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Congress Finally Passes US Trade Bills

by Mike Godfrey, Tax-News.com, Washington

29 June 2015


Both the US House of Representatives and the Senate have approved legislation to restore Trade Promotion Authority, and to renew the African Growth and Opportunity Act and the US Generalized System of Preferences.

TPA enables the text of a completed trade treaty to be fast-tracked through Congress, as members of Congress are allowed only to set goals for negotiators to pursue and are prohibited from seeking amendments to a concluded deal. TPA, which last expired in 2007, will therefore allow the US Administration to submit future trade deals that are in line with the agreed goals for a yes-or-no vote.

The agreement on the extension of TPA, until at least 2018, was considered to be necessary to conclude the Trans-Pacific Partnership (TPP), between the Association of Southeast Asian Nations and their trade treaty partners, and the Transatlantic Trade and Investment Partnership, with the European Union, and was therefore a key measure in President Barack Obama's trade agenda.

In particular, the Administration hopes that the availability of TPA will provide an impetus to an early completion of negotiations for the TPP. The talks between the 12 countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam – are said to be nearing a final phase, with the participants expected to make their final negotiating offers shortly.

Both the US GSP and AGOA trade preference programs have increased trade with beneficiary countries by lowering US tariffs on their exports. Under the US GSP, which last expired on July 31, 2013, up to 5,000 types of products from 126 beneficiary developing countries are eligible for duty-free treatment when exported to the US.

Under the approved legislation, US GSP has been extended until December 31, 2017, and will also provide retroactive relief to eligible products that were imported while it had lapsed.

The AGOA's trade preferences, along with those under the US GSP and its third country fabric provision, allow for almost all goods produced in AGOA-eligible countries (approximately 6,800 items) to enter the US market duty free. It would have expired on September 30 this year, but has now been extended for a further ten years.

Congress has agreed tax provisions to offset the revenue cost of the program. These include extensions to customs user fees, changes to corporate taxes installments for 2020, and various tax compliance measures, such as increased oversight of education tax credits and increased penalties for late tax return filing.

TAGS: compliance | tax | tax compliance | Brunei | Chile | law | tariffs | trade treaty | Australia | Mexico | Singapore | fees | tax credits | agreements | education | legislation | Canada | Malaysia | New Zealand | Peru | United States | penalties | trade | European Union (EU) | Japan | Vietnam | Europe | Invest | Africa

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