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Election Results to Have Mostly Helpful Impact on SGMA Trade Objectives

The outcome of the November 2 mid-term elections could have a major impact on SGMA members’ objectives on several key trade issues.  First, the Republicans’ newfound control of the House and strengthened minority in the Senate could finally pave the way for congressional approval of the bilateral free trade agreements completed during the Bush Administration with South Korea, Colombia and Panama.  SGMA has been particularly active in pushing the FTA with South Korea given that country’s position as the United States’ fifth largest export market and our eighth largest foreign supplier for sporting goods.

Second, given the incoming Congress’ increased receptivity to trade agreements, negotiators engaged in ongoing trade talks will have an incentive to try to wrap up those agreements by late 2011 if at all possible, recognizing that the political window for congressional approval will close early the following year as the November 2012 elections near.  While a near-term breakthrough seems unlikely in the Doha Round negotiations, the new congressional dynamic could help accelerate the Trans-Pacific Partnership (TPP) free trade agreement negotiations that include the United States, Chile, Peru, Australia, New Zealand, Singapore, Brunei, Malaysia and Vietnam, with the possibility of Japan and maybe Canada joining soon as well.  While not admitting it publicly, the Administration would very much like to announce the framework of a TPP agreement at the November 2011 APEC leaders’ meeting that President Obama will hosting in Hawaii.

Third, it is difficult to predict how the recent elections affect the prospects for legislation attacking China’s currency practices.  Generally, a Republican-controlled House would be less likely to pass trade-restrictive legislation (the 348-79 bipartisan vote in favor of China currency legislation in late September was viewed by many Members as a politically expedient “free vote” given the unlikelihood of subsequent approval by the Senate).  However, because trade was not at the fore of the campaign agendas for many of the victorious Tea Party candidates, it remains unclear whether most of them will adhere to their general pro-free market philosophy in voting against China currency legislation, or whether they will adopt a more populist position and vote for it.

Fourth, the path might be smoother for future renewals of the U.S. Generalized System of Preferences (GSP), which provides preferential duty-free treatment to several categories of sporting goods equipment imported from beneficiary developing countries.  Sen. Charles Grassley (R-IA) will be forced to step down from his position as the ranking member of the Finance Committee because of term limits.  Grassley has used that position in recent years to push for the graduation of Brazil, India and other advanced beneficiary countries from the GSP program and, while his efforts ultimately were not successful, they delayed and threatened passage of GSP renewal legislation on occasion.

Finally, SGMA members may find it easier in the next Congress to secure passage of duty suspension provisions as part of miscellaneous tariff bills (MTBs).  Grassley was never a strong backer of MTBs, often raising procedural disclosure hurdles, so his stepping down as the Finance Committee’s leading Republican could facilitate that process as well.  More importantly, House Republicans will be considering possible changes to House rules that also could help the MTB process.  One would be to rewrite House rules to clarify that duty suspension bills and other “limited tariff benefits” should not be treated as earmarks and, hence, should not be subjected to the expected earmark moratorium.  Another would be to modify the current “pay-as-you-go” budget rule, which requires legislation containing a budget increase, be it a spending increase or a tax cut, to be offset with an equivalent budget-cutting measure elsewhere in the budget.  Future House Speaker John Boehner (R-OH) has suggested a “cut-as-you-go” rule that would exempt tax cuts from the offset requirement; if duty cuts and duty suspensions were to be treated as tax cuts, MTBs might have an easier path than they have had in the past.

POSTED - November 9, 2010

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