With the President set to sign H.R. 4380, the Miscellaneous Tariff Bill, into law this afternoon, we thought a history of how previous Congresses and Administrations have handled the bill might be useful.

The bill has never been controversial before and, if its provisions are considered independently, has always elicited overwhelming votes of support.

In 1996, H.R.3815, the Miscellaneous Trade and Technical Corrections Act of 1996, was introduced on July 16 and President Clinton signed it into law on October 11. It passed both the House and Senate on voice votes and through unanimous consent, respectively.

In 1999, H.R.435, the Miscellaneous Trade and Technical Corrections Act of 1999, was introduced on February 2, passed the House a week later on a vote of 414-1, and the conference agreement was adopted by the House in June by a vote of 375-1. President Clinton signed it into law on June 25, 1999.

In 2003 and 2004, the successor legislation was H.R.1047, the Miscellaneous Trade and Technical Corrections Act of 2004. It was introduced on March 4, 2003, passed the House March 5, 2003 by a vote of 415-11, got hung up in the Senate but eventually passed on unanimous consent and was signed into law by President Bush on December 3, 2004.

In 2006, the process was complicated as the miscellaneous tariff provisions were included in other major pieces of legislation. As the American Apparel and Footwear Association summarized it: “During 2006, Congress cleared two separate measures containing miscellaneous trade and tariff measures, including duty suspensions on a range of interests to AAFA members relating to apparel, footwear and textile components. These bills included the pension bill (H.R. 4) that was signed by President Bush in early August 2006 and the omnibus trade bill (H.R. 6406) that was signed by President Bush in December 2006. ”

The pension bill, H.R. 4, including a section entitled the Miscellaneous Trade and Technical Corrections Act of 2006, was introduced July 28, 2006, passed the House the same day by 279-131, passed the Senate on August 3 by a vote of 93-5, and was signed into law by President Bush on August 17. The second bill, H.R. 6406, was introduced in the House on December 7, 2006, passed on December 8 by a vote of 212-184 and then folded into H.R. 6111, which was signed into law by President Bush on Dec. 20, 2006.

Bottom line: Enactment of the Miscellaneous Tariff Bill is a big deal and a good thing, but its provisions have never been controversial and Presidents have always gladly signed it into law. We’re glad too.

We happened to catch two excellent speeches in Congress this week on the importance of Free Trade Agreements.

Rep. Kevin Brady (R-TX) spoke Wednesday during the House debate on H.R. 1875, to establish an Emergency Trade Deficit Commission. The full debate started on page H6813 of The Congressional Record. Brady, who managed the Republican side of the debate, spoke beginning on page H6188, noting that the day marked the fifth anniversary of House passage of the U.S.-Central American Free Trade Agreement, or CAFTA.

Trade agreements … give us a chance not one-way trade in, but two-way trade where we have a level playing field. The world has changed. It’s not enough to simply buy American. We have to sell American. We have to sell our products and goods and services throughout this world. In fact, over 80 percent of our trade deficit today is with countries that are not trade agreement partners, that are not level playing fields for the United States. That’s why we push hard for those agreements.

For example, 5 years ago the United States had a $1.2 billion trade deficit with Central America. Last year, the United States had turned that around, because of the agreement, to a $1.2 billion trade surplus, and we’re on track to surpass that surplus again this year. Last year, the United States had a trade surplus in manufactured goods with our Central American partners of almost $2 billion. We’re on track again this year.

 Nor is CAFTA the only example of how trade agreements can improve the U.S. trade balance. This week also marks the eighth anniversary of the final House vote on the Trade Act of 2002, under which we have resoundingly successful trade agreements with 13 countries now in force. Last year, the United States had a trade surplus of over $25 billion with these 13 countries. And so far this year, we have a surplus again.

Looking at just trade in manufactured goods reveals that these agreements were even better for American manufacturing workers. Last year, the United States had a trade surplus of over $29 billion in manufactured products with these countries that we have free trade agreements. And again, we have this year a surplus already of nearly $16 billion. Without question, these trade agreements have reduced U.S. trade deficits and increased U.S. trade surpluses.

Rep. Geoff Davis (R-KY) also spoke on the floor, emphasizing the importance of trade to the manufacturing sector: “In my home State of Kentucky, nearly 50,000 manufacturing jobs are dependent on exports. The simple fact is that 95 percent of the world’s consumers live outside the United States, and the fastest growing markets are outside our borders. So success in those markets is critical to growing our manufacturing sector and creating good paying jobs.”

In the Senate, Sen. Chris Dodd spoke on Thursday, making a strong case for enacting the U.S. Free Trade Agreements with Colombia and Panama. He argued that the agreements had value for both foreign policy and U.S. domestic economic reasons, and concluded: (continue reading…)

Mexican President Felipe Calderon is in town today on a state visit. He’ll bring a full slate of issues to discuss with President Obama. One expects he’ll raise the issue of Mexican trucking yet again, with hopes that someone senior in the Administration will provide more details on how we’re going to find resolution on it and remove the pernicious retaliatory tariffs that Mexico has (entirely within their rights under NAFTA, mind you) put on $2.4 billion worth of U.S. exports, the overwhelming majority on manufactured goods.

However, as noted earlier this week in this blog, despite repeated assurances by Transportation Secretary LaHood and other senior officials that some kind of proposed solution that will make everyone happy is imminent, we don’t expect to see any major breakthrough during President Calderon’s visit.

An earlier blog post charted Transportation Secretary LaHood’s exchanges with Sen. Patty Murray (D-WA) earlier this month and in March, where he told her that a proposal was “closer than soon” to being shared with Congress. We’ve heard that before.

According to Inside U.S. Trade [subscription], U.S. Trade Representative Kirk yesterday “expressed doubt that there would be a concrete U.S. proposal on solving the trucking dispute this week. He told reporters after a speech that he did not know if there would be a “deal” on trucking this week. “But I do know that [Transportation] Secretary Ray LaHood continues with work with Congress and others to see if we can find a way forward, ” he said.

And then, yesterday at a White House press briefing, we had this less-than-reassuring exchange:

Q: You mentioned the four meetings that the two Presidents have had. At each of those President Obama has pledged to resolve the trucking issue in accordance with the NAFTA treaty. Can you update us on what progress has been made, and just talk more generally about the trade issues that will be at the summit?

SENIOR ADMINSTRATION OFFICIAL: Certainly. And as I noted, kind of the economic competitiveness and mutual economic growth are things that we very much expect to discuss — the President discuss with President Calderón and the two teams to have an opportunity to exchange views and see how we can work together to reach a goal that both Presidents have very clearly laid out in their own countries to revitalize economic vitality and job creation in both countries. (continue reading…)

Reuters, “US to announce Mexico trucking plan soon-LaHood“:

WASHINGTON, May 6 (Reuters) – President Barack Obama’s adminstration will soon announce its plan to reopen the U.S. border to Mexican trucks and end a dispute that prompted Mexico to slap duties last year on $2.4 billion worth of U.S. goods, a top U.S. official said on Thursday.

“President Obama’s team has worked very hard to put a proposal together. We will be announcing it very soon,” U.S. Transportation Secretary Ray LaHood told lawmakers.

Truckinginfo.com has a more detailed report, including the pressure put on LaHood by Sen. Patty Murrray (D-WA); Washington state’s fruit growers have suffered a major hit to their sales from Mexico’s retaliatory tariffs. From “LaHood: Announcement on Mexico Truck Proposal Is ‘Closer Than Soon’”:

“Back in March, I urged you and the administration to move quickly to craft a plan to resume cross-border trucking with Mexico in a way that would address the safety concerns raised during the pilot and end the tariffs imposed by the Mexican government,” Murray said during Thursday’s hearing.

Murray wanted to make sure the proposal was really near this time around, interrupting LaHood with, “Sooner than soon?” He responded saying, “It is closer than soon.”

A NAFTA dispute panel found that the United States violated the North American Free Trade Agreement when it failed to implement a cross-border trucking program meant to ease the movement of products between Mexico and the United States. Mexico responded in March 2009 by announcing $2.4 billion of tariffs affecting products, Reuters reported, including sunglasses, toilet paper, pet food, ornaments, soy sauce, Christmas trees and produce such as strawberries, pears and onions.

The Dallas Morning News on Sunday does its own story on the anniversary of Mexico’s tariffs retaliating against the United States for violating NAFTA, also reporting on Brazil’s WTO-sanctioned tariffs retaliating against the U.S. cotton program, “Companies caught in the middle of U.S.-Mexico trucking dispute“:

“We have heard from American exporters,” U.S. Trade Representative Ron Kirk said Tuesday. “We understand the sense of urgency. We will work as quickly as we can to see if we can’t come up with an acceptable solution.”

Transportation Secretary Ray LaHood has assured exporters that he’s hopeful a deal can be reached soon. But he said the same thing a year ago.

“We have not yet floated any proposals with Mexico and look forward to consulting with members of Congress,” the department’s Federal Motor Carrier Safety Administration said Thursday in a statement.

The Mexican embassy in Washington issued a news release last week:

We continue to seek every opportunity for dialogue and engagement with the Administration and Congress on this issue, and we urge the former to come forward with a specific proposal to resolve the cross-border trucking impasse.

In the meantime, Mexico will continue to exercise all legal means available to achieve full compliance by the United States with its commitments under the NAFTA. The safety of Mexican carriers and drivers operating in the United States has been well documented by an Independent Evaluation Panel, the Inspector General of the U.S. DOT and the Congressional Research Service. Mexico is the United States’ second-largest export market and the second largest buyer of US exports. It remains a steadfast supporter of free and fair trade, and will continue to work actively and responsibly with Congress and the Administration to find a solution.

The Morning News story highlights the impact of the Mexican and Brazilian tariffs on Texas-based Mary Kay, the personal care products company that has paid $5.4 million in Mexican tariffs over the last year.

As for the Brazilian retaliation…

• Bloomberg, “Brazil Raises Tariffs on U.S. Goods, to Break Patents“
• Capital Press, “Brazilian tariffs could stall exports,” reporting on the consequences to the ag sector.
• The Economist, “Picking a Fight“

Here’s the list of U.S. products and tariff percentages applied by Brazil, from the Brazilian Embassy. We’ll also put the list in the extended entry section below.

(continue reading…)

Robert Samuelson, writing in The Washington Post, “Obama’s Tire Tariff: Bad Policy, Right Message“:

Tit-for-tat retaliation could ignite a global trade war. If United States and China do it, why shouldn’t everyone else? Limits on tires, auto parts, chicken — or whatever — might inspire similar measures from other countries to prevent diversion of goods into their markets. Flirting with protectionism is dangerous. Announcing the tariffs shortly before Thursday’s economic summit of G-20 countries in Pittsburgh makes the predictable pious anti-protectionist pronouncements even less believable.

But tolerating China’s predatory trade practices is also dangerous. China’s cheap exports reflect more than low wages. Government actively promotes and subsidizes exports, especially through a deliberately undervalued currency. The undervaluation lowers the prices of Chinese goods. Economist Nicholas Lardy of the Peterson Institute figures the present price advantage at 15 to 20 percent. It might be more. Economist Eswar Prasad of Cornell University argues that cheap credit and subsidized land and energy enhance the price competitiveness of Chinese exports.

It’s a paradox, Samuelson writes: Tariffs as protectionism are bad policy. But in this case, the message they send to China is the right one: Cease and desist.

That’s a thoughtful analysis. Still, until the Administration starts enacting pro-trade policies — to correlate with all the pro-trade speeches — it’s difficult to distinguish between a discrete, tactical message and  nascent protectionism.

An unofficial list of goods that the Mexican government has applied new tariffs on in retaliation to Congress passing and President Obama signing the omnibus appropriations bill that ended a Mexican cross-border trucking program.

Most of the charges range from 10 to 20 percent. The notable exception is 45 percent applied to fresh grapes.

Many, many manufactured goods are included in the list. For example:

• Manicure or pedicure preparations
• Shampoos
• Hair lacquers
• Other preparations for use on the hair
• Dentrifrices
• Filament nylon yarn used to clean between the teeth (dental floss)
• Other yarn used to clean between the teeth (dental floss)
• Other preparations for oral or dental hygiene, including denture fixative pastes and powder; in individual retail packages
• Pre‐shave, shaving or after‐shave preparations
• Personal deodorants and antiperspirants
• Tableware and kitchenware, of plastics
• Other household articles and toilet articles, of plastics
• Statuettes and other ornamental articles
• Self‐copy paper
• Toilet paper
• Notebooks (exercise books)
• Other printed books, brochures, leaflets and similar printed matter, whether or not in singles sheets
• Other trade advertising materials

Earlier posts:

• No Surprise: Mexico Slaps Tariffs on U.S. Goods Over Truck Dispute
• Just a Little Protectionism? Then Comes the Escalation
• Por Favor, Mexico: Reinventing the Border Truck Program