Lady LUX

As legislators return to Congress, they will face, as always, some serious bills. But this session in particular will present several bills that are of major importance to the fashion and retail communities: a possible tax on online sales, an online anti-counterfeit proposal and a bill to permanently normalize trade relations with Russia. The situation is ripe for congressional gridlock, reported WWD.

The upcoming legislative session will likely continue the charged bickering of the previous year, with neither party disposed to cede ground on the many matters that lie before Congress.

One piece of legislation – which poses serious implications for the retail industry – would crack down on digital piracy and websites that sell counterfeits goods by increasing the authority of the Justice Department.

“It’s pretty clear they need more authority to go after these [illegal Web domain] names,” Kevin Burke, president and CEO of the American Apparel & Footwear Association, said to WWD. “From our perspective, we need to have a government that has some type of enforcement of these illegal activities that are stealing from the American public and tarnishing the names of America’s greatest brands, which have taken years to grow.”

Although he admits pushing measures through Congress will be tricky, Burke remains hopeful the proposal will garner enough support from both sides to be passed.

Phillip Swagel, professor of international economic policy at the University of Maryland, believes the bill, in the end, will be revised in Congress and then “eventually move forward.”

“The idea of safeguarding U.S. intellectual property enjoys wide support,” Swagel said. “The key is to do so in a way that does not have unintended consequences for innovation in online services.”

Backed by a motely group of interests, including Neiman Marcus Group, the National Retail Federation, the Retail Industry Leaders Association and Amazon.com, a second bill of import to the fashion world purports to change the law regarding Internet sales tax. This bill would allow states to charge sales taxes from out-of-state retailers whether or not they have a physical presence in the state.

After a raging ten year-plus debate concerning collecting online sales tax, industry lobbyists maintain lawmakers may have finally devised a plan that could win enough backing to pass Congress in 2012. The bill has even attracted support from Amazon, known to have previously decried Internet sales tax efforts.

“I think there is a lot of momentum behind it right now,” said David French, senior vice president of government relations at the NRF. “Certainly, there are a lot of frustrated retailers and frustrated governors [pressing for the legislation] … I think there might not be a lot that happens in 2012, but this may be one of the few things that does happen.”

French declares reworked legislation, first presented in the Senate in November, is critical as it generates more possibilities for states and establishes a two-track procedure for states to have the authority to collect Internet sales tax.

Bill Hughes, senior vice president of government affairs at RILA, postulates the measure “does have traction.”

“I think 2011 was a pretty consequential year for the e-fairness sales tax issue,” Hughes said, stating that many states, such as California, Texas, Illinois and Tennessee, have implemented state laws to “level the playing field on sales tax collections.”

In trade-related news, Russia officially joined the World Trade Organization in December. For U.S. companies to experience the full advantages of the country’s entry in the WTO, however, Congress must declare permanent normal trade relations with the European nation.

Trade professionals forecast the House and Senate will vote on the issue early 2012; nevertheless, human rights matters in Russia and widespread intellectual property right breaches will likely make congressional approval difficult.

“Granting PNTR to Russia inevitably will involve a Congressional evaluation of Russia’s evident reverse movement on political freedoms and human rights,” said Swagel. “So it’s not clear this will move forward immediately. It could take some time before there is enough progress in Russia to make possible Congressional assent.”

Russia’s move to enter WTO will generate a number of new investment and export possibilities for U.S. companies, especially clothing labels, interested in tapping new and more undiscovered markets.

“We have seen trade-related votes during elections,” said Burke regarding the AAFA. “The question they will ask is whether the trade vote can be viewed as taking jobs away from Americans, and I don’t see anyone seeing Russia in the WTO taking jobs away from Americans. I would argue to the contrary. As a result of expanding our bilateral trade in a place like Russia, it will increase American jobs. There will be more sourcing, more U.S. fabrics and cotton sold as a result, whether it is made in China or Central America and imported into Russia. That is an ability to increase our market.”

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