY, sponsored an MTB to waive the tariff on certain raw materials used to make carbon acrylic fibers. That would help an Evanston, Wyoming, firm – Carbon Fiber Technology LLC.
Clemons’ employer, Toray Carbon Fibers America Inc., had invested hundreds of millions of dollars on manufacturing facilities so it could make the raw materials itself at its plant in Decatur, Ala., instead of importing them from Japan, as it had done for years before. A big factor in that decision was to avoid having to pay the import duties.
“We hired American employees. We are providing their benefits. We’re all paying taxes,” Clemons told The Washington Examiner. “It just doesn’t seem the right thing to do to come along and waive that duty for another company.”
The Barrasso bill was eventually dropped from the MTB passed by Congress in 2010, after Clemons filed a written objection.
There is no way to know yet how many of the more than 1,200 MTBs proposed so far this year would grant tariff exemptions to foreign-made products that compete with U.S. manufacturers.
That determination will be made later this year by the U.S. International Trade Commission (ITC). Tariffs cannot be waived on foreign-made goods if the same product is made in the United States.
Things could be about to change. Two senators – Republican Jim DeMint of South Carolina and Democrat Claire McCaskill of Missouri – are trying to reform the MTB process. They say it’s backwards now.
Under current rules, only those tariff waivers sponsored by a member of Congress are forwarded to the ITC to determine whether they would directly compete with an American producer. The Congressional Budget Office (CBO) reviews them to ensure the value of the tariff break does not exceed the cap of $500,000 per year.
Those waivers that meet the legal requirements are lumped into a single bill and sent back to Congress for a final vote.
The current process favors big companies that can afford lobbyists and campaign contributions, DeMint said. For small firms, it is cheaper to pay the import duties than to seek tariff relief they are legally entitled to, he said.
Whoever is asking for break “has to come up and kiss the ring” to convince a member of Congress to sponsor the bill, DeMint said. Sometimes, things like campaign contributions or political support are expected in return.
“The problem is that you do have to come up here and deal with the political process, often with a lobbyist, sometimes with a fundraiser,” DeMint said, adding the whole process is “ripe for corruption.”
The DeMint-McCaskill bill would allow companies seeking a tariff waiver to apply directly to the ITC instead of seeking members of Congress to introduce bills to allow them to receive the exemptions they may be entitled to by law, DeMint said.
“It really comes down to control,” DeMint said. “A lot of people up here really want to control everything and they want things to have to go through their offices, where it gives them power. We’ve got to get rid of that.”
DeMint said his preference would be to do away with tariffs, but short of that, removing politics as much as possible would make the system fairer, especially for small companies that may use relatively small amounts of imported products to manufacture other goods.
Some members who introduced multiple MTBs this year support the DeMint-McCaskill measure, though most stopped just short of specifically endorsing it.
“That will get Congress out of it so you don’t have to have the discussion,” said Rep. Bobby Scott, D-Va., who sponsored at least 20 MTBs this year. “That’s why his bill has such merit. It gets Congress out of it and it makes a situation where the decision is made according to the law and politics doesn’t have anything to do with it. But until that passes, this is the only process there is.”
The most prolific sponsors of MTBs in Congress so far this year – Rep. Mel Watt, D-N.C., and Sen. Charles Schumer, D-N.Y. – could not be reached for comment. Barrasso also could not be reached.
Mark Flatten is a member of The Washington Examiner’s special reporting team. He can be reached at firstname.lastname@example.org or 202-459-4929. Jennifer Peebles, the Examiner's data editor, contributed - mightily - to this series.
Part I - Is 'MTB' the new name for earmarks?
Part II - MTB process favors big corporations
Part III - Bipartisan Senate duo seeks MTB reform