As soon as today, the House may vote on a trade bill that sounds trivial but is in fact quite important: H.R. 4380, the Miscellaneous Trade and Technical Corrections Act of 2010.
Without passing judgment on the specific bill, the miscellaneous tariff bill (MTB) process has been a quiet trade policy success for almost 30 years. MTBs typically contain hundreds of provisions suspending tariffs on imported goods important to U.S. manufacturers but no longer made in the United States. The most common items included in the bills are parts, specialty manufactured products, and industrial chemicals with long, tongue-twisting names. The suspensions are usually temporary, lasting three years.
At least eight such MTBs have been enacted since 1982, most recently in 2006 when Congress passed two such bills. The bills tend to garner broad bipartisan support because the tariff suspensions do not negatively affect specific domestic producers, since no domestic producers compete with the imports, or at least do not object to the tariff suspensions.
A broad range of companies and industries also support MTBs, including the National Association of Manufacturers, because it helps U.S. producers cut costs to better compete in global markets. A 2009 study by Andrew Szamosszegi of Capital Trade Inc. concluded that passage of an ambitious MTB would boost GDP by $3.5 billion and manufacturing exports by more than $1 billion. Passage of an MTB would be right in the spirit of the Obama administration’s National Export Initiative.
Complicating passage of an MTB this time around is the curious stance of GOP leaders in the House, who insist that tariff suspensions be included in an “earmark moratorium.” I’m all for banning spending earmarks, those secretive provisions in huge spending bills that dole out tax dollars for bridges to nowhere and other unnecessary projects. But the provisions of an MTB are a completely different type of legislation.
In contrast to pork-barrel spending, a tariff suspension repeals a narrow tax that falls disproportionately and unfairly on a small group of producers. Instead of granting a favor at the public’s expense, a tariff suspension relieves individual producers of a burden that falls on them and nobody else. Unlike a spending earmark, a tariff suspension creates no new claim on public resources. It does not expand the scope or size of government.
Republicans should suspend their moratorium on tariff suspensions and give the latest miscellaneous-tariff bill a fair hearing.