SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Border Tax Equity 
Act of 2009’’. 
SEC. 2. FINDINGS AND DECLARATIONS OF POLICY. 
(a) FINDINGS.—Congress makes the following find-
ings: 
(1) The United States largely relies on a direct 
tax system, whereas 150 countries currently employ 
one particular form of indirect tax known as value- 
added taxes (VAT) as well as direct taxes. The 
worldwide VAT tax average in 2005 was 15.7 per-
cent, and in countries of the European Union it 
ranges between 15 and 25 percent. 
(2) Under the rules of the World Trade Organi-
zation (WTO), direct taxes, such as corporate in-
come taxes, if rebated or refunded upon the export 
of goods are viewed as export subsidies and prohib-
ited on most goods and are at least potentially ac-
tionable on all goods. However, indirect taxes, such 
as sales taxes and VAT, may be rebated or refunded 
upon the export of goods and such rebate or refund 
is not defined as constituting a subsidy and hence is 
not actionable under WTO rules. 
(3) At present, there are no WTO rules on sub-
sidies as applied to trade in services. However, a 
number of countries currently impose taxes on the 
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import of services and exempt or rebate or refund 
taxes upon the export of services, to the disadvan-
tage of United States services providers. 
(4) The disparate treatment of border taxes 
detrimentally affects United States agricultural pro-
ducers, manufacturers, and service providers in 
that— 
(A) refunds of indirect taxes effectively act 
as export subsidies to foreign exporters; and 
(B) United States exporters are subject to 
double taxation, by paying direct taxes on do-
mestic production in the United States and hav-
ing their exported product or service face a bor-
der tax in the importing country consisting of 
indirect taxes. 
(5) Foreign governments paid their producers 
an estimated $369 billion of VAT rebates on goods 
exported to the United States. Foreign governments 
collected from United States producers an estimated 
$122.4 billion of VAT equivalent taxes on their im-
ported goods. The combined goods and services dis-
advantage in 2007 was $474 billion. 
(6) For more than 40 years, United States 
businesses have complained of border tax inequity 
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and, since 1968, prior United States Administra-
tions and Congresses have sought to resolve it. 
(7) Congress has repeatedly recognized the 
prejudicial effect of the disparate treatment of bor-
der taxes with respect to goods and has directed the 
United States to seek a negotiated solution: 
(A) In passing the Trade Act of 1974 (19 
U.S.C. 2101 et seq.), Congress sought ‘‘revision 
of GATT articles with respect to the treatment 
of border adjustments for international taxes to 
redress the disadvantage to countries relying 
primarily on direct rather than indirect taxes 
for revenue needs.’’. 
(B) In section 1101(b)(16) of the Omnibus 
Trade and Competitiveness Act of 1988 (19 
U.S.C. 2901(b)(16)) and section 2102(b)(15) of 
Bipartisan Trade Promotion Authority Act of 
2002 (19 U.S.C. 3802(b)(15)), Congress de-
clared that a principal trade negotiating objec-
tive of the United States is to obtain a revision 
of WTO rules with respect to the treatment of 
border taxes in order to redress the disadvan-
tage to countries relying primarily on direct 
taxes for revenue rather than indirect taxes. 
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(8) The disparate treatment of border taxes is 
arbitrary, inequitable, causes economic distortions 
based only on the type of tax system used by a coun-
try, and is a primary obstacle to more balanced 
trade relations between the United States and its 
major trading partners. 
(b) DECLARATIONS OF POLICY.—Congress declares 
the following: 
(1) It is critically necessary that the issue of 
border taxes be addressed and resolved in WTO ne-
gotiations, whether in the ongoing Doha Develop-
ment Round of WTO negotiations or subsequent 
WTO negotiations. 
(2) If such WTO negotiations fail to achieve the 
United States trade negotiating objective of revising 
WTO rules with respect to the treatment of border 
taxes in order to redress the disadvantage to coun-
tries relying primarily on direct taxes for revenue 
rather than indirect taxes, then effective action 
through legislation is warranted given the massive 
and inequitable distortions to trade that United 
States agricultural producers, manufacturers, and 
service providers face as a result of border taxes. 
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SEC. 3. REPORT ON RESULTS OF WTO NEGOTIATIONS TO 
REVISE WTO RULES REGARDING BORDER 
TAXES. 
(a) REPORT REQUIRED.—Not later than 60 days 
after the completion of WTO negotiations, or by January 
1, 2011, whichever occurs first, the United States Trade 
Representative shall submit to Congress a report certi-
fying whether or not each of the United States trade nego-
tiating objectives regarding border tax treatment, as speci-
fied in subsection (b), has been met as a result of such 
negotiations. 
(b) U.S. TRADE NEGOTIATING OBJECTIVES RE-
GARDING BORDER TAX TREATMENT SPECIFIED.—The 
United States trade negotiating objectives regarding bor-
der tax treatment specified in this subsection are the fol-
lowing: 
(1) With respect to trade in goods, the revision 
of WTO rules with respect to the treatment of bor-
der adjustments for internal taxes to redress the dis-
advantage to countries relying primarily on direct 
taxes for revenue rather than indirect taxes, as pro-
vided for in section 2102(b)(15) of Bipartisan Trade 
Promotion Authority Act of 2002 (19 U.S.C. 
3802(b)(15)). 
(2) With respect to trade in services— 
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(A) the elimination of the disadvantage in 
trade in services that exists for countries rely-
ing primarily on direct taxes that are not ad-
justed at the border rather than indirect taxes 
that are adjusted at the border; and 
(B) the revision of WTO rules regarding 
trade in services to ensure that such rules do 
not result in disparate treatment of border ad-
justments for internal taxes based on the direct 
or indirect nature of such taxes. 
(c) DEFINITION.—In this section, the terms ‘‘WTO 
negotiations’’ and ‘‘negotiations’’ mean the ongoing Doha 
Development Round of World Trade Organization negotia-
tions or subsequent WTO negotiations that may result in 
revisions to WTO rules to meet the United States trade 
negotiating objectives regarding border tax treatment, as 
specified in subsection (b). 
SEC. 4. TAX ON IMPORTS FROM FOREIGN COUNTRIES WITH 
AN INDIRECT TAX SYSTEM. 
Subtitle D of the Internal Revenue Code (26 U.S.C. 
4461 et seq.) is amended by adding at the end the fol-
lowing new subchapter G: 
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‘‘(d) PERIOD OF APPLICABILITY.—The tax imposed 
by subsection (a) shall apply during the period beginning 
as prescribed in section 6(a)(1) of the Border Tax Equity 
Act of 2009 and ending on the date on which the United 
States Trade Representative certifies to Congress that the 
United States trade negotiating goals of equitable border 
tax treatment have been met. 
‘‘(e) SPECIAL ACCOUNT.—The tax on imports under 
subsection (a) shall be collected by the Bureau of Customs 
and Border Protection and deposited into a special ac-
count. This special account shall be the source of pay-
ments to qualified United States exporters under section 
314(b) of the Tariff Act of 1930. 
‘‘(f) DEFINITIONS.—For purposes of this sub-
chapter— 
‘‘(1) SECRETARY.—The term ‘Secretary’ means 
the Secretary of Homeland Security. 
‘‘(2) IMPORTER.—The term ‘importer’ means— 
‘‘(A) as such term relates to imports of 
goods, one of the parties eligible to file the re-
quired customs entry documentation or infor-
mation pursuant to section 484(a)(2)(B) of the 
Tariff Act of 1930 (19 U.S.C. 1484(a)(2)(B)), 
and 
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‘‘(B) as such term relates to imports of 
services, the importer of the service as defined 
by the Secretary in rules and regulations pro-
mulgated under this subchapter. 
‘‘(3) TIME
OF
ENTRY.—The term ‘time of 
entry’ means— 
‘‘(A) as relates to imports of goods, the 
time generally specified in section 484(a)(2)(A) 
of the Tariff Act of 1930 (19 U.S.C. 
1484(a)(2)(A)) and prescribed in regulations 
(19 C.F.R. 141.68), and 
‘‘(B) as relates to imports of services, the 
time specified by the Secretary in rules and reg-
ulations promulgated under this subchapter. 
‘‘(4) INDIRECT TAX SYSTEM AND GRANTS RE-
BATES OF INDIRECT TAXES.—A foreign country em-
ploys an indirect tax system and grants rebates of 
indirect taxes paid on goods or services exported 
from that country if such country imposes indirect 
taxes (including sales taxes and value-added taxes 
(VAT)) on goods or services, and permits a rebate 
of such indirect taxes paid on goods or services ex-
ported from such country. 
‘‘(5) VALUE-ADDED
TAXES
(VAT).—The term 
‘value-added taxes’ means an indirect general con-
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sumption tax that is levied by the exporting country 
on the value added to goods and services in that 
country at multiple stages of the production and 
supply chain. This type of tax is also referred to as 
a goods and services tax (GST). 
‘‘(g) REGULATIONS.—The Secretary may prescribe 
such rules and regulations as are necessary to carry out 
this section.’’. 
SEC. 5. PAYMENTS TO UNITED STATES EXPORTERS TO 
NEUTRALIZE DISCRIMINATORY EFFECT OF 
BORDER TAXES IMPOSED BY IMPORTING 
COUNTRIES. 
Part II of title III of the Tariff Act of 1930 (19 
U.S.C. 1305 et seq.) is amended by inserting after section 
313 the following: 
‘‘SEC. 314. PAYMENTS TO UNITED STATES EXPORTERS TO 
NEUTRALIZE DISCRIMINATORY EFFECT OF 
BORDER TAXES IMPOSED BY IMPORTING 
COUNTRIES. 
‘‘(a) PAYMENTS REQUIRED.— 
‘‘(1) IN GENERAL.—Upon exportation of goods 
or services from the United States to any foreign 
country that employs an indirect tax system and im-
poses or applies indirect taxes on imports of goods 
or services at the border, the Secretary of Homeland 
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Security, acting through the Commissioner respon-
sible for the Bureau of Customs and Border Protec-
tion, shall, if requested by the exporter, pay to the 
exporter an amount equal to the amount of indirect 
taxes that the importing foreign country imposes or 
applies at the border to such goods or services, 
minus any United States taxes paid on such goods 
or services that have been rebated or refunded upon 
exportation. 
‘‘(2) INFORMATION TO BE INCLUDED IN RE-
QUEST.—An exporter who requests a payment under 
paragraph (1) shall, in such request, identify the in-
direct taxes imposed by the importing foreign coun-
try and present proof of the payment of such taxes 
to the importing foreign country’s authorities within 
a reasonable period of time after exportation of the 
goods or services. 
‘‘(b) SOURCE OF PAYMENTS.— 
‘‘(1) SPECIAL
ACCOUNT.—The payments re-
quired under subsection (a) shall be paid from 
amounts contained in the special account authorized 
under section 4491(e) of the Internal Revenue Code 
of 1986. 
‘‘(2) 
APPROPRIATION
OF
ADDITIONAL 
AMOUNTS.—To the extent that, at any time, 
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amounts contained in the special account described 
in paragraph (1) are inadequate to make payments 
required under subsection (a), there are hereby ap-
propriated, out of any money in the Treasury of the 
United States not otherwise appropriated, such sums 
as may be necessary for such purpose. 
‘‘(c) PERIOD OF APPLICABILITY.—The requirement 
to make payments under subsection (a) shall apply during 
the period beginning as prescribed in subsection (a)(2) or 
(b) of section 6 of the Border Tax Equity Act of 2009, 
as the case may be, and ending on the date on which the 
United States Trade Representative certifies to Congress 
that each of the United States trade negotiating goals re-
garding border tax treatment have been met. 
‘‘(d) REGULATIONS.—The Secretary of Homeland 
Security is authorized to prescribe such rules and regula-
tions as are necessary to carry out the provisions of this 
section. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) INDIRECT TAX SYSTEM AND IMPOSES OR 
APPLIES INDIRECT TAXES ON IMPORTS OF GOODS OR 
SERVICES AT THE BORDER.—A foreign country em-
ploys an indirect tax system and imposes or applies 
indirect taxes on imports of goods or services at the 
border if such country imposes indirect taxes (in-
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