WASHINGTON — A congressional effort to repeal a U.S. export subsidy and stave off retaliatory tariffs from the European Union starting Jan. 1 has gained a key backer: the American Textile Manufacturers Institute.

But additional support from ATMI might not be enough to push repeal legislation through Congress in time to appease the Europeans. Lawmakers are rushing to adjourn for the year and repealing this legislation is not at the top of their agenda.

The EU has been given the OK by the World Trade Organization to begin levying 5 percent tariffs on $4 billion worth of U.S. goods, starting Jan. 1. If a remedy isn’t in place by March, the tariffs would then gradually increase to 17 percent. The European Commission could levy up to 100 percent tariffs.

American products affected would include $100 million in apparel, $103 million worth of leather handbags and luggage, $16 million in cosmetics, $19 million of footwear and $500,000 in man-made filaments and cotton.

Repeal of the export subsidy — deemed anticompetitive by the WTO — has been caught in a debate over whether the $57 billion in tax breaks benefiting multinational companies should now be channeled to U.S. manufacturers as tax benefits or shared with corporations with offshore operations.

The legislation being backed by the ATMI would do both, while making other tax law changes, for a total cost of $120 billion in tax breaks over 10 years. The measure is sponsored by House Ways and Means chairman Bill Thomas (R., Calif.) and is competing with another House and a Senate measure. Completing action by the EU’s end-of-year deadline appears problematic.

In supporting the Thomas bill, the ATMI is becoming an unlikely ally with apparel importers backing the measure. Garnering backing from the textile sector is considered important because manufacturers, facing a major decline, are considered a key constituency for lawmakers to please.

In a letter to Thomas, Jim Chesnutt, ATMI chairman and president, who is also chief executive officer of National Spinning Co., said the legislation’s tax rate reductions for domestic producers are among provisions that would benefit mills. Chesnutt also said mills are concerned about the retaliatory tariffs.

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