SENATE SET TO CONSIDER CHINA PNTR AFTER RECESS

 

            The Senate this week approved a procedural motion with an 86 to 12 vote to move forward with legislation granting permanent normal trade relations (PNTR) status to China when Members return from the August recess. 

            Negotiations on the timing for the measure had been underway since the House approved similar legislation in May.  However, Senate Majority Leader Trent Lott (R-MS) had insisted on completing work on pending appropriations measures before proceeding to other legislation.  In addition, some Senators had announced their intention to offer amendments to the measure, creating the possible need to a second contentious vote in the House of Representatives.  In particular, Lott hoped to vote on a bill introduced by Senator Fred Thompson (R-TN) that would impose sanctions against China for reported weapon sales to Pakistan and other countries.

            With passage of the motion, the Senate has agreed to limit debate on PNTR legislation, which is expected shortly after the Senate returns in September.  Lott predicted that the measure would pass overwhelmingly.

            If you have any questions, please contact Erik Autor at (202) 626-8104.

 

 

HOUSE APPROVES CONTINUED VIETNAM TRADE

 

            This week, the House of Representatives voted to reject a motion disapproving the continued granting of export credits to Vietnam.  The overwhelming 332 to 91 vote ensured that Hanoi remains eligible for financial backing from U.S. export credit programs.

            As required by law, President Clinton asked Congress in June to extend Vietnam's access to United States government credits and investment guarantees for another 12 months.  Representative Dana Rohrabacher (R-CA), as he did with the annual extension of normal trade relations (NTR) to China, objected and introduced a resolution that would deny the benefits.  The House Ways and Means Committee urged lawmakers to reject the Rohrabacher resolution, and the full House followed suit as expected.

            The surprisingly strong vote is an encouraging sign for free trade supporters.  The U.S. and Vietnam signed a sweeping trade agreement earlier this month, setting the stage for a vote granting Vietnam NTR status on an annual basis, subject to approval by Congress.  It is not clear when a vote on the agreement will take place.

            If you have any questions, please contact Erik Autor at (202) 626-8104.

 

 

 

 

INTERNET WILL COST LOCAL GOVERNMENTS MILLIONS

 

            A study conducted by the General Accounting Office estimates state and local governments will lose between $300 million and $3.8 billion in tax revenue due to the growth of Internet commerce.

            Unlike brick and mortar retailers, many Internet retailers do not collect state and local taxes.  Under current state laws, retailers are required to collect sales and use taxes from a customer and immediately remit these taxes to the state.  However, based on two Supreme Court rulings, retailers without a physical presence in the purchaser’s state are not required to collect and remit a state’s sales and use tax.  Since many Internet sites and remote sellers are not located in a purchaser’s state, they do not have to collect these taxes, creating the predicted shortfall.

            The broad estimate by the GAO is due to the difficulty encountered while trying to document Internet sales.  The study goes on to say that the two states hardest hit by the lost revenue will be Texas and California, which could lose as much as $342 million and $533 million respectively.

            NRF is working closely with state and federal legislators to ensure equal collection of state and local taxes across all channels of distribution.  If you have any questions, please contact Scott Cahill or Sarah Whitaker at (202) 783-7971.

 

HOUSE PANEL APPROVES MEASURE ON FSC FIX

 

            This week the House Ways and Means Committee reported out a bill to alter the foreign sales corporations (FSC) tax, which the World Trade Organization (WTO) ruled was a violation of global trading rules.

            Earlier this year, the WTO ruled the tax constituted a prohibited export subsidy under the WTO’s Agreement on Subsidies and Countervailing Measures.  The Clinton Administration asked for time to examine the FSC and to comply with the ruling.

            The FSC allows U.S. companies to create foreign subsidiaries that are not subject to U.S. taxes and through which companies can export their products abroad.  The U.S. argued that the tax was necessary as European nations do not tax their companies’ export income.  Loss of the FSC could cost U.S. companies as much as $4.1 billion in fiscal year 2001.

             The U.S. has until October 1 to comply with the WTO decision.  Failure to comply with the ruling could result in trade sanctions levied by the European Union against U.S. goods and services.  The pending bill is only planned as a temporary measure, leaving a full review and overhaul of the FSC to the next Congress. 

            If you have any questions, please contact Erik Autor at (202) 626-8104.

 

BANKRUPTCY NEGOTIATIONS CONTINUE

 

            Senate Republicans have drafted a response to compromise bankruptcy legislation proposed by the Clinton Administration last week, but the White House has yet to respond to the proposal.  Negotiations on bankruptcy reform bills, passed by the House last year and by the Senate early this year, have been underway for some time.  A final conference report has been held up by debate over non-relevant amendments added during Senate consideration.  NRF has been working closely with Congress to ensure a strong, meaningful bankruptcy bill will be passed this year.  NRF will continue to keep its members apprised of any developments.

            If you have any questions, please contact Mallory Duncan or Katherine Graham at (202) 783-7971.

 

 

UPCOMING NRF MEETINGS

 

24th Annual Conference of State & National  Retail Association Executives

August 19 - 22, 2000, Whistler, BC

 

International Trade Advisory Council - September 21-22, 2000, New York, NY

 

Credit Management Advisory Council - September 24, 2000, San Diego, CA

 

General Counsels Forum - September 26-27, 2000, Williamsburg, VA

 

 

CONGRESSIONAL OUTLOOK

 

Both the House and Senate are in recess until after Labor Day.

 

Washington Retail Insightwill not be published during the August recess.