Manufacturers are urging Congress to move forward as soon as possible with the bipartisan Miscellaneous Tariff Bill (MTB) to support jobs and enhance our competitiveness. Failure to pass an MTB will result in a tax increase on manufacturers in the United States.

The legislation gives manufacturers in the U.S. relief on duties for imported inputs necessary to manufacture products but are not available domestically. The MTB process is extremely transparent. All of the benefits companies receive are disclosed throughout the process.

On Friday a group of 65 House freshman members sent a letter to Speaker Boehner voicing their support for the MTB.  

The MTB has been an important tool for making American manufacturing more competitive for 30 years by suspending import taxes on necessary manufacturing inputs not available in this country. Given the fragile state of our economic recovery, the MTB remains critical to expanding manufacturing employment. In other words, it’s a jobs bill. The MTB has been estimated to support 90,000 American jobs, increase U.S. production by $4.6 billion and expand U.S. GDP by $3.5 billion.

The fiscally conservative members who signed onto the letter state how the MTB is cleary not an earmark.

Over the past two years, there has been paralysis on moving forward on the MTB over whether or not MTB provisions are prohibited as “limited tariff benefits” under House rules. As fiscal conservatives, we appreciate these concerns. However, we believe it is an error to view duty suspension bills in that manner. Unlike spending earmarks, as they are sometimes erroneously characterized, a duty suspension included in the MTB is available to any U.S. manufacturer – including small businesses – importing the covered product because it is not available domestically. Downstream producers, distribution service providers, and consumers benefit as well from the tax reductions.

Manufacturers have been leading our economic recovery and look to continue to lead the way when it comes to job creation and economic growth. The MTB can help make manufacturers more competitive and support jobs.

The Defense Department released a report today assessing the risk of transferring satellites and space-related items from the U.S. Munitions List (USML).  The so-called “1248 Report” was requested from the Secretaries of State and Defense in Section 1248 of the National Defense Authorization Act for FY 2010. The White House also issued a Fact Sheet on the report.

An excerpt:

“For the sake of national and economic security, the Departments recommend that authority to determine the appropriate export control status of satellites and space-related items be returned to the President. Specifically: The President should be authorized to determine the export control jurisdiction status of satellites and related items; and The Department of Defense should be authorized to determine the need to apply special export controls to U.S. companies providing technical services in support of foreign satellite or launch vehicle development and associated launch operations, and to be reimbursed as appropriate.”

Appendix 1 of the report includes a draft proposal of USML Category XV (Satellite and Related Items), and Appendix 2 includes a draft proposal for CCL ECCN 9X515 (Spacecraft and Related Commodities). These two proposals will need legislation to be enacted.

This issue was examined by the House Foreign Affairs Committee in February, with testimony by the Aerospace Industries Association and Satellite Industry Association. Earlier this year, AIA released a study on satellite export policy that outlined the case for modernized export controls on satellites and related components.

Rep. Howard Berman and Rep. Don Manzullo also introduced legislation (H.R. 3288) last fall that would allow the president to shift satellites from the USML to the CCL. (continue reading…)

The February trade data released today by the Commerce Department showed manufactured goods exports significantly outperformed other sectors. 

Overall U.S. exports of goods and services rose 9.3 percent over February 2011, considerably slower than the 15 percent annual rate needed to achieve the goal of doubling exports in five years. Manufactured goods exports, however, were up 14.9 percent, on path to meet the goal.  Services exports were up 10 percent.  The drag on exports came from farm products of which February exports were 4 percent lower than in February 2011.

Manufactured goods exports dominated the year-over-year gain in exports, accounting for $12 billion of the total $16 billion gain in exports of goods and services.

Imports of manufactured goods in February rose less than exports, up 9.6 percent from the year-earlier month.  As a consequence, the manufactured goods trade deficit improved marginally, from $32.8 billion in February 2011 to $31.5 billion this February.

Considering the year-to-date figures, i.e., January and February compared to the same two months of last year, manufactured goods exports are below the 15 percent path to double in five years – being up 11.4 percent.  However, if the February figures are not an anomaly, this augurs well for continued growth.

Exports are very important to manufacturers, as the domestic market is growing modestly and faster growth requires greater sales to faster-growing export markets. 

While the dollar is at a competitive rate, a concern is the economic slowdown in some major markets for U.S. exports – particularly the European Union.  January exports to that market were up only 4 percent from the prior year.  However, February exports were up 13 percent, giving some cheer.

Both exports and imports with China grew slowly – each up only about 3 percent over last February.  But because imports from China are so much larger than exports, exports have to grow at a faster percent in order to bring the deficit down.  That was not the case in February, and the February deficit with China was $9 billion larger than a year ago, at a seasonally-adjusted annual rate.

Frank Vargo is vice president for international economic affairs, National Association of Manufacturers.

Yesterday a post on National Review’s The Corner blog contains some clear inaccuracies regarding the Export-Import Bank and what it means to manufacturers, both large and small.

This post would have you believe that the Bank only helps large companies when in fact the Bank is doing more and more every year for small manufacturers. In fact, more than 85 percent of the Bank’s transactions in 2011 were in direct support of small businesses. Thousands of small and medium-sized manufacturer rely heavily on the Ex-Im Bank to be able to compete globally. Without the Bank many of these companies will lose out on deals to overseas competitors, costing jobs here at home.

The Corner post also misses a key fact that Ex-Im Bank actually makes money for the taxpayers. It’s difficult to make the argument that Ex-Im is a costly program when over the past five years the Bank has returned more than $3.4 billion to the Treasury. The numbers show the facts loud and clear. And if the Bank isn’t reauthorized it would actually increase the deficit, and an offset would be needed to fill the void left from the money Ex-Im returns to Treasury. 

The bottom line is our competitors overseas are outpacing us when it comes to export financing. Our competitiveness, jobs and ability to grow exports will be hurt if the Bank is not reauthorized. The Bank is essential to the engine that drives our economy, small businesses. Just click here to read first-hand testimonials about what the Bank means to these businesses.

In a year when many are concerned about whether trade legislation can move, the NAM commends the House and Senate trade leadership for initiating the Miscellaneous Tariff Bill (MTB) process last Friday. The MTB is a process by which import duties can be suspended on essential inputs to manufacturing in America that are unavailable from any domestic source and must be imported.

Import duties on inputs that have no domestic source of supply protect no one and are simply a tax on manufacturers in America – raising the cost of domestic production even higher than it is. 

A recent report from the Manufacturing Institute and MAPI shows that it is already 20 percent more expensive to manufacture in America than it is for our major competitors, and the last thing manufacturers in America need is a tax hike – which is what would happen if the existing duty suspensions on vital inputs were allowed to expire.

We particularly want to commend Ways and Means Committee Chairman Camp, Ranking Member Levin, Trade Subcommittee Chairman Brady, Ranking Member McDermott, and Senate Finance Committee Chairman Baucus for their introduction of the process.  We also thank Representative Tom Reed (R-NY29) for his efforts and for taking the initiative in circulating a “Dear Colleague” letter pointing out that freshman Republicans view the MTB as vital to American manufacturing, and as a jobs bill.  He is truly a pro-manufacturing leader. (continue reading…)

Shortly the Senate will vote on an amendment to reauthorize the Export-Import Bank which is critical to the goal of doubling exports and jobs. The Bank assists thousands of small and medium-sized manufacturers reach new markets and sell their products around the globe that might otherwise not be possible.

If Congress fails to act and reauthorize the Bank we will be left in the dust by our competitors who are providing hundreds of billions more in export financing. Just in 2010 alone the export credit agencies in Brazil and China provided 10 times more financing to their exporters, as a share of GDP. Washington needs to act to put manufacturers in the United States on a level playing field.

We hope that senators will vote for exports and jobs today and approve the reauthorization of the Ex-Im Bank.

Tomorrow the Senate is expected to vote on an amendment which will reauthorize the Export-Import Bank. Last week the NAM issued a Key Vote letter on the amendment.

The facts are crystal clear that the Ex-Im Bank supports jobs and helps small and medium-sized manufacturers in the U.S. grow exports. More than 85 percent of the Ex-Im Bank’s transactions directly support small business.

The Washington Post’s Olga Khazan reports on what the Bank means to Patton Electronics based in Gaithersburg, MD:

Bobby Patton is the embodiment of the idea that increasing exports can help grow jobs. His Gaithersburg telecom company, Patton Electronics, first began selling routers and other devices to overseas customers during the 1990s. As exports began to comprise a greater percentage of his revenue, his bank began to take notice.

“Our local bank didn’t want to lend against those international receivables the way they lend against domestic receivables,” he said.

The threat of Congress failing to reauthorize the Bank has caused Mr. Patton to put on hold expansion plans:

Meanwhile, Patton said, his local bank has already put the brakes on his plan to expand to a new manufacturing facility.

“We have a contract to acquire a new building and move into a new manufacturing facility, and the bank is saying they don’t want to add more debt if Ex-Im is going to be changing what they’re doing on international borrowing,” he said. “They don’t want to add more risk.”

Also, CBS Evening News ran a segment this past weekend featuring small manufacturers Air Tractor based in Olney, Texas. Air Tractor uses the Ex-Im Bank to help export their products all over the world and if the Bank is failed to be reauthorized it could negatively impact their business.

Manufacturers urge senators to stand up for jobs and exports tomorrow and vote for the reauthorization of the Ex-Im Bank.

This morning the Senate Finance Committee held a hearing on Russia’s accession to the World Trade Organization (WTO) and what this means for the United States. The National Association of Manufacturers has been urging Congress to grant Permanent Normal Trade Relations (PNTR) to Russia.

A few manufacturers were among the witnesses testifying at the hearing today including Chairman and CEO of Deere and Company Samuel Allen and President and CEO of GE Russia/CIS Ronald Pollett.

The chairman of the NAM’s Russia Trade Relations Task Force Daniel Cruise, vice president for global public and government affairs of Aloca, Inc. submitted a statement for the record on the importance of granting PNTR status to Russia.

Here is a brief excerpt from the statement:

Russia offers an excellent opportunity for U.S. manufacturers, and the President’s Export Council has estimated that U.S. exports to the country could double over the next five years to $12 billion. This will create manufacturing jobs in a wide variety of industries and boost economic growth, if Congress establishes PNTR with Russia.

Russia was officially invited to join the WTO on December 16, 2011, and will formally accede to the WTO upon action by the Russian Duma to ratify the agreement. The NAM strongly supports PNTR with Russia because it will give manufacturers better access to the Russian market and commit Russia to an enforceable set of international standards. Manufacturers in the United States will benefit from tariff reductions, Russia’s commitment to join the Information Technology Agreement, non-tariff barrier reductions, enhanced intellectual property rights protection and enforcement, and loosened restrictions on services trade. Each of these additional protections will help American manufacturers sell more goods in Russia.

The NAM will continue to urge Congress to move swiftly to grant PNTR status to Russia. This is not a vote for Russia but a vote for manufacturers in the United States and jobs.

Today, after a five year wait, manufacturers in the United States can finally realize the benefits of the Korea-U.S. Free Trade Agreement (KORUS). Starting today Korea’s tariffs on over 9,000 U.S. products disappear – covering over 80 percent of all of Korea’s tariffs on U.S. products.  The remaining 20 percent will be eliminated in stages over the next few years.

This is a big deal.  Korea is the fourth largest market in the world outside the United States, counting the European Union as a single market, and it  imports nearly $300 billion of manufactured goods annually. Manufacturers in the U.S. have only 11 percent of that market, but are now poised to make gains. 

As KORUS takes Korea’s average 8 percent import duties to zero for manufacturers in the U.S., they are getting an advantage over many of our competitors, and are regaining a level playing field with our European Union competitors, whose free trade agreement with Korea went into effect last year.

The NAM advocated strongly with the Administration and Congress to win passage and implementation of KORUS, and we are very pleased that manufacturers in the United States at long last are obtaining the open access to this market that we have sought.

Large and small firms stand to benefit.  In fact, 90 percent of the companies in the U.S. now exporting to Korea are small or medium-sized firms — 18,000 of them, and almost all of them will benefit.  This is truly a great day for American exporters.

Korean firms also will gain by U.S. duties being eliminated, but U.S. tariffs on Korean products were already low – averaging only 1.5 percent.  Additionally, it is likely that many Korean gains in the U.S. market will come by displacing imports from other countries, as is also likely to be the case for American exports to Korea.

KORUS will benefit the economies of both countries and is truly win-win. Five years in the waiting, but the day is here at last. Now we need to move on to open more markets.

Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.

Today the Washington Times ran an op-ed from National Association of Manufacturers President and CEO Jay Timmons and BTE Technologies President Chuck Wetherington about the importance of the Export-Import Bank to small businesses. The Bank allows small companies, like BTE, to level the playing field against our competitors overseas.

The financing provided by the Bank allows these companies to export to new markets throughout the world. For instance the Bank has helped BTE grow to export to nearly 40 different countries.

From the Washington Times piece:

Today, BTE exports to China, Russia, Japan, Korea, most of the European Union and other countries – almost 40 in total. With the assistance of Ex-Im Bank, BTE is negotiating a deal to export to Saudi Arabia in the near future – a relationship that would contribute upward of 10 percent of the company’s total product revenues.

BTE is not alone. Many other small businesses have sought the assistance of Ex-Im Bank and reaped the benefits of expanded market access. In fact, most of the bank’s activities directly support small businesses. In today’s global economy, seeking out opportunities abroad is indispensable.

As members of Congress consider the reauthorization of the Bank we ask them they take into careful consideration the Bank’s success in helping small and medium manufacturers grow. If we are to continue to create jobs and reach the goal of doubling exports the Ex-Im Bank must play a role to help level the playing field for manufacturers in the United States.