House Members Introduce Bill To Offset Tax Advantage Of International Trade

By James A. Morrissey, Washington Correspondent

A bipartisan group of members of the House of Representatives, with the support of textile manufacturers and labor, have introduced legislation designed to deal with a tax advantage enjoyed by some 150 US trading partners. The legislation addresses the value-added tax (VAT) system available in overseas countries, but not in the United States, that provides a tax break on their imports and exports. US manufacturers say the VAT penalizes US-made goods in two ways: In foreign markets, US goods and services carry the cost of US taxation as well as the added cost of the foreign VAT; and in the US market, foreign goods that have been given a VAT tax rebate have a subsidy because no equivalent VAT tax exists in the United States.

The Border Tax Equity Act of 2007 is sponsored by Reps. Bill Pascrell, D-N.J., Mike Michaud, D-Maine, Walter Jones, R-Va., and Duncan Hunter, R-Calif.

US textile manufacturers have long called for a remedy to the VAT problem. However, with some 150 countries involved, it faces a tough road ahead.