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
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.
June 5, 2007