The Border Trade Alliance told Commerce Secretary Gina Raimondo that the U.S. port-of entry anchor for reference prices under the tomato antidumping suspension agreement "undermines the USMCA in letter and spirit," and will cause compliance problems for produce importers, since it is an administrative change to how things have always been done. In the past, a June 2 BTA letter says, the first point of sale was the reference point. But to change that to the port of entry will mean the costs of USDA inspection fees, transportation from the U.S.-Mexico border to the warehouse and other handling fees will be incorporated into the minimum reference price. The BTA believes this is an example of "U.S. trade policy calibrating around the protests of a small but vocal cohort of regional special interests."
The announcement over the weekend that the G-7 countries have agreed on a global minimum corporate tax could mean that digital services taxes will be avoided. The communique from the finance ministers said they agree that hammering out an agreement on global minimums and how to treat revenues outside corporations' home countries that do not have a physical nexus should be done at the same time. Their goal is to reach an agreement in July. They said that home countries will have the right to tax the first 10% in profit, and then at least 20% of the profit past that amount of "the largest and most profitable multinational enterprises. We will provide for appropriate coordination between the application of the new international tax rules and the removal of all Digital Services Taxes, and other relevant similar measures, on all companies."
The immediate past U.S. trade representative criticized an amendment attached to a China package which would renew the Miscellaneous Tariff Bill, and restart the exclusions for Section 301 tariffs on Chinese imports. The amendment, which got more than 90 votes in the Senate, also renews the Generalized System of Preferences benefits program, but Robert Lighthizer was silent on that aspect of the bill.
According to the White House budget, importers are expected to pay $85 billion in tariffs in the current fiscal year, which ends Sept. 30. But the administration projects that duties collections will fall to $57 billion in fiscal year 2022, and to $45 billion in FY23. Alvaro Ferreira, a consultant to Sandler Travis law firm and an economist by training, said he doesn't know what assumptions the Office of Management and Budget used to make its projections, but he thinks "maybe the administration is thinking: Let’s not take the [Section] 301 tariffs for granted, [in case] there’s an adverse court ruling by the Court of International Trade."
After the House Ways and Means Committee chairman expressed optimism that global tax negotiations would solve the problem of digital services taxes around the world, Rep. Kevin Brady of Texas, the ranking Republican on the committee, said that President Joe Biden's strategy is a lose-lose for America.
Senate Finance Committee Chairman Ron Wyden, D-Ore., and House Ways and Means Committee Chairman Richard Neal, D-Mass., "are optimistic that a strong multilateral agreement can be reached to harmonize our international tax rules, end the race to the bottom and put a stop to digital services taxes," they said in a joint statement. The Office of the U.S. Trade Representative has threatened additional 25% tariffs on billions of dollars' worth of imports from European countries, Turkey and India over their proposed DSTs (see 2106020047), but has not implemented any of the Section 301 tariffs as the administration waits to see how negotiations go at both the G-7 and the Organization for Economic Cooperation and Development (OECD). Canadian Finance Minister Chrystia Freeland told reporters June 2, "The new US administration ... has taken an approach of compromise and I think that really does mean a deal is within reach." She said that in Canada's view it's important that both the global minimum corporate tax and DST be solved together. The New York Times reported that a Treasury Department official was optimistic about negotiations, as well. The newspaper said that the OECD's outgoing secretary general said it's possible a deal on both DSTs and global taxation could be reached in October.
A senator and a House member who sponsored the Uyghur Forced Labor Prevention Act in their respective chambers have asked the union that represents National Basketball Association players to consider the fact that Chinese sportswear companies Anta, Li-Ning and Peak use cotton grown in the Xinjang region. The U.S. blocks the importation of all cotton grown in Xinjiang because of the probability that it was planted or harvested with forced labor of Uyghur Muslims. The National Basketball Players Association didn't immediately comment.
Republican Rep. Adam Kinzinger of Illinois and Democratic Rep. Jason Crow of Colorado told an Atlantic Council online audience that the COVID-19 pandemic revealed an overdependence on China and Asia for essentials, and the need to bring more manufacturing back to the U.S. or North or Central America. The two introduced a bill this year that would offer incentives for relocating manufacturing to certain Western Hemisphere countries, and more generous incentives to bring manufacturing back to the U.S. (see 2105200049). Kinzinger said he thinks it has a great chance to become law.
Rep. Brett Guthrie, R-Ky., reintroduced a bill May 25 to permanently remove the 4.8% tariff on imported basketballs. Russell Brands of Bowling Green, Kentucky, has gotten leather basketballs repeatedly covered by the Miscellaneous Tariff Bill, saving about $50,000 in tariffs, but the MTB frequently expires and has a gap before it is retroactively renewed.
Every country in the current round of retaliatory tariffs over digital services taxes will have fewer products targeted if negotiations fail to reach a solution, according to detailed lists released for the United Kingdom, Italy, Spain, Turkey, India and Austria. In all cases, as with an earlier list for France, no duties will be collected as negotiations continue. The announcement, made June 2, allows for up to 180 days before a decision has to be made on whether to hike tariffs on these goods by 25%. "Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future," U.S. Trade Representative Katherine Tai said in a press release.