At WTO, U.S. pressed to explain compatibility of a border adjustable tax

“Does the U.S. delegation consider that a new border tax policy favoring domestic exports and disfavoring foreign imports is fully compatible with WTO rules?” Ukraine has asked the United States ahead of a WTO Committee on Agriculture meeting on June 7 and 8, when an answer is due.

 

WTO experts strongly believe that a border adjustable tax, as championed by House Ways & Means Chairman Kevin Brady (R-TX) and House Speaker Paul Ryan (R-WI), would violate WTO rules. Brady, on the other hand, has maintained that any legislation his committee writes will be able to withstand a challenge at the WTO.

 

Ukraine also asked the U.S. if draft proposals for the border adjustable tax cover agriculture products. Sources have said exemptions would further endanger the plan’s chances for favorable treatment at the WTO on national treatment grounds, but Brady has repeatedly written off the chances of including carveouts for specific industries.

 

Ukraine also requested information on how the measure could come into effect.

 

“What review and approval process is necessary for final adoption and implementation of a new border tax policy, specifically will Congressional approval be required as part of that process?” the country asked the U.S.

 

Overall, the chances of Brady's border adjustable tax becoming a reality are bleak at best. The proposal, in its current form, lacks support from the Treasury secretary, Democrats in both the House and Senate, a non-trivial number of Republican senators, and some rank-and-file GOP House members.

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