Huelskamp leads push to waive some tariffs
By Mary Clarkin - The Hutchinson News - mclarkin@hutchnews.com
While tariffs and duties on some imported products like passenger car tires expired this month, two Kansas companies have looked to state legislators to secure tariff and duty exemptions for business-specific items imported to the U.S., and Kansas.
Twenty-six bills filed this year by U.S. Rep. Tim Huelskamp seek suspension of duties on chemicals imported from Asia by Philips Electronics, Salina, and footwear imported by Collective Brands Inc./Payless ShoeSource, Topeka - which is outside Huelskamp's 1st District.
When duties are suspended, it becomes cheaper for U.S. companies to import materials for products, machinery for factories, or goods to sell.
Every two or three years, Congress compiles a major Miscellaneous Tariff Bill. The pending bill contains more than 1,200 requests for tariff relief.
The process once was "completely beneath the radar," said Steve Ellis, vice president of the watchdog group Taxpayers for Common Sense.
It is drawing increased notice, partly because it resembles the earmark process that Congress put on hold two years ago in the face of public criticism - i.e. Alaska's "Bridge to Nowhere."
Ellis said elected leaders themselves drew the comparison, citing tariff bills benefitting a limited number of companies when agreeing to the earmark moratorium.
The process, however, has longstanding support from Kansas legislators, including Sen. Pat Roberts and former Sen. Sam Brownback, now Kansas governor.
Currently, Reps. Lynn Jenkins, R-Topkea, and Huelskamp, a Republican with homes in Hutchinson and Fowler, are the only Kansas officials with requests in the Miscellaneous Tariff Bill.
Nearly three-fourths of the legislation Huelskamp has sponsored since entering Congress in 2011 is tariff bills of special interest to two Kansas companies.
Philips and Payless
Philips in Salina employs more than 500 people, and some materials, such as chemicals for coating linear fluorescent lights, are imported.
Some of those necessary chemicals are mined solely in China. Companies in other nations importing the chemicals do not face a 6.5 percent tariff on the value of the import, so U.S. lamp makers would be at a disadvantage if the duty was not suspended, according to Philips.
The company's contact listed on bill-related documents, Randall Moorhead, declined to comment.
Collective Brands, parent of Payless, employs more than 800 workers in Topeka. It does not manufacture shoes, because virtually all shoes are imported. A company official was unavailable for comment, and The News was referred to a trade association.
Huelskamp is following in the footsteps of Gov. Sam Brownback, formerly in the U.S. Senate, and Sen. Pat Roberts, R-Dodge City. Both previously entered tariff requests on behalf of Philips or Payless or both companies.
Brownback also sought tariff relief on behalf of Spirit AeroSystems Inc., Wichita, as well as for the Wichita-based Mommy's Helper. For Mommy's Helper, Brownback proposed a temporary duty suspension on padded plastic potty seats, known as Contoured Cushie Step-Up, with another bill for the portable version, the Cushie Traveler.
The bills can sound "goofy," Ellis said.
On board
Payless would not be the only company benefiting from Huelskamp's bill.
Target Corp. sells shoes and supports the bill, and so does Footwear Distributors and Retailers of America.
"As you may know, 99 percent of all footwear sold in the United States is imported. Footwear imports are subject to some of the highest tariff rates on consumer goods, with some as high as 67.5 percent," R. Matthew Priest, president of Footwear Distributors and Retailers of America, wrote Congress in June.
The American Apparel & Footwear Association also commented favorably on Huelskamp's proposed legislation. That association is advocating for nearly 160 separate bills in the overall Miscellaneous Tariff Bill.
"Without action, Americans would be forced to pay artificially high prices for consumer goods," Americans for Tax Reform's Grover Norquist said to Congress this spring, praising the Miscellaneous Tariff Bill process.
But some companies consider proposed tariff bills as giving unfair advantage to a rival.
"Noncontroversial"
The Miscellaneous Tariff Bill isn't supposed to show favoritism.
To be eligible for inclusion in the overall bill, a requested duty suspension must be "noncontroversial" and not hurt a domestic manufacturer, must not cost the U.S. $500,000 or more in lost annual customs revenue, and should be temporary and able to be administered.
Those sponsoring the bills sign disclosure forms, and Huelskamp's forms showed neither he nor his wife has financial interest in Philips or Collective Brands.
The vetting process for each request involves the U.S. International Trade Commission, the Department of Commerce, and U.S. Customs and Border Protection. The House Ways and Means and Senate Finance committees also play key roles.
Most requests elicit no public comments or objections, according to the U.S. International Trade Commission.
However, Huelskamp's bills for Philips spurred an objection from Cree Inc., North Carolina, that was subsequently withdrawn. It also prompted Global Tungsten & Powders, Pennsylvania, to protest. The News was unable to reach a spokesperson for either company.
Companies' concerns
According to International Trade Commission staff, an objection hurts the chances a request will survive.
When a rival objects, the company that initiated the request typically reaches out to the other firm, asking how the bill's language can be modified so the objection is dropped.
In June, Global Tungsten & Powders (GTP) wrote Congress that Huelskamp's bills would allow Chinese producers to "dump" material in the U.S. market.
"If a duty suspension is granted, continued Chinese dumping threatens to force the few remaining US manufacturers, including GTP, to discontinue their phosphor operations and potentially leave the industry altogether," GTP's Director of Sales and Marketing Stacy Garrity wrote.
Cree and GTP have talked to Philips, and from Philips' perspective, the material it imports is not an equivalent of the product GTP markets.
The News was told GTP's objection to the Huelskamp bills is expected to be withdrawn, too, but as of last week, the protest had not been pulled.
Brownback's requests five years ago on behalf of Spirit AeorSystems Inc. drew objections. Vought Aircraft Industries Inc., asserted that the inclusion of brand names and descriptions of certain pieces of equipment in the bills appeared to prove Vought's suspicion that the bills were carefully targeted for a Kansas company. Vought also believed the estimated lost customs revenues would be greater than $500,000 yearly.
Turnaround
Fiscally conservative Sen. Jim DeMint of South Carolina used to put a number of tariff requests in the hopper.
Now, he sees the process as flawed. Some bills are so specific that they appear to DeMint as earmarks.
Sen. Claire McCaskill, D-Mo., introduced a bill that would expand the International Trade Commission's role while reducing the role of individual members of Congress, who still would make the ultimate decision. Roberts and 20 other Senators have put their names on the bill, too.
Roberts supports it because it would bring some "clarification" to the process, Roberts' staff said.
Politicians on both sides of the aisle - including then-Sen. Barack Obama, D-Ill., and Republican vice presidential nominee Rep. Paul Ryan, R-Wis., - have sponsored past tariff bills, and there is not a groundswell to change the system.
Introducing legislation to help a company back home allows a congressman to take credit from the company and its employees when the Miscellaneous Tariff Bill passes. It also can boost campaign coffers. Huelskamp, for example, has received $3,160 from Philips Electronics North America, according to the Center for Responsive Politics.
Those who disagree with DeMint note that with an earmark, an appropriation is awarded for a certain project. With tariff bills, companies and their customers benefit. Also, the tariff break is not restricted to the company behind the request but available to any business importing that item.
As a House candidate two years ago, Huelskamp said the entire earmark process needed to be overhauled, "because it leads to more spending, quid pro quos, and corruption."
He defends the tariff bill process.
"The MTB process should be open and transparent, which we believe this current one has been thus far," said Huelskamp in a statement.
He did not talk about the Philips-related bills, but noted that taxes on imported shoes "are some of the most regressive form of taxes we have."
"While the average tariff rate on all goods is less than 2 percent, footwear tariffs can be as high as 67.5 percent. For a kid's canvas shoe - these import taxes increase the costs for American families by more than 50 percent. That is very unfair to consumers struggling in today's difficult economy," Huelskamp said.
The International Trade Commission has completed its review of the bills, but the vetting process continues, said Sarah Swinehart, with the House Ways and Means Committee staff.
Final action is expected before the end of the year.
Original Publication URL: http://hutchnews.com/Todaystop/huelskamp-and-tariff--2
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