United States: Bipartisanship Necessary To Move Narrow Trade And Customs Agenda In Congress: 2012 Legislative Outlook

In January, the 2nd Session of the 112th Congress convened; and with the November elections looming, the prospects for major legislative achievements are small.1 While the political tension probably means that large – and potentially controversial – bills, such as a miscellaneous tariff suspension (see below for details), are likely off the table for 2012, a number of trade agreements, and related issues, are expected to be considered this year. Given the bipartisan concern regarding the economy and the nation's standing in the global marketplace, trade often is one area of rare bipartisan agreement and legislative action.

Legislative Outlook

Trade Agency Consolidation: In an effort to streamline government operations and reduce duplicative federal efforts, President Obama has recommended that the business-related functions of the Department of Commerce be merged with the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation, and the Trade and Development Agency. Combining these agencies requires Congressional approval. Many Members of Congress, including House Speaker John Boehner (R-OH), have supported exploring the consolidation2, but the inclusion of the U.S. Trade Representative is likely a sticking point. A joint statement released by House Ways and Means Chairman Dave Camp (R-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) in response to the President's proposal says that "Taking USTR, one of the most efficient agencies that is a model of how government can and should work, and making it just another corner of a new bureaucratic behemoth would hurt American exports and hinder American job creation."3

Trade Enforcement: President Obama's fiscal year (FY) 2013 budget proposal calls for an expansion of the International Trade Administration and the Office of the U.S. Trade Representative, as well as an increase in funding to ensure fair trade practices at the border.4 Specifically, the budget includes more than $500 million to promote exports and enforce international export laws and an additional $13 million for enhanced customs and border enforcement to restrict the importation of pirated goods.5 Approximately $26 million of these funds will be used to establish the new Interagency Trade Enforcement Center, which will advocate the use of international rules and U.S. laws to challenge unfavorable trade policies. The main focus of this effort is toward combating Chinese industrial subsidies and violation of intellectual property rights.6 The President formally established the Interagency Trade Enforcement Center by Executive Order on February 28.

Chinese Tariffs: Last December, a federal appellate court ruling restricted the ability of the Department of Commerce to impose countervailing tariffs on imports subsidized by the Chinese government.7 In response, the United States Trade Representative, Ron Kirk, has called upon Congress to enact legislation to overrule the decision. House and Senate Democrats have come out strongly in favor of such a proposal, and House Ways and Means Committee Chairman Camp has indicated that he would support a "narrowly targeted" bill that could "pass the House and Senate without complications."8 The Department of Commerce only has until March 5th to cease assessing the countervailing duties, which may accelerate action on legislation.

Russian Trade Sanctions: In his State of the Union address, President Obama declared "this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing finance or new markets like Russia."9 With the Russians seeking admission into the World Trade Organization (WTO), the Administration is asking Congress to lift the Jackson-Vanik amendment, which, since 1974, has imposed trade sanctions against Russia. This change would allow U.S. exporters to reap the benefits of reduced tariffs in Russia, once it is under the WTO agreement.10 However, there is strong resistance among some Republicans to eliminating Jackson-Vanik, due to ongoing concerns about Russian human rights abuses.

Trans-Pacific Partnership/Trade Promotion Authority: The Trans-Pacific Partnership is an effort among nine countries – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the U.S. – to create a multi-regional trade agreement this year. Broad outlines for the agreement were announced in November, and Members of Congress hope to reach a final agreement later this year.11 However, the President's "fast-track" authority to negotiate new market-opening trade agreements and send them to Congress for an up-or-down vote, known as Trade Promotion Authority (TPA), expired in 2007. TPA renewal was considered by the Senate in 2011, but rejected 55-45 by Democrats who preferred to craft a new model with more focused negotiating objectives.12 Some form of TPA likely will be considered again as the Trans-Pacific Partnership agreement is finalized, but election year politics may make an agreement difficult in 2012.

Miscellaneous Tariff Bill: Miscellaneous tariff bills (MTBs) request a "temporary reduction or suspension of duties on certain U.S. imports or request other technical corrections to the U.S. Harmonized Tariff System."13 Specifically, in order to become more competitive or level the economic playing field, U.S. manufacturers can seek a temporary suspension or decrease of taxes (duties) paid on imported products or materials that are not available in the domestic market. Such exemptions help to cut costs for U.S. companies and can boost competitiveness in the global marketplace. Formally, a request for tax relief on particular imports must be made – and enacted – by Congress. While traditionally MTBs have enjoyed bipartisan support, changes in the political make-up of Congress and the way in which some elected officials view the elimination of targeted tariffs have made consideration of an MTB this year unlikely. In particular, some Members of Congress now consider the provision of tariff relief on a specific product or material to be an "earmark" and have voiced their opposition to MTBs on that basis. Therefore, it is not probable that there are the votes in the House and Senate to pass an MTB this year.

Congressional Process

Jurisdiction for trade-related legislative and policy matters falls to the House of Representatives' Trade Subcommittee of the Ways and Means Committee and to the Senate's International Trade, Customs and Global Competitiveness Subcommittee of the Committee on Finance. Trade and customs-related legislation must pass both houses of Congress. If the House and Senate enact disparate versions, the differences must be worked out and a final compromise bill must be approved by both bodies before it can be sent to the President for his signature.

The Bipartisan Drinker Biddle & Reath Government & Regulatory Affairs Practice Group

The bipartisan Drinker Biddle & Reath Government & Regulatory Affairs Practice Group is comprised of 54 attorneys, lobbyists and public policy experts, the majority of whom work out of our Washington, D.C. office. Our team members represent clients before Congress and the Executive Branch and work to garner support for clients' policy priorities. In addition to direct representation before federal agencies and Congress, our lobbyists and public policy experts help clients: identify federal policy threats and opportunities; draft federal regulatory comments, legislative language, correspondence to Congress and/or federal agencies, Congressional or agency testimony, and issue briefs; build coalitions, develop partnerships and other alliances to bring other stakeholders to the table; and create the right messages and materials to "tell the story" and "make the case" for action. In addition, our professionals offer clients legislative and regulatory monitoring; thorough legislative and regulatory policy research, development, and analysis; and sound strategic advice and policy counsel, including assistance with compliance with federal gift and lobbying rules.


1 The first session of the 112th Congress was the least productive in more than half a century, as measured by votes taken, bills passed, and nominees confirmed. http://articles.latimes.com/2011/jul/04/nation/la-na-dolittle-congress-20110704

2 http://online.wsj.com/article/SB10001424052970204542404577158361834894658.html

3 http://finance.senate.gov/newsroom/chairman/release/?id=e67329f7-f317-4eae-880a-4193606d9bf0

4 http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/budget.pdf

5 http://www.nationaljournal.com/2013-budget/trade-obama-budget-reflects-white-house-focus-onenforcement-20120213

6 http://www.washingtonpost.com/business/obama-budget-seeks-to-boost-trade-enforcement-ratchet-pressureon-china/2012/02/11/gIQAADvg6Q_story.html

7 http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1107.pdf

8 http://www.cq.com/doc/news-4017758?wr=UEhZTDhpeFBiKnE1NEprSHNpbTNxZw

9 http://www.washingtonpost.com/politics/state-of-the-union-2012-obama-speech-excerpts/2012/01/24/gIQA9D3QOQ_story.html

10 http://www.cq.com/alertmatch/152589618

11 http://www.ustr.gov/tpp

12 http://www.reuters.com/article/2011/09/20/us-usa-trade-congress-idUSTRE78J6FU20110920

13 http://www.ustr.gov/trade-topics/industry-manufacturing/industrial-tariffs/miscellaneous-tariff-bills

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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