(Myles S. Getlan — Arent Fox LLP)

Last week, the U.S. Senate Finance Committee and the U.S. House of Representatives Ways and Means Committee approved draft legislation that would significantly increase costs on U.S. importers. The legislation, which would implement free trade agreements (FTAs) that the United States has negotiated with South Korea, Panama, and Colombia, would increase Merchandise Processing Fees (MPF) assessed on imports entering the United States.

Barring unexpected developments, we expect a sizeable increase in the MPF rate to be included in the final legislation. For some importers, these costs could be in the hundreds of thousands of dollars. Facing these future increased costs, companies should carefully consider whether they are eligible for an MPF exemption under one or more trade preference programs. However, with greater revenue at stake, the government is likely to further ratchet up enforcement efforts in relation to trade preference claims, including the MPF exemption, thereby presenting greater compliance challenges for importers. Read more here.