Following a rushed markup last week, the House of Representatives passed a five-year extension of the Internet Tax Freedom Act (ITFA).

NRF opposed the measure, which passed by an overwhelming 352 to 75 margin, because it does not directly address the more volatile issue of state sales and use taxes. Contrary to popular belief, the current moratorium does not prevent states from taxing in-state Internet purchases. While consumers are required to report such purchases on their state tax forms, most do not realize they are obliged to do so. The measure does prevent the imposition of new and discriminatory taxes on Internet use, as well as a ban on access taxes. For example, a consumer cannot be taxed on the fees charged by their Internet service provider.

Despite protests by Democrats on the House Judiciary Committee about the lack of hearings last week, once the bill reached the House floor, 142 Democrats sided with all but 9 Republicans to support the extension. Attempts to reduce the length of the extension to two years were rejected by extremely close margins. An amendment that would make the moratorium permanent was also rejected by a 336 to 90 vote.

In a victory for proponents of a level tax playing field, the House approved a non-binding amendment expressing the sense of Congress that the states should work to develop a simplified sales and use tax system to facilitate collection. The amendment, offered by Rep. Ernest Istook (R-OK), passed 289 to 138.

Two hearings have been scheduled on the issue next week. A retailer will be testifying on behalf of NRF at the hearing before the House Ways and Means Committee. The House Judiciary Committee will hold hearings on the sales and use tax issue.

On the Senate side, the outlook for passage is much less certain. Senator Michael Enzi (R-WY) has said he will work to prevent passage of the extension. Senate Minority Leader Tom Daschle (D-SD) said, "We're going to take a very close and hard look at whether or not five years makes the most sense. We have to recognize the extraordinary consequences of failing to collect the sales taxes in states like ours [South Dakota]."

If you have any questions, please contact Scott Cahill or Sarah Whitaker at (202) 783-7971.

The Senate on Thursday passed the Conference Report of H.R. 434, the "Trade and Development Act of 2000," by a strong 77 to 19 vote. The action clears the bill for the President's signature.

Passage of the trade bill was a "victory for the cause of free trade," said Senate Majority Leader Trent Lott (R-MS). In a rare display of bipartisanship, Senators on the Democratic side of the aisle agreed. "We're doing something for Africa besides sending peace forces or aid," said Senator Daniel Patrick Moynihan (D-NY).

Passed by the House last week, the measure greatly expands trade with 48 sub-Saharan African and 25 Caribbean nations, and will greatly benefit the retail industry. However, one provision contained in the final package was opposed by NRF. The carousel sanctions provision requires that when a country fails to implement the recommendations of a WTO dispute settlement panel, the U.S. Trade Representative must rotate the products on the retaliation list every four months. Therefore, all products included on a preliminary retaliation list against a target country will effectively be subject to trade sanctions (usually 100% duties) at some point while the sanctions action is in effect.

President Clinton has announced he will sign the bill at a White House ceremony next Tuesday.

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

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COUNTDOWN TO CHINA PNTR VOTE
13 Days!

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Congress is expected to vote on whether or not to grant permanent normal trade relations (PNTR) status to China the week of May 22. Members of the Republican Leadership and the White House are actively working to garner the votes for passage of the China PNTR measure. PNTR status for China is of vital importance to the U.S. retail industry.

NRF is launching a Legislative Hotline to Congress-- (800) 294-7801--which will be operational beginning Monday, May 15. Please use the automated toll free hotline to contact your Member of Congress and receive a legislative update and talking points on this critical issue. In addition to utilizing the Legislative Hotline, please visit NRF's website at www.nrf.com/govt, click on "Contact Congress," personalize a sample letter, and send it to your Member of Congress.

Work on legislation to raise the caps on the number of visas issued for high-tech workers is proceeding slowly through the Committee process in the House. A House Judiciary subcommittee approved a bill in mid-April, but the full Committee has postponed a vote on the bill because supporters say there are not enough votes to approve the measure.

The Committee began its markup of H.R. 4227 on Tuesday, but despite some progress on amendments, Chairman Henry Hyde (R-IL) delayed the final vote until next week. Meanwhile, President Clinton announced his own proposal to raise the caps to 200,000 for the next three years. The current year's cap -- set at 115,000 -- was reached in March. The President's proposal is similar to an amendment offered by Reps. Zoe Lofgren (D-CA) and David Dreier (R-CA) that was ruled non-germane. In addition, Clinton's proposal would also raise the visa fee from $500 to $2,000. The bill pending in the Judiciary Committee raises the fee by only $150.

NRF will continue to monitor these proposals, and will keep our members informed of any action taken by Congress. If you have any questions, please contact Sarah Whitaker at (202) 626-8109.

On Tuesday, the House Commerce Subcommittee on Telecommunications, Trade and Consumer Protection will hold a hearing on consumer safety issues. Specifically, the Subcommittee will address the 1996 amendments to the children's sleepwear flammability standards imposed by the Consumer Product Safety Commission. The amendments exclude infant garments sized 9 months of age or younger, and require snug-fitting garments for young children.

The hearings stem from concerns raised by consumer groups that snug-fitting cotton and infant-sized sleepwear are unsafe and may lead to increased risk of injury or death. The National Cotton Council will testify on behalf of NRF and other apparel and manufacturing groups in support of the existing standards, as burn and fatality data do not demonstrate the garments pose an unreasonable risk requiring changes to the 1996 regulations.

If you have any questions, please contact Sarah Whitaker at (202) 626-8109.

Following up on the release of redesigned $100, $50, and $20 bills a few years ago, the Federal Reserve will begin shipping new versions of the more common $5 and $10 bills later this month. The new design is aimed at stopping high-tech counterfeiters.

Like the new $20's, the bills will have larger, off-center pictures of Abraham Lincoln and Alexander Hamilton, as well as other features to make it more difficult to copy the bills.

The Treasury Department will again be working with retailers and others to educate the public about the new bills. Information about the new currency can be obtained on the Internet at http://www.moneyfactory.com/currency.htm.

Policy Council - June 13, 2000, Washington, DC
Washington Leadership Conference - June 13-14, 2000, Washington, DC
For registration information, contact Emily Wild at (202) 626-8131.

Top 5 U.S. States Exporting to China, 1998
Washington $3,172,190,000
California $2,472,154,000
Illinois $900,888,000
New York $678,612,000
New Jersey $668,466,000

CONGRESSIONAL OUTLOOK