S. 1269 – Trade Facilitation and Trade Enforcement Act
Noteworthy
Background: The Trade Facilitation and Trade Enforcement Act of 2015, commonly referred to as the “customs bill,” was introduced on April 20, 2015, by Finance Committee Chairman Hatch and Ranking Member Wyden as one of four bills dealing with trade promotion. The bill was marked up and approved by the Finance Committee on April 22, 2015, by voice vote. The committee released the bill on May 8.
Floor Situation: At 10:30 a.m. on Thursday, May 14, 2015, the Senate is scheduled to begin consideration of H.R. 1295 and H.R. 644. An amendment containing S. 1269 (Customs Enforcement) will be offered to H.R. 644. At noon on Thursday, May 14, 2015, the Senate is expected to proceed to a roll call vote on H.R. 644, as amended with S. 1269, at a 60-vote threshold. This will be the second in a series of two votes at noon.
Executive Summary: S. 1269 puts into statute various successful programs instituted by U.S. Customs and Border Protection, the agency charged with managing the import process at the border, without re-organizing the agency. The bill addresses key aspects of customs laws and practices in an effort to make the flow of legally traded goods more efficient and secure while protecting U.S. consumers and businesses against illegal imports. It attempts to differentiate between merchandise that requires additional inspections – because of the high-risk to the economic security of the U.S. – from merchandise that does not. The bill updates trade remedies to address unfair trade practices, including antidumping and countervailing duty laws.
Considerations on the Bill
Most of this bill deals with technical aspects of the enforcement of customs laws and practices. It also enhances trade facilitation and deals with remedies for currency manipulation. Key components include:
Currency Manipulation – The bill seeks to correct incidences where a foreign government implements foreign exchange policies designed to undervalue its currency in order to gain unfair trade advantage over the U.S. Titles V and VII of the bill address the practice and seek to enhance the U.S. ability to prevent foreign countries from manipulating currency to get a trade advantage.
Drawback – Federal regulations allow for U.S. producers to claim a refund of certain duties, taxes, and fees paid on imported merchandise when it is used in the creation of a product that is subsequently exported. Producers can claim back up to 99 percent of duties, taxes, and fees levied on these imports. This bill attempts to simplify drawback by modernizing the process from paper-based to fully automated. Section 906 of title IX addresses this matter.
Antidumping and Countervailing Duties – Two of the more important trade remedies that the U.S. uses are antidumping and countervailing duty laws. Antidumping laws attempt to protect U.S. consumers from imported goods that are sold at less than fair market value so as to drive domestic competition out of the market. Countervailing duty law is designed to offset the advantage an imported good has due to a foreign entity’s subsidization of the imported goods. Title IV of this bill strengthens the ability of the U.S. to enforce such laws.
De minimis – This refers to the value threshold below which unaccompanied shipments can enter U.S. commerce without payment of customs duties. This bill raises the de minimis level from $200 to $800. Section 901 of title IX of the bill addresses this matter.
Intellectual Property Rights – The bill creates a chief innovation and intellectual property negotiator tasked with the responsibility to conduct trade negotiations and enforce trade agreements. It includes improved enforcement for trade secrets.
Notable Bill Provisions
Title I – Trade facilitation and trade enforcement
This portion of the bill implements several programs and practices of U.S. Customs and Border Protection that have worked effectively. It requires CBP to report to Congress on efforts to involve private sector partners and other federal agencies in the implementation of programs that will improve security and international supply chains. This title requires annual reports from CBP to Congress on priorities and performance standards to measure the development of customs modernization and enforcement.
Title II – Import health and safety
This title establishes an interagency Import Safety Working Group. The title requires relevant federal agencies to coordinate a response plan for cargo and merchandise entering the U.S. that poses a threat to the health and safety of consumers. It requires training of CBP port personnel to enforce U.S. import health and safety laws.
Title III – Import-related protection of intellectual property rights
This title defines intellectual property rights as “copyrights, trademarks, and other forms of intellectual property rights enforced by CBP.” Under this title, CBP is required to share with the rightholder unredacted images – and is authorized to share unredacted samples – of merchandise suspected of violating intellectual property rights. Section 302 requires CBP to share images of suspected trademark and copyright violations. Section 303 provides CBP with authority to seize circumvention devices.
Title V – Amendments to antidumping and countervailing duty laws
This title strengthens antidumping and countervailing duty laws, particularly to allow them to be applied where foreign countries have manipulated currency to gain an unfair trade advantage. These provisions allow the U.S. to issue rulings to increase the price of imported goods as a way of remedying that advantage.
Title VII – Currency manipulation
Subtitle A of this title incorporates the text of S. 433, the Currency Undervaluation Investigation Act. It directs the government to determine if an export subsidy is being received in the form of purposefully undervalued currency. It also provides the formula for measuring the value of that subsidy or undervaluation, which would allow for the imposition of countervailing duties as a remedy.
Subtitle B provides enhanced reporting requirements on exchange rate issues and calls for certain remedies if countries fail to address persistent imbalances in currency value.
Administration Position
A statement of administration policy has not been released at this time.
Cost
CBO reports that the bill will decrease deficits by $48 million during the 11-year period 2015-2025. This is the result of an increase in direct spending of $146 million and an increase in revenue of $193 million. CBO also estimates that spending subject to appropriation would total $2.2 billion from 2016-2025; this amount is subject to current discretionary spending caps and does not increase spending.
Amendments
No amendments will be in order during consideration of this bill.