October 5, 2004 - Today, the Co-Chairs of the New Democrat Coalition (NDC) sent a letter to the Chairman of the House Ways and Means Committee, Rep. Bill Thomas, urging him to complete the conference report on HR 4520, the FSC/ETI bill. Rep. Adam Smith (D-WA), Rep. Jim Davis (D-FL) and Rep. Ron  Kind (D-WI) realize that without passage of this bipartisan bill, American businesses will continue to be hit by increasing European Union (EU) tariffs.

Earlier this year, the EU began imposing retaliatory duties of 5% on selected U.S. exports in the dispute over U.S. compliance with a WTO ruling involving the FSC/ETI export tax regime. Unless Congress repeals these export tax provisions, the EU plans to increase the tariff being applied to some 1,607 different products by 1 percentage point per month until it reaches 17% by March 2005.

The Co-Chairs of the NDC, in their letter to Thomas, stressed four main areas that need to be addressed in order for the NDC to support the conference report.

These four areas include:

1. Revenue Neutrality: The conference report must be revenue neutral and not increase the budget deficit.
2. Research and Development Tax Credit: The conference report must include the form of R&D tax credit adopted by the Senate that creates an incentive for those research-intensive companies that do not receive a meaningful benefit under the extension of the credit provided in the recent tax extenders bill.
3. Manufacturing Deduction: The conference report should include a U.S. manufacturing deduction of 9%.
4. Invest in America: The conference report must provide a robust provision that will temporarily reduce the effective tax rate applied to the earnings of the foreign subsidiaries of U.S. companies, which will allow them to re-invest that money in the United States.

“If the provisions outlined in our letter to Chairman Thomas are in the final conference report, this will be a good bill for American business,” said NDC co-chair Adam Smith. “It’s vital to our economy that we enact this legislation as soon as possible so that American businesses are not at a competitive disadvantage overseas because of the actions of their own government. We have the power and the ability to fix this problem now.”

“As America’s workers endure continued unemployment and sluggish economic growth, the last thing our nation needs is a tariff showdown with the European Union,” said NDC co-chair Jim Davis.  “For the sake of U.S. employers and employees alike, Congress must pass legislation to repeal FSC/ETI export taxes, and as New Democrats, we believe this legislation should also take steps, such as passing an effective R&D tax credit, to help set our economy on track for a strong recovery.”

“I am hopeful that the final version of the FSC/ETI bill will provide needed relief to our domestic manufacturers to help keep jobs in the United States and spur economic growth,” said NDC co-chair Ron Kind.

The complete text of the letter is available at the NDC Web site at: http://www.house.gov/adamsmith/NDC/ndc.html.