Extension of Permanent Normal Trade Relations (PNTR) status for China received a major push forward this week as two Congressional committees approved PNTR legislation.

On Wednesday, the Senate Finance Committee approved a measure that removes China from the list of countries requiring a yearly waiver of the Jackson-Vanik statute by a resounding 18 to 1 vote. The lone dissenter was Senator Jim Jeffords (R-VT).

Across the Capitol, the House Ways and Means reported out a bill that grants PNTR status to China and contains provisions to protect U.S. markets from a surge of Chinese imports. The measure was passed by a 34 to 4 margin. The House is scheduled to consider the measure next week, with the vote expected on Thursday, May 25.

As the debate continues, a number of key legislators have announced their support in recent weeks. With supporters and opponents desperately seeking votes, every announcement is trumpeted as a victory. Among the announced supporters are such influential members as Charles Rangel (D-NY), Sander Levin (D-MI), House Judiciary Chairman Henry Hyde (R-IL), and Chet Edwards (D-TX), the Chief Deputy Minority Whip. Levin's support came after a proposal he drafted to creating a panel to monitor China's human rights record and create a method to protect against a sudden influx of Chinese products was accepted by Republican leadership.

Unfortunately for supporters, House Minority Leader Richard Gephardt (D-MO) announced his opposition to the China measure last month, claiming it would diminish the ability of the U.S. to influence the Chinese government. "America should not trust the Chinese government to make progress on its own and unilaterally surrender our nation's ability to influence Chinese policy through trade," Gephardt said.

The Clinton Administration has stepped up their lobbying efforts, drafting a number of big names to endorse PNTR status. Former Presidents Gerald Ford and Jimmy Carter, along with former secretaries of state Henry Kissinger and Jim Baker, joined the President at the White House to express their support for granting PNTR status. This week, Federal Reserve Chairman also came out in full support of trade with China.

There are also prominent names out in opposition to the measure. Noted Chinese dissident Wei Jingsheng arrived on Capitol Hill this week to argue against extending PNTR to China. "You can't consort with the Chinese Communists," repeated Wei at each visit. "You must use your power to bargain with them."

Meanwhile, across the Atlantic, Chinese and European Union negotiators completed a deal that removed the largest remaining hurdle to Chinese membership in the World Trade Organization (WTO). If the U.S. fails to grant PNTR to China, European businesses will have a distinct competitive advantage over U.S. businesses once China joins the WTO.

In the end, supporters are cautiously optimistic. "I think we've poised to have success," said House Speaker Dennis Hastert (R-IL). Administration officials have also voiced optimism, although one noted the Chinese government "has a long record of saying just the wrong thing, or doing something stupid, at the last moment." As if to prove the point, the China Business Times, an official newspaper, threatened war with Taiwan. "If Taiwan's new leader refuses…to recognize the one China principle…then relations between the two sides will take a turn. War in the Taiwan Strait will be difficult to avoid."

NRF has launched a Legislative Hotline to Congress. Please use the automated toll free hotline--(800) 294-7801--to contact your Member of Congress and urge them to support PNTR status for China. In addition to utilizing the Legislative Hotline, please visit NRF's website on govt affairs, click on "Contact Congress," personalize a sample letter, and send it to your Member of Congress.

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

At a hearing before the House Ways and Means Oversight Subcommittee, Les Ledger, Owner of Ledger Furniture of Copperas Cove, TX, testified on behalf of the National Retail Federation in support of a level tax playing field for Internet sales.

The hearing followed last week's passage of a five-year extension of a moratorium on new and discriminatory Internet taxes. The measure passed by the House did not address the more controversial state sales and use tax issue, but did contain a non-binding provision urging states to work to develop a simplified sales and use tax system to facilitate collection.

In his testimony, Ledger made clear that retailers do not support the imposition of new taxes. "Retailers oppose new taxes on the Internet, including 'bit' and 'access' taxes," Ledger testified. "However, the retail industry feels that Congress must also address the broader more complicated states sales and use tax inequity."

Drawing on his personal experience as a small business owner, Ledger explained to the Subcommittee the impact an uneven playing field would have on his business. Ledger Furniture is located next to a P/X that sells furniture and is not required to collect sales taxes. "I don't have to wait to see the effect that tax-free purchasing [will have] on my business. I already know how it feels to compete with an entity that has a government imposed tax subsidy."

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

As directed by the recent Gramm-Leach-Bliley Act, the Federal Trade Commission (FTC) has released their regulations concerning the use of consumer financial information. The new rules will take effect in November 2000, but the FTC has provided additional time in which to achieve full compliance, i.e. until July 1, 2001. All customers required to receive privacy notices must receive them far enough in advance of that date in order for the customers to have had a reasonable opportunity to “opt-out” by the first of July.

Also contained in the FTC rules are provisions stating that “inactive” retail customer accounts do not become “active,” and thus subject to additional notice requirements, merely because a retailer sends marketing material designed to entice customers back into the store. In addition, despite opposition from others, the Commission supported NRF's request that it maintain its definition requiring that a company be “significantly engaged” in a financial service before it becomes subject to the rules. While most in-house credit operations would trigger the rules requirements, maintaining lay-a-way program or maintaining a tab for customers at a small retail operation specifically would not. In addition, the FTC included a special new provision for retailers with private label credit programs that will allow the card issuer and the retailer to share account number information. This was a significant concern for many private label issuers.

The new rules and comments are quite extensive. They may be accessed through NRF's website at www.nrf.com/govt. If you have any questions, please contact Mallory Duncan at (202) 783-7971.

In a major victory for retailers, this week President Clinton signed the "Trade and Development Act of 2000." The measure--the first major trade initiative in over five years--contains both the African Growth and Opportunity Act and the Caribbean Basin Initiative, which expand trade with sub-Saharan Africa and nations of the Caribbean.

At the signing ceremony on Thursday, the President thanked Congress for their efforts on the bill and urged them to continue to pass free trade legislation, specifically Permanent Normal Trade Relations (PNTR) status for China.

"It is clear that by breaking down barriers to trade, building new opportunities and raising prosperity, we can lift lives in every country and on every continent," the President said. "This bill reaffirms that position. And I hope it will be reaffirmed next week, when Congress votes on [PNTR] with China."

The effective date of the bill is May 18, although several of the provisions will not go into effect until October 1, the beginning of the new fiscal year.

With less fanfare, the President also signed the " Worker Economic Opportunity Act," which amends the Fair Labor Standards Act (FLSA) to ensure stock options do not have to be calculated into overtime pay.

Under the new law, gains from stock options would be treated as an employee benefit, not as a form of compensation, and therefore would not require companies to recalculate overtime payments for their employees.

Conferees are continuing the slow progress towards a compromise on digital signature legislation. Conferees have yet to actually meet, leaving the work to their staffs.

Initial work had been held up by disagreements on the amount of exceptions for electronic notifications. House Commerce Chairman Tom Bliley (R-VA) pushed a list of instances where paper notices would be required. However, Senate Banking Chairman Phil Gramm (R-TX) felt consumers should be given the option to receive notices electronically or on paper. An agreement on the exceptions was released in a draft on Monday.

In addition to differences among Republican conferees, Democrats responded to Monday's draft with a list of concerns over consumer protections and regulatory provisions. With the willingness of Bliley to allow consumers to "opt-in" to electronic notification, many Democrats were mollified. "We are very close to a final agreement," said Bliley, "and if everyone continues to work together in good faith, I think we can have a bill to the White House before Memorial Day."

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

After a delay to round up enough votes, the House Judiciary Committee approved a measure to increase the number of H-1B, or high-tech visas by a party line 18 to 11 vote.

The measure, introduced by Representative Lamar Smith (R-TX), would remove all limits on the number of visas for three years, while placing a number of restrictions on companies applying for the visas.

A rival proposal, authored by Representatives David Dreier (R-CA) and Zoe Lofgren (D-CA), was not voted on during the markup. The Dreier-Lofgren version would place a cap of 200,000 on the number of visas, but contains fewer restrictions on businesses. It also doubles the visa fee to $1,000. With the bill now moving to the House Rules Committee, which Dreier chairs, there may be another attempt to bring up the Dreier-Lofgren language.

NRF, recognizing the need for more high-tech employees, supports increasing the number of visas, and is actively working to ensure the caps are raised. If you have any questions, please contact Sarah Whitaker at (202) 626-8109.

Next week, the House of Representatives will take up a measure that would allow doctors to bargain collectively with health plans and insurers. The "Quality Health-Care Coalition Act" (H.R. 1304) would create an exemption under anti-trust law that would permit doctors to form "cartels," leading to higher fees and increased health insurance costs.

By removing competition, health care professionals could engage in boycotts or price-fixing, which are currently illegal. It would also allow doctors to insist on contracts that prohibit nonphysician providers' services, depriving consumers of their right to choose. Overall, the bill could increase health care costs by as much as $80 billion a year.

NRF strongly opposes this bill and is working to defeat the measure. However, with 220 cosponsors, H.R. 1304 will be difficult to defeat. NRF will continue to work to block the passage of the bill as it moves to the Senate.

If you have any questions, please contact Katherine Graham at (202) 626-8195.

Representative Bill Archer (R-TX), chairman of the House Ways and Means Committee, announced the Committee would hold a markup of legislation (H.R. 8) to repeal the estate tax. The measure will be nearly identical to the estate, or "death" tax repeal contained in the tax relief package vetoed by President Clinton last year.

"The time has come to bury the death tax," said Archer.

The proposal would phase out the estate tax over ten years. Repeal of the tax would greatly benefit small and family-owned businesses. NRF supports the measure, and will work with Congress to ensure swift passage. Should the Committee report out the bill, Archer suggested the House would consider it shortly after the Memorial Day recess.

If you have any questions, please contact Scott Cahill at (202) 626-8168.

Over the past week, key players on bankruptcy have been meeting to hammer out an agreement. Although a handful of issues still need to be addressed, it appears that they are moving closer to an agreement on the substance of the conference report. However, questions remain on how a conference report would move forward procedurally. There continues to be speculation that the bankruptcy bill could be attached to another legislative vehicle, such as the digital signatures bill that is also undergoing a difficult conference.

It is possible the measure could be brought up next week. NRF will continue to monitor the legislation and keep our members informed of any progress. If you have any questions, please contact Mallory Duncan or Katherine Graham at (202) 783-7971.

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.

International Trade Advisory Council - June 15, 2000, Washington, DC

CONGRESSIONAL OUTLOOK