Advocacy Archives

Advocacy updates

Seventh Circuit Court Denies NAFEM Challenge to Commercial Refrigeration Efficiency Standards

August 8, 2016

On Aug. 8, 2016, the U.S. Court of Appeals for the Seventh Circuit issued its decision denying industry’s petition for review of DOE’s commercial refrigeration test procedure and efficiency standards published in 2014 (EERE-2013-BT-TP-0025 &amp EERE-2010-BT-STD-0003).

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The decision means manufacturers must be ready to comply with the new standards by March 27, 2017.

NAFEM maintains that at every step, the court deferred to the agency. “Arguing against an agency is always an uphill battle, but the amount of deference the court exhibits in the opinion is much greater than what we have seen in other cases,” says Jeff Longsworth, NAFEM Legal Counsel. According to Longsworth, the court seemed reluctant to grasp the technical integrity issues raised by NAFEM and the Air-Conditioning, Heating and Refrigeration Institute (AHRI), which collaborated on the filing. “We knew this was a risk, but we had faith that the court would do their job – especially given the excellent help from members in breaking the information into bite-sized pieces for a lay person to understand. It’s disheartening that the court did not look beyond the DOE’s words and into the substance and technical impact of the case.”

NAFEM’s advocacy efforts present its members’ point-of-view to legislators and regulators making decisions that potentially impact the industry. NAFEM works with allied industry partners, law makers, government agencies and other stakeholders to actively advocate for its members’ interests.

For details on these initiatives, members can login with your NAFEM site credentials. All others should contact: Charlie Souhrada, CFSP, NAFEM director, member services, +1.312.821.0212; csouhrada@nafem.org.

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Florida Agrees to Exempt Food Equipment Distributors from Interior Design Licensing Law

Fall 2009

In a victory for the food equipment industry, Florida Governor Charles Crist has signed a bill that will permit food equipment manufacturers and distributors to provide draft layouts and other design assistance to their customers in Florida without fear of prosecution under state licensing regulations.

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Incredibly,  contract agents for the Florida Board of Architecture and Interior Design (FBAID) began last year to prosecute furniture and restaurant equipment dealers who were providing design assistance to customers but were not licensed to interior designers.  One Florida restaurant equipment distributor was facing the prospect of a large fine; others were on a target list.

The Florida interior design licensing law had been on the books for over 10 years.  What was new was the decision to apply it to food equipment distributors.  Without action by the legislature to stop them, the board was expected to continue prosecution of any equipment distributor in the state who did not employ a licensed interior designer.

In January, NAFEM’s officers approved a position statement that said, in part: “…However it may originally have been intended, the Florida Interior Design Practice Act has been turned into an attempt by a cartel to create a monopoly of design services.  Enforcement of this Act must be suspended and the Act repealed…”

NAFEM immediately began a campaign to assist Jerry Pierce, chairman, Restaurant Equipment World, and other Florida distributors to generate a groundswell of support for total repeal of the Florida design law.  During The NAFEM Show in February, NAFEM staff met with Tom Ackert, executive director of Orange County Convention Center to discuss strategically reaching out to key Florida legislator on the exclusion of the foodservice equipment and supplies industry from the Act.  Additionally, the Foodservice Equipment Distributors Association (FEDA) alerted its members to the issue and participated in hearings in Tallahassee, while the Orlando County Government and the Florida office of the National Federation of Independence (NFIB) provided critical support.

The effort to totally repeal the licensing law proved very controversial.  The American Society of Interior Designers (ASID) recruited design students from Florida State University (FSU) to testify against repeal, but the votes were not there for total repeal of the law.  Ultimately, the case that food equipment distributors know their products and how they should be installed far better than interior designers won out in the last days of the legislative session with a targeted exemption for the industry, introduced by Florida Representative Scott Plakon.

The amendment to the Florida law now states that: “A manufacturer of commercial food service equipment or the manufacturer’s representatives who prepares design, specifications, or layouts for the sale or installation of such equipment is exempt from licensure as an architect or interior designer.  If (a) the design specifications, or layouts are not used for construction or installation that may affect structure, mechanical plumbing, heating, air conditioning, ventilating, electrical or vertical transportation systems; and (b) the design specifications, or layouts do not materially affect life safety systems pertaining to fire safety protection, smoke evacuation and compartmentalization, and emergency ingress or egress systems.”

While interior design licensing laws exist in a number of states, no other has attempted to extend the reach of its law to food equipment.  However, a bill has recently been introduced in Pennsylvania (HB 1521) at the request of an interior design association.  NAFEM is monitoring this legislation and will take action as necessary.

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Campaign Against Union “Card Check” Bill Making Headway – NAFEM Members Again Urged to Call, Write Congress

Summer 2009

Prospects of defeating the misnamed “Employee Free Choice Act” have greatly improved recently, as two key senators who previously supported the bill – Arlen Specter (D-PA) and Blanche Lincoln (D-AR) – announced that they will no longer support it, at least in its present form.

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This bill, better called “card check” legislation, would replace current law that requires a secret ballot before a union is authorized in a workplace. Instead, if 50 percent of a firm’s workers sign a simple card calling for a union, that workplace would instantly be organized. Employers would then only have 60 days to negotiate and agree to a contract – if this did not occur, federal mediators would automatically be called in.

The “card check” legislation easily passed the House of Representatives in the 2008 Congress and failed in the Senate only because it fell short of the 60 votes needed to close debate and move to final up or down decision where only 50 votes would have been needed. With the increased Democrat majority in the Senate this year and pledged support by President Obama, labor supporters had been optimistic about passing the bill.

Recently, however, both Senators Specter and Lincoln have announced that they would not support the bill this year, at least not in its present form.

“The problem of the recession makes this a particularly bad time to enact employee choice legislation,” Senator Specter said. Recognizing that his decision likely put the 60 votes needed to achieve closure out of reach, he suggested that Senators might instead “choose to move on” and instead consider amendments to the National Labor Relations Act (NLRA).

Senator Lincoln was less categorical, saying only that “I cannot support that bill in its current form,” leaving open the option that she might support the modified bill.

NAFEM has been urging members to write their senators and members of Congress in opposition to the bill and to attend rallies being organized in key states by the National Association of Manufacturers ((NAM). Members in Pennsylvania and Arkansas should now write Senators Specter and Lincoln to thank them for their recent statements opposing the bill.

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NAFEM Joining Campaign to Overturn Florida Law

Spring 2009

NAFEM is backing a campaign to overturn a Florida state law that forbids anyone who is not certified and licensed interior designed from providing floor plans or sketched for installation of appliances, including food preparation and storage equipment.

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The Florida Board of Architecture and Interior Design (FBAID) has recently begun to apply an existing state licensing and practice law aggressively, subjecting manufacturers’ representatives in foodservice, as well as dealers of kitchen and bath equipment, and other appliances, to the risk of significant fines.

Most states have laws licensing interior designers, with varying educational and other requirements, but only a few have laws limiting the practice of interior design. Florida is now the only state which forbids equipment dealers and manufacturers’ representatives from providing non-architectural designs for equipment layout. The trade association of interior designers is aggressively promoting similar laws and, if the Florida practices are not stopped, dealers in other states could face similar prohibitions.

Although several Florida state senators and representatives have recently introduced bills to amend the existing interior design statute, these were not, as introduced, sufficiently specific to solve this problem. NAFEM is working with Florida food equipment dealers, with the support of the Orange County Convention Center (OCCC) and the Florida office of the National Federation of Independent Business (NFIB), to improve these bills. The interior design association is expected to fight aggressively to preserve the existing law, and the outcome is uncertain.

The NAFEM statement prepared in support of the effort to amend the law states “…there is no reason that food equipment manufacturers and their dealers should be prohibited from providing planning and installation assistance to their customers; even more important, these personnel are far better qualified to provide this service than any ‘design professionals’ who may not be familiar with the specific requirements of food preparation and handling equipment.”

NAFEM’s paper further states “…however it may have been intended, the Florida Interior Design Practice Act has been turned into an attempt by a cartel to create a monopoly of design services.”

The NFIB, the National Association of the Remodeling Industry (NARI), and the National Kitchen and Bath Association (NKBA) are among the groups NAFEM is working with in the effort to exempt equipment design from this onerous Florida practice law.

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Campaign Against “Card Check” Bill Begins – NAFEM Members Urged to Weigh In With Congress

Spring 2009

Even before the mis-named “Employee Free Choice Act” was introduced in the new Congress, manufacturers and other business organizations geared up to confront an intense lobbying and public relations campaign designed to force quick Congressional action on the bill, which gives union organizers new tools to turn around the recent declines in union power.

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This bill, better called “card check” legislation, would replace current law that requires a secret ballot before a union is authorized in a workplace. Instead, if 50 percent of a firm’s workers sign a simple card calling for a union, that workplace would instantly be organized. Employers would then have only 60 days to negotiate and agree to a contract – if this did not occur, federal mediators would automatically be called in.

The “card check” legislation easily passed the House of Representatives in the last Congress and failed in the Senate only because it fell one vote short of the 60 votes needed to close debate and move to the final up or down decision, where only 50 votes would have been needed.

Timing of Congressional action is uncertain. As of this writing, lead sponsors in both the House and the Senate were working to line up additional co-sponsors. Labor unions and other supporters are lobbying vigorously to build the support which they hope will lead to fast Congressional action.

President Obama had promised during the campaign to sign this bill on passage in Congress, and Labor Secretary Hilda Solis was a principal supporter when in Congress. Some polls, however, have shown disapproval among the public, including Democratic voters and workers at non-unionized plants. President Obama’s failure to mention the bill in his recent address to Congress, laying out his priorities, may or may not show some hesitation.

NAFEM members are strongly encouraged to write their senators and members of Congress, adding to the number of voices opposing the bill. The easiest way to do this is to use “EFCA Toolkit” on the National Association of Manufacturers (NAM) Web site.

Log onto www.nafem.org/efca. Scroll down to “Take Action – Contact Congress Today.” Type in your name, company, address and zip code. This will bring up a draft letter and the names and correct addresses, both e-mail and fax, of your senators and member of Congress. Edit or shorten the letter, as you wish. You could send the letter electronically, but we strongly recommend that you print it out on company letterhead and send it by mail or fax. Hard copy letters usually get more attention than e-mail.

You don’t have to be a NAM member to utilize this service. NAFEM is an association member of NAM and is working closely with the NAM government relations staff on this initiative.

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NAFEM To Ask Congress To Accelerate ENERGY STAR Program For Foodservice Equipment

Winter 2008

Energy Savings Already Evident in Nation’s Restaurants — NAFEM will ask the new Congress, convening in January to increase appropriations for the Environmental Protection Agency’s (EPA) ENERGY STAR program and will encourage EPA to develop ENERGY STAR ratings for additional items of food preparation and service equipment.

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In campaign speeches, President-elect Barack Obama has called for new investments in energy efficiency, noting that the nation’s buildings account for nearly half of all carbon emissions in our country. “We’ll set a goal of making our new buildings 50 percent more energy efficient within several years,” Obama said in one major speech on energy policy.

It’s no secret that restaurant and other food establishments are heavy consumers of energy. According to Pacific Gas & Electric’s Food Service Technology Center (FSTC), the annual energy bill of the commercial foodservice sector is $10 billion, with 80 percent of this $10 billion expended by inefficient food cooking, holding, and storage equipment.

The FSTC further states that restaurants consume almost five times more energy per square foot than any other type of commercial establishment. Citing these figures, EPA concludes that “ENERGY STAR helps restaurants owners and operators improve the performance of their facilities and equipment while reducing energy costs.” (See www.energystar.gov)

ENERGY STAR standards currently address only six categories of foodservice preparation, storage and refrigeration equipment. Despite this limited scope, the standards are already delivering substantial savings in energy use. EPA estimates that:

  • Each ENERGY STAR qualified electric steam cooker can save 6,270 kWh annually, while each ENERGY STAR qualified gas steam cooker can save 45 MBtu annually;
  • Each ENERGY STAR qualified gas fryer can save 50 MBtu annually;
  • Each ENERGY STAR qualified commercial dishwasher can save about 509 MBtu annually, as well as 52,000 gallons of water due to reduced water use; and that
  • ENERGY STAR qualified refrigerators and food holding cabinets provide energy savings up to 50 percent.

NAFEM believes that expansion of the ENERGY STAR program for commercial foodservice equipment offers an easily achievable reduction in the use of energy in the United States and commensurate reduction in CO2 emissions. The National Restaurant Association has also enthusiastically supported the ENERGY STAR program.

NAFEM will be asking members to contact their members of Congress to support this position when Congress in early 2009 turns to developing appropriations for EPA and other federal agencies.

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Labor Expected To Press for Early Action On “Card Check” Bill to Facilitate Union Organizing

Winter 2008

With a Democratic President in the White House and nearly 60 assured votes in the Senate, labor leaders will be pressing for early action on the “card check” bill to eliminate secret ballots for workplace unionization.

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This bill, ironically titled the “Employee Free Choice Act,” passed the House of Representatives easily in the last Congress but died in the Senate when Democrats could not muster the 60 votes required to head off a potential filibuster. Even if the bill had passed the Senate, President Bush would have vetoed it.

When the new Congress convenes in January, with Democrats just short of the magic 60, this vote will be tight. Arlen Specter (R-PA), has votes with the Democrats on this issue. His might be the deciding vote.

On the other hand, a few of the new Democratic Senators had pro-business records as governors, or elsewhere in their earlier careers, providing some prospect that the Democrats might not be a solid bloc on this issue. His might be the deciding vote.

The heavy TV campaign organized by the U.S. Chamber of Commerce, with support of the National Association of Manufacturers (NAM), targeting Democratic Senator candidates who favored doing away with the secret ballot may have helped save at least on, and possibly two, Republican supporters of the business position on this issue.

NAFEM will be alerting all members as this issue comes to the fore. Constituent contacts from NAFEM members and other business supporters will be essential to hold on to the present requirement that a workplace be unionized only when employees have voted for a union in a secret ballot.

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Trade Talks Failure and Prospects for Tariff Productions

Fall 2008

The recent round of Geneva tariff reduction negotiation and the prospects of any generalize reduction of foreign tariffs on industrial products – including food preparation and serving equipment has failed, for now, under the auspices of the World Trade Organization (WTO).

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The Geneva talks were the last hope of completing the “Doha Round” of talks to negotiate the basics of a comprehensive round of world-wide tariff reductions, with the objective of expanding world trade. For the United States, reductions in foreign tariffs on manufactured goods were a major goal.

The biggest stumbling block was agriculture. As with most disagreements, different parties have different ideas as to whom is to blame. A final blow was the demand by China and India that they would be permitted to disregard all commitments on tariffs on agricultural imports at any time that imports of a food product rose 10 percent or more. Existing policies would permit some tariffs adjustments in those cases, but not unlimited tariff increases. Any such unlimited tariff increase could easily be made into an outright trade barrier – a provision unacceptable to the United States and other agricultural exporters.

On the other hand, most developing countries were calling for a major reduction in agricultural subsides in the U.S. and Europe. While these are not direct export subsides, they do support production, in some cases enabling U.S. and European producers to sell on world markets below overseas costs of production. The United States, in the Geneva round, offered to cap its agricultural subsidies at a level well below a cap previously agreed upon, but still somewhat above our current rate of subsidies. Many developing countries, anxious to protect their own food producers, found this insufficient.

It will be some time before negotiations resume for a worldwide round of trade negotiations. The best likelihood of any action to further reduce tariffs on manufactured goods may be a possibility of negotiations between the U.S. and Europe, where agriculture would be less of an issue.

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Coalition Ad Campaign Targets Congressional “Card Check” Supporters

Fall 2008

A TV advertising campaign featuring a cast member from “The Sopranos,” funded by the Coalition for a Democratic Workplace, is targeting Democratic candidates in several key Senatorial races for their support of the so-called “Employee Free Choice Act” – the bill that would actually end the requirement that a secret ballot be held to decide whether or not a workplace is unionized.

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The Employee Free Choice Act passed the House of Representatives in the current Congress but was blocked from coming to a vote in the Senate on a near party-line vote. (Arlen Specter of Pennsylvania was the lone Republican voting to bring the bill to the floor.) A key factor in determining the prospects of this bill will be whether or not Democrats achieve a 60-vote majority in the fall elections.

One coalition ad features actor Vincent Curatola as a union boss walking into a polling booth, tapping a voter on the shoulder and handing him a card supporting a unionizing campaign, as a crowd glares at the intimidated worker. A second version, being run in Maine and Minnesota takes direct aim at Senatorial candidates Tom Allen and Al Franken for their support of the bill, while singling out in incumbents Suzanne (R-MP) and Norm Coleman (R-MN) as “heroes” for opposing it.

Under the proposal, workers would effectively lose their right to a private ballot when deciding whether to join a union. The private ballot would be replaced with the “card-check” scheme where a union is automatically recognized if a majority of workers simply sign a card. Organizers would be able to put direct, public pressure on individual workers to acquiesce.

NAFEM members can view the TV spots and get further information on both the “card–check” proposal and the ad campaign at www.myprivateballot.com. The National Association of Manufacturers (NAM) of which NAFEM is an association member, is the major supporter of the coalition funding the campaign.

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NAFEM Needs Member Support on State Tax Issue

Summer 2008

Our efforts to get the Judiciary Committee to act on the “business activity” tax issue need member “grass-roots” support for the pending legislation. NAFEM needs to be able to cite specific member companies affected by these taxes – and also those who would like to help us head this off before they are affected – when talking with Congressional offices. Support is especially needed from members in Michigan – home to Judiciary Chairman Conyers – and from California, home to several Judiciary Committee members.

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NAFEM needs to know how many members have faces these taxes already, and in which states. Help us in this campaign. E-mail NAFEM Executive Vice President Deirdre Flynn, dflynn@nafem.org with information.

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Congressional Small Business Committee Supports Action on “Business Activity” Taxes

Summer 2008

The chair and ranking minority member of the House Committee on Small Business have asked the House Judiciary Committee to take action on pending legislation to clarify that states cannot impose “business activity” taxes on firms that make sales in their states but have no office or other physical presence there. The letter to Judiciary Chairman John Conyers (D-MI), signed by both Congresswoman Nydia Velazquez (D-NY) chair of the Small Business Committee and Congressmen Steve Chabot (R-OH), ranking minority member, as a direct result of a hearing February 14 at which four small business representatives, including NAFEM Government Relations Committee Chairman David Rolston, CFSP, Hatco Corporation, Milwaukee, Wisc., outlined problems created for small manufacturers by these taxes.

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This bipartisan action, somewhat uncommon in an election year, is a welcome development.
Legislation to make clear that states cannot put these income-based taxes on firms that have no office or other physical presence in their states passed the House Judiciary Committee in 2006 but did not reach the House floor. The bill has been re-introduced this year in both the House and Senate.

NAFEM, working with a coalition including the National Association of Manufacturers (NAM), strongly supports this legislation. While only a minority of NAFEM members have been hit with these out-of-state “business activity” taxes, more states are moving in this direction, and those states already levying these taxes are becoming more active in tracking down firms which sell their states, particularly those who sell through manufacturers’ representatives. Fines are steep.

“Small businesses face unique challenges competing in today’s economy,” Velazquez and Chabot wrote. “Generally, they have less access to capital, are more susceptible to economic downturns, and are more harmfully impacted by regulatory and administrative rules when compared to larger organizations. Thus it is imperative that we are mindful of the impacts that tax policy, whether it is at the local, state, or federal level, has on our nation’s small businesses.”

The Congressional Small Business committees do not have authority to approve legislation, but often serve to bring attention to issues needing action. The next step must be up to the House Judiciary Committee.

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Economic Stimulus Package Aids Small Businesses – Could Stimulate Restaurant Purchases

Spring 2008

Although headlines have emphasized individual tax rebates.  President Bush’s recently signed Economic Stimulus Act of 2006 includes several very important incentives for businesses – including restaurants – to invest in new equipment. While chase incentives will be most useful for small businesses, they also could stimulate immediate purchases of food equipment by restaurants and other commercial foodservice establishments.

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Companies that purchase up to $100,000 in capital assets in 2008 will be able to expense (deduct directly) up to $250,000 of this investment in the year the equipment is placed in service.  These expensing limits and phase-out threshold are significantly higher than the $128,00 expensing limit and $510,000 threshold that would have applied prior to passing the stimulus package.

The National Restaurant Association (NRA) has advised this increased immediate expensing limit would apply to foodservice equipment purchased by its members.

The new law includes a “bonus” first year 50 percent depreciation allowance on capital equipment placed in service in 2005 that would normally be written off on a 20-year depreciation schedule.  This precision is available to all companies, restaurants included.  Small businesses can take both the direct expensing outlines above and accelerated depreciation on other investments above $250,000 level but under the $800,000 threshold.

As with most tax laws, details are complex and there are prescriptions on what property qualifies.  NAFEM members should consult their accountant or tax attorney and also find a useful description of these business stimulus measures, prepared be Deloitte Tax L.L.P. on the National Association of Manufacturers (NAM) website, www.NAM.org.

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NAFEM Campaigns to Rein in State “Business Activity” Taxes

Spring 2008

With Government Relations Committee Chairman David Rolston, CFSP, president, Hatco Corporation, testifying at a recent Congressional hearing, NAFEM has placed itself at the center of a renewed effort to rein in the proliferation of taxes that many states are placing on firms that have sales in those states but no office or other physical presence.

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Bills to clarify that states can impose these “business activity” taxes – essentially a form of income tac – only on businesses that have offices, manufacturing, or employees in those states, have now been introduced in both the Senate and the House of Representatives. The Senate bill, introduced by Charles Schumer (D-NY) and Michael Crapo (R-ID) is S. 1726; the House bill, H.R. 5267, has been introduced by Congressmen Rick Boucher (D-VA) and Robert Goodlatte (R-VA).

Rolston was one of five business representatives testifying at a hearing of the House Committee on Small Business February 14 on the impact of these taxes on small business.

After describing NAFEM and its typical members – 66 percent businesses with less than $10 million a year in sales and typically with no physical presence outside their home states – Rolston laid out for the committee the impact these taxes have on NAFEM members and many other small manufacturers if a state’s ability to impose these taxes is left unchecked.

“Efficiency and predictability are essential to a small business,” Rolston said. “The growing practice of states to assess “business activity” taxes on firms that have no physical presence in the taxing jurisdiction has come as an unpleasant and shocking surprise. If left unchecked, these taxes will become a nightmare for small businesses, increasing our administrative costs, adding an unnecessary layer of inefficiency and limiting our ability to grow.”

A number of states, Rolston explained, are imposing these taxes on firms that sell through manufacturers’ representatives or use independent service firms for warranty and repair work, as do most NAFEM members. “Our manufacturers’ representatives and service agents in these states do pay state income taxes on their own business profits. We should be paying taxes in states where we have presence and receive government services. For us, that is Wisconsin. We should not be paying taxes in states where we have no physical presence.”

“As a small U.S. manufacturer, we face many threats from outside our borders,” he continued. “We continue to be successful by staying lean and smart. Adding unnecessary headcount to administer programs like activity taxes makes us less competitive with overseas companies.”

As a similar bill to clarify that states do not have the right to tax out-of-state firms failed in the last Congress, largely due to opposition from the National Governor’s Association (NGA), prospects for the legislation are not clear. NAFEM is working with a coalition of firms and other organizations, including the National Association of Manufacturers (NAM) and several large firms in financial services and direct marketing, to gain additional co-sponsors. Support from the House Judiciary Committee, which has primary jurisdiction, is critical.

Although headlines have emphasized individual tax rebates. President Bush’s recently signed Economic Stimulus Act of 2006 includes several very important incentives for businesses – including restaurants – to invest in new equipment.

While chase incentives will be most useful for small businesses, they also could stimulate immediate purchases of food equipment by restaurants and other commercial foodservice establishments.

Companies that purchase up to $100,000 in capital assets in 2008 will be able to expense (deduct directly) up to $250,000 of this investment in the year the equipment is placed in service. These expensing limits and phase-out threshold are significantly higher than the $128,00 expensing limit and $510,000 threshold that would have applied prior to passing the stimulus package.

The National Restaurant Association (NRA) has advised this increased immediate expensing limit would apply to foodservice equipment purchased by its members.

The new law includes a “bonus” first year 50 percent depreciation allowance on capital equipment placed in service in 2005 that would normally be written off on a 20-year depreciation schedule. This precision is available to all companies, restaurants included. Small businesses can take both the direct expensing outlines above and accelerated depreciation on other investments above $250,000 level but under the $800,000 threshold.

As with most tax laws, details are complex and there are prescriptions on what property qualifies. NAFEM members should consult their accountant or tax attorney and also find a useful description of these business stimulus measures, prepared be Deloitte Tax L.L.P. on the National Association of Manufacturers (NAM) website, www.NAM.org.

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Senate Defeats Union Organizing Bill; Labor Already Looking to 2009

Fall 2007

Shortly before adjourning for the July 4th recess, the U.S. Senate, on the procedural vote, killed for this Congress the “Employee Free Choice Act” – a bill that would unionize a workplace if a majority of the employee simply sign a union authorization card. The bill would do away with current law, which requires that a majority of employees vote for the union in secret ballot before a union is authorized. The bill had previously been passed by the House of Representatives.

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The Senate vote was by party line, with only one exception: Senator Arlen Specter of Pennsylvania voted for the bill, the only Republican to do so. The bill did receive a bare majority of votes – 51 of the 100 members of the Senate voted to invoke “cloture” which would have brought the bill to the floor for an up or down majority vote. Under Senate procedures, 60 votes are required for cloture.

The outcome, for this year, was as expected; it was clear from the outset that the bill would not get 60 votes, and President Bush had vowed to veto the bill even if passed.

Union leaders, however are already looking to the next Congress, which convenes in 2009 following the 2008 election. They assume that the nation will at that time have a Democrat as President willing to sign the bill. Could there at that time be 60 votes for it in the Senate?

The 12 Republicans who voted against the bill will be up for election. One Democrat who would presumably have voted for the bill – Tim Johnson (D-ND) is recovering from a stroke and was absent for the vote. Assuming he would have made a 52nd vote for the bill, a shift of eight Senate seats from Republicans to Democrats could make 60 votes obtainable.

While the Democrats are generally expected to increase their Senate majority in the next election, a shift of eight of the 12 seats – essentially, a Democrat landslide – seems less likely.

The union blog continues: “This vote is a step forward because it is the first time in a generation that a majority of the U.S. Senate has voted for workers’ rights.”

The AFL–CIO spin on the bill is that it “would have leveled the playing field in the workplace by allowing workers to decide to join a union without employer interference and require arbitration if a timely agreement is not reached on a first contract.” Such a position ignores the basic democratic principle that a vote is free only if it is cast in secret; the possibilities of intimidation by organizers are obvious if employees can be publicly coerced into signing a simple card authorizing a union.

NAFEM members in Pennsylvania should let Senator Specter know that they are disappointed in his vote. You can fax him a brief letter stating (for example) that you are surprised that he does not agree that all votes in a democratic society should be secret votes to +1.202.228.1229.

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Legislation Re-introduced to Give Using Industries Status in Trade Cases

Summer 2007

Congressman Joe Knollenberg (R-MI) has reintroduced “The American Manufacturing Competitiveness Act” (H.R. 1127), legislation that gives users of industrial materials the right to participate effectively in hearings before the International Trade Commission (ITC) and the Department of Commerce (DOC) in trade cases, such as anti-dumping complaints against foreign producers exporting to the United States.

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At present, representation in these cases is confined to the complaining U.S. firm and to the representatives of the foreign exporter. Neither the DOC nor the ITC consider the impact of its decisions on firms that use steel or other industrial materials. When NAFEM members and other steel-using manufacturers have in the past made presentations at ITC hearings on the impact of duties on their firms and the U.S. economy, their points have been ignored.

The Knollenberg bill, supported by NAFEM and other members of the Consuming Industries Trade Action Coalition (CITAC), had 63 sponsors in the previous Congress. The work being done with our support by CITAC is important in a continuing effort to achieve balance in U.S. trade laws.

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Congressional Showdown Imminent on Union Organizing Bill

Summer 2007

In early March, the Democratic-dominated House of Representatives passed H.R. 800, the “Employee Free Choice Act.” Also called the “card check bill,” H.R. 800 allows a union to organize if a majority of employees sign an authorization card – no election to follow.

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Just prior to the Easter recess, Senator Ted Kennedy (D-MA), introduced a companion bill in the Senate (S. 1401). Senate action is likely before the July recess (and might have occurred by the time this publication reached you.)

But despite the union victory in the House, the bill is unlikely to become law. Senate Minority Leader Mitch McConnell (R-KY) has sworn to block the bill in the Senate, where 60 votes (rather than just a majority) are needed to pass any legislation. Additionally, the White House has said President Bush would veto the legislation, if necessary.

Current law requires a secret vote once a sufficient number of employees have signed a petition for a vote to organize a union. Under the Democratic proposal, no vote would occur.

Union advocates in the House and Senate argue that the present rules too easily allow employers to intimidate union organizers by denying them equal access to employees on the employers’ grounds. They also allege that employers discriminate against or even fire employees known to be promoting unionization, despite clear laws prohibiting such action. Opponents of the bill counter that such offenses are rare, and that without a secret ballot, employees would be easily intimidated by union organizers, at the workplace or even at home, into signing the authorization card.

The legislation also would impose compulsory, binding arbitration if an employer and a union are unable to agree quickly on a first contract. If, following unionization, no agreement is reached within 90 days on the first collective-bargaining agreement, either party could refer the dispute to the Federal Mediation and Conciliation Service. If mediation fails, the dispute would proceed to compulsory arbitration.

The Senate vote is anticipated to be largely along party lines, with only a relatively small number of Senators still thought to be undecided as of the April recess. NAFEM has asked members from five key states – Arkansas, Colorado, Florida, Louisiana, and Pennsylvania – to contract Senators Blanche Lincoln (D-AR); Bill Nelson (D-FL); Mary Landrieu (D-LA); Mark Pryor (D-AR); Ken Salazar (D-CO); and Arlen Specter (R-PA) – to encourage them to uphold the American tradition that the only free election is a secret election.

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New Congress Moving on Several Trade Issues

Spring 2007

International trade issues have come quickly to the forefront of the new Congress that convened in late January. U.S. International Trade Representative (USTR) Susan Schwab, moving to head-off Congressional complaints of inaction, announced February 2 that the Administration was initiating a complaint to the World Trade Organization (WTO) over practices of the Chinese government that promote exports and discriminate against imports.

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The House Ways & Means Committee has asked the Department of Commerce (DOC) to delay an action that would change the way in which Commerce calculate anti-dumping duties, expected to reduce the magnitude of duties in future cases, and asked for comments from industry on the proposal. NAFEM has submitted comments along with other trade associations and corporations, supporting the DOC proposal.

Senator Jay Rockefeller (D–WV) has introduced a wide-ranging bill that would make major changes in U.S. trade laws, increasing protection for steel and other industries.

China
Complaints over Chinese trade policies, including subsidies for its domestic manufactures and currency manipulation that makes its products more competitive in export markets, have been growing in Congress for several years. Bills introduced in the last Congress requiring the U.S. government to retaliate against the current sea manipulation were opposed by the administration, which asked for freedom to continue to negotiate with the Chinese over both trade and currency issues.

Moving ahead of the expected reintroduction of these bills this year, the Administration announced in early February it requested dispute settlement negotiations with China at the WTO over what USTR called “China’s use of what we contend are illegal subsidies.” The request for negotiations is a required first step before the United States could ask the WTO to establish a dispute resolution panel and judge the legality of China’s policies under WTO rules. As the WTO would probably agree with United States in this case, the eventual outcome would be WTO authorization of retaliatory tariffs by the United States against Chinese products.

The U.S. complaint does not get into the issue of currency manipulation, but alleges instead that China provides a range of tax rebates or reductions that give an unfair competitive advantage to Chinese products when they are exported. “That means a range of domestically produced goods in the United States, from steel to wood products to information technology, are denied an opportunity to compete fairly in the United States and in third country markets,” according to the USTR’s office.

Second, the complaint alleges China provides income and VAT tax reductions to firms in China, whether Chinese or foreign-owned, that purchase products made in China, including steel products, instead of imports.

The new chairman of the Trade Subcommittee of the House Ways and Means Committee, Representative Sander Levin (D – MI) supported the action, saying “I am glad the Administration recognizes that Chinese subsidies are a widespread problem that has caused major harm to American workers, farmers and businesses. But actively using WTO enforcement procedures, United States can hold China, as well as other trading partners, accountable to the WTO commitments.”

“Zeroing”
When a U.S. industry wins an anti-dumping case against a foreign manufacturer, the DOC has to calculate the amount of anti-dumping tariff, intended to level the competitive field between the domestic and the foreign manufacturer. To do this, Commerce compares the price at which the foreign firm has sold the product in the U.S. market to its presumed cost of production. The current tariffs on stainless sheet and strip from a number of European and Asian manufacturers have been calculated this way.

Often, the foreign manufacturer has made a number of sales, not all at the same price. In calculating duties in the past, Commerce has looked only at sales that have taken place below the cost of production. Sales at higher prices have been “zeroed” out of the calculation. Obviously, this leads to higher tariffs than if all sales had been averaged.

The Consuming Industries Trade Action Committee (CITAC), of which NAFEM is a founding member, has led a campaign to persuade the DOC to end “zeroing” and instead to take a weighted average of all prices at which the product has been sold, calculating tariffs in a manner CITAC and NAFEM believe is more equitable. Late last year, under pressure from several WTO decisions, Commerce proposed to make this change.

In January, the new leaders of the Senate Finance and House Ways and Means Committee, Senator Max Baucus (D-MT) and Representative Charles Rangel (D-NY), asked Commerce to delay its action pending Congressional review, and the Ways and Means Committee subsequently requested comments from industry.

NAFEM, on behalf of the industry, has joined other CITAC members in writing the Ways and Means Committee in support of the DOC proposal. Noting that NAFEM members compete effectively in export markets, NAFEM wrote Chairman Rangel that “the food equipment industry’s competitiveness, particularly in export markets, depends on access to stainless sheet and strip steel at competitive prices. When domestic prices exceed those on the world market, as has happened when tariffs are calculated incorrectly, we lose exports and lose jobs.”

Congress might direct Commerce to stick with its past methods of calculating duties. As this story went to press, no decisions had yet been made.

Rockefeller Asks for Major Changes in Trade Law
Senator Jay Rockefeller (D-WV) is the first to introduce legislation to ramp up protection for domestic manufacturers against foreign competition. Other bills will soon follow.

According to a recent report in American Metal Market, “the bill reads like a wish list for the domestic steel industry and the United Steelworkers Union, who sent their top officials to Capitol Hill last week to meet with several congressmen and at least one Bush Administration official to promote their agenda.”
While China is the main target of Rockefeller’s bill, its provisions are far broader. The bill would:

  • Give Congress final word on any proposed changes to U.S. regulations design to implement WTO decisions, such as the elimination of “zeroing” (see above);
  • Increase dumping margins in cases where foreign producers absorb anti-dumping and countervailing duties instead of passing them on to customers;
  • Expand application of countervailing duties to non-market economies, principally China; at present only anti-dumping duties apply to China;
  • Clarify that exchange rate manipulation (as in China’s case) is a subsidy subjects to countervailing duties;
  • Require negotiations to eliminate the differences in treatment of direct and indirect Value Added Taxes (VAT) on export sales and, if the negotiations don’t eliminate the disparity, make rebates of VAT taxes subject to countervailing duties.

Rockefeller’s bill is very unlikely to move in its current form. However, many of its provisions are likely to be introduced in other bills and receive serious consideration. Congress’ decisions will be heavily influenced by the outcome of the complaint against China’s use of tax subsidies to promote exports and limit exports recently filled with the WTO by the USTR (see above).

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Shift to Democratic Control in Congress Changes the Business Climate

Winter 2006

The new line-up in Washington, with Democrats in control of both the U.S. Senate and House of Representatives, changes the political equation on many issues important to the foodservice equipment and supplies industry, and to the business community in general. While it would be an error to consider the Democratic majorities as hostile to business, there will be a noticeable shift from corporate-friendly to business-friendly. At least for the next two years, however, Congress will be limited by the potential veto power of President Bush. Many of the newly-elected Democrats are somewhat more conservative than the current Democratic House leadership.

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Some Specific Issues:

Minimum wage:
A proposal to raise minimum wage to $7.25 an hour will be among the first orders of business in the new Congress convening in January and will almost certainly pass. While the restaurant and hotel industries have traditionally argued that the increased costs would hurt their sectors of the economy, many economists doubt a severe negative impact. A veto here is unlikely.

Trade Issues:
One of the most notable shifts will be in the Congressional attitudes on “free” versus “fair” trade. Not only are new leaders of the Senate Finance and the House Ways and Means Committee less supportive of free trade than recent Republican chairs, but several Republicans with similar views, such as Phil English (R-PA), a strong supporter of the steel industry, have risen in seniority on the Ways and Means Committee.

Steel trade issues could again become contentious. A worst-case possibility is that the steel caucus might again call for mandatory quotas on steel imports, as in a bill passed by the House of Representatives in the 1990s. NAFEM was a vigorous participant in the campaign that stopped this quota bill in the Senate, which was then under Republican control.

Even the infamous “Byrd Amendment,” which encourages the filing of trade cases by awarding import duties to the companies that brought the cases, could reappear with the re-emergence of Robert Byrd (D-WV) as chair of the Senate Appropriations Committee.

Taxes:
Congressman Charles (D-NY), expected to become chairman of the tax-writing Ways and Means Committee, said during the campaign that the Democrats would not roll back the Bush tax cuts, which are scheduled to expire in 2010. But the incoming House leaders, led by presumptive Speaker Nancy Pelosi (D-CA) also have made clear that they want to pass legislation to reduce the impact of the Alternative Minimum Tax (AMT) on middle and lower-income Americans. Reforming the AMT will be costly however, and as a result, this pledge may mean only that there will be no overall tax increase. To reform the AMT without increasing the federal deficit, Congress is likely to look sharply at the Republican reductions in capital gains and dividend taxes and in income taxes at the highest end of the tax scale. Since many Republicans also support the reform of the AMT, these changes might pass even if President Bush were opposed.

Estate tax:
Efforts to abolish the estate (or “death” tax) are dead, at least for the foreseeable future. A middle-of-the road decision exempting many smaller estates from taxation could emerge ahead of 2010, when the tax would otherwise revert to old levels, but no action is likely this Congress.

Trade with China:
We will almost certainly see renewal of proposals, already supported by many Republicans, to increase tariffs or otherwise limit Chinese exports to the US unless China allows its currency to rise in value. Congressman Rangel has said that he will favor a more aggressive approach toward China and other countries on currency policies and enforcing trade rules. “We have to insist that if they trade with us, it’s free trade. We must protect American jobs,” Rangel said recently.

Immigration:
The campaign by some House Republicans to stiffen enforcement of laws intended to prevent employers from hiring illegal immigrants and to deport many illegal or undocumented workers, which would have affected the workforce for many restaurants and hotels, is at an end. Congress may now be ready to come closer to President Bush’s proposal for tightened border controls but a generous “guest worker” program.

Health Insurance:
While action prior to the 2008 election is unlikely, many of the new Democratic leaders will renew the health care debate, calling either for a national health insurance program or one which requires all businesses either to provide health insurance or pay into a tax to fund coverage for the uninsured. A new program in Massachusetts, supported by Republican Governor Mitt Romney (one potential president contender) could be one model.

State “Business Activity Taxes”:
The effort, strongly supported by NAFEM, to obtain federal legislation restricting the right of states to impose “business activity taxes” on firms that have no physical presence in their states is probably dead. Support was shaky even among Republicans, who were facing pressure from the National Governors Union and from several Republican governors to oppose this bill, and the presumptive new chairman of the House Judiciary Committee, John Conyers (D-MI), has been opposed.

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WEEE/RoHS Reminder

Fall 2006

The waste of Electronic and Electrical Equipment (WEEE) Directive went into effect in August 2005 and is aimed at reducing the amount of EEE final disposal waste. The Restriction of use of certain Hazardous Substances (RoHS) Directive, aimed at reducing the hazardous substance content of electronic and electric equipment (EEE), went into effect July 1, 2006.

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Manufacturers seeking more information can contact the U.S. Department of Commerce’s (DOC) contact in Brussels, Rosemary Gallant (rosemary.gallant@mail.doc.gov). In addition, NAFEM’s Web site (www.nafem.org/resources) has two PowerPoint presentations from the DOC that provide a valuable overview, as well as the June update from the U.S. mission to the EU WEEE/RoHS.

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Important News Regarding Hexavalent Chrome

Fall 2006

While stainless steel does not itself include hexavalent chrome, the Occupational Safety & Health Administration (OSHA) believes that it may be generated by welding, or in some cases, grinding. OSHA has not provided any specific information on whether or not it believes that welding would generate levels of hexavalent chrome that exceed the action or the permissible exposure levels, leaving it up to individual employers to make these determinations.

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Effective November 27, this new OSHA standard requires initial workplace exposure monitoring of any operation that may generate hexavalent chrome. If the levels exceed the Permissible Exposure Level (PEL) of 5.0 micrograms per cubic meter of air, measured on an eight-hour, time-weighted average, other requirements are triggered, including use of personal protective equipment (respirators). Other actions, including continued air monitoring, are triggered if exposures exceed an action level of 2.5 micrograms per cubic meter of air.

A summary of the OSHA rule is available on NAFEM’s Web site along with a list of possible variables in welding operations that might affect the levels of hexavalent chrome generated.

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Congress Moving to Head Off Proliferation of State Business Activity Taxes

Fall 2006

With recent action by the House Committee on Judiciary, Congress is finally moving ahead with action to prevent states from imposing “business activity taxes” on firms that make sales in their states but have no office or other physical presence.

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Over the summer, all NAFEM members were urged to write their congressional representatives in support of the full house vote on the Business Activity Tax Simplification Act (BATSA) of 2006 – HR1956.

At least 10 states are currently imposing these taxes – a form of income tax, based on corporate earnings – on firms that ship products into their states as a result Internet-placed orders or developed by independent sales representatives. While action by the various states is inconsistent and often arbitrary, a number of NAFEM members have reported they have been assessed these taxes.

The House version of the BATSA, introduced by Congressmen Bob Goodlatte (R-VA) and Rick Boucher (D-VA) as passed in late June by the House Judiciary Committee Chaired by James Sensenbrenner (R-WI). NAFEM members in Sensenbrenner’s district and others in nearby Wisconsin districts have strongly urged Sensenbrenner to act on this bill, and NAFEM Government Relations Chair David Rolston, CFSP president, Hatco Corporation, Milwaukee, has since met with him to express our appreciation. The legislation would require “nexus” before a state can impose such business activity taxes: meaning having an office or employees in the state for more than a de minimis period.

One earlier version of the bill would have made a firm subject to nexus, therefore to these taxes, if a firm had either an employee or a sales representative in the state. NAFEM immediately flagged this an unacceptable, and the legislation now exempts a firm from nexus as long as its sales representative represents at least one other firm in the state.

With the full House vote anticipated shortly, we’re turning our attention to the Senate Finance Committee.

Over the summer, NAFEM members in Pennsylvania and Tennessee were encourages to write to Senators Rick Santorum (R-PA) and Bill Frist (R-TN) respectively, urging their support for S2721, the Senate version of HR1956. Members will again be asked to write their Senators when the bill leaves committee and heads to the Senate floor.

The Senate bill, introduced by Senator Charles Schumer (-NY) with co-sponsorship by Senators Mike Crapo (R-ID), Tim Johnson (D-SD), John Thune (R-SD), Jim DeMint (R-SC), and George Allen (R-VA), has been referred to the Senate Finance Committee, chaired by Senator Charles Grassley (R-IA). With Congress expected to adjourn for the year in early October, prior to the election, the window for action in this Congress will close. If this opportunity to deny states the ability to impose onerous taxes on firms that have no physical presence in their states is lost this year, it may not recur.

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New OSHA Standard on Hexavalent Chrome Covers Welding of Stainless Steel

Summer 2006

Under a standard published in February, the Occupational Safety and Health Administration (OSHA) has sharply reduced the permissible level (PEL) for workplace exposure to hexavalent chrome from 52 to 5 micrograms per cubic meter of air, measured on an eight hour time-weighted average. While OSHA has provided no data on likely levels of exposure, the agency believes that stainless steel welding can generate hexavalent chrome, and OSHA inspectors are likely to expect at least initial air monitoring by the compliance date of November 27, 2006. (Firms with fewer than 20 employees have until May 30, 2007.)

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The National Association of Manufacturers (NAM) and the Special Steel Institute of North America (SSINA), believing that meeting the standard will be prohibitively expensive, have filed suit asking for court review. Several unions, thinking the PEL should be still lower, also have asked for court review. While a court review will almost certainly take place, this may not affect initial 2006 compliance requirements.

The standard applies to all occupational exposure to hexavalent chrome unless the employer has objective data demonstrating that a material containing chromium or a specific process, operation, or activity involving chromium cannot release dust, fumes, or mist of chromium (VI) in concentration at or above 0.5 ug/m3 (one tenth the PEL).

The standard sets an “action level” at 2.5 micrograms per cubic meter of air. This action level triggers requirements for periodic air monitoring, medical surveillance and employee notification. Air monitoring results that exceed the PEL of 5 micrograms per cubic meters of air immediately trigger additional requirements, including respiratory controls. By May 10, 2010, employers are required to reduce exposure to the PEL by engineering and work practice controls unless the employer can demonstrate that these controls are infeasible. Standards by which “feasible” will be measured are not specified, but the history of enforcement of other OSHA health standards indicated that this hurdle will be high.

If periodic monitoring indicated that exposures are below the action level, employers will be able to discontinue monitoring for those employees. However, employers are not permitted to meet the action level or the PEL through employee rotation.

NAFEM will provide members with additional information on the standard, its likely impact on firms that weld stainless steel and on compliance as information becomes available.

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Byrd Amendment Repealed – With Two Year Delay

Spring 2006

NAFEM and the Consuming Industries Trade Action Coalition (CITAC), of which NAFEM is a founding member, celebrated a long-awaited victory February 1 when the House of Representatives voted to repeal the Byrd Amendment. The Continued Dumping and Subsidy Offset Act of 2002, known as the Byrd Amendment, re-routes duties collected by the U.S. government from anti-dumping or counter-vailing duties on imported products to the firms that brought the trade cases.

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The Continued Dumping and Subsidy Offset Act of 2002, known as the Byrd Amendment, re-routes duties collected by the U.S. government from anti-dumping or counter-vailing duties on imported products to the firms that brought the trade cases. (Refer to the Winter 2005 issue of NEFEM in print or www.nafem.org/publications/inprint for a full discussion of the impact of the Byrd Amendment and reasons for its repeal.)

A provision of the Deficit Reduction Act of 2005, the repeal passed the House by a two-vote margin, 216-214. The bill, which had been approved by the Senate prior to the December recess, has now been signed by President Bush.

In a concession to opponents, however, repeal is delayed for two years and payment of duties collected on imports subject to the duties will continue to up to October 1, 2007.

Two Congressmen from Idaho – home of Micron, a recipient of the payments, had earlier threatened to vote against the Deficit Reduction Act if it included Byrd Amendment repeal. Given the expected closeness of the vote, their threat had weight. Ohio Senator Mike DeWine (R-OH), home of Timken Company, the largest recipient of Byrd funds, also sought to delete Byrd repeal from the final bill. However, Senate and House leaders, notably Senator Chuck Grassley (R-IA), chair of the Senate Finance Committee, and Congressman Bill Thomas (R-CA), chair of the Ways and Means Committee, held fast that Byrd is bad trade policy and should be repealed.

Repeal of the Byrd Amendment does not change the trade duties, only whether or not they are paid out to the firms that brought the trade cases. Duties on imported stainless sheet and strip will continue through their scheduled expiration in 2008. But paying these duties to the firms that brought the cases (approximately $10 million went to U.S. manufacturers of stainless steel in 2004 alone) is an obvious incentive for firms to bring trade cases or ask for their renewal.

The effect of import duties on the market for a product where imports are significant, like stainless sheet and strip, is difficult to estimate precisely, and extends beyond the percentage of total supply that is imported – about 22 percent, in the case of stainless sheet and strip. But. It is likely that the increased costs paid by U.S. firms using stainless sheet and strip exceed the value of duties paid.

In addition to the unfortunate incentive of Byrd payouts to encourage trade complaints against foreign suppliers, the Byrd Amendment was having other effects on U.S. trade. The World Trade Organization (WTO) ruled this use of import duties illegal under rules to which the U.S. is party. As a result, major trading partners in the European Union (EU), Canada and Mexico have imposed retaliatory duties on a wide range of U.S. products. Fortunately, none include foodservice equipment. It is anticipated that retaliatory duties will remain in place for the next two years until the Byrd repeal goes into effect.

There could, of course, be efforts by firms that have benefited from these payouts to re-instate the Byrd Amendment before repeal is finally effective. NAFEM and CITAC are continuing to monitor the situation closely. For further information, contact Bob Wilbur, NAFEM director, government relations, +1.202.367.1224.

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Byrd Amendment – Status Uncertain By Bob Wilbur, NAFEM Director of Government Relations

Winter 2005

The fate of legislation to repeal the Byrd Amendment (see adjoining story) was uncertain as this issue of NAFEM in print went to press. The Ways & Means Committee of the House of Representatives (where tax, trade and most spending bills must be approved) voted on October 26 to include repeal of the Byrd Amendment in a much larger bill, the Deficit Reduction Act, needed to fun federal programs for the next fiscal year. The full House of Representatives then, on November 18, passed this bill 217-215. Byrd repeal was one, but not the most critical of issues which made the bill controversial.

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The votes in the House were major victories for the Consuming Industries Trade Action Coalition (CITAC), of which NAFEM is a founding member and active participant. The votes for Byrd repeal were achieved in the face of vigorous and well-funded opposition from that minority of U.S. manufacturers who are receiving Byrd Amendment funds from the federal government.

At CITAC’s request, the provision to repeal the Byrd Amendment was proposed early this year by Congressman Jim Ramstad (R-MN) and Clay Shaw (R-FL), both members of the Ways & Means Committee. Their bill, with the support of Ways & Means chair Bill Thomas (R-CA), was folded into the Deficit Reduction bill.

The Deficit Reduction Act must still go to conference with a separate bill from the Senate that does not address the issue. Several senators from states in which Byrd fund recipients are located want to kill this provision in order to retain these payouts. The decision will most likely be made in December. Leading up to the vote, NAFEM is asking select members whose senators are on the conference committee to contact those Senate offices.

Senator Charles Grassley (R-IA), chair of the Senate Finance Committee, who will be extremely influential in the conference, has announced his support for Byrd repeal, recognizing the need to respect WTO rules, the impact of retaliatory tariffs, and the report of the Government Accountability Office (GAO) that Byrd disbursements are too often misused. As NAFEM in print went to press, however, the outcome of the Senate-House conference is unpredictable. If Byrd repeal is taken out of the Deficit Reduction Act in conference, we expect the House sponsors to re-introduce their legislation next year.

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NAFEM Working with NAM to Reduce Catastrophic Health Care Costs

Fall 2005

NAFEM has joined a work group of the National Association of Manufacturers’ (NAM) Health Policy Committee that is studying options for changes in federal policy that could reduce the costs of health insurance, particularly for small and medium-sized manufacturers.

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Called the Coalition to Control Catastrophic Health Care Costs, or HC5, the study group is starting with differing proposals outlines last year by Senate Majority Leader Bill Frist (R-TN), himself a surgeon, and Senator John Kerry (D-MA) during his presidential campaign. While differing in details, these proposals had as a central theme the development of reinsurance for employers to cover part of the catastrophic care – extremely high costs incurred by a small minority of employees who are seriously injured in auto or other accidents, or contract a disease requiring long-term hospitalization or other extended care. The risk of catastrophic health incidents is thought to be one reason that smaller employers often pay higher insurance costs than larger firms.

At the same time, the coalition recognizes that health care costs have a major impact on the profitability and international competitiveness of all U.S. manufacturers, large or small. In many competing countries – such as China – little health care is offered to employees, while in Europe, overall per-person costs are less and more of the health coverage available is subsidized by government.

In addition to the Congressional proposals for reinsurance of catastrophic cost, the NAM study group is examining programs undertaken by some manufacturers to reduce the incidence of avoidable catastrophic costs, particularly heart disease, by improved disease management or employer-sponsored preventative care. One large automotive supplier, for example, has identified 10 percent of its employees most vulnerable to heart attack or stroke and succeeded in getting the majority of them to enroll in exercise or diet control programs to reduce their risks of advanced heart disease.

Although no action is expected this year, several Congressional committees are looking at the steadily increasing costs of health care in the U.S. (national average health care costs increased 8.4 percent last year), and searching for ways to intervene. The HC5 coalition intends to make sure the manufacturing community is prepared to shape action, rather than be on the defensive if proposals coming out of Congress are misguided or dangerous.

NAFEM members interested in this subject, particularly any who have positive stories to share regarding how they have reduced health care costs, are asked to contact Bob Wilbur, NAFEM’s director of government relations, rwilbur@smithbucklin.com.

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Myriad of Issues Pending in Washington

Summer 2005

NAFEM is working with a range of industry coalition to promote favorable action on several legislative issues important to members.

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First, NAFEM is seeking federal legislation to resolve a problem that a growing number of members have encountered in the last year: A number of states demanding payment of “business activity taxes from firms that have made sales in those states but in which they have no physical presence.” H.R. 1956, recently introduced in the House of Representatives by Congressmen Robert Goodlatte (R-VA) and Rick Boucher (D-VA), would clarify that simply making sales does not establish the “nexus,” which subjects a firm to state business activity taxes.

This bill has been referred to the Subcommittee on Commercial and Administrative Law of the House Judiciary Committee. NAFEM has asked all members located in the Congressional districts of members of this committee to make sure their representatives know that this issue is important to them and that the bill should be passed as soon as possible.

In the last Congress, NAFEM was a signatory of a letter organized by the Business Roundtable, an organization of Fortune 500 firms supporting this bill, and Bob Wilbur, NAFEM’s director of government relations has recently represented NAFEM at meetings of the Business Roundtable and with the chief counsel of the House Judiciary Committee to support Goodlatte/Boucher bill.

Second, the Consuming Industries Trade Action Coalition (CITAC), of which NAFEM is a founding member, is advocating repeal of the “Byrd Amendment,” under which tariffs, collected by the United States as a result of “countervailing” or “anti-dumping” duties, are paid to companies filing trade cases. Previously, these tariffs went to the U.S. Treasury. This incentive obviously encourages U.S. manufacturers to bring forth trade complaints, which often are approved by the U.S. International Trade Commission (ITC) simply because the foreign manufacturer has sold into the U.S. at prices below those of domestic manufacturers. Current duties on stainless sheet and strip from several manufacturers in Europe, Japan and Korea are one example – the U.S. manufacturers of stainless sheet and strip collected approximately $7 million from tariffs paid by the importers of stainless sheet and strip in 2004.

The ITC will decide later this summer whether to continue the present tariffs on stainless sheet and strip from these European, Japanese and Korean manufacturers. Although U.S. trade law does not ask the ITC to consider the impact of tariffs on users of imported materials, Representative Joe Knollenberg (R-MI), with a number of co-sponsors, has asked the ITC to do so in this and a related case on hot-rolled steel. NAFEM and CITAC have applauded Knollenberg resolution. In the last year, U.S. imports of stainless sheet and strip have risen 42 percent, and the percentage of stainless sheet and stip used in the United States that is imported has risen from 19 to 24 percent – arguably, evidence that U.S. manufacturers cannot meet full U.S. demand. ITC action, however, is unpredictable, as U.S. trade law does not permit them to take into account the effect of tariffs on users of the imported material, only the impact on U.S. manufacturers of imports of the same product.

Third, NAFEM has been in contact with the National Restaurant Association (NRA) to offer support on efforts the NRA plans for later this year to extend a provision of the 2004 tax bill, which reduced the depreciation period for reconstruction or improvement of restaurant facilities. NRA also will ask that the depreciation period be reduced from the current 39-1/2 years on new restaurants, an action that NADEM will support.

For further information on NAFEM government relations activities, contact Deirdre Flynn or Charlie Souhrada at NAFEM Headquarters, +1.312.821.0201.

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2004 Business Tax Reform Big Gain for Manufacturers

Winter 2004

The “American Jobs Creation Act of 2004,” signed by President Bush shortly before the election has significant benefits for NAFEM members and their customers.

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First, the Act will phase in, by 2010, a reduction in the maximum marginal tax rate for manufacturing activities within the United States from 35 to 32 percent. The tax reduction will replace the “Extraterritorial Income” (ETI) tax incentives to firms, almost exclusively very large manufacturing exporters, who set up Foreign Sales Corporations qualifying for those ETI tax reductions on their exports. Those firms who used the ETI program will lose by termination of this benefit, but the majority of American manufacturers, including most NAFEM members, will come out ahead.

Details of the tax reduction are somewhat complex.  For 2005 and 2006, there is a deduction of three percent from taxable income; for 2007, 2008, and 2009, a deduction of six percent; and for years after 2009, a reduction from taxable income of nine percent.  In each case, the deduction is limited to 50 percent of wages for domestic manufacturing.  The reductions apply to both Subchapter C and S Corporations as well as to sole proprietorships.

Limiting the tax reduction to profits from manufacturing within the United States is intended to reduce the incentives to move manufacturing overseas.

Second, the legislation encourages restaurants to upgrade their facilities by reducing the depreciation schedule for major improvements made to existing facilities prior to January 1, 2006 from 39.5 to 15 years. The wording of this provision is somewhat vague, and even the National Restaurant Association (NRA) is uncertain whether the shortened depreciation schedule would apply to installed cooking and other food preparation equipment or only to structural improvements. The NRA is obtaining legal guidance, which it promises to share with NAFEM, but a definitive interpretation may have to wait for IRS guidelines or even case-by-case determinations. Even if food preparation equipment is not directly covered, NAFEM members should benefit from the improved tax treatment of restaurant improvements made next year, which should encourage restaurants to upgrade equipment at the same time as they make structural changes.

As this provision is now scheduled to expire January 1, 2006, NAFEM members may want to bring this provision immediately to the attention of their customers. While the Congress could subsequently extend this provision, prospects for an addition business tax bill in 2005 are uncertain.

Third, the European Union Trade Commission (EUTC) has responded to elimination of the ETI by recommending that the EUTC end, effective January 1, the retaliatory tariffs that the European Union (EU) has implemented against thousands of American exports, including some stoves and other cooking equipment exported by NAFEM members. These tariffs, now at 12 percent, were initiated by the EU late last year after the World Trade Organization (WTO) ruled that the ETI provisions amounted to an illegal export subsidy under rules of the WTO to which the United States has subscribed. Although the tariffs are paid by the importing rather than the exporting firm, NAFEM members that market these products in Europe have found their competitiveness damaged.

The EU is, however, asking the WTO to rule out the legality of the two-year transition for ending the ETI benefits and on a provision, that extends ETI benefits for American manufacturers who entered into binding contracts before September 17, 2003. This leave some uncertainty over possible reimposition of retaliatory tariffs later in 2005 if the WTO again rules against the United States. Any new tariffs, however, would almost certainly be on fewer products and at a lower level; cooking equipment might well be excluded.

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NAFEM 2004 Size & Shape of the Industry Study

Winter 2004

This past spring, NAFEM sponsored its 2004 Size & Shape of the Industry Study, an industry-wide, information-gathering survey of the foodservice equipment and supplies market. The survey data was collected and aggregate results analyzed and reported through a joint effort by the University of Nevada, Las Vegas (UNLV) and Fryett Consulting Group. Companies can use the results to improve industry knowledge, assist in business planning, develop new products, set benchmarks and identify business opportunities.

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The results are compiled in nine volumes defined by the categorical breakouts within the survey: Food Preparation Equipment; Primary Cooking Equipment; Refrigeration & Ice Machines; Serving Equipment; Smallwares, Cookware & Kitchen Tools; Storage & Handling Equipment; Tabletops & Servingware; Warewashing, Janitorial & Safety Equipment; and Furnishings, Décor & Custom Fabrication.

Participating companies received two priority points and a copy of the complete report free of charge. Member non-participants may purchase for $250 per volume or $995 for the complete set. The data will be available to channel partners on March 1, 2005 for $495 per volume, or $3,395 for the complete set; and to the industry at large on September 1, 2005 for $995 per volume, or $6,500 for the complete set.

Visit www.nafem.org for more information and to order your copy of the study; or simply download an order form and mail or fax it to NAFEM Headquarters.

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ITC to Review Anti-Dumping Duties on Stainless Steel

Spring 2004

Toward the second half of 2004, the International Trade Commission (ITC) will implement a review of “anti-dumping” duties on stainless steel implemented in 1999. Such a review occurs automatically five years after anti-dumping duties are implemented, and is intended to determine if changed circumstances warrant discontinuing the tariffs.

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Primary parties of the review will be the domestic stainless steel manufacturers who brought the complaint forward in 1998, as well as those foreign manufacturers in Europe and Asia who now are subject to the duties have led to higher prices for stainless steel sheet and strip in the U.S. and the impact on competition in our industry both domestically and overseas.

Given the recent action by the Bush administration to terminate the Section 201 tariffs on other types of steel, the ITC – mindful of the impact of tariffs on steel users which was made visible in the battle over the Section 201 tariffs – may now be more sympathetic to the impact of these tariffs on users of stainless steel than they were in 1999.

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Access to Steel at World-Competitive Prices

Spring 2004

The announcement by President Bush in December to terminate the Section 201 Tariffs – which added 30 percent to the cost of steel for many steel-using manufacturers – was a major victory. At NAFEM’s request, stainless steel sheet and strip had been exempted from the Section 201 steel tariffs from the outset.

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Nonetheless, the trade association of specialty steel manufacturers stated it wanted the tariffs extended to stainless sheet and strip. NAFEM’s arguments for the exemption were that the food equipment industry, in order to maintain its growing export markets, must have access to steel at prices no higher than its members’ overseas competitors; and that U.S. manufacturers of stainless steel sheet and strip were profitable and therefore had no need for trade distorting protection.

Even though exempted from the tariffs, NAFEM recognized the damage being done to other steel-using industries and supported their campaign to end the tariffs. As a member of the Consuming Industries Trade Action Coalition (CITAC), which advocated for domestic users of industrial raw materials, including steel, NAFEM assisted CITAC in organizing several major lobbying days on Capitol Hill. NAFEM also joined steel-using corporations and several other manufacturing trade associations in a letter to President Bush calling for an end to the steel tariffs, and supported a resolution in the National Association of Manufacturers’ (NAM) Trade Policy Committee which brought balance to NAM policy.

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U.S. Equipment Makers Could be Hit by Retaliatory Tariffs

Spring 2004

U.S. manufacturers of cooking and other food preparation equipment exported to Europe should be aware of plans by the European Union (EU) to pull retaliatory tariffs on a wide range of U.S. products, including some food preparation equipment, as early as March 1, 2004.

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The tariffs would be paid by the equipment importers, not the exporter, but could affect competitiveness of U.S. products in European markets – potentially off-setting some of the sales advantage that U.S. products have gained by the recent fall of the dollar versus the Euro.

The threatened tariffs are in retaliation for tac exemptions that the U.S., since 1984, has been offering to U.S. firms on exports that they make through Foreign Sales Corporations (FSCs) – corporate entities that many major U.S. manufacturers have set up in foreign jurisdictions in order to reduce taxes on earnings from exports. Under this U.S. law, 15 percent of all revenue generated was exempted from corporation tax.

The World Trade Organization (WTO), in final resolution of a series of complaints brought against the U.S. over this issue, has ruled that these tax exemptions are an export subsidy, illegal under the rules of the WTO, with which the U.S has agreed to comply.

As authorized under the WTO rules, the EU now has threatened to impose retaliatory tariffs, beginning at five percent starting this March, on a wide range of U.S. products, both agricultural and manufactured. The tariffs will increase one percent per month until reaching 12 percent in October.

The list of products against which the EU plans to implement these tariffs includes stoves, ranges, cookers, plate warmers and similar non-electric cooking equipment included in Chapter 7321 of the EU tariff codes. Articles of iron or steel “for table use” also are covered.

As hundreds of U.S. products, including major agricultural commodities, are on the EU list, the U.S. Congress is considering early changes in U.S. law to head of retaliatory tariffs. One proposal being considered in the House Ways & Means Committee would repeal the FSC legislation and replace it with a three and a half percent reduction in corporate taxes on earnings from exports of companies that have 100 percent of their production in the U.S. A sliding scale would apply to U.S. firms that manufacture both here and overseas. This proposal would benefit all exporters, not just those which have set up FSCs.

While both the House Ways & Means and the Senate Finance Committee were to hold hearings on this issue as early as last month, the chances that Congress will have completed action before March are small. Unless the EU agrees to suspend the implementation date of its retaliatory tariffs in light of action pending in Congress, U.S. firms could begin to see the impact on their European customers early this year.

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Corporate Tax Break for Foodservice E&S Exports

Summer 2003

NAFEM Export Assistance Advisory Council Member Kurt Bahnmaier, FETCO Corp., attended a seminar covering a little known topic that could prove a tremendous tax benefit to many of you who export foodservice equipment and supplies: the Extraterritorial Income Exclusion (ETI). It’s a way to deduct the value if your foreign sales from your corporate tax returns, resulting in significant savings and perhaps even a refund from the IRS.

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Since the ETI became effective September 30, 2000, you can amend your 2000, 2001, and 2002 tax returns. However, the ETI is not here to stay. It might be repealed by Washington lawmakers during 2003, making the 2003 tax year the last opportunity to take advantage of these potential savings.

Ask the following of your business:

  • Do we export finished manufactured goods?
  • Do the products have at least 51 percent U.S. content?
  • Do our export sales total less than/equal to $5 million per year? (The ETI can be excluded even in cases where companies export over $5 million per year. However, the income of this amount is means-tested and it is recommended a tax professional be consulted for further details.)

Those of you who export products are encouraged to take advantage of this tax break and contact your tax professional or contact the seminar presenter David Massoth of Dugan & Lopatka, +1.630.665.4440 or dmm@tdip.com, for more information.

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International Trade Issues High on NAFEM Washington Agenda

Summer 2003

NAFEM is working aggressively with coalition partners to achieve a better balance between steel manufacturers and steel users in our international trade policies.

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In 2001, the response to NAFEM’s request, the Bush Administration exempted stainless steel sheet and strip from Section 201 tariffs on most imported steel. Some NAFEM members using galvanized or other products covered by the tariffs have still seen tariff-caused price increases, but not nearly as great as those of many steel-using manufacturers, who have seen price increases of 30 percent or even more on the steel they use.

NAFEM supports the steel users’ sub-committee of the Consumer-Trade Action Coalition (CITAC) in its effort to get the Section 201 tariffs phased out this September.

Part of NAFEM’s effort has been to support a revision of steel trade policy with the National Association of Manufacturers (NAM), which historically has refused to comment on the needs of steel users, despite its overall free-trade orientation.

NAFEM supported a highly contentious resolution passed by the NAM International Trade Committee calling for recognition of the impact of steel tariffs on steel users in the formulation of steel trade policy. Despite bitter opposition from steel manufacturers, this resolution was approved by the NAM committee and subsequently by the NAM Board of Directors.

The new NAM policy statement, titles “Challenges to U.S. Manufacturers in the Global Marketplace,” reiterated a number of barriers to U.S. exports, such as the high value of the dollar, tariff barriers overseas and government subsidies. But NAM’s policy statement does include this new addition:

“NAM believes that the needs of steel producers and steel consumers should be take into consideration in formulating international policy on steel. To help clarify key issues that are affecting manufacturing in the United States, NAM recommends that President Bush instruct the U.S. International Trade Commission to gather evidence of the impact of the steel Section 201 steel tariffs on both steel-producing and steel-consuming industries and to report its findings no later than July 31, 2003.”

Resolutions also have been introduced in both the U.S. House and Senate calling on the International Trade Commission to report to President Bush on the impact of the tariffs on steel-using industries. These resolutions are unlikely to overcome the steel-trade caucuses of Congress, but their introduction and support by a credible number of House and Senate representatives indicates that steel users employ far more workers than steel manufacturers and that an unbalanced trade policy hurts U.S. industry more than it helps it.

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“Fast-track” Authority in Doubt

Fall 2002

NAFEM, working with the National Association of Manufacturers (NAM), has been supporting the Trade Promotion Act (TPA) to give President Bush “fast-track” negotiating authority to facilitate tariff-reducing agreements with foreign nations.

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At present, U.S. manufacturers are losing sales to countries, even in South America, that have negotiated reduced tariffs with European competitors, while our trade negotiators are hobbled by the ability of the Senate to nit-pick any trade agreement negotiated by President Bush and his trade representative.

While both the Senate and House have now passed the TPA, there are sufficient differences between the Senates and House bills so that it’s essential that they confer to agree on a merged bill. However, the Senate wants to combine this with several other pending trade bills, complicating the ability of House negotiators to develop an agreement with the Senate that could survive a new house vote.
The NAFEM Washington office will continue to follow on these issues.

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Steel Tariffs Hurting Other Industries, Early Repeal Sought

Fall 2002

The Consumer-Industry Trade Action Committee (CITAC), of which NAFEM us a member, is campaigning to obtain relief from the recently imposed Section 201 tariffs on most carbon and some heavier than stainless sheet and strip were exempted (at NAFEM’s request)., NAFEM will be supporting CITAC’s effort.

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Many small manufacturers, such as those in the machine tool industry, are being hurt by the tariffs and the resulting price increases on the steel they use. Many are losing orders to foreign competitors and might not survive 18 months.

CITAC’s efforts to publicize the impact of steel tariffs and quotas on steel-using industries, and on the economy as a whole, is beginning to create a better balance of public opinion between steel manufacturers and their unions, and those hundreds of thousands of employees whose livelihood is dependent on obtaining steel at no-worse-than-world-prices. Any action by CITAC therefore improves our position on overall steel issues, and helps head off negative future action on stainless sheet and strip.

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Steep Tariffs Announced on Many Steel Products; Stainless Sheet and Strip Remain Exempt

Summer 2002

As expected, the Bush Administration announced tariffs of up to 30 percent on a wide range of steel products this March. When the Bush Administration initiated the “Section 201” petition to the International Trade Commission (ITC), which led to these tariffs, NAFEM’s effort to persuade the administration to exempt stainless steel sheet and strip from the petition last May was successful. The 30-percent tariffs apply to flat rolled steel and hot rolled/cold finished bar only. These will drop 24 percent in the second year and 18 percent in the third year.

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Stainless rod and stainless bar are subject to tariffs of 15 percent the first year, 12 percent the second year, and 9 percent the third year. Tariffs on stainless wire will be 8 percent all three years.

The Consumer-Industry Trade Action Coalition (CITAC), of which NAFEM is a member, expressed dismay over the decision. The dismay came despite opposition from some members of the Bush Administration and a wave of editorials, from the Wall Street Journal to the New York Times, pointing out there are far more employees at steel-using firms than at steel manufacturers. Bob Wilbur, NAFEM vice president for Government Relations, assisted CITAC members at a meeting March 13 in Washington in which small manufacturers using steel products included in the tariff decision reiterated to their Congressmen that these tariffs will make them less competitive with foreign manufacturers, thus resulting in job losses and, in some cases, complete failure of the steel-using firms.

In an off-the-record speech which leaked to the press, Treasury Secretary Paul H. O’Neill was reported to have a stated belief that the decision risked more hobs in steel-using industries than it would protect among steel manufacturers. More economists believe that the old-line coke-and-iron-ore steel manufacturers are so far from being competitive with newer plants, both domestic and foreign, that the tariffs will only stretch out their demise.

While applauding the tariffs, the Congressional steel caucus has turned its efforts to promoting a bill which would put a 1.5 percent tariff on all steel sold in the United States. These funds would be used to support pension and healthcare costs for steelworkers whose firms have gone out of existence. NAFEM has joined CITAC in opposing this bill, which would target steel users with costs of change in the national economy for which they have no responsibility.

NAFEM does not expect this bill, nor others introduced by members of the steel caucus that would put quotas on all steel, including stainless sheet and strip, to move in Congress this year. Next year is less certain. There also is some speculation that the stainless industry, encouraged by recommendation of the ITC on the cases just decided, might itself initiate a similar action, including stainless sheet and strip, next year. NAFEM will be watching this situation closely.

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Fostering Excellence in Foodservice

Summer 2002

One of the best ways for NAFEM to build on its strengths is to plan for the future through a strong professional development effort. Part of that effort includes NAFEM’s support of the Foodservice Equipment Distributors Association (FEDA) Educational Foundation where NAFEM is generously allocating $250,000 over the next five years to the program.

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The FEDA Educational Foundation is designed to provide training and education, and expand industry knowledge of individuals in the food service equipment supplies trade through online certification programs and graduate degrees in distribution.

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ITC Recommends Tariffs on Most Steel, but Stainless Largely Exempt

Spring 2002

Following an investigation requested by the Bush Administration, the International Trade Commission (ITC), has recommended tariffs of 20 percent on most steel products, other than stainless steel plate, sheet and strip. President Bush is expected to accept these recommendations with a decision anticipated in the first quarter, 2002.

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Stainless steel sheet and strip was exempted from the ITC investigation, under section 201 of U.S. trade law, as the result of a successful petition made by NADEM last March when the Bush Administration was developing request for ITC action.

In a letter to the Office of Special U.S. Representative for Trade and to the Department of Commerce, NAFEM Immediate Past President John Nackley, CFSP, pointed out that imports of stainless steel sheet and strip had not risen in the past year, and most importantly, that past quotas or tariffs had damaged the international competitiveness of this successful, export-oriented industry.

In addition to most carbon steel, the ITC has recommended duties of 15 to 20 percent in the first year of relief, scaling down in subsequent years, on stainless steel bar, stainless steel rod, and stainless fittings and flanges. However, the ITC voted against recommending import duties on stainless plate.

While the food equipment industry is not greatly impacted by this immediate case, we need to be vigilant. Steel industry supporters in Congress have introduced legislation calling for quotas on all steel products, including stainless. While the ITC recommendations for additional tariffs probably mean no action will be taken on that proposal, the worsening situation of the steel industry means protectionist pressures will remain.

Commenting on the ITC case, the Specialty Steel Industry of North America, the trade association of stainless steel producers, cautioned that “other industry sectors, such as flat-rolled products, are struggling with imports in this weak economy. We will continue to monitor the actions of foreign producers and take action as necessary.”

The Bush Administration also is attempting to forge international agreements to reduce excess capacity, and therefore over production in the worldwide steel industry, thereby reducing the temptations to sell steel overseas below domestic costs. These negotiations focus on carbon and steel where over-capacity is most pronounced.

NAFEM also is continuing efforts, in conjunction with the Consuming Industries Trade Action Coalition (CITAC), to obtain changes in U.S. trade laws to ensure that users of imported materials, such as steel, have a full opportunity to present their case in any future trade cases taken before the ITC. At present only the complaint – usually the U.S. steel producer – and the foreign supplier are parties to these cases. The economic effects on steel-using companies and industries are essentially ignored.

As a member of CITAC, NAFEM is helping Congressman Jim Kolbye (R-AZ) obtain additional co-sponsorship for H.R. 2270, the legislation he has introduced that would give steel-using industries full standing in ITC cases. Current co-sponsors are Jim Moran (D-VA) and Jim Ramstad (R-MN), NAFEM members should urge their Congressmen to co-sponsor this legislation to allow NAFEM or its members to participate in any future ITC action concerning stainless steel sheet and strip.

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Trade Promotion Authority: Next Stop, the U.S. Senate

Spring 2002

Legislation supported by NAFEM to give President Bush “fast-track” authority to negotiate bilateral-tariff-reducing treaties with other nations passed in the House of Representatives in December 2001 by a margin of only one cote – 215-214.

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Having passed in the House, the legislation moved on to the Senate, where it was expected to pass soon after Congress reconvened in January. Under this legislation, the Congress would still have the authority to approve or disapprove any treaty, but would not negotiations with other countries impossible.

A number of countries competing with the United States in the production of food preparation and serving equipment have already negotiated bilateral treaties, which result in lower tariffs for their products than for those from U.S. The situation makes it more difficult for NAFEM members to compete in growing export markets. This kind of tariff discrimination against U.S. products would become worse if the President and the U.S. trade negotiations lack the authority to negotiate the treaties, which the Trade Promotion Act will provide.

NAFEM members from the districts of “swing,” or undecided Congressmen, were active urging their representatives to support the Trade Promotion Act. The NAFEM Washington office, working with the National Association of Manufacturers (NAM) and US Trade, a NAM-affiliated organization, participated in a number of meetings with Congressmen who were wavering in support of who had not studied the issues.

John Nackley, CFSP, InterMetro Industries Corp., Wilkes-Barre, Pa. and NAFEM immediate past president, wrote to all members of Congress to point out that almost 20 percent of the industry’s products are now exported, meaning that 20 percent of employment is directly dependent on exports. These export markets represent growth opportunities for most NAFEM members. The letter campaign was successful: The majority of those Congressmen or Congresswomen with whom NAFEM or its members made direct contact ended up supporting the bill.

Approval was uncertain until the last minute. Unions were strongly opposed, fearing job losses in the U.S. and ignoring the jobs that exports create.

NAFEM will again write members of the Senate when the bill comes before that body, which will probably take place during the first quarter of 2002. However, the Senate is traditionally more trade-oriented than the House of Representatives, so this vote approval should be far less difficult to obtain. NAFEM will keep you updated on the outcome of the vote.

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