Democratic, Republican Staffers in Congress Question Which Elements Will Be in Trade Title
With negotiations expected to begin in earnest soon on the House and Senate's trade packages, staffers in both chambers of Congress say there could be support for antidumping and countervailing duty reform and language around Section 301 tariff exclusions, but the likelihood of a dramatic de minimis change seems somewhat remote.
On de minimis, Senate Finance Committee Chairman Ron Wyden, D-Ore., has expressed some interest in making changes, but he also has defended the $800 threshold's utility. He issued a statement that said, "I am taking a close look at Representative Blumenauer’s proposal. De minimis has a role to play in allowing American small businesses to get the inputs they need, but using it to bypass tariffs for a multimillion dollar fast-fashion business or avoid any scrutiny as to the content of shipments is not what we had in mind. We will be working with Representative [Earl] Blumenauer [, D-Ore.,] in the conference process and beyond to make sure the de minimis law is doing what it is intended to do."
In interviews on background with International Trade Today, staffers wanted to emphasize how much compromise has already been done with the Generalized System of Preferences benefits program language. A House Democratic trade staffer said that there's a lot of overlap between House and Senate language on GSP, and said, "I think all those differences are bridgeable."
A Senate Republican staffer said the House should recognize Senate Republicans already made changes to GSP to satisfy Democratic concerns about the environment and gender equality. “Senator [Mike] Crapo [, R-Idaho,] demonstrated a lot of leadership here by getting a 91-4 outcome. It wasn’t easy,” he said.
Renewing the GSP and Miscellaneous Tariff Bill is usually not controversial. They expired at the end of 2020. The Senate renewal continues the MTB program as it has been -- goods are chosen by the International Trade Commission, who requested them is public, and members may object to any item on the record. The House renewal, which had no Republican support in the Ways and Means Committee, would change future cycles so that end-use goods are not eligible.
A House Democratic trade staffer argued that the Senate's U.S. Innovation and Competition Act (USICA) "is not as pro-competitive as it was originally thought to be." She said that given how many MTB goods are imported from China, it's a legitimate question to ask if this really counters China's economic manipulation. She said the administration has not weighed in on which version of MTB it prefers.
A Republican Senate staffer questioned House Ways and Means Trade Subcommittee Chairman Rep. Earl Blumenauer's characterization that a third of the MTB list is end-use products. He pointed to chemicals that can be bought off the shelf, but are used as manufacturing inputs.
“If they have a problem with microwaves, object,” said the Senate Republican staffer, referring to one of the consumer products on the MTB list. He said Republicans have never blocked the removal of an item after an objection.
Some Democratic constituencies also have criticized the Senate bill for requiring a broad Section 301 tariff exclusion process, and for the criteria Crapo laid out for granting exclusions. However, that language gave the Office of the U.S. Trade Representative broad latitude to make its own decisions on expanding exclusions.
The House Democratic staffer said the caucus is not unanimous in its position on requiring exclusions, since some members represent companies that want exclusions. Still, she noted the administration could change its tack on tariffs as the fourth anniversary of the first round of tariffs approaches.
Treasury Secretary Janet Yellen told Bloomberg TV on April 22 that cutting Section 301 tariffs is "something we're looking at" to fight inflation. According to press reports, a national security adviser said on April 21 that it could make sense to remove tariffs on lists 3 and 4A, on goods such as bicycles or apparel, because they have no strategic importance, and said that doing so could fight inflation.
The Senate bill did not include changes to trade remedy laws known as Level the Playing Field 2.0, but several expected Senate conferees, both Republicans and Democrats, were co-sponsors of that bill. The House companion bill is in the House's trade title.
A House Democratic trade staffer said she doesn't think Level the Playing Field Act is some new controversial approach, or that its planks "haven't been talked about before. For many, this is just a long time coming." She said those voices who are opposed may represent companies that benefit from cheap imports, and it's important to examine "who's objecting, and the reason why."
A senior Senate Democratic aide said that the time and money it costs companies to file successive AD/CVD cases is definitely a problem, and there is bipartisan recognition of that. She said that Commerce Department staffers have given proponents of the bill technical assistance, looking into World Trade Organization rules' compatibility, feasibility and how to preserve due process while making the changes.
A Republican Senate staffer noted that the original Level the Playing Field Act went through markup, and said that some senators have process concerns about making such changes without a markup. He said he has questions about how they'd estimate how cross-border subsidization distorted prices. He asked, “How would you calculate the denominator?”
He said he wants to know more about what products would have or would benefit from changes to the law for successive or concurrent trade remedy cases. If solar panels are an example, he said, there's already an antidumping circumvention petition. He asked: How would a circumvention petition and a successive AD case work together?
The top Republican on the House Ways and Means Committee, who will be a conferee, is against Level the Playing Field 2.0. The Senate Republican aide said it's important to Senate Republicans that House Republicans get a voice in these negotiations. And he said that the fact that Ways and Means ranking member Kevin Brady, R-Texas, introduced USICA's trade title with all Republicans on the committee shows that the Senate approach already has three of the four sides on board.
In contrast, a senior Senate Democratic aide said many House proposals do interest Senate Democrats, but that they recognize they have to think about what can get Republican votes in the Senate to cross the 60-vote threshold.