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Legislative Update: Enforcement, Trade Deficits, Footwear, Cuba

Friday, June 02, 2017
Sandler, Travis & Rosenberg Trade Report

Trade Enforcement. The Jobs and Trade Competitiveness Act (introduced May 26 by Rep. Pascrell, D-N.J.) would heighten trade enforcement efforts, discourage foreign outsourcing, and encouraging domestic insourcing in the following ways.

- provide a 20 percent tax credit that U.S. businesses could use for costs associated with moving a production line, trade, or business located overseas back to the U.S.

- disallow the tax deduction companies can currently take for costs associated with outsourcing

- enable the Department of Commerce to impose countervailing duties to offset the impact of currency manipulation on a U.S. industry

- establish a non-partisan congressional office to investigate barriers to U.S. exports, develop complaints against foreign countries, and press the executive branch to take action

- ensure that the Trade Enforcement Trust Fund is provided with mandatory funding to be used to crack down on unfair trade, including violations of environmental and labor provisions in trade agreements

- establish an independent commission to advise Congress on whether the World Trade Organization has manifestly expanded or diminished the rights and obligations of the U.S. under an international trade agreement

- create a chief manufacturing negotiator to ensure that U.S. trade policy promotes domestic manufacturing by determining negotiating positions and enforcement strategy

- create a chief trade prosecutor who would be the new leader within the executive branch for ensuring that trading partners live up to their obligations

- require the Government Accountability Office to systematically and regularly review U.S. enforcement efforts in international fora such as the G-20 and the U.S.-China Strategic and Economic Dialogue

- require U.S. Customs and Border Protection to facilitate the exchange of information among interested parties in antidumping and countervailing duty evasion investigations

- establish congressional advisory groups on enforcement

- require the GAO to review efforts to enforce a 2016 law that closed a loophole allowing goods made using forced labor to enter the U.S.

- provide more legal support during WTO disputes

- require the Office of the U.S. Trade Representative to identify trade enforcement priorities and enhance consultation with Congress on enforcement actions

Trade Deficits. H.R. 2734 (introduced May 25 by Rep. Slaughter, D-N.Y) would require the Department of Commerce to address the trade deficits between the U.S. and other countries. Although no information has yet been made available about this legislation, Slaughter introduced a measure in October 2016 entitled the Trade Deficit Reduction Act. That bill would have required the White House to identify the countries with which the U.S. has the worst trade deficits and develop plans of action to address those deficits, with strict deadlines and oversight from Congress. The Trump administration is already moving to take similar steps.

The Balancing Trade Act (H.R. 2766, introduced May 30 by Rep. Kaptur, D-Ohio) would require the president to take the necessary steps to create a more balanced trading relationship with countries with which the U.S. runs annual trade deficits of $10 billion or more for three consecutive years.

Footwear. H.R. 2735 (introduced May 25 by Reps. Smith, R-Neb., and Blumenauer, D-Ore.) would make certain footwear eligible for duty-free treatment under the Generalized System of Preferences for the first time. The American Apparel and Footwear Association estimates that such a change would save companies about $57 million in import duties per year that could then be used to support U.S. workers, invest in product innovation, and lower prices for consumers.

Cuba. Amid reports that the Trump administration is considering a shift away from the Obama administration’s policy of easing relations with Cuba, the Freedom to Export to Cuba Act (S. 1286, introduced May 25 by Sen. Klobuchar, D-Minn.) would lift the U.S. trade embargo against that country. A press release from Klobuchar’s office states that this legislation would repeal the current legal restrictions against doing business with Cuba, including the original 1961 authorization for establishing the trade embargo, subsequent laws that required enforcement of the embargo, other restrictive statutes that prohibit transactions between U.S.-owned or -controlled firms and Cuba, and limitations on direct shipping between U.S. and Cuban ports. The bill would not, however, repeal portions of law that address human rights or property claims against the Cuban government.

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