Finance Committee Moves Trade Bills Forward, Tacks on Duty Removals, MTB Reform

Lawmakers tacked the lion’s share of the approved amendments onto Customs Reauthorization. Finance members rejected other amendments, including tariff preference level extensions for Bahrain.

Miscellaneous Tariff Bill Reform

The committee voted unanimously to approve a reform measure for the Miscellaneous Tariff Bill submission process as an amendment to the Customs Reauthorization bill. Finance members Rob Portman, R-Ohio, and Pat Toomey, R-Pa., introduced the American Manufacturing Competitiveness Act of 2015, S-998, in recent days, along with Sen. Claire McCaskill, D-Mo. (see 1504170001). Finance members Bob Casey, D-Pa., Richard Burr, R-N.C. and Tom Carper, D-Del., joined as co-sponsors for the amendment.

The legislation is a new version of a several-years-old bill that would allow U.S. industry to submit specific tariff suspension bills directly to the International Trade Commission, rather than through lawmakers (see 1501290002). A Portman aide said in a recent interview the legislation improves upon its previous iteration by trying to ensure impartiality in the approval of specific tariff suspension bills, regardless of whether they are submitted through Congress or the ITC (see 1504200017).

The legislation would require both Congress and the ITC to notify industry of the beginning of the submission process for the specific tariff suspension bills on October 15. The legislation outlines the rollout of the submission process with the goal of compiling an underlying MTB bill in a period of months. The ITC and Congress would be required to replicate that process starting in mid-October 2018.

Currency Manipulation

The committee approved the Currency Undervaluation Investigation Act, S-433, as an amendment to Customs Reauthorization by an 18-8 vote. Sen. Charles Schumer, D-N.Y., led the effort to submit the amendment, but Sens. Burr, Portman and Sherrod Brown, D-Ohio. The legislation would require the Commerce Department to apply countervailing duties on imports from countries that manipulate their currencies (see 1502120014). The bill would allow Commerce to assess the benefit from manipulation by comparing the average real exchange rate, drawn from two metrics, to “the official daily exchange rate identified by” the U.S. government.

Hatch rejected the currency measure, but committee ranking member Ron Wyden backed the amendment. He later praised it in a statement released following the hearing. “It’s going to lay down the law and say there are clear consequences when China manipulates its currency at the expense of American middle-class workers and businesses,” said Wyden in the statement (here).

House Ways and Means Chairman Paul Ryan, R-Wis., has repeatedly rejected the currency legislation, instead calling for continued diplomacy (see 1502130023). The Obama administration also has hit back against currency legislation and rules in TPP (see 1502090017). A Treasury official testified at the Finance markup, and called for continued bilateral diplomacy. The official also said the U.S. is making progress in cracking down on currency manipulation at the G20, International Monetary Fund and other international fora.

Trade Enforcement Boosts

Finance members approved an amendment, offered by Brown and Sen. Debbie Stabenow, D-Mich., to establish an Interagency Trade Enforcement Center in the Office of the U.S. Trade Representative. Stabenow co-sponsored the amendment, in the form of a bill titled The Trade Enforcement Act, S-758, in March (see 1503170048). The amendment would make permanent the current ITEC. President Barack Obama established the ITEC in 2012. The committee also approved an amendment to establish a chief manufacturing negotiator at the Office of the U.S. Trade Representative, which is part of the Trade Enforcement Act. Through the adoption of an additional amendment, the committee also approved the establishment of a Trade Enforcement Trust Fund.

South African Resistance to US Poultry Market Access

Sen. Johnny Isakson, R-Ga., offered an amendment to the preference package to require an out-of-cycle review for South Africa as part of that country’s beneficiary status in the African Growth and Opportunity Act, and the committee approved by voice vote. Isakson has pressured hard for South Africa to remove antidumping duties on U.S. poultry exports (see 1503310069). Isakson withdrew an amendment that would have only extended AGOA for South Africa for three years, as opposed to the 10-year extension of the whole program.

Modifications to the Chairman’s Summary

Hatch released summaries for the four bills on April 20 at the same time as the formal announcement of the markup. Prior to the April 22 markup, Hatch released a modified version of those summaries with changes set to advance with the bills (here). The modified version includes the following measures:

Performance outerwear tariffs. Hatch included a duty elimination provision for recreational performance outerwear as part of his modified version of the preference package. Similar measures in the past aimed to slash duties on a wide range of qualifying goods, from overalls to ventilated ski pants (see 14092327).

Athletic footwear. The modified summary also includes an amendment to the definition of athletic footwear to include some outdoor performance footwear.

GSP outdoor goods. Hatch’s modified summary would put into law the GSP Update for Production Diversification and Trade Enhancement Act, which would qualify outdoor goods for GSP benefits. Lawmakers in both houses of Congress introduced legislation to that affect earlier this Congress (see 1502030059).

Customs user fees and MPF. Hatch included in his modified summary a temporary extension of the increased Consolidate Omnibus Budget Reconciliation Act, which aims to ensure all carriers and people that enter the U.S. do so in compliance with customs law, the mark says. This incorporates an increase in the Merchandise Processing Fee, up to 0.34 percent of import value from 0.21 percent.

Tariff Preference Levels Fail

Finance members rejected an amendment from Sen. Bill Nelson, D-Fla., to extend the tariff preference level for Bahrain. The vote failed 16-10. Nelson argued the lapse in the TPL, which will occur in 2016 (see 1504060016), will damage industry in Florida. Burr hit back at that argument, saying U.S. textile policy has favored foreign nations to the detriment of U.S. manufacturing.

Following the defeat of the Bahrain TPL amendment, Sen. Ben Cardin, D-Md., withdrew his amendment to extend the TPL for Nicaragua. That TPL lapsed at the outset of 2015, despite an industry scramble to renew it (see 1410150064). The National Council of Textile Organizations recently voiced support for TPA (see 1504210012), but earlier warned against TPLs in the trade bills moving forward (see 1503260001).