April 18, 2022
Something rare is about to happen in the Congress—an actual House-Senate conference on legislation, in this case, the competing versions of China legislation. Those of you who still remember middle school civics and the fondly recalled text, How a Bill Becomes a Law, know what I’m talking about. That book laid out the traditional approach—hearings, committee action, floor action, all separately in the House and Senate, followed by a conference, where designated representatives of both bodies come together to reconcile differences.
Sadly, things haven’t worked like that for a long time, aside from the occasional appropriations bill. These days, differences are usually worked out by leadership with little involvement from rank-and-file legislators, aside from a few that may have managed the bill along its way. At this point, however, it looks like the conference on the House COMPETES Act and the Senate’s United States Innovation and Competition Act will follow a more traditional, albeit enlarged, model. So far, there are 107 conferees—26 from the Senate and 81 from the House. (Since each house speaks for itself, the difference in numbers doesn’t matter, although it may make it harder for the House to reach internal agreement.)
This is not unprecedented. The 1988 Omnibus Trade and Competitiveness Act, which I participated in, had close to 200 conferees from nearly every committee. In order to make it manageable, it was broken into sub-conferences, with members from relevant committees being the main participants in resolving subject matter in their jurisdiction. That means the trade part of the bills will likely be handled by the Ways and Means and Finance conferees and not the entire group. However, there are some Senate conferees not representing a specific committee, and there are some very interested in the trade provisions, like Rob Portman (R-OH), John Cornyn (R-TX), and Sherrod Brown (D-OH), who are not the designated conferees from the Senate Finance Committee.
That matters. Just as the old cliché, 90 percent of life is showing up, is still valid, it is also true that those who show up at the conference usually do better than those that do not. Provisions whose “champion” is not present usually got thrown overboard first. So, watch and see if the abovementioned senators appear at the trade meeting even if they’re not invited.
There are many issues with the conference, but I will focus on the main six in the trade area. The first two are renewal of the Generalized System of Preferences (GSP) program and the Miscellaneous Tariff Bill (MTB) process, which appear in both bills in different forms. There are differences that are not insignificant—the House version, for example, adds more criteria for GSP eligibility—but nothing that the parties should not be able to reconcile.
The third is extension of the Trade Adjustment Assistance program, most of which expired last June. This has been an essential element of U.S. trade policy for over 50 years, and, while there is always conservative resistance to it, it generally makes it across the finish line after concessions to its opponents—either a reduction in spending on it or an agreement to accept other, unrelated provisions.
The other three appear only in the House bill, and all have proved controversial. Indeed, I expect the initial Senate position will be that all should be dropped because they have not been fully vetted or considered in the Senate. That is not likely to fly, but it indicates the House will need to make some significant concessions if it is to retain any of them.
Probably the most vulnerable is Rep. Blumenauer’s (D-OR) proposal to remove de minimis tariff treatment for imports from nonmarket economies and those subject to “enforcement actions,” meaning tariffs imposed pursuant to Sections 232 or 301. (I explained the difficulties with this provision, including its World Trade Organization inconsistency, in my January 18 column.) This was a late addition to the House agenda and has not been extensively considered either body. The most likely outcome is that it will be dropped but live to fight another day on another bill.
The most controversial provision is the one providing for review of outbound investments, also something I’ve discussed previously. Since the last time I wrote about it, the administration, along with Senate Finance Committee chairman Ron Wyden (D-OR), has indicated some support for the idea, if not the specific House provision, and that may be enough to prevent it from being summarily dropped. Even its proponents seem to recognize it has problems—its scope is too broad, its process too cumbersome, and the Office of the U.S. Trade Representative is clearly the wrong place to put it. I believe it is beyond repair, but that won’t stop the attempt. The main challenge will be limiting it to a narrowly defined set of investments. If that proves impossible, it may ultimately be dropped.
The last one is the set of trade law amendments, originally proposed by Senators Brown and Portman, that would amend U.S. antidumping and countervailing duty laws to enable the government to deal more quickly and effectively with serial offenders and those who try to circumvent the law. These appear to have legs, despite substantial business opposition. The administration has made positive noises about them, and, since the primary offender is China, there should be substantial sympathy for them among the conferees. The fact that both senators are conferees, even if not for this section, gives them an advantage if they choose to press it.
So, the result on the trade issues is likely to be a mixed bag with some winners and losers. But the real winner here may be the legislative process because, for at least one major bill, it seems to be back to normal.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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