Temporary duty suspension in the United States

LAURA PfNSKY

and EDWARD

TUVVER

ABSTRACT This article investigates the temporary duty suspension program of the United States Congress. It documents how the legislative process works and discusses the likely economic effects of the program. It proposes that this program be revamped so as IQ eliminate iis systematic bias in favor of large profitable fums, rent-seeking behavior by ~tjt~ne~~ rent capture by legislators anti lobbyists, slowness, and b~~a~e~t~e cost, ~~~t~o~lly~ it advocates New Zealan#s regime. Tkis regime grants concessions antomat~ally from tke firstday ofthe month in which the appl~eat~~ is received, as long as other rnannfactu~~ do not object.

lNTRODUCTlON The United States has a long history of complicated international trade policies. Many of these policies, such as the North American Free Trade Agreement in 1993, are debated at length in the public spotlight, C&hers,however, live in the dark confines of our intricate, iegislative system. This is the story of one such policy. “Ihqmrw duq suspension (TIX) is a policy by which the customs duty or %x” on an imported go& is removed for a short period of time, usoaIly two to three years ~~nt~~e~)_~ Theoretically, TDS has been psible since the founding of the United States, and I have found evidence of its implementation at least since the earIy 195%. However, according to government experts involved in the process, TDS was a minor factor in American international trade policy until the 198Os, when the number of TDS bills exploded (interview). In the 198Os,companies, especially in the chemical and pharmaceutical industries, realized the potential windfall gains from TDS and began to make TDS requests en masse (interview). Although the number of TDS bills has increased dramatically in the last 15 years, the procedure for obtaining TDS is neither simple nor well-documented. E;urtbermore, because TDS bills are not well publicized, citizens and, unfortunately, some members of Congress are unaware of how TDS works and the magnitude of its ~rn~le~~tatio~ costs (interview; crowding 19993,p_ 1756). This article seeks to iIl~inare these gray areas. First, the TDS process is examined, and then TDS in the I%.%-recent history and future prospects-is

Laura Pinsky l Duke Managt?ment Gumpeny, Box 90533, Durham, NC 27708-0533, emuif: [email protected], and Edward Tower l Economics Department, Duk@ University, Box 90097, Durham, NC 27708-0097, e-mail: [email protected]. Copyright Q 1995 by JAI Press, Inc. North American Journal of Ecanomics & Finance 6(1):17-36 ISSN 1062-9408 All rights of qductian in any form reserved

discussed. Additionally, this article addresses some of the political and economic in@ieations of TDS legislation, We discuss the economics of piecemeal tariff reductian, noting that piecemeal tmiff elimination may be welfare reducing. Hence, duty suspension may be undesirable, although in some cases an import subsidy may be optimal. Still, we argue that the program produces some of the tariff reduction that legislative reform of the entire structure would eventually produce anyway. Consequently, a method of tariff reduction that enables the tariff system to respond quickly and broadly to changes in economic circumstances and minimizes rent seeking by petitioners, rent capture by legislators, adrni~is~~iv~ cost, and bias in favor a{ Iarge profitable firms is desirable. We propose that the system be revamped and sjmp~i~ed. In part&z&r, we advocate the streamlined approach used in New Zealand. This regime grants concessions automatically from the first day of the month in which the application is received, as long as other manufacturers do not object.

THE TDS PROCESE TDS is a tripartite process involving the private sector, Congress, and the U.S. president’s ad~nist~tion -which is generally represented by the executive agencies (primarily the Department of Commerce and the U.S. Trade ~epr~e~~tiv~ fI_ISTR& The private sector begins the process by r~~~~st~ng TDS on an imported cornrn~~t~~ Congress is responsible for evaluating the ~quest, with signj~can~ input from the executive agencies, and for enacting it into law. The International Trade Commission (ITC) serves as an informative resource to both Congress and the executive agencies and assists in the ana1ysis of TDS bills.

Congress-Part

One

The TDS procedure begins when a constituent brings a request for TDS to one of his or her senators or representatives-or more commonly, to the staff of one of these legislators, The constituent usually represents a company but on occasion may be an individual importer. The request may be a formal document or it may be h~ndw~tten an a scrap of paper (interview). Furthermore, it may be accompanied by extensive industry data or be subinitted withour any supp~~~nt~ info~ation. Histo~ca~~y~ one of the key dete~n~ts of the passage of a TDS biff is &at no domestic c~~t~tors be injured if TDS were granted jinterview). Thus, ~lt~~u~h aTDS petitioner isnot requixrrd to provide a member ofCongress with data to support the request, it is in the petitioner’s best interest to provide some evidence that no injury will occur to a competitor. After a staff member hm received the request, he or she will evaluate it. If the staff member determines that the request is appropriate, the request will bf: forwarded to the Legislative Counsel, who will draft the request as a “miscellaneous tariff bill.” Each house of Congress has its own Office of the Legislative Counsel, comprised of from 25 to40 lawyers. Different lawyers in each office specialize in particular kinds of legislation, and the TDS request is given to the lawyer who handies trade and tariff legislation. As the populari ry of TDS has soared, companies have become increasingf y know~~~~bie about zhe TDS process. As a result, many retain their own iobby~sts to push TESS legislation. Al Spifner> a semi-retired chemicaf engineer at Rohm arld Haas, is probably the mast famous TDS lobbyist, He drafts bills himself and even “supplies c~ngression~ offices with names and phone numbers of likely opponents” (Overby 1993, p, 20).

~~P~~t~~Ye-su~b as ~~~~~~r-wjl~ petkkX3 a %egis’fat0r for temporary duty ~ns~t~s~~~~a TDS biE can be ~n~od~~~~dby either a senator or a representative. f-fowever, under the Constitution, all revenue bills, of which TDS is one fype, must originate in the House ofRepresentatives (interview). This wwXd seem to imply that importers should file requests for TDS with their representativas rather than with their senators because the Senate, technically, cannot originate revenue bills. However, this is not necessarily the case. When the House enacts any type of revenue bill and messages it to the Senate, the Senate often adds amendments to it-regardless of their relevance to the initial bill. Thus, a senator can introduce a TDS bill on the floor of the Senate to be eventu~iy added as an amendment to a Hoz~e-passed measure. Otlce a TDS biii has been ~ntr~~gc~ in the Senate_ the ~~~~~~t~j~ refers 2 to the Senate Finance Comrn~tt~~ whir% ~~~~at~ -itand ho&k it u&f a reventle biff is se~lt over from the Eo~~se_’The ~r~~~~ within tile Finance Committee is similar to that f~~~~w~ by a TDS bill in the House once it has reached the Ways and Means Commit&& Thus, initially assume that the legislator approached by the constituent is a member of the House of Representatives. Aftor a request for temporary duty suspension has been put into proper legal form, a Representat,& introduces the bill on the floor &the House. The bill is then handed to the HOUSEclerk, who assigns a number to it, The clerk gives the bill to the Parliamentarian, who determines which House committee has jurisdiction over it. The committee then refers the bill to the appropriate subcommittee. The House Ways and Means Co~~t~~ has ~u~~~~tjon B&Y%‘ df tariff biiffs,and ence TDS bills are given to Ways and Means, they are sent to the s~~~rn~tt~ on Trade? The Su~omrn~ttee on Trade 4% solicits comment from some for a@ of the ~o~~o~~ng executive trranch agencies* where a~~rop~ate: the ~e~a~rn~~~ of Commerce, Descent Of Agriculture, Deparfment of%‘&, Department of LaboF, D~~~t~~~~tof theTreasury, and the United States Trade Reproscntative (USTR). These age&as provide Congress with statements of the adminlstratiorr position on each TDS bill. The Office of Management and Budget is responsible for caordixlating the statements of the agencies and for submitting them to Congress. As srated E-&&s=*a company

The Depetimentaf Cammerce and tbs WWF? Of thecxecutiu~ agmcles,tireDepartment of Commerce (heredter r&kmd‘tofis‘%cmmxce”)arxftk %X2Xfra=s2 Ihe@xs%st inBuen~e 0sthcz ~~~~~~~~~~~~ positim~~~~~~~e~~. Congress is un~ikelg $0 consider any TDS EIfl wit&o& input from these Xwe agencies ~~nter~~ew~. Commerce and the USTR provide Congress with statements refkcting domestic and foreign issues, respectively. The division within Commerce whkh is primarily responsible for TDS bills is the ~~~te~~~~~~~a~ Trade Administration; in the USTR it is the Office of GATT Affairs. Commerce is chartered ta prutt;ct domestic commercial interests (interview). Therefore, its contribution to the administration position is usually dett?rnrined by whether or not the TDS will benefit domestic industry, Moreover, ‘*domestic industry’” is always defined as the petitioning firm plus its competitors. Commerce ignores indir=t (general equilibrium) effects, such as the stkutus to other tradeable sectors, which are likely to result from the ~e~~~~at~on of the dollar ReGessary to rebdance trade after a ~a~~~~~arsector’s imports expand_ Not s~r~js~ng~y. tkn, a comity ~~~enta~~e often talks to C!ommerce whife a

20

LAURA PINSKY and EDWARD TOWER

TDS bill is being considered in Congress, in order to persuade Commerce to support the company’s bill (interview). Commerce also has the informal, organizational role of preventing strong public debate on a TDS bill (interview). If a domestic manufacturer presents opposition to a TDS bill, Commerce often intervenes before the debate moves to the House or Senate floor. Commerce brings the TDS petitioner and the TDS opponent together and attempts to broker a compromise solution on the proposed legislation (interview). The USTR’s role in the TDS process is to advise Congress of the administration’s foreign concerns regarding pending TDS legislation (interview). The USTR’s comments are of two types. First, the USTR represents foreign interests in discussion of TDS bills; foreign governments often submit comments to the USTR about a TDS bill that involves U.S. imports from their countries, and the USTR conveys this info~ation to Congress (interview). Second, the USTR will encourage or discourage Congress from passing a TDS depending upon the value of the duty in multilateral trade negotiations; the USTR views duty suspension bills as bargaining chips in resolving trade disputes (interview). For example, if the USTR knows that a duty is of particular importance to a foreign government, it is likely to state a position discouraging the passage of the corres~nding bill because of the duty’s “high negotiating value,”

The International Trade Commission In addition to input from executive agencies, the Su~ommittee on Trade asks the ITC for a report, which contains economic data and legal analysis of the bills.4 The ITC basically exists to provide information and objective analysis to Congress. Therefore, it responds to all such requests regardless of the likeliho~ of the bill’s passage. The Office of Tariff Affairs and Trade Agreements and the Office of Industries at the ITC are primarily responsible for handling the requests from the subcommittee (interview). These offices are also primarily responsible for preparing the “information report” in response to the subcommitt~‘s request. The ITC report provides Congress with info~ation regarding the technical, legal, and customs administrative implications of aTDS bill (interview). More specifically, the report includes at least the following: 1. 2. 3. 4. 5. 6.

The level of domestic production of the imported good (if any); The level of domestic consumption of the imported good; Technical issues of tariff classification; Revenue effects; Competitive products; and Known support or opposition.

Revenue loss is usually calculated by multiplying the quantity (or value) of imports by the rate of duty. Occasionally, economists will do an elasticity analysis, but usually Congress does not request such information. Additionally, the assessment of competitive products is a somewhat subjective process; the ITC generally relies on the expertise of an industry analyst for these assessments (inte~iew). Once a report is completed, it must be approved by a majority of the six commissioners of the ITC; most bill reports are approved unanimously. The commissioners generally approve the TDS bill reports with some minor modifications (interview).

FriQT to the l%os, the ITC was processing between 10 and 20 TDS bilks a year. However, when ‘TIE exploded in the f 9SOs, the number of biffs skyrocketed to between 300 and 400

TDS bills annuaIly, with as many as 100 requests being received in a single day (interview). Because rhe fTC has had to process so many TDS bills, the reports have becomeincreasingly streamlined. F~duct~on of an i~f~~at~an report takes six to eight weeks. However, in special circumstances, the procedure can be expedited to two to three weeks (interview). After approval by the commissioners, a report is sent to the House Ways and Means Subcommittee on Trades

The su~rn~tt~e also requests public comment on tempor~ duty s~s~~s~~~ bills under ~~s~de~~t~on; this usually occurs several months after the bill is i~~du~~ in Congress (int~view). Trad~t~ona~~y, the s~b~o~itt~ ~hai~erso~ will issue one press retease which covers many recently proposed tariff bills. These bills are not solely new TDS bills; rather, they generally combine new TDS, TDS extension, duty reduction, and tariff classification bills. The public comment period established in the release is ~~r~xirnate~y one month. When the public comment period ends, the subcommittee compiles the all of the statements that it has received, The Government Printing Office prints the statements for use by the House Ways and Means committee and its staff, but the statements are also public d~uments, as are the ITC reports. Usually, public comments su~rn~tt~ to the sub~rnrn~tt~ are oniy from the companies who sought TDS in the first place. However, sometimes there is op~~it~on in the industry, Genera%y, if there is o~~sit~on, the biIf dies quiet&. Most TDS bitts are passed as so-called ~‘unan~rno~sconsent” at *‘~on~nt~vers~~‘~ legislative action, and contested bills are set aside. However, a contested bill can be included in a miscellaneous tariff bill if the sponsor is very persuasive; such action is infrequent (int~view)* Addit~onaIly, if there is any debate over a contested bilI, it is generaliy behind closed doors. Yet, in rare situations, a sponsor of a TDS bill will V&X an objection to a bill publicly. This occurred relatively recently, in 1990, when senators Jesse Helms (R-NC) and Terry Sanford (D-NC) engaged in what C~~g~~s~~~~~~ Quar&~$ called a “spirited debate” (Elviag X990, p. 12.50) on the Senate floor with senators John Heinz (R-PA) and Arlen Specter (R-PA). Most senators found this fervent dialogue to be embarrassing-the equivalent of airing the Senate’s dirty ~au~d~ in frost of the patblic. The debate6 arose over a proposed 3-7 percent TDS on ~~tid~~e hydro~h~o~de-~ ingredienr imported from Singapore by the ph~ma~euFj~a1company Glaxo for production ofits antiulcer drug Zantac (Overby ‘i993, p. 22). Giaxo is a U.K.-based company which has its U.S. headquarters in North CaroXina’sResearch Triangle Park. On July 18, i989, Senator Sanford introduced the TDS bill as S. 1342.’ However, senators Heinz and Specter opposed the bill on behalf of SmithKline Beecham-a competing pharmaceutical company with offices in Pennsylvania: Glaxo’s Zantac and ~n~i~~line’~Tagam~twere fighting to dominate the $2-billion-ayear U.S. mxket for Fresc~~ti~ anti-ulcer drugs. Tagamet had a virtual monopoly in the late 19X&, but Zamac arrived in 1983 and within six years had captured a 53 percent market share (Overby 1993, p. 22).

22

LAURA PINSKY and ~~WA~~

TOWER

Not surprisingly, SmithKline Beecham was concerned that a TDS on ranitidine hydrochloride would give Glaxo a competitive advantage which would allow Glaxo to gain an even greater market share. More specifically, SmithKline Beecham was concerned “that Glaxo would increase its promotional budget for Zantac by an amount equal to the duty paid (USITC 1991, p. vi).” Another criticism by opponents was the revenue loss of $1 l-13 million which would result from the bill. In addition to Heinz’s and Specter’s protests to the bill, SmithKIine Beecham voiced its opposition directly to Congress, as did the adminjstrati~n.8 Because of this opposition, the Senate Finance Committee was unable to agree on the provision and, as a result, it was not included in the noncontroversial miscellan~us tariff bills voted out of con~rn~tt~ (interview). Therefore, Helms and Sanford introduced a ranitidine hydr~hlo~de amendment to the Customs and Trade Act of 1990 (HR. 1594). The amended bill passed the Senate on April 24, 1990 (USITC 1991, p, 1). However, when members of the Senate and the House met to work out the differences between the versions of the Act passed in each house, the ranitidine hydrochloride provision was struck out. The issue of opposition is an important one because unless a company (or companies) publicly protests a request for TDS, the TDS bill almost always will pass. Although the ITC reports on TDS bills contain cost data (i.e., revenue loss estimates), Congress has not always been so concerned with these data. That is, even though an ITC report shows a loss to the Treasury for to taxpayers), a bill will likely pass if no competing industry producers oppose it. However, to Congress’ credit, in 1987 the House Ways and Means Committee did charge the ITC to perform a study ofTDS to determine whether there were cost savings to consumers from the temporary duty suspension bills in the Trade and Tariff Act of 1984. The study determined that there was a net savings to consumers “which could have been as high as $14 million (USITC 1988a, p, vii).”

Parliamentary Procedure After a bill has been researched,’ the Subcommittee cm Trade adds it to a collection of miscellaneous tariff bills. Then, usually once or twice per Congress, a Miscellaneous Tariff Act is introduced in the House. If the bill passes, it goes to the Senate. The senators vote on it and, if there are no amendments, it is forwarded to the President for his signature. If, however, the Senate adds amendments (which it almost always does), then the version ofthe bift which was passed in the Senate must be approved by the House as well ~in~erview). At this point, the Senate has two options. First, the Senate can message the amended bill directly to the House for passage; this action is most often taken when the amendments are unlikely to be controversial. Second, the Senate can request a conference with the House; this is done primarily when it is unlikely that the House will pass the new amendments. In conference, conferees from bath the House and the Senate get together to form a compromise of the two versions of the bill. Assuming that the Senate messages the bill to the House, the House then has four options: It can: (1) accept the amendments as written; (2) amend the Senate amendments; (3) request a conference with the Senate; or. by not taking any action, (4) let the bill die. If, on the other hand, the Senate requests a conference, the House can either agree to the request or disregard it and let the bill die. If a conference is agreed upon, regardless of which house originally proposed it, then each house appoints conferees, Technically, the Senate as a whole Itas the power to appoint Senate conferees. However, usually the Senate’s presiding officer will nominate the conferees on

behalf

of the

Senate.

~~~~a~~y~ the presiding officerof the senate isthe Vice

Presiden.ntof

the United States, but the Senate has a President Pro Ternpore, ty~i~a~~ya senior Senate

member, who acrs in the Vice President’s stead. In contrast to the rules in the Senate, in the House the presiding officer-that is, the Speaker-has the power to appoint the House conferees. Each house selects conferees fmm both parties, generally reflecting its party ratio. Additionally, the conferees are traditionally selected from the committees with jurisdiction over the original legislation. The number of conferees varies from bill to bill. Also, the number of conferees appointed by each house may differ. However, each house’s conferees vote in a block, so the difference in the number of appointees is not a factor. It is irn~~~t to notz~&at the entire biH does not go into confewxxx Instead, the ccmferees only debate ~~drn~ats added FOthe uriginaf u&on of the bill or sections of the original bitt which were stricken by the second house. Additionally, the conferees are restricted to considering some~ompromise of the House version and Senate version. The September W78 Congressional S~~~~o~~~~~(CSJ) provides the following example of this restriction: If it is a House appropriationsbill with a Senate amendment inserting a new $100 appropriation, the conferees are free to agree upon $100 or any sum less than $100, even to the extent of eliminating the whole item since it was not in the Nouse bill-but they cannot go above $100 (CSJ,p, 21, Qnce the conference report is complete, under standard procedure, the house u&i& qreed to the ~~~fer~~c~ acts on the report fir& In the Senate, the conference report cannot be

changed. In the House, no a~~d~nts can be added to the report but “a separate vote may be taken on a motion to reject a portion of the conference report which was originally proposed by the Senate and which the Speaker rules non-g~m~a~e to the original House version of the bill” (CSJ~p, 3). If the House amends the conference report, the Senate can either accept the changes or request another conference. The conference procedure is a likely path for a TDS bill, as part of a larger miscellaneous tariff act, to follow. For example, the Customs and Trade Act of 1990 (Public Law 101-382), which included many TDS bills, followed this procedure.

Thus, the path ofaTDS ME is seldom direct. Although aTDS bill.will rare& f~~o~~s~~on unless another U.S. company protests, the road to passage can be long and often convoluted because the TDS biIl is grouped with other tariff bibs. Furthermore, since 1990 another wrench has been thrown into the works. In that year, Congress passed, and the President signed, the Budget Act of 1990, which contains the “pay-as-you-go’” rule. Pay-as-you-go or, more succinctly, “pay-go” states that any piece of legislation which eliminates revenue must have a corresponding piece of legislation which generates the same amount of revenue or which lowers spending by au equivalent amount. This makes the possibility that a TDS bill will pass very unlikely. The TDS process was already time consuming prior to pay-go, and the need to enact ~o~~~ding ~eve~ue-generating Iegisfation lengthens the process even fu~h~-~t to mention the fact that such Ie~s~ation mighE be ~~iti~a~~yuu~pu~~.

24

LAURA PINSKY and EDWARD TOWER

Recent TDS Legislation Not surprisingly, then, the Customs and Trade Act of 1990 was the last of its sort law. The Miscellaneous Tariff Act of 1992 (H.R. 4318) was passed by the House the Senate. When it was sent to the Senate, the SenateParliamentarian referred it to Finance Committee, where it died because of budget (i.e., pay-go) problems. House passed the bill, there was an “estimated $384 million loss of revenue from the first year” (U.S. Congress 1992, p. 2).*’ Therefore, it adopted:

to become but not by the Senate When the the bilf in

an amendment. . . to reclassify certain multipu~se vehicles as trucks subject to a 25 percent rather than 2.5 percent rate of duty [to] result in a revenue increase estimated by the Congressional Budget Office of $215 million per year. To offset the remaining revenue loss [as pay-go required] the Committee adopted a staff proposal to stagger the effective dates of the provisions (U.S. Congress 1992, p. 2). The vehicles which were reclassified as fight trucks were minivans and sport-utility vehicles (U.S. Congress 1992, p. 147). Although vehicles from Japan were included, “a loophole exempted similar vehicles from Europe: the Volkswagen van and Land Rover’s upscale Range Rover (Overby 1993, p. 22).” House Ways and Means Chair Dan Rostenkowski Several representatives -including (D-IL) and the Trade Subcommittee Chair Sam Gibbons (D-FL j-objecte d to the vehicle provision because it: 1. 2.

violated the GATT,” and would have resulted in higher costs to “average American consumers 1992, p. 148)s”

(U.S. Congress

Nevertheless, the provision passed the House. However, when the bill was sent to the Senate, the Senate Finance Committee struck out the minivan and sport-utility vehicle provision, for the same reasons that Rostenkowski et al. opposed it, but Senate Finance could not find another way to make up the lost reveriue from TDS bills. Thus, the bill died in committee (interview). The Future of TDS There is a big question as to how TDS will be granted in the future. As stated earlier, it seems unlikely that TDS will continue to exist in its current form because it is too difficult to create corresponding legislation to replace the revenue lost by TDS as pay-go requires. Additionally, the TDS process is extremely time consuming for the congressional staffs of both Committees, the executive branch agencies, and the ITC. For example, even though no TDS bill has become law since 1990, the ITC still processes 20-30 TDS reports a month! However, as a short-term solution to the problem of TDS implementation, Congress incorporated most of the pending noncontroversial TDS bills into the GATT Uruguay Round Agreements (interview)-which were passed on 1 December 1994. The majority of the products for which TDS bills were introduced in the 103rd Congress-a number somewhere between 300 and 400-were included (interview). However, the tariff changes on these products had to be permanent rather than temporary because the Uruguay Round generally avoided temporary concessions. Additionally, these concessions may not completely or instantaneously eliminate the tariff, as is the case with TDS. Instead, the tariffs can be phased

Temporary Duty Suspension

in the United States

25

out over a period of 5-10 years (or longer if the issue is p~icul~ly ~litically sensitive). Furthermore, the tariffs might not be reduced to zero as would be the case with TDS (interview). The Uruguay Round Agreements are estimated to cost the United States somewhere between$l6-21 billion in totallost tariffrevenueovera%lOyearperiod(interview). Pay-go applies to the legislation, so this much revenue will need to be replaced. Congress has selected various sources of revenue, including: (1) trimming the interest rate on large refunds of taxes to corporations; (2) repealing the 4 percent minimum rate on savings bonds; (3) raising customs fees; (4) charging fees to firms receiving telecommunications licenses from the FCC; and (5) reducing agricultural export subsidies (U.S. Congress 1994, pp. 237-239). The inclusion of these products in the Uruguay Round does not preclude the intr~u~tion of more TDS bills. Of course, these new bills would be subject to pay-go and may not be enacted because of pay-go constraints. However, if another sweeping piece of trade legislation, like the Uruguay Round Agreements, should come before Congress, the TDS bills-or variations thereof-could be incorporated into it. Additionally, there is another channel by which TDS could continue to exist; interested private sector parties have lobbied-and are still lobbying-Congress to enact the so-called “administrative duty suspension” (ADS) process (interview). “If ADS were enacted, it would take the TDS process out of the legislative arena and give it to an administrative body; Commerce, the USTR, and the ITC have all been mentioned in this context” (interview). Basically, Congress would confer on the executive branch the power to grant TDS requests without the passage of legislation. The ADS process would begin when a duty suspension request was reviewed by the app~p~ate executive agency. Then, the agency “would send its recommendations to the White House for approval” (Lawrence 1993, p. 3A). It is important to note that ADS is generally considered to be a supplement to the legislative TDS process. A proposal by the Synthetic Organic Chemical Manufacturers Association (SOCMA), for example, stipulates that the ADS process would be activated only after Congress had considered a TDS bill for one year without taking action (SOCMA 1989, p. 2). Many of the private sector parties which are pursuing ADS have even outlined for Congress the basic principles upon which they feel ADS should be based. Over 70 companies signed a memorandum to the House Ways and Means Committee in February, 1993, which stated these principles. The memorandum included decision-making criteria (e.g., “the retention or creation of jobs in the United States”), eligibility under ADS (e.g., TDS “should be granted for a live-year period’), and the petitioning process, among other considerations. One of the co-signers of the memo was SOCMA, which, as noted, had previously issued its own proposal for an administrative duty suspension process. In a proposal sent to the House Ways and Means Committee on May 26, 1989, SOCMA had stated that the Congressional duty suspension procedure had several disadvantages “most of which are inherent in the legislative process.” The disadvantages listed by SOCMA included: 1. 2. 3.

There is no mandatory procedure to require that the [TDS] legislation be considered; There are no clearly established standards for determining which duty suspension requests should be granted and which denied; The timing of the process is extremely uncertain, thereby making efficient planning and contracting impossible; and

26 4.

LAURA PINSKY and EDWARD TOWER

It is all too easy for legislation to suspend duties to get lost in the ongoing crush of legislative business, in which only the most important matters are likely to receive consideration.

The SOCMA proposal concluded that these disadvantages could be minimized by the adoption of ADS. Senator William Roth (R-DE&who has worked with SOCMA and the staff of the House Ways and Means Subcommittee on Trade to develop ADS legislation-was the first to introduce a bill to implement this process; other members of Congress have subsequently introduced similar legislation (interview). In Roth’s proposal, the ITC would be given the power to grant TDS, but a corporation could appeal to Congress if unhappy with an ITC ruling (Overby 1993, p. 23).12 In a memorandum to House Ways and Means commenting upon the various proposed ADS legislation, the ITC expressed some concern “that the process may not work as envisioned” (USITC 1988b, p. 15). In the memo, the ITC stated that it was concerned that the administration’s policy of using duty suspensions as bargaining chips might conflict with its role in ADS:Furthermore, the ITC expressed concern about the administrative costs which might result from ADS. Because a TDS petitioner could file for duty suspension both by legislative and executive action, the administrative costs for the ITC-which would have to write reports under both actions-could conceivably double (USITC 1988b, pp. 15-16). Nevertheless, several legislators from both parties “have been active in support of the ADS concept” (interview), and the Senate has even passed Senator Roth’s legislation twice (Overby 1993, p. 23). However, ADS has yet to be implemented. Many members of Congress are wary to delegate this power to the executive branch (interview).

POLITICS AND TDS Political pressures have resulted in several interesting subtleties in the TDS process. For example, a member of Congress may ask that a temporary duty suspension be changed into a permanent one, rather than have to renew it every few years, and sometimes this does occur. However, the administration often discourages such action. Also, the administration often discourages the passage of a duty suspension bill when it believes that it can use the bill as a bargaining chip in multilateral trade negotiations. Similarly, if the administration believes that the bill might have high negotiating value in the future, it is apt to discourage Congress from making a temporary duty suspension permanent. Therefore, a duty suspension bill is much more likely to remain temporary for an extended period of time than to become permanent; one TDS bill was renewed consistently for almost 20 years. Interestingly, TDS also can be applied retroactively. That is, when a member of Congress introduces a TDS bill on the floor, the member can also request that past duty paid be refunded to the company. “It is fairly common for duty suspension bills to be introduced which request retroactive effect and it has been the [House Ways and Means] Committee’s practice, in some cases, to authorize such retroactive effect” (USITC 1988b, p. 17).‘” However, requests for retroactivity also often meet opposition, especially from the administration, because, typically, the windfall gains are not passed on to the consumer (U.S. Congress 1977, p. 6). Nevertheless, companies lobbied for the inclusion of retroactivity clauses in the Uruguay Round. For example, one lobbying organization-the Supporters of Miscellaneous Tariff

Legislation’4-r~uested that the duty reductions in the Uruguay Round be implemenr~d as of 1 Janus 1993, but this legislation was not included in the agreement (inter~fie~). The document did contain a few indjvidual retroactive suspensions; however, these were designed to correct errors in previously enacted tariff bills (interview). Finally, members of Congress can apply for a temporary and a permanent suspension of duty simultaneously. Presumably, a Congressional member would do this hoping for permanent suspension but only expecting temporary suspension. For example, Jack Kemp [R-NY) did this in 1977: HR-2446 would have provided for a “permanent elimination of the import duty on horses entering the United States, both below and above the present $150 valuation break,” and HR-3259 would have continued “the temporary suspension of those import duties.” In his testimony before the Subcommittee on Trade on February 22, 1977, Kemp said: I prefer the reporting to the full House of HR-2446, but if the Subcommittee or full Committee deems it necessary to reportHR-3259, in light of the continuing multinationai trade negotiations, I would, ofcourse,not object.

ECONOMICS AND TDS The inextricable link between politics and TDS has been subject to severe criticism. Some challengers of TDS claim that politicians use TDS to “give out trade goodies to favored corporations” (Overby 1993, p. 18). That is, because TDS bills tend ta favor only one company or only a few companies, members of Congress realize that if they can get a TDS bill passed, the colorations that benefit will make their appreciation known come election time.

The 1988 ITC Report The importance of this criticism rests on the question of whether TDS bills actually benefit consumers’5 in particular and the economy as a whole. The 1988 ITC report is the only investigation of the economic impact of TDS on the consumer that we were able to locate. Unfortunately, the findings of the investigation are misleading and questionable. The study found that: The miscetianeous temporary duty suspensions enacted in P.L. 98-573 are estimated by the Commission to have resulted in cost savings to US consumers which could have been as high as $14 million in 1986(USITC 1988a, p. vii). The estimate was based on the Commission’s industry analysis and on questionnai~ surveys sent to importers and users of products under TDS (USITC 1988a, p. vii). The findings of the study are misleading because they state the cost savings to U.S. consumers but not the net savings to Americans. More specifically, the study showed a cost savings to consumers of around $14 million and lost tax revenue of over $29 million. Although it is doubtful that all of the lost tax revenue is a direct loss to consumers, these figures show that the net loss to consumers could be as high as $15 million. Moreover, most families function as producers, taxpayers, beneficiaries of public goods, and consumers. There is no reason for an analyst to distinguish between these measures of welfare change. It would be better to explore the net gain to various groups and to Americans in the aggregate.‘”

28

LAURA PINSKY and EDWARD TOWER

Additionally, there are questions relating to the methods by which the lost revenue and cost savings were determine. First, a footnote to the study states that the lost revenue may be overestimated; the calculation is based on imports in the duty-free equilibrium, and, as a result, the imports are larger when the duty is suspended than they would have been otherwise (USITC 1988a, p. viii). ” Second, the measurement of cost savings to consumers hinges on particular macroeconomic assumptions. It assumes that the price of the bundle of other goods consumed in the United States is unchanged in price. This occurs if monetary policy makes it occur. However, for that to be the case, if non-lump-sum taxes are levied to compensate for the lost tariff revenue, factor prices throughout the economy must fall, in order to hold the output prices of these other goods constant. Finally, even if the results of the study are found to be useful, it is questionable whether they can be extra~lated to apply to later miscellaneous tariff bills with TDS components. The 1984 Trade and Tariff Act resulted in only $29 million of lost revenue from TDS, but, as stated earlier, TDS bills in the 1992 Miscellaneous Tariff Bill would have resulted in over $200 million of Iost revenue had it passed. Because the magnitude of the loss in the 1992 bill could be as high as seven times that of the 1984 bill, one must be wary in extrapolating the economic implications of the ITC study to more recently proposed legislation. The Need for CostBenefit

Analysis

More thoughtfully structured analysis is necessary to determine the current economic implications of TDS. Admittedly, this is challenging because the indirect economic effects on Americans are difficult to calculate with confidence. In its study, for example, the ITC sent questionnaire surveys to importers as its only means to collect data about these indirect effects. In the survey, the ITC asked compani~ for their benefits from TDS and to what extent those benefits were passed on to consumers. As we investigated the inner workings of TDS, we expected to find extensive discussion of the economic implications of TDS and, in particular, the welfare implications. Except in a few instances, such as discussion of retroactive TDS, welfare did not seriously factor into the debate. Instead, TDS seems to have been designed solely to create rents (the “trade goodies” mentioned previously), with little consideration as to whether resources are redistributed in a beneficial way. The consumer-cost-savings method employed in the ITC study results from arbitrary macroeconomic assumptions, and it makes no sense to focus on consumer cost alone. The sensible approach to studying the economic effects of TDS on Americans is to determine the effect on the welfare of particular groups of Americans and on Americans in the aggregate-where it is recognized that each Ame~can is a producer, a taxpayer, and a recipient of entitlements and public goods as well as a consumer. Searching

for Simple Rules of Thumb for Piecemeal

Tariff Policy

So, what would be the appropriate way to deal with the likely welfare effects of temporary duty suspension? One way would be to look at the industries in which TDS is occurring and to calculate the effective rates of protection for those sectors. Welfare tends to be enhanced when a more level playing field is created for U.S. industry, and it tends to be decreased when the playing field becomes more uneven. If initially advantaged sectors are advantaged further by the duty suspension, that is not desirable from a welfare standpoint. If, instead, sectors which were initially disadvantaged receive a small amount of advantage, then that is a good thing (see Tower 1984a).

TemporaryDuty Suspension in ft7e United States

29

Another means to getting a handle on whether a duty suspension is welfare beneficial is to determine whether initially high tariffs were lowered or initiaily low tariffs were lowered. Better welfare effects come from lowering initially high tariffs. To illustrate the issue of calculating a second-best optimum tariff, consider the following models. Model A. Assume that export volumes are fixed. Also, assume the duty suspension is on a good with an initially high tariff; then, a duty suspension reallocates imports from the initially high tariffed items to initially low tariffed items. In this case, each incremental reduction in the tariff is beneficial until the tariff falls to the level of the other tariffs; after that, it is detrimental (see Appendix 1). Model B. Suppose that the tariff reduction under consideration is anticipated to depreciate the currency, thereby expanding exports and contr~t~ng other imports. Furthermore, suppose that for each additional doliar’s worth (at world prices) of increased imports of the commodity in question (good l), other imports (of good 2) contract by 50 cents andexports (of good 3) expand by 50 cents. If no taxes or subsidies are attached to exports, then the optimum import tariff in question is half of the import tariff on good 2 (see Appendix 1, see also Tower 1984b).

Model C. This is the same as Model B, except that each additional dollar’s worth of increased imports of good 1 causes two dollars of increased exports of good 3, with the additional foreign exchange earnings used to purchase one dollar of increased imports of good 2.‘s In this case, the optimum import tariff on good I is a subsidy equal to the import tariff on good 2. ModeJ D. Consider a three good economy in which two imports are consumed in fixed proportions and a third good is exported free of tax. Assume nodomestic production of either importable and equal imports of the two goods in value terms at worId prices. In this case, the optimum ad valorem tariff on the first good is a subsidy equal ta the ad valorem import tariff on the second, so a zero net tariff is attached to the import bundle.

Model E. This model is harder to understand than the other four. In this model, our country is a small one. It imports two goods. These two goods, which are not produced at home, form a composite commodity. It exports a third good, whose price is held constant by the home monetary authority. The only distortions are ad valorem import tariffs, expressed as fractions of the world price. Trade balance and full em~lo~ent for the home economy prevail throughout. The two importables are combined according to constant returns to scale to form a composite commodity. The representative citizen in the home economy consumes both the exportable and the composite commodity. We discover that lowering the tariff on good 1 is more likely to be beneficial, the higher is its tariff relative to that of good 2, the lower is the elasticity of substitution between the two importables, the higher is the elasticity of demand for the composite, and the lower is the share of good 2 in the composite. We also calculate the optimum tariff on good 1. The optimum tariff is lower, the greater the elasticity of demand for the composite relative to the elasticity of substitution between the two importables in producing the composite. It may be either positive or negative, being zero when the two elasticities are equal (see A~~nd~x 2)

Because these different models yield such different results, it ishard to derive a reasonable rule of thumb for TDS, We draw three conclusions. First, selective free trade may be inferior to the status quo. Second, m&zing the highest tariffs is most likely to be welfare improving. Third, systematic rules for tariff reduction would be less likely to set up destructive rent seeking than the current system.

P&w Ze;tfanblaw permits an importer to apply to the Minuses of Commerce for a tariff concession when there is an absence of a suitable New ~~~~~d-jnad~ alternative; them is a preset fee of NZ$252 for the application. However, a ~~~factu~r of a suitable alternative product may object to the application. “There is a three week period in which manufacturers may notify their objection to the granting of a concession.. . . Concessions are effective from the first day of the mouth in which the application is received by the Ministry.” The speed with which concessions are granted and the low cost of applying make this a much less cumbersome alternative to the U.S. process. Moreover, it automatically shrinks the administration and rent seeking, and it also eliminates the possibility ofrent capture by legistators.t9

It seems that the political structure of TDS (i.e., eliminate the duty if no one objects) is unlikely to serve economic welfare signi~c~tly, unless the initial tariff is high. Welfare gains occur on the production side from shifting resources, and these resource shifts generally involvecosts for someone. Duty suspensions will probably occur where these resource shifts are small and, therefore, are unlikely to generate much of a welfare improvement. Moreover, if the duty suspension generates no resource movement directly (e.g., retroactive duty suspension), to the extent that a higher distorting tax elsewkere is required to balance.the budget, welfare will decline We find the simplicity of the New Zedand regime appealing and recommend that something similar be adopted by the United States. The t~iff-setting ~~han~srn in the United States tends to remove tariffs when no dominant actors object, so after each major tariff bilf, we would expect to find no tariffs unfess they are supported by some interest. As ?echnoIogy changes, the range of goods on which no one will object to tariffs will alter. The New Zealand regime produces those tariff cuts which a legislative conference would also produce but with fewer resources used up in rent seeking and no time lost in waiting for the vote on the next tariff bill. We close with the reminder that best tariff policy requires that the tariff structure be the product of systematic cost/benefit analysis ofall the tax and tariff instruments available, with no role for rent seeking. As a practical matter, we believe that this calls for free trade combined with a sensibte domestic tax structure (see Krugman 1993).20

Temporary Duty Suspension in the United States

31

APPENDIX 1 In this appendix, we calculate the two s~ond-~st-optimum tariffs discussed in models A and B. Our country is small, so world prices are fixed. We normalize them all to equal unity. M; is the net import of good i measured either in physical units or values at world prices. Trade balance implies: cMi=O. There are no domestic distortions,

(1)

so the change in real income, y, is given by: dy=t*dM,

(2)

where I is the vector of adv~orem tariffs and Al is the vector of net imports. We assume that a changed import tariff on good 1 causes a change in imports of good 1 Of:

dM1 = adt,

(3)

where a <: 0. The response of each other net import is given by: dMi/dM, = ri.

(4)

Clearly, rt = 1, and continued trade balance (Equation [ 11) dictates that the ris sum to zero. From Equations (2), (3), and (4): dy = t l radtl

(5)

where r is the vector of ri. When only the imports of goods 1 and 2 alter (model A in the text), trade balance dictates that r2 = -1, so: dy = (rI - r;?)adr, and the second-best-optimum

(6)

tariff on good 1 is:

In Model B, where onty net imports of goods 1,2, and 3 alter, rz = -.5, r3 = -.5, and t3 = 0. This implies: dy = (tl - .5i2)adt so the second-best-optimum

tariff on good 1 is: t1 = St,.

Finally, from Equation (5). the general formula for the second-best-optimum

(9) import tariff

is: N

SO)

where there are N commodities and the ts on the righthand side sum to minus unity. This is the formula we use to derive the results for models C and D.

APPENDIX 2 In this appendix, we derive the text’s model E. Our country is a small one. It imports goods 1 and 2, in quantities Mt and M2. These two goods, which are not produced at home, form a composite commodity. ft exports good 3, whose price is held constant by the home batty authority. The only ~sto~jons are ft and $2.the ad valorem import tariffs, express& as fractions of the world price. The world prices of both imports are normalized at unity. Trade balance and full ~rn~~oyrn~t for the hone economy prevail th~ug~ut~ Goods t and 2 are combined according to constant returns to scale to farm a composite commodity, C. The representative citizen in the home economy consumes both the exportable and the composite commodity. The change in real income is given by: dy = t,dMl + r2dM2a

u 11

We denote proportional changes with hats, domestic prices with Ps, and the elasticity of substitution between the two importables in producing the composite, with Q. Thus: G, - f&z = &~

- $1)”

(121

The home price of each ~rn~~ab~e is 1 pfus the rariff. The tariff on good 1 is assumed to vary, but the tariff on good 2 is assumed to remain c~~nstant. Thus, the seeond price is constant: F, = 0.

(1%

The demand for the composite is given by: ; = -&

041

where F is the &&city of demand for the &orn~sjt~~ d~~~~ to be positive_ and PC is the price of the composite, The change in the price of the composite is g&en by: &B,F, where Qi is the share of the import of good i in totlrl imports at domestic production of the composite is given by: 6 = @,Icj* f @$I. Combining

Combining

Equatians

(141, CE), and (16) yields: n /\ n @&M, +@2M2=-8@$$

prices, The

(161

(171

~~a~~o~s (12), (IS), and (17) yields: Gt = -@@, + @&

and

r13

08

We define Ti as the ad valorem import tariff on i, expressed as a fraction of the domestic price. This allows us to rewrite Equation (20) as:

AL PP%$t.

-fi@&

-Pa&-j -I-T$B&J - 8)”

(211

wan P&Tis i&ial s~~i~~ at domestk

p&es on the ~o~sjr~ (~r~r~~~~2~~ good I is rn~e fikejy to be beneficial, the higher is its t~~~$la~~v~ to that of good 2, the lower is the eiaskity of substitution between the two importables, the higher is the elasticity of demand for the composite, and the lower is the share of good 2 In the composite. To find the second best optimum tariff on good 1, we set the lefthand side of Equation (21) equal to zero. We write the result as: We seefromEquation (2Xf that Iowering rhet~~on

Thme feat speeiaf cases Ernest. If the efasticity of substitution ;equaIs tPet3. efasticity of demand: T,O@ll?”= 0

(231

If the elasticity of demand is Ia~e relative to the elasticity of substitution: (24)

pptimmn t

= T

2=

cw

this case, the optimum tariffon good 1 is positive and equals that on good 2, for only this tariff creates equality betwmn the marginal utilities and the world-relative price of the two importables.

h

34

LAURA PINSKY and EDWARD TOWER

Leo Webb, acting chief of the Legal Division of the Office of Tariff Affairs and Trade A~eements at the Inte~ational Trade commission, for answering lots of questions, sending relevant documents and commenting upon a draft of this paper. The paper was also improved by suggestions from Debasis Bandyopad, Gmer GlikCekus, Henry Grabowski, Peter Lloyd, VLnce Manks, Mia Mikic and participants at the 1994 meetings of the New Zealand Economic Association. Tower worked on the paper while he was a Visiting Professor at the University of Auckland. Thanks go to the Center for ~ntemational Studies at Duke for funding Tower’s trip to the New Zealand Meetings.

1. Because there has been Iittte written about TDS, much of the jnfo~at~on for this article was acquired through personal interviews with various experts. in order to honor confidentiality, these sources are collectively listed as ‘*interview.” 2. Technically, there is a Senate Finance Subcommittee on ~n~e~at~ona~Trade, which is responsible for TDS bills. However, because the full committee has a comparatively small number of members, the entire committee will usually vote on trade bills rather than go through a separate subcommittee action (interview). 3. Although, for simplicity, this discussion focuses upon the actions of the staffof the House Ways and Means Subcommittee on Trade, it is important to note that the Senate Fiance Committee staff plays a very active role in the TDS process, particularly when a tariff bill is passed by the House and sent to the Senate (interview). 4. In 1988, the ITC estimated that it was spending approximately the equivalent of”six work-years per annum in preparing reports for the Congress on tariff legislation” &JSiTC t$Xgb_ p. 7). 5. Or to the Senate Committee on Finance. 6. It was stated earlier that the Department of Commerce has the informal role of brokering a ~mpromise when a company opposes a TDS bill, However, hecause this action takes pface behind the scenes, it is often difficult to determine when it occurs. I was unable to find a source that could confirm whether Commerce attempted to broker a compromise between the concerned parties and, thus, prevent this debate from occurring. 7. “A House counterpart bill was introduced on August 31989 as H.R. 3130” (USITC 1991, p. If. 8. Interestingly, during the Senate’s investigation of the bill, representatives from other pharmaceutical companies said that they did not object to the bill (USITC 1991, p. I). Apparently, the companies in the pha~a~euti~a~ industry had a tacit agreement not to oppose each other’s TDS bills. Thus, SmithK~jne Beecham’s opposition was somewhat of a surprise ~~nt~rv~ew~~ 9. information on Parliamentary procedure was taken from the September 1978 issue of the Congressional Sra~~~Mr~~~and from interviews. 10. Estimates were calculated by the Congressional Budget Office based on information from the ITC (U.S. Congress 1992, p. 96). 11. The vehicle reclassification provision violated GATT in two ways, First, it raised a “bound” rate of duty, and second, it clearly discriminated against Japan (U.S. Congress 1992, p. 147). 12. “A similar administrative process, minus the appeal is already used by the European Community” (Overby 1993, p. 23). 13. It is interesting to note that in its analysis of the proposed ADS legislation, the ITC stated that it believed that the legislation precluded the President from issuing retroactivity on temporary duty suspensions (USJTC 1988b. p. 17). $4. This organization has over I00 members. Participants include, forexamp~e~ AppL Computer, Inc.; Bausch and Lomb Incorporated; Mattel, Inc.; Pepsico, Inc; and the Rohm and Haas Company. 15. In this discussion, the term “consumers” refers to consumers of intermediate gocds and consumers of end products,

Temporary Duty Suspension in the United States

35

1.6. Ideally, of course, the analysis should be i~te~emporal. In particular, it should assess the impact on growth. Moreover, if a duty suspension is perceived to be temporary, it will set up incentives for intertemporal substitution. See, for example, de Melo and Tarr (1992). 17. However, to the extent that the duty free imports substitute for other imports with tariffs attached, TDS generates a revenue loss. There are, of course, other general equilibrium effects. To the extent that the duty reduction lowers the cost of transforming utility into leisure and there is a progressive income tax, labor force participation is encouraged by the substitution effect but discouraged by the income effect, and tax revenues change accordingly. 18. This could occur if labor and capital were perfectly mobile in the domestic economy, goods 1 and 3 were produced by capital and labor, with good 2 produced by labor alone, where capital’s share in sector 3 was tiny and its share in sector I was huge. In this case, a lower tariff on 1 would displace a great deal of capital and a little labor from sector 1. The capital along with lots of labor would be absorbed into sector 3. Some of this labor would come from sector 2, resulting in more imports in sector 2. 19. More information is available from Tariff Concessions, Ministry of Commerce, P.O. Box 1473, Wellington, New Zealand. Tel: 64-4-4720030; fax: 64-4-4738949. 20. Finger (1993) reaches a similar conclusion with regard to antidump~g. His preference is to eliminate it. To control it, he suggests subjecting antidumping activity to the requirement that it serve the national economic interest.

REFERENCES Browning, Cl. 1993. “Firepower.” National Journal (October): 1755-l 757. de Melo, J., and D. Tarr. 1992. A Generaf Equilibrium A~~ys~s rtf US Trade Policy. Cambridge, MA: MIT Press. Elving, R. 1990. “Senate Backs Caribbean Bill, Declines to Broaden Scope.” Congressional Quarterly Weekly Report (28 April): 12.50. Finger, M. 1993. Antidumping: How it Works and Who Gets Hurt. Ann Arbor, MI: University of Michigan Press. Krugman, P. 1993. “The Narrow and Broad Arguments for Free Trade.” American Economic Association Papers and Proceedings 83(2 May): 362-366. Lawrence, R. 1993. “House Panel Drafts Bill on Suspension of Duties.” The Journal of Commerce (April 27): 3A. Overby, P. 1993. “Trading Favors.” Common Cause Magazine (Spring): 18-23. Tower, E. 1984a. Eflective Protection, Domestic Resource Costs, and Shadow Prices: A General ~qui~ibr~urn Perspective. World Bank Staff Working Paper No. 664. Washington, DC: World Bank. Tower, E. 1984b. “On A Quick and Dirty Approach to Estimating Second Best Optimum Tariffs.” lnternnfional Review of Economics and Business 3 1(3, March): 212-219. U.S. Congress. 1977. House Committee on Ways and Means, Subcommi~ee on Trade. Hearings on Duty-Free Entry or Temporary Suspensions of Duty. 95th Cong. I st sess. U.S. Congress. 1978. House Committee on Ways and Means, Subcommittee on Trade. Hearings on Certain Bills to Provide Duty-Free Entry, Temporary Suspension ofDuty, or Private Relief 95th

Cong. 2nd sess. U.S. Congress. 1992. House Committee on Ways and Means. Report on tke ~~s~el~~~eous Tart#Act of 1992. 102d Cong. 2nd sess. 30 June. U.S. Congress. 1994. House Committee on Ways and Means. Report on the Uruguay Round Agreements Act. 103rd Cong. 2nd sess. 3 October.

U.S. International Trade Commission (USITC). 1988a (February). Cost Savings or t?Fher &nej?ts to US Consumers Resulting From Temporary Duty Suspensions in the Trade and Tat-$-Act of 1984. Washington, DC: USITC, U.S. International Trade Commission. 1988b (February 29). Memorandum to rhe Comminee on Ways and Means of the US House ofRepresentatives, on Sections 941 through 944 of H.R.3, rhe Omnibus Trade and Competitiveness Act of 1987. Washington, DC: USITC. U.S. International Trade Commission. 1991 (January). Ranitidine Hydrochloride: The Potential Impact on Dome& ~~rn~~t~~~~~ in the Antiulcer Drug Market of a Te~~poru~ Duiy Suspension on Imports. Washington, DC: USITC.