Legislative update: Expanded trade preferences possible, export controls reform moves ahead
May 26, 2009
World Trade\Interactive
Congress took a number of trade-related actions last week ahead of its Memorial Day recess. A bill to extend trade preferences to additional countries was reintroduced, and a foreign relations bill that includes export reform measures and increased resources for intellectual property rights enforcement began moving through the House. Efforts to advance a miscellaneous trade bill and legislation implementing the U.S.-Panama Free Trade Agreement are continuing as well.
Trade Preferences. Sen. Dianne Feinstein, D-Calif., introduced May 21 a bill (S. 1141) that would extend U.S. trade preferences to certain least-developed countries. The Tariff Relief Assistance for Developing Economies (TRADE) Act of 2009, which was also introduced in the previous Congress, would grant preferential trade benefits equivalent to those under the African Growth and Opportunity Act to 14 LDCs – Afghanistan, Bangladesh, Bhutan, Cambodia, Kiribati, Laos, Maldives, Nepal, Samoa, Solomon Islands, East Timor, Tuvalu, Vanuatu and Yemen – not already covered by U.S. trade preference programs, plus Sri Lanka. These 15 countries are already eligible for Generalized System of Preferences benefits, but the TRADE Act would enable them to receive duty-free treatment for exports of goods excluded from GSP coverage, including textiles and apparel, watches, electronic articles, steel articles, footwear, handbags, luggage and glass products. This treatment would be effective as of Jan. 1, 2009, and would generally remain available through Dec. 31, 2019.
Congress could also act this year to extend trade preferences to Afghanistan and Pakistan and Paraguay. A CongressDaily article cited Rep. Chris Van Hollen, D-Md., as saying a bill to allow duty-free access to goods produced in Reconstruction Opportunity Zones in Afghanistan and Pakistan could be attached to the foreign relations authorization bill now moving through the House or may be incorporated into the LDC measure.
With respect to existing preference programs, the Andean Trade Preference Act is scheduled to expire Dec. 31. Trade that is currently eligible for duty-free entry into the U.S. under the ATPA risks losing those benefits if the program is not renewed. Businesses involved in trade with ATPA beneficiary countries should therefore begin efforts to ensure that these preferences are not allowed to expire.
MTB. Supporters are working to maintain momentum toward congressional passage this year of a miscellaneous trade bill that lowers or suspends tariffs on imports of key manufacturing and production inputs that are not made in the U.S. or where there is no domestic opposition. Several business groups recently urged the Senate Finance Committee to begin work on the MTB, pointing out that the House Ways and Means Committee is already drafting its version of the bill and that a markup is anticipated in the near future. Click here for more information on how your company can get involved in this process.
FTAs. The Senate Finance Committee held a hearing last week on the U.S.-Panama FTA, which the Obama administration has not yet submitted to Congress due to outstanding concerns about that country’s labor rights and bank secrecy laws. See related article this issue for more details.
Export Controls. According to a press release from the office of Rep. Don Manzullo, R-Ill., a two-year foreign relations authorization act approved May 21 by the House Foreign Affairs Committee includes the following provisions designed to “modernize the federal government’s export control policy by strengthening national security and helping American companies sell more defense-related goods overseas.”
• requires the White House to conduct a comprehensive and systematic review and assessment of the U.S. arms export control system and report to Congress within 18 months
• requires the Directorate of Defense Trade Controls to have at least one licensing officer for every 1,250 applications by fiscal year 2011 to prevent future license processing backlogs
• requires DDTC to assign no less than three individuals by FY 2010 to review applications for commodity jurisdiction determinations
• creates a performance goal of no longer than 60 days to process a defense trade license
• creates a performance goal of no longer than 30 days to process a defense trade license for close allies
• establishes a seven-day processing time for defense trade licenses for close allies in support of combat operations or peacekeeping or humanitarian operations with U.S. armed forces
• increases the transparency of commodity jurisdiction determinations by requiring them to be published on the State Department’s Web site
• creates a special licensing authorization for U.S.-manufactured spare and replacement parts or components in connection with defense items previously lawfully exported to close allies
• increases the representation and augments the input of the Defense Trade Advisory Group into the State Department’s defense trade agenda
• adds South Korea and Israel to the list of NATO+3 countries receiving expedited consideration for the export of U.S. defense items
• strengthens export promotion activities for small businesses and manufacturers by designating a small business liaison at the State Department and adding a small business Web site to the department’s homepage
IPR Enforcement. The foreign relations authorization bill would also increase resources and training for intellectual property rights enforcement, especially in countries identified by the U.S. government as lax in enforcing those rights. Specifically, the bill directs the secretary of state to appoint 10 IPR attachés and to give priority in designating the embassies or other diplomatic missions to which those attachés are assigned to countries where their efforts will have the greatest potential benefit (e.g., countries identified in the Office of the U.S. Trade Representative’s annual Special 301 IPR report).
Other. Other trade-related bills that have been introduced recently include the following. (Note that the text of these bills can be found on the Library of Congress’ Web site.
• S. 1142 – to amend the Federal Food, Drug and Cosmetic Act with respect to inclusion of effectiveness information in drug and device labeling and advertising
• H.R. 2542 – to amend the Internal Revenue Code of 1986 to repeal the shipping investment withdrawal rules in section 955 and to provide an incentive to reinvest foreign shipping earnings in the United States
• H.R. 2595 – to restrict certain exports of electronic waste
• S. 1089 – to facilitate the export of United States agricultural commodities and products to Cuba
• H.R. 2518 – to prevent undue disruption of interstate commerce by limiting civil actions brought against persons whose only role with regard to a product in the stream of commerce is as a lawful seller of the product
• S. 1076/H.R. 2480 – to improve the accuracy of fur product labeling
• S. 1043 – to require the U.S. Trade Representative to negotiate a remedy for the equitable border tax treatment on goods and services within the WTO by Jan. 1, 2010
• S. 1027/H.R. 2378 – to clarify that fundamental exchange rate misalignment by any foreign nation is actionable under U.S. countervailing and antidumping duty laws
• S. 1021 – to provide an enhanced credit for research and development by companies that manufacture products in the U.S.
• H.R. 2359 – to ensure parity between the temporary duty imposed on ethanol and tax credits provided on ethanol
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