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House Passes US Omnibus Trade Bill

by Mike Godfrey, Tax-News.com, Hong Kong

21 December 2010


The United States’ House of Representatives has passed the Omnibus Trade Act of 2010, which extends important expiring trade provisions, and which will now proceed to the Senate for consideration.

The Chairman of the House Committee on Ways and Means, Sander M. Levin, said that the Act’s passage “is vital for expanding American jobs and helping hundreds of thousands of workers who lost their employment and who continue to seek to return to work. The bill’s provisions reinforce each other and I urge my Senate colleagues to act without delay to pass this important legislation.”

The bill would suspend or reduce, 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 products included in the legislation undergo a vetting process to ensure the benefits accorded do not come at the expense of domestic manufacturers. During the process, the House Committee on Ways and Means and the Senate Finance Committee, the Administration, and the independent US International Trade Commission thoroughly review each tariff relief request to ensure there is no opposition from domestic manufacturers of like or competitive products.

The National Association of Manufacturers has confirmed its support for the bill. A letter from NAM said that it is “one of the most important short-term actions Congress can take to preserve and expand good American jobs, cut the costs of doing business in the United States and boost American manufacturing exports. US manufacturers, large and small, use the tariff suspension provisions to obtain raw materials, proprietary inputs and other products that are not available in our nation.”

NAM pointed out that a study last year concluded that this bill, together with the previous tariff bill signed into law in August 2010, would increase US production by USD4.6bn and support almost 90,000 jobs, as the costs savings realized allow US companies to maintain competitive operations, invest in new facilities and re-train workers.

The bill would also extend 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 be extended for 18 months. It was noted that both GSP and ATPA help 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.

The total cost of the bill would be offset by an extension of customs user fees. It will now progress to the Senate for its vote, hopefully before the end of the year.

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

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