WASHINGTON — In 2009, Georgia Sens. Saxby Chambliss and Johnny Isakson helped repeal import tariffs on certain types of fibers to aid Coats North America, a textile company with factories in Albany and Douglas.
A tariff is a tax meant to protect domestic manufacturers from cheaper foreign goods, but the law does not always keep up with what U.S. firms are manufacturing. When certain raw materials no longer are available domestically, companies do not want to pay an extra tax to import them. So, for decades they have sought help from the federal government by asking local members of Congress to secure temporary exceptions to tariffs.
But this year, when Coats North America came calling to renew a few tariff suspensions, Georgia’s senators declined, said Chris Smith, the company’s director of government relations.
What Smith encountered is a shift in Washington, as some lawmakers say the tariff-exception process is no more fair than the now-banned earmarks, which lawmakers used to steer money to projects in their home state. The debate has kept some members of Congress from seeking tariff exceptions, and businesses are waiting to see what happens to the thousands of bills already in the pipeline this year.
Tea party-attuned Sen. Jim DeMint, R-S.C., has denounced the bills, saying that, like earmarks, they’re about a company’s ability to use access to a member of Congress, rather than merit, to get a federal benefit. He pointed out that about 40 percent of past bills apply to only one importer, while the vast majority help 10 or fewer companies. By House rules, a benefit to fewer than 10 companies constitutes a banned earmark.
Smith said the criticism is misguided, and the government losing out on hundreds of millions of dollars in tariff revenue is not the same as wasting money on pork projects such as Alaska’s “Bridge to Nowhere.”
Coats North America seeks to eliminate tariffs on acrylic material that hasn’t been available domestically since 2005 to make yarn at its Georgia factories. The tariffs add about 3 percent to the cost of making the product, a disastrous hit to the bottom line when selling to retailers such as Wal-Mart, Smith said.
In the end, he got backing from Albany Democratic Rep. Sanford Bishop and Sen. Kay Hagan, D-N.C. — Coats’ U.S. headquarters is in Charlotte — but Smith said he was “quite disappointed, frankly, that in Georgia, the state that the jobs are in, we didn’t find any support on the Senate side.”
Georgia’s senators said they are awaiting consensus among Senate Republicans on reforming the tariff bill process before sponsoring more bills.
Supporters of the current system include the U.S. Chamber of Commerce and National Association of Manufacturers.
Last month, DeMint and Sen. Claire McCaskill, D-Mo., introduced a bill giving all authority over tariff suspensions to the International Trade Commission, instead of using Congress as a gatekeeper.
“I fully support removing trade barriers that hurt American businesses and raise costs on American consumers,” DeMint wrote in a recent blog post. However, he said, the current process “unnecessarily creates a situation ripe for abuse.”
Many lawmakers do not equate targeted tax breaks with big-spending projects, while others are backing off the tariff bills.
Of the Georgia delegation, only Bishop and Atlanta Democratic Rep. John Lewis have put forth tariff bills this year. Past tariff bill sponsor Rep. Jack Kingston of Savannah, a GOP leader on the Appropriations Committee, told the Capitol Hill publication Roll Call that the tariff bills are no different from earmarks — and, if one is banned, both should be. Asked about the issue last week by The Atlanta Journal-Constitution, he replied, “I was told to shut up.”
A spokeswoman for Isakson said the senator is awaiting the results of a panel appointed by Senate Republicans. Chambliss in a statement said “it is imperative to find an orderly process for tariff suspensions that provides transparency and fits in the model of good government that the American people expect.”
Though only two Senate Republicans have introduced bills, both chambers of Congress are moving forward tariff bills; nearly 800 were submitted in the Senate and more than 1,250 in the House.
The U.S. Chamber of Commerce helped circulate a letter to House Speaker John Boehner from 65 freshman Republican members, calling the miscellaneous tariff bill process “an important tool for making American manufacturing more competitive for 30 years.”
Reps. Rob Woodall of Lawrenceville and Austin Scott of Tifton signed onto the letter but have not introduced any tariff bills. Woodall said no one in his district had approached him about offering one.
“I feel better about keeping it in the sunshine down here,” he said of the process.
Bishop introduced 20 bills in all, which he said will help his district, though the companies that benefit are headquartered elsewhere. He said Georgia farmers will get lower prices when they buy herbicides, fungicides and insecticides from Delaware-based chemical giant DuPont, thanks to tariff breaks.
“Given the economic situation that we’re faced with and given the challenges that American manufacturers have, we want to make all the products in America that we can,” Bishop said.
Lewis’ bills would ease tariffs on products used to make copper and aluminum wire and are designed to help Indiana-based Superior Essex, which has an office in Kennesaw. A spokeswoman for Lewis refused to comment on the bills.
Outside Congress, few opponents of the process have lined up so far.
Two executives at Heritage Action, the advocacy arm of the influential conservative think tank, came out against the bills in a recent op-ed for The Daily Caller website, arguing that the bills open the door for a return to earmarks and open up Republicans to charges of hypocrisy.
Tom Schatz, president of anti-earmark crusaders Citizens Against Government Waste, said his group has not taken a position on the tariff bills, and he can appreciate arguments in favor of keeping the status quo. Schatz said public examination is only beginning.
“I think it depends on how outraged taxpayers are over this,” he said. “Is there a Bridge to Nowhere in there somewhere?”
How tariff repeals work
• Members of Congress file bills seeking tariff exceptions for companies buying items from overseas that aren’t made in the U.S.
• The bills are reviewed by the International Trade Commission and the public during a comment period to certify they are broadly available and would not hurt a domestic manufacturer.
• The Congressional Budget Office must certify that an exception will reduce government revenue by less than $500,000. Bills’ sponsors also must list an affected company and attest that they do not have a financial interest in it.
• Once the bills go through the process, they’re voted on as one package.