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On MTB, the Time for Talk has Expired; Manufacturers Need Action NOW

A year ago today, House Ways and Means Chairman Dave Camp (R-MI) introduced Miscellaneous Tariff Bill (MTB) legislation, H.R. 2708, along with his colleagues, Representatives Sander Levin (D-MI), Devin Nunes (R-CA), and Charles Rangel (D-NY). Unfortunately, the House has not taken any further action on MTB legislation and neither has the Senate.

It has been 562 days since the 2010-passed MTB expired and manufacturers have been calling on Congress to extend it ever since. It is long past due time that both chambers of Congress act on critical MTB legislation. As a result of Congressional inaction on an MTB package, manufacturers in America have been facing higher taxes that substantially increase their production costs and concretely threaten their competitiveness as well as their ability to retain and create new manufacturing jobs for American workers.

While some members of Congress provide explanations as to their inaction, there is no excuse. The MTB passed in 2010 enjoyed broad bipartisan support and sailed through the House by a vote of 378-43 and the Senate by unanimous consent. If both chambers acted on this crucial jobs legislation today, we would expect a similar show of support from both sides of the aisle.

In response to inside-the-beltway concerns that MTB provisions resemble earmarks, even stalwart conservatives like Grover Norquist, President of Americans for Tax Reform, has emphasized the importance of passing the MTB, saying that MTB measures “are not spending bills; they are tax cuts, period….While earmarks favor only a special few, the tariff-cuts benefit wide swaths of American industry and help create U.S. jobs and economic growth.” Mr. Norquist aptly points out that, without Congressional action, “the United States is applying a tax that only makes it harder for American companies to compete with their foreign competitors – and harder for them to create or even maintain existing jobs and economic growth.”

Job creators like PING, Bayer, BASF, and Lasko Products cannot afford to wait any longer for this cost-cutting legislation to be enacted.  If Congress is serious about supporting manufacturing in the United States, they will move MTB legislation without further delay.

Members of Congress can call the MTB whatever they like, but for manufacturers, it is nothing less than a jobs bill and it is time that Congress act on it now to support American manufacturers and workers.

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NAM Supports Official Launch of Environmental Goods Agreement Talks in Geneva

I was pleased to attend yesterday’s official launch of the Environmental Goods Agreement (EGA) negotiations at the World Trade Organization (WTO) here in Geneva. USTR and their thirteen negotiating counterparts – Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and Chinese Taipei – kicked off the first round of talks during a press event. Manufacturers welcome these efforts to build on the progress already achieved by the APEC forum in 2011 to eliminate and reduce tariffs on green goods.

The Coalition for Green Trade, co-chaired by the NAM, National Foreign Trade Council (NFTC) and U.S. Council for International Business (USCIB), was launched this week and released a global sign-on letter by a broad range of international industry associations in support of the EGA talks.

The NAM believes that, in order to address and eliminate trade barriers, the United States must leverage all available tools by securing ambitious, high-standard commitments in ongoing trade agreement negotiations – including in the WTO EGA negotiations. On behalf of our nearly 13,000 member companies, the NAM strongly supports the negotiation of a high-standard, ambitious EGA that significantly reduces and eliminates tariffs on a wide range of green goods and technologies.

With global tariffs on environmental products as high as 35 percent in some nations, a significant reduction or elimination of these trade barriers will have a substantial, positive impact on manufacturers in the United States who develop and produce goods aimed at solving environmental challenges, enhancing their ability to decrease the cost of their products to consumers both inside and outside the United States, thereby, growing sales and creating new manufacturing jobs. A strong EGA will have other significant benefits, as well, from improving access to important green and energy efficient technologies for businesses and consumers worldwide, to improving manufacturers’ ability to enhance their sustainability.

For manufacturers such as The Coca-Cola Company, the EGA represents a significant opportunity to eliminate tariffs on the environmentally sustainable goods they procure in their global supply chain.  As a company that operates in more than 200 countries around the world, their procurement system is committed to environmental sustainability.  A global trade agreement on “green goods” will allow The Coca-Cola Company and many others to build out supply chains that bring environmentally friendly technologies to markets and consumers that might not otherwise find them cost-effective. Three priorities in these negotiations for The Coca-Cola Company are: 1) systems that help to provide clean drinking water; 2) lower emission, more efficient refrigeration units; and, 3) plant-based PET plastics for their bottles.

The NAM supports APEC’s list of 54 environmental goods eligible for duty reduction or elimination; however, we believe that list is far too limited given the breadth and significant growth in this sector. Therefore, we believe it is critical that these negotiations substantially broaden the list of goods eligible for tariff liberalization across a broad range of industries whose products improve energy efficiency, sustainability and serve other environmental remediation purposes.

Yesterday the NAM is participating in two roundtable events with stakeholders to discuss shared goals and objectives for the EGA talks and to advocate for strong outcomes that will ultimately tear down barriers to trade and help manufacturers grow their exports. We are working closely with our industry counterparts from other participating nations, as well as with U.S. and foreign government officials to build a strong foundation of support for the EGA and to start early towards building critical mass for key elements of an ambitious agreement.

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Time is Up: Manufacturers Need Congress to Act on the MTB

Today dozens of manufacturers are on Capitol Hill delivering a message to lawmakers: pass the MTB. It’s been more than 530 days since the Miscellaneous Tariff Bill expired, resulting in a huge tax increase on manufacturers both large and small.

Congress’s failure to act has resulted in an unnecessary $748 million tax on manufacturing in the United States. As a result of Congressional inaction, not only have manufacturers’ costs jumped, but their competitiveness has also been damaged, threatening their ability to retain and create new jobs.

While the MTB enjoys broad bipartisan support in both chambers of Congress, it remains hamstrung by inside-the-beltway politics. Congress’s failure to act on this jobs bill couldn’t come at a worse time, as manufacturers struggle to regain their footing in a still-struggling economy.

The MTB is exactly the type of bill Congress needs to consider without delay; it cuts costs for America’s job creators and strengthens their competitiveness in a challenging global economy. Congress’s continued failure to act has added to manufacturers’ uncertainty and inability to plan for future investment and job creation.

Manufacturers will not give up until this critical jobs bill is enacted. We will continue telling Congress to act on the MTB now!

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Manufacturers Push for Growth-Producing Outcomes in T-TIP Agreement

This week U.S. and EU negotiators return to the negotiating table in the fifth round of Transatlantic Trade and Investment Partnership (T-TIP) talks. The negotiations are being held in Arlington, VA this round, and I made a presentation to negotiators and stakeholders on manufacturers’ priorities in the T-TIP agreement.

A quick glance at the numbers might lead some to question the importance of negotiating a strong trade and investment agreement between two of the world’s economic leaders, the United States and European Union.  After all, the two economies enjoy the world’s largest commercial relationship – comprising one third of total goods and services trade and nearly half of global GDP.  In 2013, the United States exported close to $232 billion of manufactured goods to the EU, or roughly 17 percent of all U.S. goods exported to the world.

So, why do we need to strengthen this economic alliance further? The answer is simple and critical: there are barriers to trade and investment across the Atlantic that, if removed, would yield substantial economic growth for both the United States and the EU – growth that both economies desperately need to maintain, sustain, and grow jobs in a changing global market. For example, according to a Johns Hopkins study of the transatlantic economy, even a modest alignment of U.S. and EU regulatory standards and non-tariff barriers could increase GDP by an estimated $106 billion.  That’s real money linked to real jobs.  Another study by Bloomberg’s Ken Monahan estimates that tariff elimination across the Atlantic would result in more than $10.5 billion in total duty savings and would boost U.S. and EU exports each by 17 percent!

In order to ensure that the final T-TIP agreement lives up to these expectations, it is essential that the T-TIP is a comprehensive, high-standard agreement aimed at further opening the transatlantic market to increased trade in goods and services, promotes greater transparency in rulemaking, and removes unnecessary regulatory obstacles to trade. Ultimately, a T-TIP agreement should eliminate all tariffs upon implementation, address regulatory barriers, strengthen investment ties, and provide strong protection and enforcement of intellectual property rights and set a new standard for the global economy.  A successful, growth-producing T-TIP will be one that reduces the cost of doing business across the Atlantic by eliminating both tariff and non-tariff barriers to trade and investment.  Such an agreement will put manufacturers in the United States in a stronger competitive position not just in terms of trade with the EU but in the global economy as a whole.

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Growing Manufacturers’ Opportunities in the Asia Pacific: Opening New Markets

As President Obama heads from South Korea to Malaysia to meet with Prime Minister Najib Razak, manufacturers are focused on promoting the big new growth opportunities in Malaysia that would result from a high-standard, ambitious, market-opening TPP. With a GDP of $525 billion and a population of more than 30 million, Malaysia represents a significant new market opportunity for U.S. exports, sales and commercial partnerships if a strong TPP is concluded.

Along with Japan and Vietnam, Malaysia represents one of the biggest new markets that a successful TPP could cover. Already, it is the United States’ 24th largest export market for manufactured goods. The U.S.-Malaysia partnership can grow even stronger through a successful TPP that would address key impediments to a stronger U.S.-Malaysia commercial relationship. For example, Malaysia continues to maintain significant tariff and non-tariff barriers, including import licensing limits on certain manufactured and other products, export taxes on raw materials and export subsidies on certain manufactured goods exports, stringent limits on foreign participation in investment and government procurement and transparency and intellectual property rules that need improvement. These barriers not only impede U.S. sales into Malaysia, they undermine Malaysia’s own efforts to attract increased foreign investment and increase economic growth.

Overall, with TPP countries representing $28 trillion in GDP and almost 800 million consumers that account for about 40 percent of global trade, the TPP’s potential to drive new growth and opportunity for manufacturers in the United States is substantially larger than any previous trade agreement that the United States has negotiated. While eliminating tariffs immediately is critical, the final TPP agreement must also eliminate government distortions that limit market access, from non-tariff barriers and the lack of transparency to activities of state-owned enterprises (SOEs) that undermine fair competition. The TPP must concretely resolve longstanding market access issues that have impeded U.S. exporters’ access into TPP markets, especially in the Japanese, Malaysian and Vietnamese markets, where the United States does not currently have trade agreements.

While much of the focus is on market access during the President’s Asia trip, a number of critical issues in other TPP chapters remain unresolved, including strong protections for intellectual property rights and investment, provisions dealing with unfair competition created by SOEs, and movement of cross-border data. Ensuring the TPP is consistent with longstanding global trade rules and norms is just as important. In a dangerous and misguided move, the United States has proposed to exclude a single product (tobacco) from rules preventing parties from imposing arbitrary or discriminatory trade barriers. As the head of an independent Malaysian think tank wrote recently in The Straits Times, the U.S. proposal “would reset the international trading system back to the 19th century” and could open the door for similar exclusions for other products.

Manufacturers urge President Obama to continue pushing for an ambitious, market-opening TPP that will boost manufacturers’ competitiveness and ability to grow

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Growing Manufacturers’ Opportunities in the Asia Pacific: U.S. Push for Ambition and Market Access in TPP Must Continue

With President Obama’s Asia visit kicking off in Japan today, manufacturers are hopeful that the President and Japanese Prime Minister Shinzo Abe will make meaningful progress towards achieving ambitious and market-opening outcomes in the Trans-Pacific Partnership (TPP) negotiations, and that work will continue during the President’s visit to Malaysia to meet Prime Minister Najib Razak later this week. Manufacturers have long supported the negotiation of the TPP that TPP Leaders described in November 2011 that “will be a model for ambition for other free trade agreements in the future, forging close linkages among our economies, enhancing our competitiveness, benefitting our consumers and supporting the creation and retention of jobs, higher living standards, and the reduction of poverty in our countries.” Already, comprehensive, high-standard U.S. free trade agreements help propel nearly 50 percent of manufacturing goods exports around the world.  A TPP done right will boost the United States’ already record manufacturing exports, as well as other sales and other commercial opportunities, by linking America’s highly productive manufacturers to new consumers around the world.

As recognized by each of the TPP countries then and as manufacturers have long advocated, such an agreement must:

  • provide comprehensive market access that concretely levels the playing field;
  • ensure high standards on issues such as intellectual property, transparency and investment;
  • address new trade challenges such as cross-border data flows and longstanding issues such as competition from state-supported enterprises; and
  • incorporate strong enforcement mechanisms so that the agreement is more than words on a piece of paper.

When Japan joined the TPP talks in 2013, it committed to negotiate on the same ambitious basis that the existing TPP negotiating countries had already agreed. U.S. Trade Representative Ambassador Mike Froman said today in Japan, the talks are at a “crossroads” and now is the time for Japan “to choose a bold path.”  Manufacturers agree.  Similarly bold choices must also continue in the capitals of all TPP partners to achieve an ambitious and fully market-opening outcome. Manufacturers urge Japan, Malaysia and all other TPP countries to continue to focus on that ambition this week and in the weeks to come so that the momentum of the TPP talks can be regained and that the TPP  countries’ commitment to an “ambitious, high standard and comprehensive”  agreement that was renewed in December 2013 can be achieved.

A successful TPP agreement that truly opens markets and improves the competitiveness of manufacturers in the United States represents an unprecedented opportunity to boost commercial ties throughout the Pacific Rim and beyond. The NAM continues to urge the immediate and comprehensive elimination of tariffs and non-tariff barriers, strong protections consistent with U.S. practice on intellectual property and investment for all products, new provisions to permit the movement of data cross border and new disciplines to ensure fair commercial competition with state-owned enterprises. These provisions all must be backed up by state-of-the-art enforcement provisions from state-to-state to investor-state mechanisms. Ultimately a successful, growth-producing TPP agreement will be one that ensure that manufacturers in the United States will be put on a fair and competitive footing in each of the TPP markets.

President Obama, Prime Minister Abe and Prime Minister Najib Razak have a critical opportunity this week to inject new vitality into the TPP talks. Manufacturers hope they will seize this occasion to move the negotiations closer to a pro-growth and pro-competitive conclusion.

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Growing Manufacturers’ Opportunities in the Asia Pacific: Seizing Huge Growth Potential

The President’s visit to Asia this week should highlight the value of strengthening trade and investment ties and identifying areas for increased commerce and cooperation throughout the Asia-Pacific region. We believe that increased American economic and commercial engagement in the Asia-Pacific is critical unlocking numerous growth opportunities for manufacturers in the United States.  The Asia-Pacific represents a huge market with an even greater growth potential that we hope the President’s trip can help catalyze.

Already, the Asia-Pacific region is a strong and growing purchaser of U.S. manufactured goods. Three of the top ten export destinations for U.S. manufactured goods are in Asia (China, Japan and South Korea). Total U.S. manufactured goods exports to Asia grew from $213.25 billion in 2009 to more than $331.56 billion in 2013. More specifically, transportation equipment exports from the United States to Asia nearly doubled from $30.21 billion in 2009 to just over $60 billion last year. Computer and electronic product exports also grew from roughly $55.61 billion in 2009 to $67.08 billion in 2013. Chemical exports to Asia also increased by $13.4 billion over the last five years.

Yet the potential for greater growth for manufacturers in the United States is substantial The Asia-Pacific region boasts nearly 60 percent of global GDP and is the fastest growing region in the global economy. The Asia-Pacific also makes up roughly half of the world’s population, making it a market ripe for more U.S. export growth.

To boost manufacturers’ export and sales opportunities in the region, more work is needed to eliminate tariff and non-tariff barriers, expand commercial relationships and ensure our trading partners play by the rules of the international trading system. The United States is seeking to negotiate a comprehensive, high standard and market-opening Trans-Pacific Partnership (TPP) agreement that would include our Asia-Pacific partners (Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam) along with several Western Hemisphere partners (Canada, Chile, Mexico and Peru). The United States is also negotiating a bilateral investment treaty (BIT) with China, and efforts are underway to expand relationships with the Association of Southeast Asian Nations (ASEAN). More broadly, the United States has cooperated with 20 of our Asia-Pacific trading partners through the Asia Pacific Economic Cooperation (APEC) forum to expand economic ties and develop stronger frameworks in numerous areas, from trade in environmental goods and transparency to creating a stronger enabling environment for infrastructure investment. At the same time, though, there are over 130 other trade agreements in the Asia-Pacific that exclude the United States and put manufacturers at a substantial disadvantage in other Asian markets.

To move successful trade negotiations forward and eliminate the competitive disadvantage that manufacturers in the United States face in many Asian markets, enactment of Trade Promotion Authority (TPA) is critical. Both the President and Congress need to work closely together to move a strong TPA bill. In January, the Bipartisan Congressional Trade Priorities Act was introduced to facilitate the negotiation and implementation of comprehensive and ambitious trade agreements and require intensive consultations throughout the negotiating process. Despite repeated calls by manufacturers and the broader business community, no further action has been taken on this or any other TPA legislation. To grow substantial new commercial opportunities in the Asia-Pacific, action on TPA is critical.

As Commerce Secretary Pritzker so aptly stated in a speech last week at Johns Hopkins School of Advanced International Studies: “We can act now to advance American values and interests in setting the rules for trade in a region representing 40 percent of the world’s economy, or we can let others with different values and interests take the lead.” Manufacturers agree that the time is now for the United States to lead in this region, where significant growth opportunities are awaiting U.S. exporters.

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KORUS Agreement Has Shown Strong Results on Two-Year Anniversary

March 15th marked the two-year anniversary of the Korea-U.S. Free Trade Agreement’s (KORUS FTA) entry into force and the facts are clear. Despite what some trade critics say, exports of U.S. manufactured goods to Korea have increased.  Thanks to KORUS, more than 95 percent of U.S. industrial and consumer goods are entering the Korean market duty-free, and as a result, exports of U.S. manufactured goods to Korea have gone up 3.1 percent or $1 billion since the agreement was implemented. Specifically, exports of electrical equipment, appliances and other components jumped 22.5 percent and exports of pharmaceuticals experienced a huge increase of 52 percent! Moreover, U.S. manufactured goods saw an increase in exports to Korea of 9.2% from January 2013 to January 2014, while manufactured goods exports from Korea to the U.S. only increased 3.1 percent.

The U.S. Trade Representative’s (USTR) Office released a fact sheet on the enhanced opportunities the KORUS agreement has created over the last two years. “In its second year, this landmark agreement continues to provide tangible benefits for American businesses, workers, and farmers exporting to our sixth-largest trading partner,” USTR stated.  As USTR notes, the overall U.S.-Korea trade balance has been negatively impacted by decreases in corn and fossil fuel exports due to the U.S. drought in 2012, but those events are unrelated to the agreement’s implementation. USTR also noted slowed economic growth in Korea over the past two years was associated with decreased demand for all of its imports – not just those from the United States. In addition, the European Union’s free trade agreement with Korea entered into in July 2011, so it is likely that manufacturers in the EU had the advantage of moving their products into Korea’s market first.  As the global economy continues to improve, we hope to see even stronger U.S. exports to Korea.

At the same time, the NAM is working closely with our members, USTR and the Korean government to resolve some key issues with KORUS implementation including customs issues for certain U.S. exports to Korea and an array of non-tariff barriers, especially in the auto sector, which greatly impede manufacturers’ access to the Korean market. Last week, Korean ambassador to the United States Ahn Ho-young expressed a commitment to addressing any outstanding issues with implementation of the KORUS agreement. It is critical that Korea remain focused on resolving these challenges and that the Korean government continue working with the U.S. government to respond to market access concerns from manufacturers in the United States – especially if it is serious about seeking accession to the Trans-Pacific Partnership (TPP) agreement.

Additionally, more work needs to be done to ensure that manufacturers in the United States are aware of the new export opportunities in Korea resulting from the KORUS FTA. Manufacturers can visit FTA Tariff Tool to determine tariff levels for their exports to Korea.

While it’s still too early to determine the full impact of KORUS on U.S. manufactured goods exports, a closer look at the numbers reveal that they are headed in the right direction, and manufacturers believe that continued cooperation with Korea will only strengthen our economic ties and expand the benefits of the KORUS agreement.

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NAM Applauds Critical Step Taken by the Pacific Alliance

The NAM welcomes this week’s announcement by the Pacific Alliance – Chile, Colombia, Mexico and Peru – that they have signed an agreement to eliminate tariffs on 92 percent of goods. The other 8 percent of tariff eliminations will be phased in over time. The Alliance of these Latin American nations was kicked off in April 2011 and formalized in June 2012. Together, these four countries comprise 210 million people – more than a third of Latin America’s population and more than Brazil’s. Combined they boast an economic output of 35 percent of Latin America and the Caribbean’s GDP and roughly 50 percent of Latin America’s trade flows. The Alliance’s objectives include economic integration and a gradual move towards the free circulation of goods, services, capital and persons. But perhaps one of the Alliance’s primary goals is to deepen the region’s trade ties with Asia, whose markets are rapidly expanding.

This critical first step by the Alliance is substantial and much needed in a region where trade-liberalization has been under attack in recent years. For example, Argentina has broken a number of its core WTO commitments and the United States, Canada and others have a pending WTO case against them. There are also ongoing concerns about Brazil’s use of localization requirements to effectively close its market to U.S. and other exports. The four members of the Pacific Alliance, on the other hand, have long supported the ideals of free trade and market-opening agreements.

The Pacific Alliance is being characterized as a living agreement and Costa Rica has indicated its intention to sign on as a full member. A prerequisite of acceding to the Alliance is having free trade agreements in force with the other members. While Costa Rica has agreements with all four, its deal with Colombia has not yet been implemented. Notably, the United States has observer status, along with 22 other nations, including Germany, Great Britain, and Italy which will not be allowed to join as full members as they fail to meet the second requirement, which is having a coastline on the Pacific.

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Congress Needs to Act NOW on the MTB

Tomorrow marks an unfortunate anniversary for manufacturers in America.  400 days will have passed without Congressional action on the Miscellaneous Tariff Bill (MTB).

For three decades, Congress has supported manufacturing in America by suspending import taxes on necessary manufacturing inputs and raw materials that are not available in the United States and must be imported from other countries. The last MTB enacted into law expired on December 31, 2012, which has resulted in significantly higher costs and in some cases, reduced hours for workers and even layoffs.

The MTB strengthens manufacturers’ global competitiveness by cutting their production costs. Doing so supports thousands of domestic manufacturing jobs. In fact, the MTB enacted in 2010 was estimated to support 90,000 jobs, increase U.S. production by $4.6 billion and expand U.S. GDP by $3.5 billion. Moreover, failure to pass a new MTB will result in a staggering $748 million tax hike on manufacturing over the next three years. This translates into a whopping $1.857 billion in economic losses. Manufacturers across a broad range of industries are already paying this $748 million tax and are calling on Congress to act as swiftly as possible on this commonsense, bipartisan and jobs-supporting legislation.

Numerous manufacturers, like Glen Raven in Burlington, North Carolina, rely on the MTB in order to make their products here in the United States. The President and CEO of Glen Raven, Leib Ohmig, recently shared with the NAM the importance of the MTB to his business: “Glen Raven is one of the world’s leading manufacturers of performance fabrics used in the furniture, automotive, safety, marine and sun shade industries. Since the raw materials required to manufacture these fabrics are no longer available in the United States, Glen Raven relies on the MTB to ensure these inputs can be sourced competitively. The expiration of the MTB has resulted in a significant tax on American manufacturing and made companies less competitive in the global marketplace. Glen Raven urges Congress to promptly pass the MTB as a means to spur much needed job creation and economic growth in the United States.”

DuPont also relies heavily on the MTB for their crop protection business. James Hay, Business Director for DuPont Crop Protection, North America said, “Duty suspensions increase the competitiveness of our U.S. manufacturing base by lowering our input costs and providing us the tools to sustain U.S. production. Lower manufacturing costs provide opportunities for business growth to support our company’s mission of sustainable growth.”

For companies like Glen Raven, DuPont, Lasko Products, BASF, Bayer CropScience and many others, the MTB is critical to keeping their costs low, enhancing their competitiveness in the global market, and most importantly, to sustaining and growing manufacturing jobs here in the United States.

Congressional action on this critical jobs bill is long overdue.  Tell Congress to ACT NOW!

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