WASHINGTON — With European Union trade sanctions against U.S. exports three days old, the Senate Wednesday took up legislation designed to make the problem go away.
But the bill, which would eliminate an export tax subsidy deemed unfair by the World Trade Organization, isn’t expected to emerge quickly from Congress.
At the center of the debate is how to repeal and redirect the $50 billion in export tax credits given to multinational corporations over 10 years, which is tied to the larger election-year issue of the decline in U.S. manufacturing jobs.
The Senate measure is also competing with two House bills, which in turn have divided lawmakers in that chamber. At issue with all the measures is whether revenue from repealing the export subsidy should be redirected to U.S. manufacturers alone, or whether multinationals that export and also have offshore production should still receive some tax credits, but recast to comply with the WTO.
Because of the export subsidy, the WTO authorized EU sanctions on some $4 billion worth of U.S. goods, including apparel and footwear. The extra duties started at 5 percent and are to increase 1 percent monthly until a 17 percent ceiling is reached or the offending subsidy is repealed.
Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, urged passage of the Senate bill.
“The estimated cost to U.S. apparel and footwear manufacturers and their workers for the month of March alone is $1 million,” said Burke, noting that many companies, in advance of Monday’s start of sanctions, pre-shipped apparel, footwear and luggage, and incurred “costly warehouse charges” to avoid the extra duties.
The Senate bill would cut corporate income taxes for U.S. manufacturers by 3 tax rate percentage points and allow producers that are unprofitable now to reclaim federal taxes paid for the last three years. These breaks would amount to $60 billion over 10 years. In addition, the measure would create almost $40 billion in tax breaks for multinational corporations on their offshore operations.
Several Democrats are angling to strip the multinational tax breaks from the bill, despite arguments that these companies employ more than 23 million U.S. workers.“Consider just one example: Wal-Mart supports its international operations at its headquarters in Bentonville, Ark., where it employs more than 15,000 people,” the Coalition for Fair International Taxation said in a news release.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)