Year in review: Policy debates impacting retailers in 2016 and beyond

The conclusion of the 2015-2016 session of Congress was marked by an unprecedented presidential and congressional election cycle. Before and after the contentious elections, however, there was plenty of action both in Congress and in the courts on public policy issues that continue to impact the retail industry.

With a temporary injunction in place, Labor Department overtime rules that would drive up costs for retailers are now on hold.
The injunction was issued just before the new rules were set to take effect on December 1 and came in a lawsuit brought by NRF, other business groups and 21 states. NRF hopes the court will permanently block the rules, but that might not be necessary — the Trump administration is expected to oppose the rules as written and could either drop them entirely or issue a version more in line with previous changes. Another option is NRF-backed legislation that would phase in implementation rather than have the number of workers covered by overtime dramatically expanded overnight.

A separate federal judge issued a permanent injunction blocking the Labor Department’s “persuader rule.”
The regulations would have limited employers’ use of outside legal counsel or consultants in union-organizing proceedings by increasing reporting requirements. The court said that would be a violation of attorney-client privilege and noted that some law firms had already said they would no longer be able to do such work. NRF and other business groups argued that the rules would make it difficult for employers to obtain legal advice on labor issues.

House Republicans introduced a controversial tax reform proposal.
The plan offered by Ways and Means Committee Chairman Kevin Brady, R-Texas, would replace the current corporate income tax with a consumption tax that would discourage consumer spending and reduce retail sales. Worse yet, the plan’s “border adjustability” provision would eliminate retailers’ ability to deduct imports as a cost of goods sold, effectively creating a new tax on imported merchandise that would drive up prices even more. NRF supports tax reform that would “broaden the base” by removing tax provisions that benefit only a few industries and then use the revenue saved to lower rates for all businesses. But NRF will lead the fight to prevent adoption of a consumption tax or passage of legislation that would tax imports.

Trade faces new threats.
Brady’s border adjustability plan is a de facto tariff on imported goods. But it comes at the same time that Trump has also proposed tariffs on goods from China and Mexico. Trump also opposes the Trans-Pacific Partnership trade agreement and has said he wants to tear up the North American Free Trade Agreement. NRF will continue to educate Congress on how free and open trade lets retailers provide American consumers obtain the products they need at prices they can afford, and that imports also provide important parts and raw materials for U.S. manufacturers.

Bank-led efforts to repeal landmark debit card swipe fee reforms have ramped up.
In June, House Financial Services Committee Chairman Jeb Hensarling, R-Texas, released draft legislation that would repeal the Durbin Amendment as part of a larger effort to roll back the Dodd-Frank Wall Street Reform and Protection Act. NRF has asked Congress to reject any repeal of Durbin, saying its cap on debit swipe fees has saved consumers billions of dollars and that its provisions on how debit transactions are routed has increased competition. The fight is not expected to go away in 2017, as congressional Republicans and the Trump administration want to reduce banking regulation. NRF will lead the charge to remind Congress of Durbin’s value to consumers and the economy and argue that any change to Dodd-Frank should not include repeal of the Durbin Amendment.

Related to Durbin, Visa stopped improperly steering debit transactions to its own network following a request by NRF, an investigation by the Federal Trade Commission and a ruling by the Federal Reserve.
Visa had required consumers to select either “Visa Debit” or “U.S. Debit” when using debit cards in new EMV chip readers. That steered transactions toward the more-expensive Visa network rather than a dozen less-expensive networks run by banks, ultimately contributing to higher prices for consumers. The Fed said the practice violated the Durbin amendment’s guarantee that retailers could choose how to route debit transactions for processing. 

Congress stalled on patent reform legislation, but an FTC study has provided momentum for 2017.
The study found that 17 percent of companies receiving demands for payment from patent trolls are retailers. The report reinforces the need for lawmakers to put an end to “shakedown settlements” forced on retailers by patent trolls, an issue that remains an industry priority entering the new year.

What can retailers expect in 2017?

It’s become a truism in Washington that “personnel equals policy,” so the first indications about the nature of the next administration have become evident through Trump’s staffing decisions. The choice of CKE Restaurants CEO Andrew Puzder as labor secretary is recognition by Trump of the important role retail and restaurants play in the economy and in providing jobs for millions of Americans.

NRF anticipates that the Trump administration will seek action on three legislative priorities —  tax reform, regulatory reform and Affordable Care Act repeal —  very early next year. NRF’s agenda for 2017 and beyond is driven by retailers’ input, and many 2016 issues —  swipe fees, online sales tax, trade, tax reform, patent abuse and workforce policies — remain on that agenda. There are several ways for retailers to take action and get involved.

Beyond the first-100-days agenda, NRF is optimistic that bipartisan majorities can be found to pass patent litigation reform and online sales tax legislation. These issues remain challenging, but the anticipated makeup of Congress has likely shifted some votes in the favor of businesses.

Overall, the business community is hopeful that the Trump administration will restore some of the traditional lines of communication between employers and the White House and also between the White House and both parties on Capitol Hill. These relationships have been strained in recent years, but GOP control of the House, Senate and White House should improve the state of relations between the branches of government. With Trump’s style of leadership and mix of pro-business and anti-business policy positions, Washington has clearly entered a new political era.