Minnesota businesses line up to ask Congress for cut in tariffs

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: July 9, 2012 - 9:22 AM

Businesses see it as economic boost. Critics call it stealthy earmarking.

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WASHINGTON - Minneapolis-based Target Corp. would like to suspend import duties on certain types of children's wallets and bamboo kitchen devices. 3M Co. in Woodbury needs to cut duties on foreign fluoropolymers and other industrial materials. Knitcraft Corp. of Winona wants a break on Italian wool and Australian spun cotton.

Where to go? The answer, increasingly, is Congress, where lawmakers in both parties readily oblige home-state business interests in a nationwide tariff bill worth hundreds of millions of dollars in revenues that otherwise would go to the U.S. Treasury.

It's a periodic ritual in Congress, played out in low-key lobbying requests that rarely catch the public eye.

But this year's version, the first since 2010, comes amid a new ban on earmarks, which many Republicans regard as special interest pork-barrel spending. It also comes during a presidential campaign focused on the economy, jobs and global competition as work is sent offshore and goods and services are outsourced.

Backers of the tariff requests see them as a way to help homegrown businesses that rely on imports otherwise unavailable domestically. "It's whatever we need to manufacture here that we can't get in the U.S.," 3M spokeswoman Jacqueline Berry said.

Business leaders say the lost duties are a small price to pay for keeping U.S. manufacturers and retailers in business. But critics say the tariff suspensions are becoming the politically acceptable alternative to earmarking -- a way to promote local concerns coming at federal taxpayer expense.

"One of the arguments for why earmarks were corrupting is that you were giving a benefit to one company that may have lobbied you or given to your campaign," said Bill Allison with the Sunlight Foundation, a government transparency watchdog group in Washington. "This is exactly the same thing."

Lawmakers who support the tariff breaks note that once they are approved, they are available to anybody. But mindful of the political sensitivities, many Minnesota lawmakers in Congress have stayed away, noting privately that the tariff bill's provisions tend to be highly technical and narrow in scope.

Amid hundreds of requests in the House and Senate, this year's "Miscellaneous Tariff Bill" contains more than two dozen provisions sought by a bipartisan trio of Sen. Amy Klobuchar and Reps. Erik Paulsen and Keith Ellison, mostly on behalf of 3M, Target and a few other Minnesota companies.

"These bills help ensure that Minnesota businesses are not slapped with unnecessary tariffs and that consumers do not see higher prices as a result," said Klobuchar, a Democrat who has cultivated an image as a consumer advocate in the Senate.

Jobs agenda

The last tariff bill, signed by President Obama in 2010, was worth an estimated $298 million in savings to private companies nationwide, according to the Sunlight Foundation.

A Minnesota Republican who is pushing the tariff requests argues that the savings spur American job growth.

"It's lowering production costs, making finished products more competitive, creating savings for consumers and ultimately supporting U.S. jobs," Paulsen spokesman Philip Minardi said. "The bill helps keep manufacturing jobs here in the United States."

In Minnesota, some of the biggest players are 3M, Honeywell International and Dow Chemical, companies that have spent a combined $25 million since 2010 lobbying Congress on a wide range of regulatory issues. Target, with a more modest lobbying presence in Washington, has a half-dozen tariff requests in this year's bill.

U.S. companies have to make their requests through congressional offices, which then forward them to the International Trade Commission and the U.S. Commerce Department to ensure they have no impact on domestic firms.

Lost manufacturing

The Dow Chemical and 3M requests filed through the Minnesota lawmakers are heavy on chemicals and other raw materials for industrial processes. One example is a request to temporarily suspend the duty on "mixtures of C5-18 perfluorocarbon alkanes."

Honeywell has asked for tariff relief for a type of cathode-ray tube, while Entegris, a Massachusetts tech firm with facilities in Fridley and Chaska, has requested a break on cellular plastic sheets for nano-retention filters.

Target's shopping list of tariff exemptions runs from electric wine bottle openers to certain types of swimming pools. Company officials say consumers are the ultimate beneficiaries.

"We strive to provide our guests with the best products at the most competitive prices, and these bills help us to do so," Target spokeswoman Stacia Smith said.

Jennifer Porter Gore, a spokeswoman for Ellison, a Democrat who is backing tariff requests for Entegris, Target and 3M, said the requested duty-free imports cannot be available domestically, even if the final products they go into are.

Allison says the periodic tariff bills, which Congress first passed in 1982, reflect the nation's diminishing manufacturing dominance. "Obviously, there's been a huge erosion in the U.S. manufacturing base," he said. "We don't make a lot of things here anymore."

Knitcraft, the Winona sweater manufacturer seeking cotton and wool products abroad, provides a perfect illustration. The privately held firm, which sells apparel under the St. Croix brand, used to buy the lustrous, wrinkle-free, mercerized cotton it needs domestically. When U.S. suppliers dried up, the company turned to Italian spinners and dye houses.

That means paying a duty on raw materials Knitcraft used to get domestically. And because the materials come from abroad, the company also must pay duty on the finished sweaters it sells in Canada, despite free-trade agreements between the United States and its northern neighbor.

The problem became a loss of competitiveness, Knitcraft Vice President Mary Bergin said. The answer was an appeal to Paulsen's office. The 52-year-old company lists no other Washington lobbying activities.

"We want to keep our prices low enough that we can continue to compete here in the U.S.," Bergin said. "Why wouldn't you want to help U.S. manufacturers?"

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.

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