On 1st November, the day set by the World Trade Organisation as its deadline for the US to replace its Foreign Trade Corporation rules, the US Senate passed a new set of rules by voice vote, before sending Senators off to contest elections due this month. The Bill they passed was nearly the same as legislation previously passed in the House, and now incorporated in the portmanteau $240bn tax-cutting bill facing a Clinton veto (HR 2614).
Later in the day, however, House Republican leaders balked at following suit immediately because the Senate has been procrastinating over HR 2614.
Sen. Daniel Patrick Moynihan of New York, senior Democrat on the Senate Finance Committee, said if Congress does not pass the export tax legislation before adjourning for the year it could result in $4 billion in retaliatory tariffs. Because of the delays over HR 2614 and vital appropriation measures, Congressional leaders are now having to plan for a lame-duck session of Congress after the presidential election, something they had hoped to avoid.
House Majority Leader Dick Armey, R-Texas, told reporters that House Republicans favor holding firm on the entire tax measure rather than moving individual pieces, even if the United States could face trade retaliation from Europe if the measure isn't enacted this month. Some Republicans disagreed with the House GOP leadership's decision to delay final action. 'We have to do something before we get out of here, because otherwise there will be a lapse and the Europeans will beat up on us,' said Rep. Amo Houghton, R-N.Y.
The hope is that the evident efforts made by Congress to pass a bill, even if they are now on hold for a few days, will have done enough to persuade the WTO and the EU (which brought the complaint against the US in the first place) to wait events later in the month before acting. Although the EU has said that even the new rules don't satisfy its complaint, it has agreed that the WTO should be asked to rule on the situation.
The new export legislation, which increases the cost of the export tax break by approximately $4.5 billion over 10 years, will replace the Foreign Sales Corporation law invalidated by the WTO. For a detailed explanation of the Senate bill amending the FSC legislation see http://www.house.gov/jct/x-111-00.pdf
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