Capital Briefing: May 6, 2010

A Publication of the National Association of Manufacturers
E-mail briefing from the
National Association of Manufacturers
May 6, 2010

Focus -- The Consumer Product Safety Enhancement Act

In recent years, alarming headlines have drawn attention to safety recalls of children's products imported into the United States. In an effort to mitigate these hazards and better protect the children who were most at risk, Congress in 2008 passed the Consumer Product Safety Improvement Act (CPSIA) - the most sweeping reform to U.S. consumer product safety laws in decades.

Manufacturers take the safety of their products very seriously and accept their responsibility to minimize the risk for consumers. Moreover, many manufacturers' own employees and families are consumers of these products. Safety is their top priority.

Although the CPSIA was well-meaning and the National Association of Manufacturers (NAM) supported some of its provisions, its broad reach had the unintended consequence of harming manufacturers and consumers alike. The law imposed unrealistic and inflexible timelines for new product testing and certification and impractical labeling requirements. In addition, it applied the same rigid criteria to a wide range of products, regardless of their intended use.

Soon after its enactment, the NAM petitioned the Consumer Product Safety Commission (CPSC) - the body charged with implementing the law - for relief from these burdensome regulations for products that posed no risk and sought additional clarification on the new rules. However, manufacturers across the country were already preparing for the new regulations by eliminating safe products and halting production and distribution.

Millions of safe products were deemed illegal and had to be destroyed. Businesses lost millions of dollars and thousands of manufacturing jobs were put in jeopardy. In some cases, consumers of certain children's products, such as youth-sized ATVs, were left only with adult-sized options, which are more dangerous for children. Institutions like Goodwill stopped taking donations of children's clothing and toys.

In short, the law came at a great cost without a commensurate improvement in safety. Its confusing and stiff new guidelines hurt manufacturers and, by extension, the American consumer by banning safe products.

The NAM led an aggressive campaign to educate manufacturers and lawmakers about the impact of the CPSIA. The CPSC, through word and deed, acknowledged that the law was fundamentally flawed and that new legislation was needed. Congress has taken notice and is now taking action.

On April 29, the House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection held a hearing on the Consumer Product Safety Enhancement Act (CPSEA), which was drafted to clarify and improve implementation of the CPSIA. This new proposal addresses many but not all of the problems of the original legislation.

It amends the exclusion process to allow many items banned under the current law to be sold again. These include products that pose no risk to children from lead content, such as bicycles, motorcycles, ATVs and snowmobiles. The CPSEA recognizes that component parts of products that are inaccessible to the user present no risk to children, and it creates an exemption for inaccessible phthalates. It recognizes the inappropriateness of retroactively applying future standards and instead applies them prospectively from the date of manufacture. And it allows manufacturers, retailers and private citizens to resume donating safe children's products to charities.

The NAM was a key player in discussions leading to the drafting of the CPSEA and worked closely with its authors to ensure that provisions harmful to manufacturers, and ultimately consumers, were removed. As a result, the CPSEA is a positive step toward correcting several of the shortcomings of the CPSIA.

NAM Vice President of Infrastructure, Legal and Regulatory Policy Rosario Palmieri joined other interested stakeholders to testify at the hearing. In his testimony, Palmieri noted the law's impact on manufacturers and called for its passage: "This legislation is urgently needed," and unnecessary delays "could prevent needed relief from coming in time to preserve manufacturing jobs that have been hard hit in this recession." He added, "We are hopeful that bipartisan cooperation will result in the swift adoption of legislation to allow manufacturers to continue to produce and sell safe children's products."

Challenges certainly remain, and there is a long way to go. As the CPSEA works its way through the House and a Senate version is developed, the NAM will remain actively engaged to protect manufacturers and to help ensure that Congress gets it right.

Product safety is a vital concern for manufacturers. The federal government has a positive role to play in ensuring the safety of our products. Effective oversight, in fact, complements our industry's own high standards.

Going forward, we need to make sure that these measures focus on safety and not on increasing litigation and mandates. In the long run, this will better help protect consumers and preserve the benefits of the U.S. market for American manufacturers.

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Top Story

NAM Leads Business Community Efforts to Pass Miscellaneous Tariff Bill. On May 5, NAM President John Engler sent a letter to every member of Congress urging them to support the Miscellaneous Tariff Bill (MTB). The MTB provides vital tariff suspensions for companies that import foreign inputs not produced in the United States. On December 31, 2009, however, hundreds of duty suspensions from the MTB expired, leaving U.S. manufactures to face increased tariffs on inputs and components critical to their production processes. Governor Engler's letter was sent as a cover to a larger business community letter supporting the MTB and signed by nearly 150 companies and associations. In his letter, Governor Engler noted, "The MTB is one of the most important short-term actions Congress can take to preserve and expand good American jobs, cut the costs of doing business in this country, boost America's manufacturing competitiveness, and boost our manufacturing exports. American manufacturers, large and small, use the MTB's tariff suspension provisions to obtain raw materials, proprietary inputs, and other products that are not available in the United States." Without the MTB's suspension of tariffs, companies must pay duties on these imported products, resulting in one more disadvantage to manufacturing in America. Details : Douglas Goudie , (202) 637-3078.

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Human Resources Policy

Immigration Reform Efforts Continue. Under pressure from immigration rights groups to move forward on reform, Senate Democrats released a 26-page outline late last week. The Administration and Senate Democrats are now trying to use that document in an effort to recruit Republicans and achieve bipartisan support for the policies included in the outline. The goal, however, may have changed as President Obama has stated he would like to get started this year, but not necessarily complete reform this year. Details : Jeri G. Kubicki , (202) 637-3127.
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Energy & Resources Policy

EPA Issues Coal Ash Proposed Rulemaking. On May 4, the Environmental Protection Agency (EPA) released its long anticipated proposal to regulate coal combustion byproducts (CCBs), or so-called "coal ash", under the Resource Conservation and Recovery Act (RCRA). The proposal includes two options: to regulate CCBs under stringent "hazardous waste" requirements pursuant to RCRA Subtitle C; and a less stringent alternative under "solid waste" rules pursuant to RCRA Subtitle D. EPA officials are not expressing a "preferred option" and characterize each proposal as "coequal". Under both scenarios, the EPA states it will maintain exemptions for so-called "beneficial use" of CCBs. Manufacturers oppose regulation under hazardous waste requirements because of the increased likelihood of lawsuits, among other reasons. The proposal will be subject to a 90-day comment period following publication in the Federal Register. Details : Bryan Brendle , (202) 637-3176.

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Tax, Technology and Domestic Economic Policy

Senate Takes Up Financial Services Reform . Senate floor action began earlier this week on S. 3217, the Restoring American Financial Stability Act of 2010. On the derivatives issue, Sens. Richard Shelby (R-AL) and Saxby Chambliss (R-GA), Ranking Members of the Senate Banking and Agriculture Committees, respectively, introduced a substitute derivatives amendment May 5 that addresses many key concerns for NAM members. A floor vote on the amendment is expected next week. During the debate on financial reform, the NAM has urged policymakers to ensure that any derivatives reform effort includes a strong and clear exemption for business end-users, like manufacturers, that use customized over-the-counter (OTC) derivatives to manage risk. In addition, the NAM has called for clear exemptions from central clearing, bilateral margining and exchange-trading requirements for business end-users to avoid drawing large amounts of capital from business operations, including job creation. The NAM has serious concerns, however, that the current exemption language in S. 3217 is not strong or clear enough to safeguard manufacturers. Other provisions in S. 3217 could effectively eliminate the exemption for many companies and, in some cases, subject them to capital and margin requirements or higher costs. It is expected that the Senate will consider a number of issues of interest to manufacturers as the debate goes on, and the NAM will continue to monitor new developments. Details : Dorothy Coleman , (202) 637-3077.

NAM Urges House Support for Home Star Act . On May 5, the NAM sent a key vote letter to all House offices urging support for H.R. 5019, the Home Star Energy Retrofit Act. Nearly a quarter of the 2.2 million manufacturing jobs lost since December 2007 have been in industries closely connected to housing, such as furniture, wood and textile products and building materials, and the Home Star program would quickly create jobs in the manufacturing, distribution and sale of energy-efficient products. As the NAM stated in the letter, "The Home Star program would spur much-needed consumer demand for energy-efficient products and building materials by providing significant and immediate rebates for home energy-efficiency retrofits. Cost-effective energy efficiency and conservation measures are important for reducing energy costs, stretching available energy supplies and reducing greenhouse gas emissions." American manufacturers are committed to producing more energy-efficient consumer products for residential use. Click here to read the NAM's key vote letter on H.R. 5019; click here to read NAM President John Engler's and former Energy Secretary Spence Abraham's op-ed in The Hill. Details : Dorothy Coleman , (202) 637-3077.

Urge Congress To Restore the R&D Tax Credit . Both the House and the Senate have passed different versions of tax extenders bill H.R. 4213, and each includes a one-year extension of the R&D tax credit. Congress now is working toward the goal of completing final action on H.R. 4213 by Memorial Day. Please use the NAM's Contact Congress to send a pre-typed email - which can be easily edited to include company-specific information about the impact of the R&D credit - to your senators and representative. The more emails congressional offices receive, the stronger the message to Congress to act sooner rather than later to renew the credit at this critical time. For more information, click here . Details : Monica McGuire , (202) 637-3076.

Bonus Depreciation May Be Added to Senate Bill . A one-year extension of bonus depreciation for 2010 may be added to H.R. 4849, a small business tax bill, next week in the Senate. NAM-supported bonus depreciation will allow companies of all sizes to deduct in the first year of the recovery life half of the cost of machinery and equipment purchased and placed in service this year. The House passed H.R. 4849 earlier this year, but it did not include bonus depreciation. Details : Monica McGuire , (202) 637-3076.

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Trade Policy

NAM Task Force Mobilizing for Leadership on International IPR Issues. The NAM's new Task Force on International Intellectual Property Rights (IPR), chaired by ITW Vice President Mark Croll, had an initial meeting at NAM headquarters April 29. A number of member companies and associations attended or called in and contributed ideas on how the NAM can best take a leadership role in attacking international product counterfeiting and piracy as well as other IPR challenges. The guest speaker, new White House Intellectual Property Enforcement Coordinator (IPEC) Victoria Espinel, strongly endorsed the NAM's leadership on these important issues. More member participation and input is needed, especially from small and medium-sized manufacturers, to fight the sales-killing, jobs-killing scourge of IPR crimes and policy challenges around the world. Details : Shaun Donnelly , (202) 637-3142.

NAM Concerned with Conflict Minerals Trade Act. New legislation is moving through Congress that could affect global supply chains and create new customs burdens. H.R. 4128, the Conflict Minerals Trade Act, was introduced to stop the trade in conflict minerals that is sustaining the war in the Congo. The NAM, while recognizing the important goal of the legislation, has significant concerns with mechanisms in the bill that aim to end the trade of conflict minerals into the United States. The legislation would require a transaction-by-transaction import declaration at entry certifying that a company's imports do not contain "conflict" minerals. The bill defines conflict minerals as columbite-tantalite (coltan/tantalum), gold, cassiterite (tin), wolframite (tungsten), or their derivatives. These minerals are used in a wide variety of products including the production of consumer electronic devices, aerospace parts and components, steel, capital goods, machinery, defense articles, cutting tools, medical equipment and many other items. The NAM is actively working with Congress to make changes to the legislation and has convened the Customs and Border Coalition to create a unified industry approach to finding a solution. We encourage NAM members to examine their products to determine if their products, parts, or components contain the minerals listed above. Details : Catherine Robinson , (202) 637-3403.

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Small and Medium Manufacturers Update

The CPSIA's Impact on Small and Medium Manufacturers. The misguided Consumer Product Safety Improvement Act (CPSIA) has had a devastating impact on small and medium-sized manufacturers throughout the United States. Because of the onerous regulations, many small businesses are now stuck with inventory they can no longer sell, while many others have been forced to shut down.

The NAM is working to draw attention to this issue. NAM President John Engler has noted that the law "is causing massive disruptions to industries across the board, particularly small and medium-sized companies." Family businesses and small batch manufacturers - in many cases children's toy or clothing producers - have essentially been outlawed because they cannot afford the mandatory testing and labeling requirements, not because their products are unsafe.

In addition to imposing high costs on small businesses to comply with the law, it has also proven disruptive for companies as they try to figure out how the constantly-changing rules apply to them. Quite simply, most small and medium-sized manufacturers lack the money and manpower to bear the significant new costs imposed.

Congress recently held a hearing on the Consumer Product Safety Enhancement Act (CPSEA), which is designed to address the flaws of the CPSIA. NAM Vice President of Infrastructure, Legal and Regulatory Policy Rosario Palmieri testified on behalf of manufacturers. His written testimony can be found here , and more details of the full hearing are available here .

Small and medium manufacturers should tell their representatives the impact the law has had on their ability to grow, compete and maintain jobs and remind them that any legislative fixes must take the needs of small businesses into consideration.

Click here to watch a video about the CPSIA. For more information on taking action, contact NAM Vice President of Infrastructure, Legal and Regulatory Policy Rosario Palmieri at or (202) 637-3177.

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Other News

Car Rental Discounts for NAM Members Through Avis and Budget. The NAM is pleased to announce a new partnership with Avis and Budget to help NAM member companies significantly reduce car rental costs. NAM member companies and staff will receive discounts of up to 25 percent through Avis and up to 20 percent through Budget. These discounts can be used by employees for both corporate travel and their own personal travel needs. To book travel with Avis, call (1-800) 331-1212 or visit and use discount code: (AWD) #B486800. To book travel with Budget, call (1-800) 527-0700 or visit and use discount (BCD) #R211600. Details/Non-Booking Inquiries : Wendy McIntyre , (202) 637-3197.

Learn Innovative Wellness Strategies at the 2010 Integrated Care Summit . Health care reform creates valuable new opportunities to improve employee health and productivity through worksite wellness programs. Learn how manufacturers can use innovative health promotion strategies to flatten the cost trend at the 2010 Integrated Care Summit, hosted by the NAM, DMAA: The Care Continuum Alliance and the Center for Health Value Innovation, October 13-14 in Washington, D.C. Employers responsible for administering health benefits qualify for significantly reduced registration rates - a savings of $300 when combined with NAM member discounts. Register by June 4 for additional early-bird savings. Visit or call (202) 737-5980 for event details and to register at discounted NAM member rates. Details : Dan Akman , (202) 637-3196.

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Questions or comments? Please contact Clare James Johnson at .

President: John Engler
Executive Vice President:
Jay Timmons Chief Operating Officer: LeAnne Wilson
Senior Vice President, Communications: Maureen Davenport

Managing Editor: Clare James Johnson

Copyright © 2010 National Association of Manufacturers



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