November 17, 2018

Washington Wire: Impact of Elections on Taxes, Trade, and Trading

11/07/2018

Impact of Elections on Taxes, Trade, and Training  

 
As the dust continues to settle on the 2018 mid-term elections, the “winners” include President Trump, House Democrats and Senate Republicans, while the “non-winners” also include President Trump but more so, Senate Democrats, House Republicans, and GOP Governors.
 
While much of the media and the political base of both parties will focus on investigation and possible impeachment hearings, House Democrats will try to leverage their new control to exact some priorities from President Trump in the next Congress, which starts January 3, 2019. House Democrats will quickly move to place Republicans and the White House at odds by supporting a large infrastructure measure only if the government partially “pays for” the funding through repealing tax cuts in the law signed by President Trump in December 2017. Democrats could seek to narrow the scope of Qualified Business Income subject to the lower pass-through tax rate, believing the recent regulatory interpretations incorrectly cover some in the financial and other service industries. Many will focus on increasing the new 21% C-Corporation rate, though Democrats lack the support in the Senate to move on such a proposal. Democrats could also focus on the treatment, taxable levels, rates of capital gains, carried interest, and the estate tax, among others. Ultimately, few believe Congress will send the President a robust infrastructure measure, especially with half a dozen Senate Democrats running for the White House and hesitant to provide a victory to the current administration.
 
On the mind of many is how House control by Democrats will impact the recently negotiated NAFTA 2.0. Under the current trade laws, Congress may only vote up or down on a negotiated free trade agreement, in a process that does not allow for amendments or direct changes to the agreement itself. The Congress does, however, have to pass an “implementing bill,” which can include additional provisions requiring the U.S. government to take certain steps to achieve additional goals. Few question that House Democrats will call for stronger environmental and labor provisions, particularly those they feel are enforceable on Mexico. Traditionally, Democrats, backed by unions, support tariffs on imported goods, but many Democrats felt hesitant to publicly show support for President Trump’s trade policies. Few expect Democrats in the House to take up significant bipartisan legislation to address the impact of tariffs on U.S. businesses and consumers. House and Senate Democrats will likely continue their investigatory role into how the administration chose winners and losers in the tariff and exclusion processes.
 
Along with control of the U.S. House, Democrats now have a role to play in the process to fund the federal government. One Voice and other manufacturing groups are hopeful workforce training remains a bipartisan issue after we, along with others, successfully lobbied the President and current Congress to increase resources for Career and Technical Education programs.
 
For those interested in more information, One Voice’s Washington, D.C. based lobbying firm put together the attached more detailed analysis of the elections. .

 

 

 
USITC in Final Phase of AD/CVD Investigations on Common Alloy Aluminum Sheet from China
 
The International Trade Commission (USITC) is currently in the final phase of its anti-dumping (AD) and countervailing duty (CVD) investigations regarding the imports of common alloy aluminum sheet from China. In the preliminary phase, the USITC and the Department of Commerce issued affirmative determinations in both the CVD and AD cases. The scope of the investigation is aluminum common alloy sheet, which is a flat-rolled aluminum product having a thickness of 6.3 mm or less, but greater than 0.2 mm, in coils or cut-to-length, regardless of width. Common alloy sheet within the scope of these investigations includes both not clad aluminum sheet, as well as multi-alloy, clad aluminum sheet.
 
On Tuesday, November 28, 2017, Commerce announced the self-initiation of AD and CVD cases regarding the imports of common alloy aluminum sheet from China. According to Commerce, imports of common alloy aluminum sheet from China were valued at an estimated $603.6 million in 2016. U.S. Customs and Border Protection has been collecting cash deposits on imports related to subject Chinese entities at preliminary subsidy rates ranging from 31.2 percent to 113.3 percent, and at a preliminary dumping rate of 91.47 percent. Commerce lowered the preliminary dumping rate in August, after initially collecting at a rate of 167.16 percent.
 
The USITC is set to issue its final determination on December 19, 2018. Should the USITC issue an affirmative determination, Commerce will then publish an antidumping and/or countervailing duty order with the final dumping and subsidy rates. This is a significant case many who follow trade are watching closely as the U.S. Government self-initiated this case, a rarity, as typically businesses pursue AD/CVD actions.

 

 

 
Auto Suppliers Ask for Stability in EPA SAFE Vehicles Rule; General Motors Calls for Electric Vehicle Quotas
 
On October 26th, the comment period closed for the EPA’s Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years (MY) 2021-2026. Beginning in 2017, President Trump ordered the EPA to begin reversing the Obama Administration’s decision to increase the fleet wide average passenger and light truck fuel economy standards to 54.5 mpg by MY2025. Of the over 7,000 comments the agency received in October on the SAFE rule, car manufacturers and their suppliers came out against the EPA’s proposal to change fuel economy standards for MY 2021 as price quotes and manufacturing processes have already been set for that model year. In addition, manufacturers raised concerns with and pushed back against the SAFE rule’s determination that lightweight vehicles were less safe. In a surprise to many, General Motors (GM) submitted comments calling for a National Zero Emissions Program, which would implement quotas for electric vehicles. GM suggests that the electric vehicle quotas would start at 7 percent of an automotive manufacturer’s fleet for MY 2021 and rise by 2 percent every year, capping the requirement at 25 percent for MY 2030. While many manufacturers raised concern over overreaching environmental regulations, auto companies and their suppliers already began production and planning for many of the vehicles potentially affected by any changes the current administration would implement.

 

 

 
California Issues Emergency Regulation Requiring Employers to Submit Form 300A to Federal OSHA Website by December 31, 2018
 
At the end of October, California’s Division of Occupational Safety and Health (DOSH) issued an emergency regulation requiring California employers to submit their Calendar Year (CY) 2017 Form 300A injury reports to Federal OSHA’s online Injury Tracking Application (ITA) portal by December 31, 2018, and their CY 2018 Form 300A injury reports by March 2, 2019. Under the Federal Injury Reporting Rule, employers with over 250 employees and certain employers, including manufacturers, with 20-249 employees must annually submit Form 300A injury reports electronically to OSHA’s ITA portal. While OSHA set a deadline of July 1, 2018, for submissions of these forms, because California is one of several states with OSHA-approved State Plans, the federal agency conceded it did not have the regulatory authority to issue fines to any California employers that failed to submit their Form 300A injury reports by that deadline. Now that the state issued this emergency regulation, California One Voice members should submit their CY 2017 Form 300A injury reports by December 31, 2018. Please click here to access OSHA’s injury reporting webpage and ITA portal.
 
In Washington, D.C., One Voice is one of the leading organizations urging the U.S. Department of Labor to change the rule requiring the electronic collection of injury reports and possible online publication of the collected data. We believe providing the information to the public without explanation will harm the image of manufacturing in America in the eyes of parents and educators.