Ninth District Congressman Adam Smith (D-Tacoma) announced today that he is co-sponsoring legislation to both bring the United States into compliance with World Trade Organization rulings and promote jobs in the United States.
H.R. 1769, The Job Protection Act of 2003, is a bipartisan bill led by Congressmen Phil Crane (R-Ill.) and Charlie Rangel (D-N.Y.). It would repeal the FSC/ETI (Foreign Services Corporation/Extraterritorial Income) and replace it with a domestic manufacturing and production income exclusion.
“Companies receiving tax benefits should be providing jobs to Americans,” Smith said. “This bill addresses the FSC/ETI issue in a way that is fair and promotes job growth here in America.”
The World Trade Organization recently ruled that the U.S. FSC/ETI tax deduction was not in compliance because it unfairly promoted exports. As of May 7, the European Union (EU) will be formally authorized to impose $4 billion in trade sanctions against the United States at any time. Since the Bush Administration’s United States Trade Representative Robert Zoellick has repeatedly said the issue could not be settled through negotiation, legislation repealing the FSC/ETI is necessary to prevent the EU’s trade sanctions.
House Ways and Means Chairman Bill Thomas (R-Calif.) has promoted legislation that would repeal FSC/ETI and provide a new tax benefit primarily to multinational corporations. Smith argues that approach rewards companies with large operations overseas and does nothing to help those companies that employ many Americans here at home and export their goods and services.
“This is a critically important issue, and the actions of Congress will have serious consequences,” said Smith. “We must act to avoid trade sanctions which will hurt our already-fragile economy, businesses and workers; however, we must act wisely so that we don’t encourage businesses to move more operations overseas because of the way the tax code is structured. This approach will allow us to avoid trade sanctions and will promote jobs here in the United States. It’s a win-win for America.”
The Crane-Rangel bill is bipartisan and has the support of the majority of the Washington state delegation. It is also supported by Boeing, Microsoft, and the AFL-CIO.