U.S. IMPORT INDUSTRY CONTINUES FIGHT AGAINST PROPOSED MPF EXTENSION

U.S. IMPORT INDUSTRY CONTINUES FIGHT AGAINST PROPOSED MPF EXTENSION    The U.S. import industry has stepped up its efforts this week to remove language from the Senate healthcare legislation that would extend the government’s collection of the merchandise processing fee on imports another eight years.
   The Bipartisan Patient Protection Act (Senate bill 1052), which was proposed by Senators John McCain, R-Ariz.; John Edwards, D-N.C.; and Edward Kennedy, D-Mass., contains a provision to extend the MPF’s expiration from 2003 to 2011.
   “This eight-year extension would remove any near-term opportunity to debate whether the fee should be continued or whether an extension could be earmarked specifically for modernizing U.S. Customs operations,” said Ronald Schoof, manager of customs and export regulations at Caterpillar and chairman of the Washington-based Joint Industry Group, in a letter to the senators.
   MPF has been opposed by importers since its implementation in the 1985 Consolidated Omnibus Reconciliation Act, because the industry was led to believe the money would be earmarked for Customs modernization. Instead the revenue from the fee is poured into the government’s general funds. Last year, Customs collected nearly a $1 billion in MPF.
   “If the Customs Service is to continue collecting this user fee it must directly fund improvements to Customs processing, specifically the Automated Commercial Environment (ACE) and other U.S. Customs initiatives that are greatly needed to the improve the trade process,” Schoof said.
   Schoof also told the Senators that the use of MPF to pay for the legislation’s programs could result in a dispute with the World Trade Organization.
   “In the late 1980s, a GATT (General Agreement of Tariffs and Trade) panel found that the user fee was GATT-illegal because it was being collected in amounts exceeding the cost of Customs processing,” Schoof explained. “While the U.S. addressed that problem by placing certain caps on the fee, it was clear from the panel finding that linkage of the fee to the cost of Customs commercial operations is of seminal importance to the question of GATT legality. If our trading partners believe Customs user fees are being used to fund health-care related goals, another GATT challenge is virtually certain to surface in the WTO.”
   Other industry groups, such as the National Customs Brokers and Forwarders Association of America and the American Association of Exporters and Importers, have launched similar letter-writing campaigns to oppose the Senate bill’s MPF provision.
   “We encourage our entire membership to contact their elected officials in both the Senate and the House regarding this piece of legislation,” said Alan Atkinson, a spokesman for the Joint Industry Group.