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Transition, phase-ins of border adjustments could be key to garner support

February 10, 2017

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The House GOP's border adjustability plan to rebate taxes on exports but not allow deductions for imports -- a proposal staunchly opposed by retailers and other industries that have formed a coalition to fight the plan -- could garner sufficient support on Capitol Hill and among the business community if transition periods and “phase-ins” for the measure are designed to offset disadvantages for those industries, sources said.

[Daily News| February 09, 2017 |Daily News]

These sources, who closely follow the developments around the GOP's tax reform blueprint, noted that House Ways & Means Committee Chairman Kevin Brady (R-TX) has promised to use “transitions to accommodate concerns” raised by opponents. The promise of transitions is a vague enough commitment to get industries that are either on the fence or not on board with the provision to support it, sources said. Brady has repeatedly stressed that despite demands to grant exemptions for certain industries and commodities, the plan will cover the entire U.S. economy.

But one source said the talk of transitions “opens the door to a lot of negotiation” -- and, potentially, ways to offset some of the negative aspects of the plan for opponents -- which could ultimately help Brady and his team persuade them to support the provision.

Read more at Inside US Trade


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  • Another reason for a transition is to allow time for manufacturing, esp. the labor force, to respond. Labor supply is very tight now. It will take years to change priorities and career plans to have the 3 to 4 million additional worker needed.
  • Is it a coincidence that all the countries with trade surpluses are doing well economically? I don’t think so. It seems that the countries that fought a little harder to protect their economies and jobs are doing much better than those that don’t. “While manufacturing employs now only 10% of private sector non farm workers, it accounts for 75% of the countries research and development spending on corporate patents. Therefore the relationship between competition in the global market place and the creation of new products and production processes is one of immense importance for the US economy”…Steve Maas at the NBER.