Trade and China Tariffs During Lame Duck Session

Tuesday, December 8, 2020

With a dwindling variety of in-session legislative days earlier than the top of the present 116th Congress, the U.S. Home of Representatives and Senate are working to conclude their work earlier than adjourning on the finish of the yr. The highest “must-pass” legislative priorities stay finalizing the Fiscal 12 months 2021 appropriations course of, the annual Nationwide Protection Authorization Act (NDAA), and maybe one other spherical of financial stimulus associated to the COVID-19 pandemic. The present appropriations Persevering with Decision, briefly extending federal spending, expires this Friday, December 11. There’s diminishing expectation that settlement might be reached earlier than the top of this week, so we anticipate one other short-term extension as congressional negotiators proceed to strike a deal – probably for one week.

We’re prone to see a lot of different coverage priorities folded in with the ultimate spending invoice, doubtlessly within the type of an omnibus legislative measure – and that might embrace commerce and tariff-related issues. We’re watching most carefully the renewal of the Generalized System of Preferences (GSP) and the Miscellaneous Tariff Invoice (MTB).

MTB: ML Methods is listening to that the MTB is slowed down by Member objections to particular MTB petitions and there’s a good probability we received’t see completion of the invoice earlier than the top of the yr. The excessive variety of objections appears to be a results of the general variety of tariff aid petitions submitted to the Worldwide Commerce Fee (ITC) for inclusion on this yr’s MTB – and never because of any widespread philosophical objection to the MTB itself (though there are a couple of Members who do oppose). Those that have adopted the MTB in earlier years will recall that there’s some historical past of the MTB not being accomplished on time. Regardless of the potential delay, there’s a excessive diploma of confidence on Capitol Hill that even when they don’t end MTB this yr, it will likely be accomplished early subsequent yr. Sadly for profitable petitioners, they can not retroactively get well any duties paid earlier than passage of the brand new invoice. That is additionally the final MTB underneath the present statute, so Congress will seemingly cross one other MTB authorization invoice within the 117th Congress. Some well-placed congressional employees appear to really feel that the brand new course of, the place the MTB originates at ITC after which goes to Congress, is rather more efficient and manageable than the earlier course of that labored extra like earmarks and began with Member workplaces directing tariff aid petitions to ITC on behalf of constituents.

GSP: As reported within the press final week, Republicans aren’t proud of Democratic calls for brand spanking new provisions within the GSP renewal, largely centered on human rights, employee rights, and related provisions. Senate Finance Committee Chairman Grassley (R-IA) launched a 16 month straight extension of the GSP in September and want to cross that earlier than he steps apart as chairman on the finish of this congress as a result of Republican time period limits on committee chairmanships. Assuming Democrats don’t take the Senate majority with the 2 Georgia runoffs, Senator Crapo (R-ID) will assume the chairmanship of the Finance Committee. Our expectation is that Senator Crapo would largely adhere to the identical coverage positions as Chairman Grassley – and in reality is conserving Grassley’s chief of employees as his personal. From the Democratic perspective, the proposed modifications are non-controversial and would merely replace GSP, which was first enacted in 1974, to be extra aligned with the provisions of different more moderen commerce legal guidelines just like the African Progress and Alternative Act (AGOA) which was enacted in 2000 and addresses human and employee rights points.

Our sense is that GSP negotiations are persevering with apace and there’s nonetheless a possible probability that GSP is renewed this yr – with the objective of together with it in an finish of the yr catchall omnibus invoice versus passing as stand-alone laws. If for some cause Congress doesn’t get it throughout the end line earlier than the year-end deadline, we must always keep in mind that earlier GSP renewals have been completed retroactively, so even when they don’t meet the deadline, importers will nonetheless have the ability to safe a retroactive refund of any duties paid. With that stated, congressional employees are very a lot conscious that GSP is a little bit of a lifeline for a lot of importers already going through the China tariffs and are working onerous to make sure GSP renewal is accomplished this yr.

With regard to tariffs, President-elect Biden has indicated he doesn’t plan to make any instant modifications to the Part 301 China tariffs. As we shared beforehand, the extra instant change will seemingly be extra considered one of tone and magnificence since many Democrats are in settlement with President Trump on addressing China’s financial and commerce insurance policies. Key congressional workplaces have indicated that they don’t seem to be anticipating any instant modifications with regard to the tariffs however many are on the lookout for a extra lively engagement on worldwide commerce with the incoming administration.