[Congressional Record Volume 146, Number 45 (Tuesday, April 11, 2000)]
[Senate]
[Pages S2546-S2547]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 SENATE RESOLUTION 285--EXPRESSING THE SENSE OF THE SENATE THAT THERE 
  SHOULD BE PARITY AMONG THE COUNTRIES THAT ARE PARTIES TO THE NORTH 
 AMERICAN FREE TRADE AGREEMENT WITH RESPECT TO THE PERSONAL EXEMPTION 
ALLOWANCE FOR MERCHANDISE PURCHASED ABROAD BY RETURNING RESIDENTS, AND 
                           FOR OTHER PURPOSES

  Ms. COLLINS (for herself, Mr. Moynihan, Mr. Gregg, Mr. Kyl, Mr. 
Leahy, and Mrs. Hutchison) submitted the following resolution; which 
was referred to the Committee on Finance:

                              S. Res. 285

       Whereas the personal exemption allowance is a vital 
     component of trade and tourism;
       Whereas many border communities and retailers depend on 
     customers from both sides of the border;
       Whereas an United States citizen traveling to Canada or 
     Mexico for less than 24 hours is exempt from paying duties on 
     the equivalent of $200 worth of merchandise on return to the 
     United States, and for trips over 48 hours United States 
     citizens have an exemption of up to $400 worth of 
     merchandise;
       Whereas a Canadian traveling in the United States is 
     allowed a duty-free personal exemption allowance of only $50 
     worth of merchandise for a 24-hour visit, the equivalent of 
     $200 worth of merchandise for a 48-hour visit, and the 
     equivalent of $750 worth of merchandise for a visit of over 7 
     days;
       Whereas Mexico has a 2-tiered personal exemption allowance 
     for its returning residents, set at the equivalent of $50 
     worth of merchandise for residents returning by car and the 
     equivalent of $300 worth of merchandise for residents 
     returning by plane;
       Whereas Canadian and Mexican retail businesses have an 
     unfair competitive advantage over many American businesses 
     because of the disparity between the personal exemption 
     allowances among the 3 countries;
       Whereas the State of Maine legislature passed a resolution 
     urging action on this matter;
       Whereas the disparity in personal exemption allowances 
     creates a trade barrier by making it difficult for Canadians 
     and Mexicans to shop in American-owned stores without facing 
     high additional costs;
       Whereas the United States entered into the North American 
     Free Trade Agreement with Canada and Mexico with the intent 
     of phasing out tariff barriers among the 3 countries; and
       Whereas it violates the spirit of the North American Free 
     Trade Agreement for Canada and Mexico to maintain restrictive 
     personal exemption allowance policies that are not 
     reciprocal: Now, therefore, be it
       Resolved, That it is the sense of the Senate that--
       (1) the United States Trade Representative and the 
     Secretary of the Treasury, in consultation with the Secretary 
     of Commerce, should initiate discussions with officials of 
     the Governments of Canada and Mexico to achieve parity with 
     respect to the personal exemption allowance structure; and
       (2) in the event that parity with respect to the personal 
     exemption allowance of the 3 countries is not reached within 
     1 year after the date of the adoption of this resolution,

[[Page S2547]]

     the United States Trade Representative and the Secretary of 
     the Treasury should submit recommendations to Congress on 
     whether legislative changes are necessary to lower the United 
     States personal exemption allowance to conform to the 
     allowance levels established in the other countries that are 
     parties to the North American Free Trade Agreement.

  Ms. COLLINS. Mr. President, I thank the Senator from Texas and salute 
the work she has done on behalf of retail businesses in border 
communities in Texas on the very issue I am about to discuss.
  Mr. President, I rise today to submit a resolution seeking parity 
among the countries that are parties to the North American Free-Trade 
Agreement with respect to the personal exemption allowance for 
merchandise purchased by returning residents. I am pleased to be joined 
today by Senators Moynihan, Kyl, Gregg, Hutchison, and Leahy as 
original cosponsors.
  NAFTA was intended to remove trade barriers among the countries of 
the United States, Canada, and Mexico. While some of the goals of NAFTA 
have been realized, glaring inequities remain. One such inequity that 
affects small businesses, particularly retailers, located in border 
communities is the difference in personal exemption allowances 
permitted by the U.S. versus the allowances permitted by Canada and 
Mexico.
  For Maine citizens living near the U.S./Canadian border, moving 
freely and frequently between the two countries is a way of life. 
Cross-border business and family relationships abound. The difference 
in personal exemption allowances, however, puts Maine businesses near 
the Canadian border at a considerable disadvantage in relation to their 
Canadian counterparts. Let me explain why. A United States citizen 
traveling to Canada for fewer than 24 hours is exempt from paying 
duties on $200 worth of merchandise. For trips over 48 hours, the 
exemption increases to $400 worth of merchandise. Under our laws, 
Canadian stores are able to serve both Canadian and American customers 
and, because of the exemption level, can sell Americans a significant 
amount of merchandise duty-free.
  Unfortunately, this situation only works one way. A Canadian citizen 
is allowed a duty-free personal exemption allowance of only $50 for a 
24-hour visit and $200 for a 48-hour visit. This means that a Canadian 
shopping for the day in the border communities of Fort Kent, Madawaska, 
or Calais or indeed anywhere in Maine can bring home only $50 worth of 
merchandise before a duty is imposed. This is a significant deterrent 
to Canadians who would otherwise shop in Maine communities.
  This disparity harms many Maine businesses, including Central 
Building Supplies, a small, family-owned home building materials 
business that has been in the same location in Madawaska, Maine for 35 
years. Its owner wrote to me concerned about this issue. Over the past 
couple years, his small store has lost sales in kitchen cabinets, 
windows, wood flooring, and ceramic tile largely due to the inequity in 
duty allowances and the exchange rate. Whether they are located in the 
St. John Valley or in Washington County, small businesses cite similar 
problems. The allowance disparity also hurts stores in the Aroostook 
Centre Mall and the Bangor Mall, which have traditionally attracted 
Canadian shoppers.
  This discrepancy in personal exemption allowances gives an enormous 
competitive advantage to the Canadian and Mexican retailers. It gives 
these retailers to our north and the south access to cross-border 
shoppers while limiting that same opportunity for American retailers. 
Mr. President, this is not fair trade, and this is not free trade. This 
parity should be eliminated.
  The resolution I am submitting today would express the sense of the 
Senate that the United States Trade Representative and the Secretary of 
the Treasury should initiate discussions with officials of the 
Governments of Canada and Mexico to achieve parity with respect to the 
personal exemption allowance structure. In the event that parity in the 
personal exemption is not reached within one year after the date of the 
adoption of this resolution, this resolution would require the United 
States Trade Representative and the Secretary of the Treasury to submit 
recommendations to Congress on whether legislative changes are 
necessary to achieve personal exemption parity. The steps set forth in 
this resolution would begin to resolve this inequity. I urge my 
colleagues to support its swift passage.
  I thank the Senator from Texas for not only yielding but for 
cosponsoring this resolution.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. I commend my colleague from Maine for submitting this 
resolution. It is very similar to a resolution I submitted 2 years ago. 
Unfortunately, the U.S. Trade Representative has not taken this cause 
as a serious cause. I hope with bipartisan support on Senator Collins' 
resolution the U.S. Trade Representative will see this is an issue on 
the northern border and on the southern border. It is a very serious 
issue that severely disadvantages retailers in the United States and 
also is a handicap for the consumers in both Canada and Mexico that 
want to purchase big items such as television sets, refrigerators, 
washing machines, and dryers available on the borders that they are not 
able to purchase without huge tariffs.
  We passed the North American Free Trade Agreement to do away with 
tariffs so we would have free and open trade across our borders. It is 
not working when it comes to retailing in that cross border area where 
people walk back and forth. Parity is achieved if you fly in and out of 
our three countries, but not if you go across by car.
  It is a terrible inequity. I hope Senator Collins' resolution gets 
the attention of our U.S. Trade Representative about the seriousness of 
this issue. I commend her for the resolution.

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