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Congress Fails To Pass US Omnibus Trade Bill

by Mike Godfrey, Tax-News.com, Washington

27 December 2010


Following its earlier acceptance by the United States House of Representatives, the Senate failed to pass the Omnibus Trade Act of 2010, which would have extended important expiring trade provisions, before the end of the session of Congress.

The bill would have suspended or reduced, for three years, import duties on over 290 products, mostly on inputs or components, reducing the cost of manufacturing in the US and, thereby, it is said, supporting American manufacturing. In fact, 91% of the bill – 271 of 298 provisions – cover inputs used in further manufacturing, including chemical inputs, inputs used by the US textile and apparel industry, and inputs for metals and petroleum exploration.

The bill would also have extended Trade Adjustment Assistance (TAA) programmes that were overhauled in 2009 for 18 months, providing support and training to trade-affected workers. However, since the reforms were implemented in May 2009, there have been additional trade-impacted workers who may not have been certified under the former TAA programmes that would be eligible for TAA for Workers benefits and training opportunities. It was reported that, in the 2010 fiscal year alone, almost 228,000 workers took advantage of TAA.

In addition, tariff preference programs for developing countries - the Generalized System of Preferences (GSP) and the Andean Trade Preferences Act (ATPA) – would have been extended for a further 18 months. Both the GSP and ATPA helped support US jobs, in addition to promoting development. The majority of US imports under GSP were inputs used to support US manufacturing – including raw materials, parts and components, and machinery and equipment.

It was said that the GSP, in particular, has benefited US businesses and consumers through cost savings on imports. US imports under the GSP exceeded USD20bn in 2009 and were expected to exceed USD27bn in 2010. The GSP saved US importers nearly USD577m in duties in 2009. In addition to its benefits to American families, the GSP was designed to promote economic growth in the developing world by providing preferential duty-free entry for about 4,800 products from 131 designated beneficiary countries.

The US Trade Representative, Ron Kirk, said that he was “disappointed that Congress adjourned without fully extending three trade programmes that support American jobs and increase US competitiveness. The exclusion of the GSP from the package means that this important program will lapse on December 31, hurting American consumers and businesses as well as workers and farmers in many of the world’s poorer countries.”

He added that the government “will continue to work with Congress in an effort to secure a full, long-term reauthorization of these three essential trade programmes.”

In addition, the House Ways and Means Committee Chairman, Sander M. Levin, said: “This legislation passed the House with broad bipartisan support, and is supported by the Chamber of Commerce and the National Association of Manufacturers. Failure to pass this bill will have serious adverse consequences for workers, manufacturers and developing countries.”

TAGS: tax | business | law | tariffs | legislation | United States | import duty | trade

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