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Legislative Update: Customs Reauthorization, Russia Trade Status Could be Next

Monday, November 14, 2011
Sandler, Travis & Rosenberg Trade Report

Legislation implementing free trade agreements with Korea, Colombia and Panama occupied much of the trade policy bandwidth in Congress in recent months, and its enactment into law last month opens room for Congress to advance a number of other trade issues. A dormant customs reauthorization bill could be re-energized, and lawmakers may also consider a measure on the trade status of Russia now that Moscow appears ready to join the World Trade Organization.

Customs Reauthorization. The Senate Finance Committee may be seeking to have a customs reauthorization bill completed and ready for consideration by the end of November. Businesses, organizations and individuals with an interest in resolving problematic customs issues should take this opportunity to make sure those issues are part of this legislation. Contact Andy Olson or Ned Steiner in our Washington, D.C., office at (202) 216-9307 for more information.

Russia. It now appears that Russia will be extended a formal invitation to join the World Trade Organization at the Dec. 15-17 WTO ministerial meeting in Geneva. For U.S. companies to take full advantage of the concessions Russia has made as part of its accession bid, Congress would have to repeal the so-called Jackson-Vanik Amendment, thus allowing the president to grant permanent most-favored-nation status to goods imported from Russia. President Obama said Nov. 10 that he looks forward to working with Congress on this effort “to ensure that American firms and American exporters will enjoy the same benefits of Russian WTO membership as their international competitors.”

However, a number of lawmakers and trade organizations have urged caution in considering a Jackson-Vanik repeal and urged U.S. officials to first make sure that several issues of concern are sufficiently addressed. These include protection of intellectual property rights, Russia’s commitment to join the Information Technology Agreement (which provides duty-free treatment to information technology products traded among member countries), market access restrictions for U.S. agricultural products, and the impact of Russia’s auto investment regime on U.S. automobile and auto parts companies.

Trade Remedy Enforcement. Congressional action this year on some sort of legislation concerning the evasion of antidumping and countervailing duties is possible because the issue has remained on policymakers’ radar screens. Several measures have been introduced in the Senate this year, U.S. Customs and Border Protection officials said in May that they are pursuing a variety of methods to combat AD/CV duty evasion, and the Government Accountability Office issued a report on possible remedies earlier this month.

Lacey Act Enforcement. Recent federal raids of a major guitar manufacturer by federal agents enforcing the Lacey Act amendments of 2008 could spur support for the Retailers and Entertainers Lacey Implementation and Enforcement Fairness (RELIEF) Act (H.R. 3210). This bill would exempt any plant product imported or manufactured before May 22, 2008, prevent individuals from being penalized for unknowing violations, and limit the penalty for a first-time infraction to $250. In addition, the requirement to declare the genus and species of the imported plant material on an import declaration would be limited to solid wood and items imported only for commerce.

China. The Senate approved Oct. 11 legislation to address the alleged undervaluation of China’s currency. However, House Republican leaders have all but said they will not bring the bill up in that chamber, and there appears to have been no forward momentum in the intervening weeks. Obama administration officials reiterated during a House Ways and Means Committee hearing in late October that U.S. trade issues with China go beyond currency and that the current approach of engagement combined with selective enforcement is their preferred option.

On a separate issue involving China, Rep. Steven King introduced last week legislation that would direct the president to impose duties on merchandise from China in an amount equivalent to the estimated annual loss of revenue to holders of U.S. intellectual property rights as a result of violations of such rights in China. That amount would be determined annually, and the resulting duties would be distributed to the U.S. rights holders. It appears that this bill would at least in part violate World Trade Organization rules.

Corporate Taxation. A discussion draft of legislation reforming the way the U.S. taxes corporate income earned overseas was circulated in late October by House Ways and Means Committee Chairman Dave Camp. Companies interested in commenting on this legislation should contact Andy Olson or Ned Steiner in our Washington, D.C., office at (202) 216-9307. There has been no further word on when the bill could be formally introduced.

Other. Other trade-related bills that have been introduced recently include the following. The texts of these bills are or will be shortly available on the Library of Congress’ Web site.

• S. 1830 – to improve the enforcement of intellectual property rights

• H.R. 3112 – to require that certain actions be taken with respect to complaints received by the Department of Commerce of nontariff barriers imposed by other countries

• S. 1827 – to establish a Trade Enforcement Division in the Office of the U.S. Trade Representative

• H.R. 3338 – to provide for the identification of corporate tax haven countries and increased penalties for tax evasion practices in haven countries that ship United States jobs overseas

• H.R. 3380 – to amend the Federal Food, Drug and Cosmetic Act concerning safe dietary ingredients in dietary supplements

• H.R. 3383 – to require railroad carriers to prepare and maintain a plan for notifying local emergency responders before transporting hazardous materials through their jurisdictions

• H.R. 3395 – to enable concrete masonry products manufacturers and importers to establish, finance and carry out a coordinated program of research, education and promotion to improve, maintain and develop markets for concrete masonry products

• S. 1779 – to require the United States Trade Representative to notify the World Trade Organization if any member of the World Trade Organization fails during two consecutive years to disclose subsidies under the Agreement on Subsidies and Countervailing Measures

• H.R. 3288 – to authorize the president to remove commercial satellites and related components from the United States Munitions List subject to certain restrictions

• H.R. 3273 – to authorize the Secretary of Homeland Security or of any other department in which the Coast Guard is operating to enter into agreements with foreign governments or international organizations for the performance of port security assessments

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