House Votes To Tighten Rules on Tariff Breaks
Tuesday, January 9, 2007
The House voted last week to shine a spotlight into the murky world of import-tariff suspensions, a little-known form of special-interest legislation that has cost taxpayers hundreds of millions of dollars in lost revenue.
The House overwhelmingly approved a bill that, for the first time, officially equates tariff suspensions with a better-known variety of legislative pork, the congressional earmark. The new rules require public disclosure of each measure's sponsor, purpose and cost whenever lawmakers slip one into legislation.
The rules also require that congressional sponsors identify each person or corporation "reasonably anticipated to benefit" from the breaks on import taxes.
The rules direct sponsoring lawmakers to certify that they and their spouses have no financial stake in the tax breaks, and they ban the practice of trading provisions for members' votes.
In one of the first official acts of the new Democratic majority, the House approved the rule changes 280 to 152. Some analysts predicted the changes would encourage increased scrutiny of a practice that, a Washington Post study found, often benefits large foreign-based corporations.
The Senate is expected to take up similar legislation this week.
In recent months, the number of congressionally approved tariff suspensions has soared. It rose from 440 at the end of 2004 to more than 800 in the just-concluded 109th Congress, including provisions covering such products as shoes, camcorders and boiled oysters.
Lawmakers rolled 520 of the suspensions into just one must-pass bill that was approved in December, in the final hours of the last Congress.
Such suspensions often apply to one product imported by one company, according to The Post's analysis in September. The provisions rarely, if ever, identify the company that initiated the legislation. Some provisions do not identify the product, either, referring instead to strings of numbers keyed to massive volumes of tariff tables.
Individual tariff suspensions are supposed to cost the Treasury no more than $500,000 a year in lost revenue. But in recent years the authors of a number of the provisions managed to file multiple measures aimed at a single product.
Supporters of the suspensions say they create jobs and lower consumer prices by reducing costs for U.S. manufacturers. The proponents say that proposed suspensions are reviewed by the Commerce Department, customs officials and the U.S. International Trade Commission. Congressional committees also seek industry comment on the proposed suspensions and recently began posting any objections on their Web sites. Lawmakers say they generally drop a measure if a domestic producer objects.
Rep. Sander M. Levin (D-Mich.), who is expected to chair the House Ways and Means subcommittee on trade, hailed the changes as "a useful step forward."
"The more transparency the better," Levin said. "It will be easier for people to verify the basic rules are being followed; outside groups will be able to more readily check."
Rep. Jack Kingston (R-Ga.) said the changes will help root out what he described as "old-fashioned pork."
"This should be one more lesson to my party: We were fired with cause. We got lazy, we got too cozy with K Street, and this is an example where flipping the majority cleans out the closet. I very reluctantly give kudos to the majority."
The House bill applies only to tariff suspensions that benefit 10 or fewer companies. Ryan Alexander, president of Taxpayers for Common Sense, hailed the legislation as a "good start" but said it should apply to suspensions that benefit as many as 100 companies.
"Ten doesn't really pass the smell test," Alexander said.