NRF in Washington: Advocacy update July 2022

An update on the state of retail’s key policy priorities

Congress is back in session for the final weeks before the August recess. Lawmakers have a full slate of legislative items to wrap up, including annual government spending bills, federal nominations, a U.S.-China competition bill, possibly a renegotiated reconciliation package and much more. With election season right around the corner, we expect Congress to move quickly to finish must-pass legislative items — many of which will impact the retail industry. Here are the issues retailers are closely watching.

Inflation

The recent inflation numbers from the Bureau of Labor Statistics indicate that rising prices remain a significant concern for businesses and consumers. American families are facing higher prices for groceries, household goods, energy and more, while retailers navigate higher costs and changing consumer shopping trends.

Inflation in retail

Take a closer look at the effect inflation is having on the retail industry.

Although there is no silver bullet for inflation, NRF continues to advocate for the removal of the China 301 tariffs as an effective method of lowering inflation. Removing the tariffs would reduce the Consumer Price Index by 1.3 percentage points, providing immediate relief to families and businesses. Any action by the Biden administration on tariff relief should be broad and extensive to ensure the greatest economic impact.

Data privacy

NRF strongly advocates for protecting Americans’ personal data by enacting federal data privacy legislation establishing workable and uniform national standards for U.S. privacy law that require all businesses handling consumers’ information, without exception, to protect it and honor consumers’ privacy rights with respect to its collection, use, and transfer to other parties. A preemptive federal privacy law would ensure consumers’ data and privacy rights are protected regardless of where they live. Uniform national standards would also enable more effective and efficient compliance by retailers who currently must navigate a patchwork of inconsistent state privacy laws.

H.R. 8152, the American Data Privacy Protection Act (ADPPA), was recently reported by the House Energy and Commerce Committee. NRF and our members are working actively and constructively with the committee leaders sponsoring the ADPPA to improve the bill, but the speed at which it is moving through the legislative process makes those efforts difficult. We appreciate the latest improvements made by the leaders to safeguard customer loyalty programs and require service providers to protect consumer data they handle and fulfill consumer privacy rights when requested. However, the ADPPA in its current form still fails to effectively preempt state privacy laws and the bill’s private rights of action will expose retailers to meritless lawsuits from trial lawyers. In addition, over 1,800 retailers would be regulated as “large data holders” with overly burdensome requirements more appropriately designed to address large, big tech companies’ practices that threaten consumer privacy.

NRF and the Main Street Privacy Coalition, which NRF cofounded in 2018, will continue to work to further improve the ADPPA’s workability and achieve its primary goal of establishing a uniform, national privacy for all businesses handling consumer data.

Payments

Businesses, consumers and the U.S. economy are all paying the price for the current state of the payments system. Gratuitous swipe fees charged by the biggest credit card processing companies are adding to inflation. Increased consumer prices lead to increased swipe fees paid by businesses, which inevitably leads to more costs passed to the consumer. The only winners in this cycle are Visa and Mastercard, which control 80 percent of the payments market. To make matters worse, the two companies imposed a $1.2 billion increase in credit card swipe fees this past April.

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An injection of competition and transparency into the payments system would spur innovation, security improvements and, most importantly, economic relief for businesses and American families. NRF and the Merchants Payments Coalition, a group NRF helps lead, support legislative proposals that would give retailers and other businesses more routing options for credit card transactions. That would help lower the swipe fees retailers pay, which are typically the highest operating cost after labor.

Labor shortages

Retailers and restaurants continue to face a severe labor shortage despite efforts to attract workers with higher pay, expanded benefits and increased worktime flexibility. A May report from the Bureau of Labor Statistics showed the highest unemployed-to-job-openings ratio in recorded history. The ongoing worker shortage could result in limited operating hours at establishments and delays in order fulfillment. Ultimately, the shortage is hindering our post-pandemic recovery.

One policy solution to address the worker shortage, which NRF has long urged Congress to pursue, is the advancement of workable legal immigration policies that replenish the labor pool. NRF continues to support increasing the number of visas available for both low-skilled and high-skilled workers. Too many immigration bills in Congress include burdensome employer reporting and enforcement requirements. NRF supports immigration solutions that increase legal immigration without the requirements that make it legally perilous for employers to utilize the program. That includes providing permanent legal protections to “Dreamers,” individuals who entered the country as children without proper documentation.

China competition bill

After months of negotiations around a China competition bill, it appears Congress will move forward with the slimmed-down CHIPS-Plus bill instead of a larger joint package. This is unfortunately a missed opportunity to address a number of competition issues, including online marketplace transparency and trade policies that would provide economic relief.

The House-passed America COMPETES Act – included the INFORM Consumers Act, which would provide clarity to consumers when shopping online by requiring marketplaces to verify the identity of high-volume third-party sellers and make identification and contact information of those sellers accessible to consumers. This information would also help law enforcement combat the rising incidence of organized retail crime.

In the Senate, the U.S. Innovation and Competition Act (USICA) contained a trade title with a number of key provisions, most notably, the creation of a fair and transparent Section 301 tariff exclusion process that would help alleviate the economic pressures American businesses and consumers are facing due to inflation. In addition, the Generalized System of Preferences (GSP) program and the Miscellaneous Tariff Bill (MTB) would have been reauthorized under the trade title. The two programs provide duty-relief on thousands of goods and expands product sourcing options.

Reconciliation

The Senate has renewed discussions around a limited reconciliation package. Although what is being negotiated is considerably slimmed down from the original $2 trillion package, it is critical that an increase to the corporate tax rate is not included.

The 21 percent corporate tax rate has allowed retailers to reinvest in key areas of their business, including workforces, stores and new innovative capabilities to match shifting consumer trends. An increase to the corporate tax rate would severely impact retailers already dealing with inflation and labor shortages.

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