In the second major trade victory this month, the House of Representatives Wednesday approved extension of Permanent Normal Trade Relations (PNTR) to China by an unexpectedly comfortable 237 to 197 margin. If approved by the Senate and signed into law, the measure would permanently guarantee Chinese goods the same low-tariff access to U.S. markets as is given to products from all but a few countries, such as Afghanistan, North Korea and Cuba. It would also clear the way for Chinese membership in the World Trade Organization (WTO) and open the Chinese market to U.S. exports.

"Congressional passage of PNTR will be a boon for U.S. retailers," said NRF President Tracy Mullin. "With PNTR and China's expected membership in the World Trade Organization, China will slash tariffs by over 60 percent, remove discriminatory taxes and regulations, and open its retail, distribution, and marketing systems to U.S. retailers."

After weeks of counting votes and lobbying undecided Members, the 40 vote margin was a surprising but welcome conclusion for free trade supporters. The debate on the House floor was heated at times, with a number of Members railing against China's appalling record on human rights. "Where is the freedom of speech? Where is the freedom of assembly? Where is the freedom to organize? Where is the freedom to pray? It is not in China," declared Rep. John Lewis (D-GA). But the economic benefits, and the promise of further reform in China swayed many Members. "The Chinese market is opening," said House Speaker Dennis Hastert (R-IL) as the House debate drew to a close. "Somebody is going to have an opportunity to sell to this vast new market. The question is, 'Who will be there when it opens?'"

A key factor in the margin of victory was an amendment offered by Representative Sander Levin (D-MI) that establishes a commission to monitor human rights in China, and creates a mechanism to deal with a sudden surge of Chinese imports. Critics of China have said the provision does not go far enough.

The measure now moves to the Senate, where passage is fairly certain. Senate Majority Leader Trent Lott (R-MS) and Minority Leader Tom Daschle (D-SD) have both stated they would prefer to move the bill as passed by the House, without any amendments. However, given the different procedural rules of the Senate, it is possible that one or two Senators may force votes on amendments. Should the Senate pass PNTR with any additional provisions, it would force a House-Senate conference and another contentious vote in the House on a Conference Report. In particular, Senate Commerce Chairman John McCain said an attempt to attach campaign finance reform amendments is a possibility.

Senate Foreign Relations Committee Chairman Jesse Helms (R-NC), meanwhile, promised he will wage a spirited fight against the measure. "I don't particularly relish raining on their parade, but I feel obliged to make clear that I do not intend to allow the Senate to simply rubber-stamp the President's plan to reward the Chinese communists," Helms said. In addition, Senator Paul Wellstone (D-MN), who is also holding up bankruptcy reform legislation, announced he would offer amendments on human rights issues.

NRF asks retailers to contact House members who voted in favor of PNTR to thank them for their support. Members can be contacted through NRF's Legislative Hotline--(800) 294-7801--or you can send a letter through NRF's website on govt affairs.

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

Efforts to introduce legislation providing a level tax playing field has been temporarily postponed after NRF raised concerns earlier this week over some of the provisions. NRF and other retail interests had been working closely with Senator Byron Dorgan (D-ND) to develop this legislation. Unfortunately, the newest proposal excluded critical retail industry provisions that were included in earlier versions of the bill.

The new proposal required states to only compensate remote sellers for their sales and use tax collection efforts. Originally, the Dorgan proposal provided compensation to ALL sellers, both remote and mainstreet. Since many states don’t provide compensation to retailers under the current system, providing new allowances to remote-only sellers would further stack the deck against traditional mainstreet sellers. The new language also granted states 4 years to enter a tax simplification compact, rather than the 3 years in the original proposal. Retailers support a shorter compact authorization period, which would force state and local governments to speed up their efforts to join the compact, simplify their sales and use tax system, and ultimately provide retailers and consumers a level tax playing field.

Following a grassroots blitz by the retail industry, Senator Dorgan decided to delay introduction of his “level playing field” proposal until Congress reconvenes the week of June 5. In addition, his staff has signaled that they will work with NRF to address industry concerns regarding the collection allowance provision. NRF will work with Senator Dorgan’s office over the Memorial Day recess period to ensure that ALL sellers are compensated for their collection efforts.

NRF's member response to the Action Alert was overwhelming. Within minutes after the Alert was faxed, the offices of Senator Dorgan and other key Senate co-sponsors were inundated with retail phone calls urging the Senators to address retail concerns.

NRF will continue working with the Senate in an attempt to secure passage of legislation that will address the inequity that exists in sales and use tax law. If you have any questions, please contact Scott Cahill at (202) 626-8168.

House leaders suddenly pulled H.R. 1304, the "Quality Health-Care Coalition Act" from consideration this week after active lobbying by the business community caused a number of GOP legislators to rethink their support for the measure. NRF sent a letter to the House of Representatives expressing the retail industry's strong opposition to the measure.

The bill, which creates an antitrust exemption for doctors that would allow them to form "cartels," leading to higher fees and increased health insurance costs, has 220 cosponsors, enough to pass the bill. However, in a closed Republican meeting on Wednesday, 86 Members voted for a resolution to pull the measure. The House Rules Committee then refused to report the bill out.

The fate of the measure is unclear. House Speaker Dennis Hastert (R-IL) had promised the bill's sponsor, Tom Campbell (R-CA), that the measure would be scheduled later this year. But with opposition from his own party, and from the Department of Justice and the Federal Trade Commission, chances of enactment this year are questionable.

NRF strongly opposes the measure. If you have any questions, please contact Katherine Graham at (202) 626-8195.

The House Ways and Means Committee on Thursday approved a 10-year phase out and repeal of the federal estate and gift tax by a 24 to 11 vote. The legislation is expected to move quickly to floor consideration after the Memorial Day recess.

The measure is nearly identical to the estate, or "death," tax repeal contained in the tax relief package vetoed by President Clinton last year. 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.

In addition to repeal of the estate tax, the measure also repeals all tax rates over 53 percent in 2001, and all tax rates over 50 percent in 2002. Tax rates would continue to be reduced at an accelerated rate until the full repeal takes effect in 2010. Families would also be allowed to inherit up to $3 million without having to pay accumulated capital gains taxes.

Democrats attempted to replace the repeal with an increase in the exemption, currently $675,000, to $4 million per family. The amendment was defeated 21 to 12.

NRF will continue to work with Congress to help repeal the death tax. If you have any questions, please contact Scott Cahill at (202) 626-8168.

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

Online Consumers' Beliefs on Effect of Internet Taxes 

Hurt Internet shopping 52%
Little or no effect 43%
Help Internet shopping 4%