AWPA Wireline - May 2003

The top Democrat on the House Ways and Means Committee Charles Rangel (D-NY) introduced legislation (HR 1224) to grant permanent normal trade relations (PNTR) to Russia and to ensure Congress has a role in incorporating Russia into the WTO. The bill would recognize that Russia has met the freedom of emigration requirements necessary to qualify for PNTR, but would also call for greater efforts by Russia to open its markets to foreign competitors. This bill would also provide for expedited congressional review of a resolution on Russia's entrance into the WTO.

Senate Foreign Relations Committee Chairman Richard Lugar (R-IN) introduced a similar bill (S 580). A significant difference between the two bills is that the House bill would keep a continuing congressional role in the form of non-binding resolutions presenting congressional views on the development of the bilateral relationship.

On April 4, 2003, the former Yugoslav Republic of Macedonia became the World Trade Organization's (WTO) 146th member. Accession negotiations began in 1994 and the WTO's General Council approved the accession package on October 15, 2002. Another 26 countries are in the process of negotiation to become members of the WTO. Requests for accession have also been received from Iran, Syria and Libya, but working parties on these applications have not yet been established.

Legislation was introduced in the House of Representatives by Rep. John Conyers (D-MI) concerning toxic mold. Mold has been linked to several health complaints ranging from headaches and breathing difficulties to allergic reactions and neurological damage. Specifically the bill would require EPA, the Centers for Disease Control and Prevention, and the National Institutes of Health to study the health effects of indoor mold growth and toxic mold.

EPA would also be required to promulgate national standards that include, among other things:

It also requires the Department of Housing and Urban Development (HUD) to promulgate guidelines identifying conditions created prior to and during construction that facilitate the growth of indoor mold and recommending appropriate means of eliminating those conditions.

Commercial insurers are beginning to follow the lead of homeowner insurers by excluding mold coverage from their liability policies. Instead, mold coverage is being offered under separate environmental policies.

In order to comply with the World Trade Organization's (WTO) ruling that the Foreign Sales Corporation (FSC) tax benefits were an export subsidy and therefore illegal under world trade laws, House Ways and Means Committee Ranking Member Charles Rangel (D-NY) and Ranking Republican Phil Crane (R-IL) introduced a bill that would reduce income tax for all US manufacturers. This bill would include a new deduction for manufacturers that would reduce their effective tax rate in proportion to how much of their production is done in the United States.

For companies with 100% domestic production, the 34% corporate tax rate would effectively be reduced to 31%. The legislation would offer a gradual elimination of the current tax exemptions through 2008. Other companies would receive a sliding scale rate reduction based on the value of their US production.

Grant Aldonas, US Commerce Undersecretary, however, signaled that the Administration opposes this legislation. He stated that the bill would "cut taxes on income from US-made products, and not those made overseas - even if by US firms." Instead, Aldonas offered continued support for a conflicting proposal from House Ways and Means Committee Chairman Bill Thomas (R-CA). In the coming weeks, Thomas is expected to introduce a bill that will phase out the FSC and reform US international tax laws in its place.

If some remedy is not found, the European Union member states have already approved a list of more than 1,700 US products - accounting for more than $4 billion of US exports - on which it will seek sanctions if it eventually concludes the US is not making a good-faith effort to repeal its extraterritorial income (ETI) tax regime. The European Commission must still formally approve the product list and is expected to do so soon. The list will then be submitted to the WTO, whose Dispute Settlement Body must give the EU authority to actually implement the tariffs. While the EU has periodically threatened to impose sanctions if the US does not comply, an EC spokesman confirmed that the EU is not "planning to impose the sanctions" if the US is making a good faith effort. Included in the list are some steel products.

The House of Representatives approved the Miscellaneous Trade & Technical Corrections Act of 2003 (HR 1047). This bill would temporarily remove tariffs on a range of about 300 imported inputs which are not made in the US and provides $142 million in tariff relief to US manufacturers.

However, the two Alabama Senators have placed a "hold" on the Senate companion bill - S 761. This bill has already been approved by the Senate Finance Committee, but will only be taken to the floor for final approval if there is unanimous consent to proceed from all Senators. The two Senators want to insert a controversial provision that would rescind some duty-free benefits related to socks that were approved for the Caribbean countries last year.

A bill to abolish the controversial Antidumping Act of 1916 was introduced by Rep. Jim Sensenbrenner (R-WI). The European Union had challenged the 1916 law after Geneva Steel Company used it to file a trade case against two plate importers in 1996. The EU filed a complaint with the World Trade Organization in 1998, which found the law violated global trade rules.

Sen. Ernest Hollings (D-SC) introduced a bill ? Save American Manufacturing Act of 2003 (S 592) - that would establish an Office of Manufacturing in the Department of Commerce. This office would be responsible for gathering, coordinating and analyzing all the information necessary for the Secretary of Commerce to make any determinations the Secretary is required by law to make about the industrial base of the US.

This bill would also create a WTO Dispute Settlement Commission that would review all reports of dispute settlement panels or the Appellate Body of the World Trade Organization (WTO) in proceedings initiated by other parties which are adverse to the US. The Commission will determine whether the panel exceeded its authority or diminished the rights of the US under the Uruguay Round agreement.

Finally the legislation would abolish the International Trade Commission (ITC). All functions of the ITC would be transferred to the Department of Commerce and would be performed by the Assistant Secretary of Commerce for Import Administration.

Sens. Max Baucus (D-MN), Larry Craig (R-ID), Evan Bayh (D-IN) and Jay Rockefeller (D-WV) introduced a bill that would establish a WTO Dispute Settlement Review Commission. The language is every similar to the one introduced by Sen. Hollings (see above) in that the Commission would review reports of panels adverse to US interests and determine whether the body exceeded its authority; added to the obligations or diminished the rights of the US; acted arbitrarily; or deviated from the applicable standard of review.

Senator George Voinovich (R-OH) introduced a bill that excludes certain wire rods from the scope of any antidumping or countervailing duty order issued as a result of certain investigations relating to carbon and certain alloy steel rods. Covered under this bill are wire rods used to produce Mig Wire. The legislation was referred to the Senate Committee on Finance.