WHITE HOUSE SEEKS RETAIL BACKING FOR GATT, SKETCHES PLANS FOR TAXES

Byline: JOYCE BARRETT

WASHINGTON — White House and Treasury officials — armed with funding proposals for the GATT Uruguay Round affecting retailers — briefed industry lobbyists Thursday on their tax plan and sought retailing’s backing in mustering grassroots support for the worldwide free trade pact.
“It’s obvious they are counting on retail support to win GATT approval,” said John Dill, senior vice president of government affairs for the National Retail Federation, which organized the meeting with almost 50 representatives of member companies.
Administration officials conducting the briefing included John Emerson, the White House GATT coordinator; chief textile negotiator Jennifer Hillman, and several tax attorneys with the Treasury Department.
The administration has devised a $12.5 billion package to pay for the tariff revenue that would be lost during the first five years of GATT. Of that, $550 million would directly affect retailing with the repeal of the lower-of-cost-or-market tax deduction. Under the change outlined by the administration, retailers that sell items for less than they paid for them could not take a tax deduction for the loss until after the item was sold. Under current tax law, retailers can take the deduction before they sell the item in anticipation of the expected loss.
Another tax change proposed would streamline the last-in first-out system, Dill said. The administration did not specify how this would be altered, other than to say that retailers forced out of using the lower-of-cost-or-market system and into the LIFO accounting method would find the changes to their advantage.
The change affecting LIFO is not a tax increase, but actually would cost the Treasury money, Dill said.
The retailers are awaiting more details on the administration’s tax plan before deciding whether it is acceptable, but as Dill noted, the industry still is very much behind GATT passage.
NRF officials are to meet with the administration soon for further information on the proposed tax changes.
“We want to support GATT, but we also want more details on the funding options,” Dill said.
Robert Hall, vice president and government affairs counsel for the NRF, met with administration officials Thursday on organizing a grass roots campaign for GATT. The Clinton White House, as it did with the North American Free Trade Agreement, is planning three days for industry officials to meet with top administration officials on the benefits of GATT.
Retailers are tentatively scheduled to meet with Vice President Al Gore July 26, while officials from other industries will meet with Gore Aug. 4 and 9, Hall said.
Part of the grass roots campaign will involve letter writing by local store officials, visits to Capitol Hill by chief executive officers and possibly meetings between retail workers and members of Congress, Hall said.
“The White House has gotten serious about GATT,” Hall said, noting that this week’s flurry of activity has eased concerns that the administration was not focusing on the agreement and that time was running short for consideration by Congress this year.
While the administration officials told the NRF Thursday that the odds are greater than 50 percent that Congress will vote on GATT before adjourning for its August recess, many on Capitol Hill are doubtful the vote can occur until after Labor Day.
On Capitol Hill Thursday, the administration also briefed members of the House Ways and Means and Senate Finance Committees on its funding plan, and received a mixed reaction.
Acting chairman of the House committee Sam Gibbons (D., Fla.) said it would be difficult to get support for the funding.
Past chairman Dan Rostenkowski (D., Ill.) called the plan “controversial.”
Sen. John Breaux (D., La.), called the funding “controversial but doable,” while Sen. Bill Bradley (D., N.J.) remarked, “I don’t find any serious objections to what they’ve put forward.”
— Fairchild News Service

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