Sen. Hatch Shares Tax Reform Vision at AAFA Summit

3/19/2015
Speaking before the American Apparel & Footwear Association's Executive Summit, Senate Finance Committee Chairman Orrin Hatch (R-Utah) addressed issues of tax reform and the nation's trade agenda. Here's what he had to say:

I'm very pleased to be here today to talk about both tax reform and our nation's trade agenda, two areas that I know are of interest to you and virtually everyone throughout the business community.  If we're serious about promoting a healthy economy, we need to be committed to fixing our nation's broken tax code and to expanding trade opportunities.

And, believe me, I'm committed.

As the Chairman of the Senate Finance Committee – which has jurisdiction over both tax and trade – I am working to advance the interests of hardworking taxpayers and our job creators.  I'd like to take a just a few minutes today to talk about some specifics about what the committee is up to in both of these important efforts.

First, let's talk about tax reform.

Over the last several years, I've spoken numerous times – in the Finance Committee, on the Senate floor, in public appearances, and in private conversation – about the need to fix our broken tax code. In fact, I'd understand if there are some who tire of hearing me talk about tax reform – but that doesn't mean I'm going to stop any time soon.

There have been enough excuses – the American people deserve a solution.

In my opinion, tax reform is no longer optional, it is essential.  If we're going to get our economy moving again, we need a tax code that will stop standing in the way.

In December, I released a report drafted by my staff on the Finance Committee, titled "Comprehensive Tax Reform for 2015 and Beyond."  This report – I've been calling it a book as it is 340 pages long – outlines the major issues policymakers will have to confront as we undertake tax reform.

The book describes where we are with our current tax code, where we've been, and, most importantly, it gives a path forward for our reform efforts in the future.

In the book and elsewhere, I've laid out seven principles that I believe should guide our tax reform efforts.

I won't go into much detail on each principle today.  Instead, I'll just list them – and encourage you all, once again, to read the book.  Don't wait for the movie.

The seven principles are: 1) Economic Growth; 2) Fairness; 3) Simplicity; 4) Permanence; 5) American Competitiveness; 6) Promoting Savings and Investment; and 7) Revenue Neutrality.

With those seven principles in mind, the question becomes: What's next?  How do we put those principles into action?

As most of you know, the Senate Finance Committee is already fully engaged in a very real tax reform effort.  We've created five working groups that will look at all the areas of our tax system.
These five groups – which are all led by very capable and determined Senators from both sides – will examine the various areas of the tax code and learn about the policy tradeoffs and potential areas for reform, all with an eye toward producing recommendations for a bipartisan tax reform bill.

My goal is to introduce such a bill and mark it up in the committee later this year.

I want to make one thing clear: This is not an exercise.  This isn't just for show.  I'm not in this just to introduce a proposal or two and move on.  My only goal when it comes to tax reform is to make new law.  And, with the help of all my great colleagues on the Finance Committee, that's just what I plan to do.

Obviously, we have a lot of work to do.

I've said it many times before and I'll say it again here today: I'm willing to work with anyone – Republican or Democrat – to reform our nation's tax code.  Because tax reform isn't a Republican or a Democrat issue; it's an American issue.  And I plan to see it through to the end.

Now, I'd like to take a few minutes to talk about our nation's trade policy as I know that is of great concern to everyone in this room.

As you all well know, 95 percent of the world's consumers and the fastest growing markets are outside the United States. We need to break down barriers that prevent U.S. companies from effectively accessing this growing customer base.  Indeed, our job creators are only successful when they have access to markets and fair rules to trade by.  

When it comes to addressing trade barriers, there are a lot of issues on the Finance Committee's plate.  The one I get asked about the most these days is the renewal of Trade Promotion Authority, or TPA. 

Let's put TPA in context.

The Obama Administration is currently negotiating some of the most ambitious trade agreements in our nation's history.  The first is the Trans-Pacific Partnership, or TPP, an Asia-Pacific trade agreement being negotiated between the United States and eleven other countries.  And, on the other side of the world, the U.S. is negotiating an agreement with the twenty-eight countries of the European Union.

Together, these two agreements cover more than 60 percent of global trade and have the potential to dramatically change the world economic landscape, putting the U.S. in a position to lead on trade for decades to come.

But, without TPA, I'm afraid neither of these agreements will ever reach the finish line.

Why is TPA so important?

TPA is a compact between the Senate, the House, and the administration.  Under this compact, the administration agrees to pursue specified objectives and consult with Congress as it negotiates trade agreements.  And, both the House and Senate agree to allow for expedited consideration of trade agreements without amendments.

For a number of reasons, this compact is essential for the conclusion and passage of strong trade agreements.

Put simply, without TPA, our trading partners will not put their best offers on the table because they will have no guarantees that the agreement they sign will be the same one Congress considers.

If we want good trade agreements, we must have strong TPA procedures in place.

When Republicans took control of the Senate this year and I became the Chairman of the Senate Finance Committee, I made renewing TPA my top trade priority for this Congress and I set out to work with my colleagues on both sides of the aisle to craft the best possible bill.

We already had a good framework in place – the bill I introduced last year with the former Chairmen Baucus and Camp, which had broad support in Congress, the administration, and in the business community.  My goal has been to see if we can improve upon that product in order to broaden support for TPA.

Now, I'm sure all of you have read reports in the press about the difficulties we've been facing in trying to finalize a TPA deal in the Senate.  I won't bore you with the minutia of our ongoing discussions. Instead, I'll just reaffirm the commitment I've made publicly regarding this effort: I will not agree to any TPA bill that will make it harder for our negotiators to reach a good deal and more difficult for Congress to be able to vote an agreement up or down.

In the end, the purpose of TPA is to make sure we get the best trade deals possible.  Rest assured that I'm working to make sure that remains true with future trade agreements.

While renewing TPA remains a top trade priority in the Finance Committee, there are other priorities as well.

For example, we have to renew the African Growth and Opportunity Act – or AGOA – before the end of this summer.

As you all know, the AGOA program encourages African countries to further open their economies to international trade and investment in hopes of achieving sustainable economic development. The program facilitates increased trade with the beneficiary countries by lowering U.S. tariffs to their exports.

Trade with beneficiary countries has more than tripled since AGOA's enactment in 2000, and U.S. direct investment in Africa has grown almost six-fold in that time.   The program has contributed to the creation of more than a million jobs in Sub-Saharan Africa.

Of course, right now, only a small number of Sub-Saharan African countries are reaping the benefits of AGOA and American exporters continue to face challenges in Sub-Saharan Africa's growing markets.  We need to do more to ensure the program reaches its full potential.
I'm working with my colleagues on the Finance Committee to craft a reauthorization bill that will improve upon AGOA's success, to remove obstacles to trade in Sub-Saharan Africa and allow both that region and our job creators here at home to benefit from expanded market access.

Another trade priority on the committee is the renewal of the Generalized System of Preferences, or GSP.

The GSP allows for non-reciprocal, duty-free tariff treatment of certain products from designated developing countries.

GSP promotes trade with nations that are advancing their economic development and stimulates U.S. exports in these markets. The program's eligibility criteria encourages countries to move towards a more open economy and eliminate trade barriers.

Although the GSP program was initially created to assist with economic growth in the developing world, it now assists hundreds of our businesses here in the United States.  Across our country, manufacturers and importers benefit by receiving inputs and raw materials at a lower cost.  But, unfortunately, these U.S. businesses have faced high tariffs on these imports since the program expired in 2013. Without the GSP program in place, American companies paid over $600 million in tariffs in 2014.

Businesses in every state have been affected by the expiration of GSP and have a vested interest in the renewal of the program. These businesses in my home state of Utah and around the country are left with difficult decisions about downsizing, hiring freezes, and employee layoffs.

I sincerely hope we can renew this program as quickly as possible.

Finally, we also need to reauthorize our Customs and Border Protection – or CBP – to ensure that, as our future economic growth is increasingly linked to international trade, facilitation and trade enforcement are a top priority for the agency.

In the last Congress, former Chairman Baucus and I introduced the Trade Facilitation and Trade Enforcement Reauthorization Act of 2013.

This bill would do a number of things to facilitate trade, including: improving the CBP Trusted Trader partnership programs; enhancing the private-sector advisory system so that U.S. importers and others involved in trade have a stronger voice in formulating trade policy; and ensuring that CBP completes and deploys information technology systems such as the Automated Commercial Environment which fosters trade facilitation through the use of automation.

In addition, the bill would improve our ability to protect one of our nation's most important economic assets: intellectual property.  Among other things, we included in the bill provisions to codify the National Intellectual Property Rights Coordination Center which coordinates federal efforts to combat intellectual property rights violations.

It is past time for us to modernize our customs system.  And, I am working with my colleagues on the Finance Committee to improve upon our legislation and to move it during this Congress.

Well, as you can see, we have a lot to do in the Finance Committee.  Given the challenges we face as a country and the size of our jurisdiction, that's the way it has to be.

But, I think it's a good thing.

The Senate Finance Committee has a long tradition of effectiveness and bipartisanship.  I've always been proud to serve on the committee for just that reason.

It's going to take bipartisanship to realize these goals.  And, it's going to take no small amount of compromise.  But, I believe that, if we want to do good things for the American people, we're going to have to work together.

I look forward to continuing in these efforts.  And, I look forward to hearing from all of you as we move forward.  Working together, I know we can do great things. Thank you, once again, for having me here today and for taking the time to listen.
X
This ad will auto-close in 10 seconds