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Modernizing Trade Policy

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Swipe fees, health care and taxes have dominated the headlines on public policy issues affecting the retail industry the past year or so. But there’s another crucial issue simmering in the background that’s about to see a lot more attention — international trade.

As any retailer knows, our industry relies heavily on merchandise made overseas. Much of what we sell simply isn’t made in America anymore, at least not at reasonable prices or in commercial quantities. Yet these products — especially clothing and shoes — are often saddled with exorbitant duties and tariffs that are a holdover from the days when domestic manufacturing thrived. Today, these tariffs merely drive up prices for consumers while doing little or nothing to create or protect U.S. jobs.

Protectionists have been successful at perpetuating out-of-date trade policy and blocking efforts to acknowledge the realities of today’s global economy. Long-pending free trade agreements with Colombia, Panama and South Korea provide clear examples: The Colombia agreement was signed in 2006, the others in 2007, but none have received the congressional approval required for implementation.

In July, however, the House Ways and Means Committee and the Senate Finance Committee approved draft legislation that would implement these three agreements. Under special rules for trade pacts, differences between their versions must be resolved at the White House, and final bills will be sent back to Congress for a straight up-or-down vote without amendments.

NRF heartily welcomed the committee action as a significant step in moving our nation’s trade agenda forward. The FTAs are not perfect — they include restrictions limiting their usefulness in allowing retailers to import apparel duty-free. But they will make it easier for U.S. manufacturers to export goods and help create U.S. jobs. That puts more spending money in the hands of American families and increases consumer demand in a way that is a win for U.S. manufacturers, retailers and our nation’s trading partners.

Approval of the FTAs will also break a Congressional logjam that has blocked a number of other trade bills that could have significant impact on retail sourcing. Perhaps most important is renewal of the Generalized System of Preferences. GSP provides duty-free treatment for nearly 5,000 products from more than 100 developing nations, but retailers have been left paying huge duties since it was allowed to expire at the end of last year.

NRF has been aggressively arguing the importance of free and open trade with Congress and the Obama administration. We hope action on these agreements is a sign they have heard that message and are ready to work aggressively to expand trade opportunities — those that open markets for exports and those that make it easier for U.S. retailers to import merchandise. Retailers need modern trade policy to continue providing American consumers with the products they want at prices they can afford.