House Ways and Means Committee Chairman Richard Neal, D-Mass., told International Trade Today that a carbon border adjustment tax is still "in the mix" as Democrats try to figure out how to pay for a broad array of social and environmental spending. A carbon border adjustment tax could add tariffs to certain imports that are carbon-intensive, if the U.S. determines their manufacture was less clean than the domestic manufacturing processes. But when pressed during a Sept. 23 hallway interview with reporters for more details on where things are on the tax, Neal acknowledged that the discussion of this tax is more conceptual than practical. "Did it come up as a talking point? Yes. Did it come up as a solution point? No." Neal said that all the pay-fors that passed out of Ways and Means are on the menu of options for how to pay for the Build Back Better bill. That includes restricting the use of drawback by tobacco importers and exporters (see 2109130038).
Rep. Brad Schneider, D-Ill., introduced a bill that would offer the more generous unemployment and retraining benefits under Trade Adjustment Assistance to people who lost their jobs because their companies' exports declined after retaliatory tariffs. The bill, whose text was published Sept. 20, says the retaliation could be as a result of tariffs under Section 232, Section 301 or the International Emergency Economic Powers Act. Currently, TAA covers job loss due to import competition in goods and services.
Importers that used to benefit from the Generalized System of Preferences program have paid about $750 million in tariffs since the program expired at the end of last year, according to a Sept. 21 letter to the leaders of the Senate Finance Committee and House Ways and Means Committee. The letter, signed by more than 300 trade groups and firms, says the lapse of the GSP benefits program hurts workers at importing companies, which are also dealing with much higher freight costs and pandemic impacts.
In reaction to news that China has formally asked to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (see 2109170052), TPP's two greatest champions in the Senate said negotiations on trade with Asian allies must resume. Sens. Tom Carper, D-Del., and John Cornyn, R-Texas, issued a joint statement Sept. 20: “It shouldn’t come as a surprise to anyone that China is taking steps to strengthen their trade powers across the globe. For quite some time, we have been warning about China’s subtle yet deliberate moves to join the CPTPP -- the very trade pact crafted to counter China’s trade influence that the United States mistakenly walked away from. And last week, we saw them take an affirmative step in that troubling direction. We’ve long believed that United States trade leadership is critical for our country’s economy and national security -- and it’s clear that China is not waiting to assert itself in the region. The U.S. cannot afford to continue waiting in the hallway -- we must get our seat back at the table to re-engage our Asia Pacific allies in trade.”
The Reinforcing American-Made Products Act, which would prevent states from making more stringent rules for “Made in USA” labeling than the Federal Trade Commission rule, passed the Senate by unanimous consent Sept. 15. A House companion bill has not yet been introduced.
The legislative language for a proposed change to the treatment of excise tax drawback claims on exported tobacco would make such claims ineligible not just going forward (see 2109130038), but also would disallow claims filed since Dec. 18, 2018. That is the date that CBP issued a final rule saying that such claims were not allowed. However, the prohibition did not take effect until Feb. 19, 2019, because of the 60-day waiting period after the rule's publication (see 1908300032). The final rule was overturned in court, so some exporters have been collecting substitution drawback on these goods -- or as the government calls it, "double drawback," since the case was won.
More than 150 trade groups and companies sent a letter to the co-sponsors of the Ocean Shipping Reform Act, endorsing the legislation. The letter says, "We certainly welcomed the Interpretive Rule on Detention and Demurrage as published by the Federal Maritime Commission, but we need more than just 'guidance' that is not being followed by ocean carriers nor marine terminals, leading to hundreds of millions of dollars in unfair penalties against US shippers and their transportation partners.”
Three liberal senators re-introduced a bill that would limit the amount of Chinese or Vietnamese content for goods that enter the U.S. under future free trade agreements. The bill, which Sen. Bob Casey, D-Pa., mentioned months ago during a Senate Finance Committee hearing (see 2107270062), would instruct the administration that any trade agreement brought for a vote in Congress would have to limit non-originating material to no more than 20% of the product's value, if that non-originating material came from non-market economies. The bill says that after the first five years, that content would be limited to no more than 10% of the product's value. A number of former Soviet republics are also on the International Trade Administration's non-market economy list, but they are not as significant players in the global supply chain as Vietnam or China.
The top Republican on the House Ways and Means Committee's Trade Subcommittee and Rep. Jackie Walorski, R-Ind., another prominent voice on trade, both proposed amendments to trade legislation that emphasize the complaints that Republicans have about the Democrats' trade policy.
The previous country of origin labeling (COOL) for beef triggered a dispute among the U.S., Mexico and Canada that the U.S. lost at the World Trade Organization (see 1512070017), leading to retaliatory tariffs, and ultimately, the end of mandatory COOL. Ranchers have repeatedly sought the return of COOL, as they dislike the fact that cattle raised in Canada but slaughtered in the U.S. are labeled as U.S. products. South Dakota's two senators, Sen. Jon Tester, D-Mont., and Sen. Cory Booker, D-N.J., announced that they will introduce a new COOL bill next week that will require the U.S. trade representative consulting with the agriculture secretary to develop a new mandatory COOL regime that could withstand scrutiny at the WTO. The agency would have six months to develop the plan and six months to implement it, Sen. John Thune, R-S.D., said. If the USTR does not come up with a plan, an automatic mandatory COOL would begin for beef. “Transparency in labeling benefits both producers and consumers,” Thune said. “Unfortunately, the current beef labeling system in this country allows imported beef that is neither born nor raised in the United States, but simply finished here, to be labeled as a product of the USA. This process is unfair to cattle producers and misleading for consumers. When you see a ‘product of the USA’ label on the grocery store shelf, it should mean just that."