July 13, 2009

The Honorable Laura Richardson U.S. House of Representatives Washington, DC 20515

Dear Representative Richardson:

The Customs and Border Coalition (CBC), an industry voice on trade facilitation, national security and customs and border issues, represents a broad base of companies and associations (many in your district) engaged in international trade. The Coalition includes manufacturers, retailers, customs brokers, freight forwarders, and virtually every other entity involved in global supply chains. We write today in opposition to a proposed increase in the Harbor Maintenance Tax (HMT) from 0.125 percent to 0.4375 percent, as outlined in the Making Opportunities Via Efficient and More Effective National Transportation Act of 2009 (MOVEMENT Act). While the CBC agrees that improvements to infrastructure are needed, there are several reasons why increasing the HMT is the not the proper financing method.

First, the HMT is a user fee designed to reimburse the government for services provided to users (e.g., importers and exporters) of the nation’s ports as part of transportation infrastructure funding. The HMT trust fund has enjoyed a surplus for many years and no projects are backlogged for lack of funds. Thus, we do not believe that an increase in the HMT is warranted.

Second, in light of the current global and U.S. economic crisis, the proposed increase in the HMT will increase operating costs by billions of dollars for U.S. industry, seriously harming our ability to compete in the global market. The financial burden of such an increase will fall on industries importing critical components and final products for their domestic operations, including small and medium-sized businesses that are already heavily affected by the current negative economic climate. With companies currently cutting every possible expense from their operations, increases in such overhead costs will inevitably result in fewer jobs. Now is not the time for such an additional cost for business or more job losses. Third, the CBC is also concerned that the increase in the HMT may conflict with our international obligations under the World Trade Organization (WTO). In 1998, the European Union (EU) requested consultation with the United States over the HMT and any further increase is likely to result in the EU and perhaps other countries bringing a complaint before the WTO. Before moving forward, it is imperative to determine that the increase in the HMT is consistent with our obligations under the WTO, which prohibits “taxation of imports or exports for fiscal purposes” (GATT Article VIII para.1) and increases in fees that lack underlying substantiation in terms of an increased cost of services.

Fourth, the HMT was created to fund dredging projects to improve America’s ports. Revenue collected for the HMT may only be used for such purposes. The funds Congress does not authorize for harbor maintenance and dredging are returned to the Treasury. The MOVEMENT Act calls for the fees collected under the HMT to be used for broad infrastructure projects as well as projects for the environment and national security. The CBC is concerned that the stated uses of the HMT contravene the existing authority for appropriate expenditures of the HMT trust, thereby opening these uses to further legal challenge. As a result, the HMT would no longer qualify as a true user fee approximating the cost of a government service, but rather, resemble a tax on freight used for general purposes. Again, such a tax is vulnerable to federal litigation and a challenge at the WTO.

Finally, the bill requires a small subset of industry to pay for improvements that benefit society as a whole. Importing industries are not the sole beneficiaries of the proposed improvements, and thus should not be expected to bear the substantial increase in operating costs. The CBC recognizes the importance of improving America’s infrastructure, addressing environmental mitigation, and improving cargo inspections and port security but believes the MOVEMENT Act is not the proper mechanism to accomplish those laudable goals.

The proposed legislation imposes an unreasonable increase of operating costs on industry at a time when companies cannot afford it, may contravene international obligations, and unfairly places the burden on a small subset of the total beneficiaries. For these reasons, the CBC opposes the MOVEMENT Act. The CBC would be pleased to provide additional information. Please contact Catherine Robinson, Secretariat for the CBC, at [email protected] or 202-637-3403.

American Apparel & Footwear Association (AAFA) American Association of Exporters and Importers (AAEI) American Petroleum Institute (API) Association of International Automobile Manufacturers, Inc. (AIAM) Automotive Trade Policy Council (ATPC) Business Alliance for Customs Modernization (BACM) Columbia River Customs Brokers and Forwarders Association Consumer Electronics Association (CEA) Custom Brokers & Forwarders Association of Northern California Distilled Spirits Council of the U.S. (DISCUS) Emergency Committee for American Trade (ECAT) Express Association of America (EAA) Fashion Accessories Shippers Association (FASA) Fragrance Materials Association (FMA) Foreign Trade Association Grocery Manufacturers Association (GMA) Guitar and Accessories Marketing Association (GAMA) INDA, Association of the Nonwoven Fabrics Industry Information Technology Industry Council (ITI) Los Angeles Customs & Freight Brokers Association Motor & Equipment Manufacturers Association (MEMA) National Association of Foreign-Trade Zones (NAFTZ) National Association of Manufacturers (NAM) National Foreign Trade Council (NFTC) NPES, The Association for Suppliers of Printing, Publishing and Converting Technologies Pacific Coast Council of Customs Brokers and Freight Forwarders (PCC) Retail Industry Leaders Association (RILA) San Diego Customs Brokers Association Secondary Materials and Recycled Textiles Association (SMART) Society of Chemical Manufacturers and Affiliates (SOCMA) Sporting Goods Manufacturers Association (SGMA) TechAmerica The Alliance of Automobile Manufacturers Travel Goods Association (TGA) Toy Industry Association (TIA) Washington Council on International Trade (WCIT) Wine & Spirits Wholesalers of America, Inc. U.S. Association of Importers of Textiles and Apparel United States Council for International Business (USCIB)

cc: Representative James Oberstar Representative John Mica Representative Charles B. Rangel Representative Dave Camp Representative Corrine Brown Representative John Conyers Representative Elijah Cummings Representative Alcee Hastings Representative Carolyn Kilpatrick Representative Barbara Lee Representative James McDermott Representative Kendrick Meek Representative Dana Rohrabacher Representative Robert Scott