US textile manufacturers have thrown their support behind a bipartisan group of members of the House of Representatives who have introduced legislation to level the tax playing field for US producers against foreign competition.

The Border Tax Equity Act (HR 2600) introduced yesterday (7 June) aims to negate the disadvantage to US manufacturers caused by foreign border-adjusted taxes, including value-added (VAT) taxes. 

Overseas countries, but not the US, impose national VAT taxes on imports and generally rebate them on exports. 

The US levies no similar taxes at the border on imports. Foreign manufacturers selling in the US, pay neither US income/payroll taxes nor their own consumption/VAT taxes as the VAT is rebated by their government on exports.

HR 2600 aims to negotiate a remedy for the VAT inequity on goods and services within the World Trade Organization (WTO) by 1 January 2009.

Otherwise it threatens to impose an offsetting charge on imports at the US border or issue rebates equal to the amount of VAT taxes paid by US exporters.