WASHINGTON — Three languishing trade agreements, a Web tax bill and fashion design piracy protection legislation could all get their day in Congress as lawmakers return this week from a month-long recess for what is expected to be a highly divisive fall session.
Having passed legislation in July to raise the debt ceiling, lawmakers will now turn to another bruising battle as a supercommittee charged with cutting an additional $1.5 trillion from the nation’s deficit gets to work. Industry observers are concerned the rancor in Congress over the nation’s debt could derail all other policy initiatives, including the trade agenda, but there are signals that the Democratic-controlled Senate and Republican-controlled House can find common ground on some measures.
Adding to the highly charged atmosphere, President Obama is set to address a joint session of Congress on Thursday, where he is expected to outline proposals for a job growth plan. The Labor Department reported last week that no jobs had been added to the economy in August, with the unemployment rate remaining at 9.1 percent. Specialty stores did well, however, adding 4,900 jobs to employ 1.43 million, while apparel manufacturing added 1,100 jobs to employ 154,400, but still lost 1,400 jobs from August 2010. Within the fashion industry, those gains were offset by losses in the department store segment, which slashed 2,400 jobs to employ 1.49 million, and at apparel fabric mills, which cut 900 positions to employ 122,100.
Industry experts said they will be looking for mention of pending trade measures and an aid program for workers displaced by imports in Obama’s speech.
The bills important to the industry that Congress could consider this fall include:
■ Design piracy protection: Introduced in the House in July, the bill would put teeth into copyright protection for fashion creations by providing protection for three years to “deliberate copies that are substantially identical to protected designs.” The measure represents a compromise between the Council of Fashion Designers of America and the American Apparel and Footwear Association and has bipartisan support in the House and Senate. Sen. Charles Schumer (D., N.Y.) is expected to introduce the bill in the Senate this fall.
■ Free trade agreements: Lawmakers in the House and Senate have said they are prepared to consider pacts with Colombia, South Korea and Panama that have languished for years. The Obama administration must first send the agreements to Congress before a 90-day clock starts ticking for Congress to vote up or down on them.
■ Andean and GSP trade preference programs: Experts expect Congress to pass two trade preference programs that have expired — the Andean preference program that offers duty-free treatment for apparel made in Colombia, Peru and Ecuador when made with yarns and fabrics from the region or the U.S., and the Generalized System of Preferences, which provides duty-free benefits for about 4,800 products from 131 designated countries.
■ Trade Adjustment Assistance: This program that aids U.S. workers who lose their jobs because of foreign trade with money for retraining is tied to the pending trade pacts and is expected to move this fall.
■ Web tax bill: Sen. Dick Durbin (D., Ill.) introduced a long-anticipated bill in July that would authorize 24 states to require all Internet retailers to collect tax on online sales. It could ultimately cover more states once they adopt the Streamlined Sales and Use Tax Agreement of 1999. The bill is backed by traditional retailers and recently picked up support from long-time opponent Amazon.com, which improves its chances.
Phillip Swagel, professor of international economic policy at the University of Maryland, said he believes Congress will find common ground in some areas, despite the partisan bickering over the deficit.
“In a sense, the partisan division will boost the chances of passing the three trade agreements,” said Swagel. “Both sides are looking to show the American people they can get things done and the three trade agreements really are the common ground.”
He was not as bullish about passage of the Web tax bill, however, arguing there is “push and pull” for the legislation. On the one hand, it is attractive to lawmakers because it raises revenue at a time when the nation is in debt. But on the other hand, it runs counter to Republicans’ pledge of no new taxes.
“I could imagine it in the context of big tax reform, but it is hard to imagine having big tax reform until 2013 [after next year’s presidential election],” Swagel said.
Erik Autor, vice president and international trade counsel at the National Retail Federation, said the conventional wisdom in Washington is that Congress will take up and pass the trade pacts, but the TAA program could present complications. He said retailers are anxious to see Congress renew the Andean and GSP programs because many small companies reliant on them are “struggling to pay duties.
“As we have seen in the past, as programs expire, it puts companies in a difficult spot,” Autor said. “We know in the past some companies have had to take out massive loans in order to pay customs bills in hopes of getting reimbursed once the program is reauthorized.”
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