Senate Supports Transparency in Tariff Breaks
Rule Would Force Lawmakers to Justify Import-Tax Exemptions and List Businesses That Benefit

By Joe Stephens
Washington Post Staff Writer
Saturday, January 20, 2007

The Senate joined the House this week by voting to make it easier for the public to track a stealthy form of trade legislation that has delivered hundreds of millions of dollars in tax savings to favored corporations.

As part of a broad ethics overhaul, the Senate voted 96 to 2 on Thursday to require lawmakers to publicly disclose details about tariff suspensions, which allow individual companies to escape paying import taxes on a range of products brought into the United States. The legislation would brand the tariff measures as a type of congressional earmark and would require the same disclosures now mandated for earmarks.

Under the new Senate rules, legislators would be required to disclose when they add a tariff suspension to a larger bill. Senators would have to justify the tax break in writing and name the company that would benefit. The information would have to be posted in a searchable form on the Internet at least two days before Congress votes on the measure.

Lawmakers would be barred from adding tariff suspensions to bills in exchange for another legislator's vote. Lawmakers also would not be allowed to add suspensions that would benefit them, their families, their staffs or their staff members' families.

"It certainly is going to shine a light into the dark recesses of Capitol Hill, where the tariff suspensions have lived for years," said Steve Ellis of Taxpayers for Common Sense. "It will be a lot harder to game the system."

Ellis predicted that the changes would intensify pressure for more reform, as increased transparency led to additional questioning.

Tariff reform is a recent addition to the slate of proposed ethics changes in Congress. It surfaced as an issue in September, after a Washington Post investigation showed that the number of suspensions was skyrocketing and that those narrow measures primarily benefited large, foreign-based corporations. The Post showed how companies evaded a $500,000 cap on tariff savings by persuading lawmakers to file multiple bills with tax breaks aimed at the companies' imports. Small domestic companies struggled to keep abreast of proposals that foreign competitors could use to drive them out of business.

"I'm so excited," said Anita Dungey, a small-business owner from Upstate New York. "It's certainly keeping the legislature more accountable, and that's very, very important. It's good for U.S. workers and for U.S. companies."

Dungey said a tariff suspension initiated last year by Wal-Mart threatened to sink her family-owned business, Auburn Leathercrafters, which manufactures and sells dog collars and leashes.

In recent years, lobbyists have crafted most tariff suspensions to benefit just one corporation. Few of the measures identified the company that initiated the legislation. Many did not identify the product involved, instead using codes explained in a telephone-book-size tariff schedule.

That lack of transparency obscured the fact that the largest beneficiaries have been domestic subsidiaries of foreign corporations. In a study by The Post, eight of the 10 companies that stood to benefit most were owned by or affiliated with German and Swiss corporations.

Congressional sponsors of such bills said they are trying to lower consumer prices and create jobs by cutting costs for U.S. manufacturers and retailers. The sponsors said they generally dropped legislation if trade officials found a U.S. company that objected.

Under the Senate bill, the new tariff-suspension restrictions would apply to trade measures that would benefit 10 or fewer companies.

Before Thursday's vote, Rep. Jack Kingston (R-Ga.), who was vice chairman of the House Republican Conference for the 109th Congress, derided the suspensions as "just good old-fashioned pork."

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