MTB, GSP Renewal Now Part of China Package; Counterfeiting Enforcement Also Included

An amendment that will allow expanded information sharing from CBP on counterfeits, and which will renew the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill, will be part of the China package expected to pass the week of June 8. The amendment, sponsored by Finance Committee ranking member Sen. Mike Crapo, R-Idaho, was modified slightly from its first introduction, when it failed to pass the filibuster threshold of 60 votes. This version, which passed with 91 votes on May 27, no longer expands a forced labor initiative on seafood to all seafood products.

The amendment also directs the Office of the U.S. Trade Representative to analyze the impact of Section 301 duties on consumers and small businesses before imposing tariffs, "with a goal of mitigating the impact of duties ... including by evaluating alternatives or modifications ...." There are numerous Section 301 tariff lists pending over digital services taxes in Europe and elsewhere.

The amendment also says the USTR must establish an exclusion process under Section 301 "unless [USTR] determines and certifies to the appropriate congressional committees that maintaining an exclusion process -- ‘(A) would impair the ability of the United States to maintain effective pressure to remove unreasonable or discriminatory practices... or (B) is impractical due to the low value of the duties imposed.'" In Crapo's remarks, he said the bill would restart and reform the product exclusion process.

Crapo called the revised amendment the Trade Act of 2021, and said in a floor speech that he and Finance Committee Chair Sen. Ron Wyden, D-Ore., worked together for months to formulate it. The amendment "is an example of the bipartisanship that can be achieved if we put in the hard work to work out the details and the differences between us on very critical issues," Wyden said.

Crapo, in his summary, said, "It strengthens oversight over U.S. trade policy by providing an inspector general to the USTR, and by ensuring the application of section 301 tariffs related to China are calibrated to provide the necessary leverage to support American competition while ensuring U.S. competitiveness in manufacturing."

He also said it requires USTR to initiate talks with Japan, Australia and India to develop a strategy on critical minerals to counter China's dominance in the sector.

On counterfeiting, the bill would require an annual report by CBP on seizures of counterfeits, what country they were from, how they arrived, and in what categories. CBP then will be required to increase inspections of imports from the top source countries for counterfeit goods, as identified by the report. The bill also authorizes CBP to share information on suspected violations of intellectual property rights with "any other party with an interest in the merchandise." Restrictions on sharing information about counterfeits with trademark holders have been a hurdle to stopping counterfeits, CBP has said (see 2104160033).

On seafood, the bill orders CBP to issue regulations on the verification of seafood imports, to ensure none of that seafood is produced with forced labor, and to do so within a year. It also requires CBP's Forced Labor Division to brief the Senate Finance Committee and the House Ways and Means Committee at least every 90 days on investigations of forced labor, progress made toward issuing withhold release orders, and progress made toward closing those investigations.

The bill aims to improve supply chain resiliency, but relies on a voluntary database from importers who would tell the Commerce Secretary where they import from; what challenges there are to secure inputs if the business is a manufacturer; the business's sense of vulnerabilities of this sourcing; why the good is imported; and whether the business would be interested in sourcing the good domestically.

The top Republican on the House Ways and Means Committee, Rep. Kevin Brady of Texas, responded to the amendment's passage by saying he hopes that he and Chairman Richard Neal, D-Mass., can reauthorize the GSP and MTB quickly, because the lapse of those programs in December means "American workers have been kept waiting for too long."

The U.S. Chamber of Commerce reacted to the changes to the China package -- which it supports -- and applauded Crapo and Wyden for getting GSP and MTB renewal included in the bill. "We hope that [the bill] will be improved as the legislative process continues. In particular, the Chamber urges elimination of the County of Origin Labeling requirements, which would impose significant burdens, liability, and costs on American retailers and companies." That COOL requirement applies to sales listings of goods sold online.

Sen. Marco Rubio, R-Fla., was one of the few to vote no on the amendment, which he said could "inadvertently end up benefiting the Chinese Communist Party." Some products on the MTB list are from China.