[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  MISCELLANEOUS TARIFF BILL: PROVIDING
                  TARIFF RELIEF TO U.S. MANUFACTURERS
                      THROUGH THE NEW MTB PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON TRADE

                                 OF THE

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 25, 2017

                               __________

                          Serial No. 115-TR03

                               __________

         Printed for the use of the Committee on Ways and Means
         
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]   


                                __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
33-657                       WASHINGTON : 2019                     



                      COMMITTEE ON WAYS AND MEANS

                      KEVIN BRADY, Texas, Chairman

SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California              SANDER M. LEVIN, Michigan
PATRICK J. TIBERI, Ohio              JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington        LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois            MIKE THOMPSON, California
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska               EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
ERIK PAULSEN, Minnesota              BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas                JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee               DANNY DAVIS, Illinois
TOM REED, New York                   LINDA SANCHEZ, California
MIKE KELLY, Pennsylvania             BRIAN HIGGINS, New York
JIM RENACCI, Ohio                    TERRI SEWELL, Alabama
PAT MEEHAN, Pennsylvania             SUZAN DELBENE, Washington
KRISTI NOEM, South Dakota            JUDY CHU, California
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan

                     David Stewart, Staff Director

                 Brandon Casey, Minority Chief Counsel

                                 ______

                         SUBCOMMITTEE ON TRADE

                DAVID G. REICHERT, Washington, Chairman

DEVIN NUNES, California              BILL PASCRELL, JR., New Jersey
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
ERIK PAULSEN, Minnesota              LLOYD DOGGETT, Texas
MIKE KELLY, Pennsylvania             SANDER M. LEVIN, Michigan
PAT MEEHAN, Pennsylvania             DANNY DAVIS, Illinois
TOM REED, New York                   BRIAN HIGGINS, New York
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
TOM RICE, South Carolina


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of October 25, 2017, announcing the hearing.............     2

                               WITNESSES

Cindy Smith, Agricultural Relations Director, Gowan USA..........     5
Edward V. McAssey, Chief Operating Officer, Lasko Products LLC...    10
Michael Ratchford, Government Relations Associate, W.L. Gore & 
  Associates.....................................................    14

                       SUBMISSIONS FOR THE RECORD

Footwear Distributors and Retailers of America (FDRA)............    37
Stephen Lamar, Executive Vice President, American Apparel & 
  Footwear Association (AAFA)....................................    39
John Shelton, International Trade Compliance Manager, North 
  America, Evonik Corporation....................................    41
MTB Carpet Group.................................................    43


 
                  MISCELLANEOUS TARIFF BILL: PROVIDING
                  TARIFF RELIEF TO U.S. MANUFACTURERS
                      THROUGH THE NEW MTB PROCESS

                              ----------                              


                      WEDNESDAY, OCTOBER 25, 2017

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 2:17 p.m., in 
Room 1100, Longworth House Office Building, Hon. David G. 
Reichert [Chairman of the Subcommittee] presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

                  FROM THE COMMITTEE ON WAYS AND MEANS 
                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
Wednesday, October 25, 2017
TR-03

               Chairman Reichert Announces Hearing on the

              Miscellaneous Tariff Bill: Providing Tariff

                  Relief to U.S. Manufacturers Through

                          the New MTB Process

    House Ways and Means Trade Subcommittee Chairman David G. Reichert 
(R-WA), announced today that the Subcommittee will hold a hearing 
entitled ``Miscellaneous Tariff Bill: Providing Tariff Relief to U.S. 
Manufacturers Through the New MTB Process.'' The hearing will focus on 
the potential economic benefits to U.S. manufacturers and consumers of 
providing temporary tariff relief through the new MTB process on 
imported products not produced in the United States. The Committee is 
preparing legislation to implement recommendations made by the U.S. 
International Trade Commission (ITC) in its final report. The hearing 
will take place on Wednesday, October 25, 2017 in room 1100 of the 
Longworth House Office Building, beginning at 2:00 p.m.
      
    The ITC's final report, submitted to Congress consistent with the 
new MTB process established by the American Manufacturing 
Competitiveness Act of 2016, is publicly available and can be accessed 
here: https://mtbps.usitc.gov/external/. The Act provides that the 
legislation to be considered by Congress may not include any provision 
unless it was the subject of a petition submitted to the ITC and was 
deemed by the ITC to meet the MTB tests established in the Act, 
including that there is no domestic producer of a like product who 
objects to the provision.
      
    In view of the limited time to hear witnesses, oral testimony at 
this hearing will be from invited witnesses only. However, any 
individual or organization may submit a written statement for 
consideration by the Committee and for inclusion in the printed record 
of the hearing.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
written comments for the hearing record must follow the appropriate 
link on the hearing page of the Committee website and complete the 
informational forms. From the Committee homepage, http://
waysandmeans.house.gov, select ``Hearings.'' Select the hearing for 
which you would like to make a submission, and click on the link 
entitled, ``Click here to provide a submission for the record.'' Once 
you have followed the online instructions, submit all requested 
information. ATTACH your submission as a Word document, in compliance 
with the formatting requirements listed below, by the close of business 
on Wednesday, November 8, 2017. For questions, or if you encounter 
technical problems, please call (202) 225-3625.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any materials submitted for the printed record, 
and any written comments in response to a request for written comments 
must conform to the guidelines listed below. Any submission not in 
compliance with these guidelines will not be printed, but will be 
maintained in the Committee files for review and use by the Committee.

    All submissions and supplementary materials must be submitted in a 
single document via email, provided in Word format and must not exceed 
a total of 10 pages. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    All submissions must include a list of all clients, persons and/or 
organizations on whose behalf the witness appears. The name, company, 
address, telephone, and fax numbers of each witness must be included in 
the body of the email. Please exclude any personal identifiable 
information in the attached submission.
      
    Failure to follow the formatting requirements may result in the 
exclusion of a submission. All submissions for the record are final.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four 
business days' notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      
    Note: All Committee advisories and news releases are available at
    http://www.waysandmeans.house.gov/

                                

    Chairman REICHERT. The hearing will come to order. Good 
afternoon. The Subcommittee will come to order. Welcome to the 
Ways and Means Subcommittee hearing on the Miscellaneous Tariff 
Bill.
    Before hearing from our witnesses, I would like to make a 
few comments. For decades, Congress has considered bipartisan 
legislation to temporarily suspend or reduce tariffs on certain 
imported products not made in the United States through 
legislation that has become known as the Miscellaneous Tariff 
Bill, or MTB. The MTB is designed to boost the competitiveness 
of American manufacturers by lowering the cost of imported 
inputs and, in some cases, finished goods without harming 
domestic firms that produce competing products.
    Many companies in my home State of Washington have relied 
on the MTB, and I know that many of my colleagues have similar 
stories from their home districts. Our manufacturers have used 
the savings from past MTBs to strengthen their competitive 
edge, support the creation of domestic manufacturing jobs, 
increase U.S. production, and contribute to the economic growth 
of the United States.
    But the last MTB expired in 2012, and left American 
manufacturers without a process to help them cut costs. This 
undermined the ability of our manufacturers to provide more 
domestic jobs and damaged their global competitiveness. Last 
year, Congress took action and passed overwhelmingly bipartisan 
legislation to create a new and transparent process for 
providing tariff relief to U.S. businesses and companies.
    Under the new MTB process, companies petition the 
independent, nonpartisan International Trade Commission, not 
individual Members of Congress, for tariff relief. The new 
process is open and transparent and establishes an opportunity 
for public comment. It provides predictability for our 
businesses while also complying with the House rules.
    The ITC kicked off the new MTB process last October, 
launching a new public accessible portal for the filing of 
petitions and public documents and comments. This August, after 
lengthy analysis, the ITC provided its final recommendations to 
Congress on more than 2,500 petitions. Of those, the ITC has 
recommended that more than 1,800 of these petitions be included 
in the MTB legislation. I commend the ITC for its tremendous 
effort and dedication in successfully bringing the new MTB 
process to life; and I thank the Commerce Department and 
Customs and Border Protection as well for its work.
    Now, Congress must act to consider an MTB and deliver long-
awaited tariff relief to our manufacturers. The Committee is 
doing its part by reviewing the ITC's final report and 
preparing legislation to implement ITC's recommendations.
    So I am eager to move forward and hear from our witnesses 
today about how tariff relief, provided through the new 
process, will benefit their businesses, make them more 
competitive, create jobs, and grow our economy.
    I now yield to Mr. Pascrell for his opening statement.
    Mr. PASCRELL. Thank you to our witnesses here today. 
Welcome. And I want to say thank you to my friend, Chairman 
Reichert, for calling this hearing.
    In my home State of New Jersey, a diverse array of 
different companies will be in a better position to compete as 
a result of this legislation. We have ICF Mercantile in Fort 
Lee, New Jersey, which will obtain duty relief on high-tenacity 
rayon yarn, an input for a material used for Naval defense 
systems. Unfortunately, this specialty yarn has not been 
produced domestically in 20 years, but that means there is no 
harm from removing a tariff here.
    New Jersey has a robust presence of chemical companies. In 
fact, it is the largest industry in the State of New Jersey, 
employing close to 100,000 people. Several of the firms will 
receive tariff relief on numerous imported chemicals that I 
dare not try to pronounce.
    And all those folks who like their anti-pasta and their 
Italian subs and salad or pizza with extra mild spice will be 
pleased to enjoy a break on the cost of pepperoncini, either 
packed in oil or not.
    I agree with the Chairman that the miscellaneous trade bill 
would provide some much-needed relief to United States 
manufacturers and the workers across the country. These 
companies, as well as those represented by our witnesses here 
today, will receive a competitive boost, be able to use their 
resources in a more productive manner, whether by raising wages 
or investing in research and development.
    One key reason that this bill stands to enjoy broad 
bipartisan support is the underlying analysis completed by the 
International Trade Commission and the Department of Commerce, 
to ensure that products that are currently produced in the 
United States are not included in the final bill. In this way, 
the MTB is designed to prevent domestic companies from being 
harmed.
    I look forward to working with other Members of Congress to 
pass a noncontroversial MTB in the coming weeks for the first 
time in 7 years. Seven years is too long to go between MTBs, 
and blame can be placed on the Majority's short-sighted and far 
too blunt earmark policy.
    I also want to note that what we accomplish with the MTB in 
terms of boosting U.S. manufacturing competitiveness is small 
compared to the challenges our manufacturers are facing 
globally. For example, China has announced an ambitious 
industrial policy called Made in China 2025. I think it is 
something we need to pay attention to. A plan to transform 
China into a leader in advanced manufacturing, including in key 
sectors like aviation, rail, new energy vehicles and 
agriculture machinery.
    As a champion of U.S. manufacturing, I want to emphasize 
that we, as a country, need to be thinking big picture about 
our future. We, as a Committee, should be taking the lead here. 
Unfortunately, I don't see that we are right now.
    Before closing, I would also like to say that while I am 
glad that we are having this hearing today, I am still 
disappointed that this Subcommittee has not held a hearing on 
NAFTA renegotiations with the Administration witnesses. The 
need for a public hearing is highlighted by this 
Administration's lacking record on transparency.
    In August, I led a letter calling for the Administration to 
appoint a chief transparency officer, as required by the 
statute, but the Administration has still not done so. No one 
can say this is partisan, because I whacked the last 
Administration for a lot of the same things. I have yet to 
receive a response to my letter sent August 16. There were only 
three or four words in there that were more than two syllables. 
I don't understand it.
    My transparency concerns go beyond process. Press reports 
have now suggested that NAFTA parties are negotiating on 
currency manipulation. The Administration has given no 
indication to any of us of its plans or intentions on the 
issue. While we are here today to discuss MTB, there are other 
issues with significant consequences for America's economic 
well-being that we need to discuss openly. I look forward to a 
response from the Chairman on this matter very soon.
    Thank you, Mr. Chairman. I yield.
    Chairman REICHERT. Thank you, Mr. Pascrell.
    Today we are joined by three witnesses. The first witness 
is Ms. Cindy Smith, the Agricultural Relations Director for 
Gowan USA.
    Our second witness is Mr. Ed McAssey, the Chief Operating 
Officer of Lasko Products LLC.
    Our third witness is Michael Ratchford, the Government 
Relations Associate for W.L. Gore & Associates.
    Before recognizing our first witness, let me note that our 
time is limited, so please limit your testimony to 5 minutes. 
Members should keep their questions to 5 minutes.
    Ms. Smith, your written statement will be made a part of 
the record, and you are recognized for 5 minutes.

                   STATEMENT OF CINDY SMITH, 
           AGRICULTURAL RELATIONS DIRECTOR, GOWAN USA

    Ms. SMITH. Thank you, Chairman Reichert, and Ranking Member 
Pascrell, and Members of the Committee, for the opportunity to 
come before you today to speak to you regarding the 
Miscellaneous Tariff Bill, or MTB, on behalf of the Gowan 
Company. I am Cindy Smith, the Ag Relations Director of Gowan 
USA. I have worked with the Gowan companies for about 18 years 
in a variety of commercial and regulatory roles. And it is my 
honor to be able to speak with you today about Gowan, and why 
we believe passage of the MTB is critical for our business, for 
agriculture and manufacturing in the United States to remain 
competitive and successful.
    Gowan Company is part of a group of companies headquartered 
in the agricultural community of Yuma, Arizona. As you might 
know, Yuma is the source of nearly all the lettuce grown in the 
United States during the winter months. So pretty soon when you 
start eating salad, know that lettuce is coming from our town 
in Yuma, Arizona.
    Gowan is the only basic manufacturer and distributor of 
crop protection products in the United States that remains 
owned by a single family, the Jessen family.
    The Gowan companies include:
    Gowan USA, which is sales and product development and 
marketing of our products here in the United States; Gowan 
Milling, which is a state-of-the-art manufacturing facility in 
Yuma that formulates many crop protection products. Gowan 
products only make up about 10 percent of Gowan Milling's 
business. The vast majority of their business is toll 
manufacturing for other companies like BASF and DuPont.
    The Dune companies, which are based in Yuma, Imperial 
Valley, and Salinas, California, retail operations that sell 
crop inputs directly to growers. So they are certified pest 
control advisers that actually walk fields and make 
recommendations to growers.
    And then Gowan Seed, which is sales and product development 
and marketing personnel that focus primarily on vegetable seed 
production.
    Jon Jessen started the family of companies over 55 years 
ago after returning from military service in Korea. The 
business started with Jon himself walking fields, making pest 
control recommendations to growers, and now has grown into 
several businesses that provide a variety of inputs to U.S. 
growers. Through our marketing companies, we develop, register, 
and sell crop protection products around the world.
    The Gowan companies now employ more than 700 people in the 
United States, with a payroll that exceeds $50 million. 
Approximately half of those 700 jobs are in Yuma, Arizona, at 
our plant. Gowan Milling itself employs 300 of the 700 jobs and 
has become a major employer in Yuma.
    The MTB will help us be competitive and keep all these 
wonderful people employed and successful. Jon remains active in 
the business today as the Chairman of the Board; and his 
daughter, Juli Jessen, is the Chief Executive Officer; and 
other members of the family also remain very active in the 
business.
    Gowan develops, registers, and supplies crop protection 
products to farmers across the United States. Our business 
model is to acquire, develop, and maintain those products 
critical to agricultural production. We invest most of our 
profits right back into the business to improve the existing 
products or to bring new ones to the market. We primarily serve 
specialty crop markets, so fruits, nuts, and vegetables. U.S. 
specialty crop growers typically do not have access to many 
crop protection products that growers of large row crops 
benefit from.
    So the specialty crop markets are smaller and, therefore, 
the tools that they have are critical to their success and to 
preserve and to be competitive. The MTB process is extremely 
helpful in allowing us to remain cost-competitive and provide 
those products to specialty crop growers.
    Gowan is clearly not the largest crop protection company in 
the United States, but is a small, family-owned business. 
Access to cost-competitive materials is critical to our ability 
to compete and to be successful. To serve our customers, we buy 
active ingredients, have products manufactured by contract 
manufacturers in the United States, and source some of our 
products from outside of the United States.
    To be competitive, we have developed strategic 
relationships with suppliers and vendors who are able to supply 
our needs in a timely and cost-effective manner. Because not 
all of the raw materials needed are produced here in the United 
States, we have found the MTB process is extremely helpful in 
reducing our overall cost and improving our global 
competitiveness. Gowan is very pleased that the new MTB process 
will regularly and predictably update the Harmonized Tariff 
Schedule to suspend or reduce duties on active ingredients and 
other products that we import because they are not available in 
the United States. This new process will bring enhanced 
certainty to our long-range planning and product development 
process.
    For our business and that of our customers, international 
trade is an essential component of our livelihoods. For this 
reason, we have a keen interest in efforts to remove tariffs on 
active ingredients and other products that we import. We can't 
use those active ingredients as we import them. We have to do 
manufacturing on them to make them available to growers.
    So I appreciate the opportunity to provide input to you 
today, and I look forward to working with you on passing this 
bill as quickly as possible. Thank you.
    [The prepared statement of Ms. Smith follows:]
   [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


          Chairman REICHERT. Thank you. Mr. McAssey.

                STATEMENT OF EDWARD V. MCASSEY, 
          CHIEF OPERATING OFFICER, LASKO PRODUCTS LLC

    Mr. MCASSEY. Good afternoon. My name is Ed McAssey. I am 
the Chief Operating Officer of Lasko Products LLC, 
headquartered in West Chester, Pennsylvania. Lasko is a 111-
year-old company, a privately-owned company that was owned----
    Chairman REICHERT. Mr. McAssey, could you pull the 
microphone a little closer to you.
    Mr. MCASSEY. Lasko is a 111-year-old privately held company 
that was owned by the Lasko family since inception. In 2016, we 
were sold to Comvest Partners, a private investment firm.
    Lasko employs 942 people in the United States at facilities 
located in Pennsylvania, Tennessee, and Texas. Many of those 
employees have been part of the Lasko team for over a decade. 
I, myself, have been with the company for 33 years. We 
manufacture fans, heaters, humidifiers, and range hoods. 
Portable electric fans make up about 72 percent of our sales.
    The Lasko story is a textbook example of what the United 
States Congress intended to provide with the Miscellaneous 
Tariff Bill, or MTB. Our factories in Franklin, Tennessee, and 
Fort Worth, Texas, manufacture the portable electric fans and 
employ 638 workers, roughly 68 percent of Lasko's workforce. 
These are the two sites that will benefit from swift passage of 
the MTB. We are the only manufacturer in the United States of 
electric pedestal and desktop fans sold to the big box 
retailers. Our competition is exclusively from China.
    As a result of having to compete with low-cost Chinese 
manufacturers, our operating margins are razor thin. In order 
for our business to be viable against low-cost portable fans 
imported from China, we have invested heavily in automation for 
assembly, welding, and painting machinery. On any given day, we 
operate over 60 injection molding machines, most of which were 
manufactured in the United States.
    Despite stiff competition from China, we are committed to 
maintaining our United States manufacturing facilities. In the 
past 3 years, we have invested $7.4 million in plants, 
property, and equipment in Franklin, Tennessee, and Fort Worth, 
Texas.
    We make the injection molded parts in our fans with plastic 
resin from the United States. Much of the steel we use to 
manufacture our products is produced in the United States. We 
use cardboard made in the United States. I point this out to 
show the multiplying effect from our operations that benefit 
our suppliers as well. There would be a substantial negative 
effect on our suppliers if the MTB was to fail to pass.
    We are in a business of pennies. We can lose a sale to 
overseas competitors for a cost difference of 20 to 30 cents. 
The duty relief provided by the MTB on motor assemblies and 
related parts enables us to compete with suppliers in China who 
do not incur the costs of livable wages, health insurance, and 
retirement contributions that we provide our employees. Our 
average wage rate is over $16. Unfortunately, the 638 jobs that 
would benefit from the MTB are down 4 percent compared to this 
time last year. We have lowered our price to try to compete 
with the volume to protect our employees' jobs.
    The swift passage of the MTB is very important to Lasko and 
our workers. Our business benefits our steel, paint, and 
packaging suppliers. The tariff savings from the MTB in 2018 
would be an estimated $1.5 million, and $4.8 million over a 3-
year term. These savings will not only allow us to maintain our 
workforce, but to continue to source other parts from American 
suppliers.
    As you can see, the MTB is very important to American 
business as a whole. Passage of the bill would make Lasko and 
other manufacturers in the United States more competitive with 
low-cost manufacturing around the globe. That is why we are 
working with the National Association of Manufacturers and 
broader business community to explain the importance of this 
legislation for our workers.
    In the last year, there was a bipartisan showing which 
created the new process. While the process is not perfect, we 
look forward to working with all the stakeholders to suggest 
refinements and make the process work better in the future. 
Thank you.
    [The prepared statement of Mr. McAssey follows:]
    
                                     
    Chairman REICHERT. Thank you.
    Mr. Ratchford.

STATEMENT OF MICHAEL RATCHFORD, GOVERNMENT RELATIONS ASSOCIATE, 
                     W.L. GORE & ASSOCIATES

    Mr. RATCHFORD. Good afternoon, Mr. Chairman, Ranking Member 
Pascrell, Members of the Committee. Thank you for giving me the 
opportunity to speak with you this afternoon on this important 
topic for American manufacturers.
    My name is Michael Ratchford. I am the Government Relations 
Associate for W.L. Gore & Associates. Founded in 1958 in the 
basement of Bill and Vieve Gore's house in Newark, Delaware, 
Gore is a privately-held American manufacturer. Today, Gore has 
approximately 9,000 associates globally, with 6,000 of my 
colleagues here in the United States. Our plants are located in 
Delaware, Maryland, Arizona, Pennsylvania, California, and 
Montana.
    Gore has more than 2,000 patents worldwide on electronics, 
military and consumer apparel, medical devices, and polymer 
processing. We are also recognized for our unique culture. We 
are consistently listed on Fortune Magazine's best places to 
work.
    We are a strong supporter of the MTB process, and we have 
utilized the process since 2006. We appreciate the renewal of 
this important program. The new process builds on decades of 
work by Congress, and creates a more transparent, objective, 
and predictable process. The new process is rigorous, is 
rightly focused on ensuring that current and imminent U.S. 
manufacturing is not harmed. The new MTB process is 
significantly more transparent. Stakeholders have ample 
opportunities to become involved in the process. The number of 
petitions submitted alone demonstrates the demand for this type 
of duty relief. Of the 1,800 total petitions recommended for 
inclusion, they will save approximately $350 million in duties 
in 2018 and over $1 billion over the next 3 years.
    On Gore's part, we submitted 46 petitions. We are pleased 
that 22 were recommended for inclusion. In submitting our 
petitions, we worked with a number of trade associations, 
communicated with trade associations of which we are a member, 
including the National Association of Manufacturers; the 
Outdoor Industry Association, where I used to serve as Chair of 
the Trade Advisory Council; American Apparel and Footwear 
Association; National Council of Textile Organizations; 
Footwear Distributors and Retailers Association; and AdvaMed, 
which represents the U.S. medical device industry.
    MTBs are extremely important to the members of all these 
organizations. Virtually all of Gore's thousands of products 
are based on one material: A versatile polymer called expanded 
polytetrafluoroethylene, or ePTFE. This material is best known 
in apparel and footwear as our signature product, GORE-TEX. It 
also, though, has broad applications in the medical field. Our 
medical products include synthetic vascular grafts, meshes, and 
sutures for vascular, cardiac, and general surgical procedures. 
Over the past 40 years, more than 40 million Gore medical 
devices have been implanted, improving patient outcomes 
worldwide. We create high-value products through our design, 
research and development, process engineering, testing, 
patenting, and market research, all conducted here in the 
United States.
    When in effect, the MTB alleviates duties that act as 
barriers. The savings on these duties translate into various 
benefits for Gore, our customers, and end users. For our 
medical products, we can invest in our ongoing U.S.-based 
research and development for our technically advanced products. 
For high-performance outdoor footwear, which face duties as 
high as 37\1/2\ percent, we have observed that MTB allows our 
customers to add our technology more broadly at better price-
points. For our North American companies, a majority of 
membranes and films for these footwear products originate in 
the United States. This means the highest value portion of the 
manufacturing remains American.
    In sum, I believe the new MTB process is meeting the goals 
of the American Manufacturing Competitiveness Act of 2016, and 
the petitions have been carefully and thoughtfully vetted to 
ensure there is no domestic availability of goods. Suspending 
duties on specific goods enhances American manufacturing 
competitiveness and helps to eliminate artificial economic 
distortions that negatively impact American manufacturers and 
consumers. The new process has been rigorous, open, and 
transparent, and should build confidence that it has been fair, 
open, and free from abuse.
    Mr. Chairman, thank you for the opportunity to appear here 
today. I look forward to answering any questions.
    [The prepared statement of Mr. Ratchford follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
                                
    Chairman REICHERT. I thank all of you for your presence 
here and for accepting our invitation. Thank you for your 
testimony. And your testimony today makes it clear that the 
temporary duty relief provided by the MTB is essential in 
helping our American companies stay competitive, especially 
with increasing pressure from China.
    Mr. McAssey, you highlighted this important point in your 
testimony. Can you explain a bit more about the increasing 
competition you face from China and how the MTB allows you to 
stay competitive, manufacture here in the United States, and 
continue to employ American workers?
    Mr. MCASSEY. Yes. Thank you, Mr. Chairman.
    Yes. So we import the motor from China. The motors, you 
know, no one has contested the fact that the motor is not 
available in the United States. And what it allows us to do is 
do the rest of the manufacturing, and, you know, that is the 
steel, the bodies, the injection molding. So we add a lot of 
value to doing that here in the United States. This is not 
just, you know, a screwdriver operation. With $7.4 million of 
PP&E, it is a substantial investment to the manufacturing 
process. And, you know, we have done it largely with 
automation. And all the competition right now does come from 
the PRC.
    Chairman REICHERT. So how does MTB allow you to be more 
competitive?
    Mr. MCASSEY. You know, because we get down into just razor-
thin margins. So sometimes, you know, the difference of a sale 
is 20 to 30 cents, and, you know, we have worked with low, low 
margins. And this would allow us to go in and try to, you 
know--and continue to try to generate more volume to help drive 
down our unit cost.
    Chairman REICHERT. So the elimination of that tariff would 
allow you to sell more products, then may lead to more jobs?
    Mr. MCASSEY. Yes, sir.
    Chairman REICHERT. Ms. Smith, you mentioned in your 
testimony that the new MTB process provides better certainty 
and predictability, which will help long-range planning and 
product development. Can you talk a little bit more about how 
the new process helps you better plan and make investment 
choices in a small family-owned business like yours?
    Ms. SMITH. Sure. So, not unlike my other panel members 
here, as a small family business, margins are key, right? So as 
we were just discussing with you, the cost of goods is a key 
driver of that.
    And so, as we look at opportunities to either invest in 
existing products that we have today, or in developing new 
products to bring to the market, or partnering with others to 
bring products into specialty crops, what we can project in our 
business plans about what our potential margin will be is 
critical to us being able to spend the dollars up front to 
develop those products and get them registered, and then sell 
them.
    So our investment happens before we can ever sell a 
product. So having a predictable process that lets us better 
estimate what the cost of goods is for our products is critical 
to that whole process.
    Chairman REICHERT. It provides certainty for you?
    Ms. SMITH. Absolutely, yes.
    Chairman REICHERT. Thank you. Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Chairman.
    Mr. Ratchford, you said in your testimony that your 
company, Gore, appreciates the renewal of this important 
program, the MTB. The process creates an avenue for substantial 
duty savings. We believe the new rigorous process is rightly 
focused on ensuring that the current and imminent U.S. 
manufacturing is not harmed. That was your testimony.
    So let me ask you this: How does your company plan to use 
the saved revenue that would result from the passage of this 
MTB?
    Mr. RATCHFORD. Mr. Pascrell, for our company, I think the 
investments would be in continued research and development in a 
variety of products. You know, the more competitively priced 
those products are, the more revenue we have. That, one, helps 
secure American jobs. As I said, we have 6,000 associates here 
in the United States. Our employment footprint has been very 
constant over the past decade in that regard. But our real 
lifeblood is innovation, and continuing to invest in research 
and development is where some of the profits, one of the gains 
of the MTB would be made.
    Mr. PASCRELL. Thank you. To any of the witnesses, how 
important is tariff relief on manufacturing inputs to your 
competitiveness with imports of finished goods? Ms. Smith.
    Ms. SMITH. Sure, I will start. So it is very important, 
because agriculture is a global economy, right? And there is no 
one product that everybody uses. They have to use multiple 
products. So all of our products are competing with everything 
else that comes in. So having that competitive advantage, both 
in the manufacturing and in the ability as we sell our 
products, is critical to our success.
    Mr. PASCRELL. Mr. McAssey, any thoughts about that?
    Mr. MCASSEY. Yes. With us, you know, getting back to, you 
know, we are in this business of pennies. And allowing us to, 
as Ms. Smith indicated, have known certainty, we can continue 
to invest and invest in the R&D to make the product so that it 
is--you know, we would like to change the rules of the game 
where it is not just cost-based. And this gives us the 
certainty to know that if we do make this investment, that we 
can be competitive.
    Mr. PASCRELL. Mr. Ratchford.
    Mr. RATCHFORD. Yes. I mean, I agree with my colleagues and 
what they said here. I mean, it makes us all more competitive. 
It secures those American jobs. As I said before, for our 
company, we invest in research and development.
    Mr. PASCRELL. Go ahead, Ms. Smith.
    Ms. SMITH. I would just like to add one thing to your 
question, which is that, you know, you asked what do we do with 
the savings that we get from these. One, for sure, is what we 
have all talked about, which is reinvestment into our companies 
and products and research and development and bringing products 
to the market.
    But we also have a profit-sharing program with our 
employees. So when we have 700 employees, anything I can do to 
reduce my cost benefits my employees. It allows me to continue 
to provide healthcare coverage; it allows me to pay bonuses; it 
allows us to give raises. So I think that, you know, for sure, 
one is in the products that we bring and the manufacturing, but 
also in the benefits to the employees and the rest of the 
people in our community.
    We have a program where we invest in our schools, to help 
bring science to the classroom there, so people understand 
science and the importance of agriculture. And any savings that 
we have allows us to continue to do those things.
    Mr. PASCRELL. And the reason why I asked the question in 
the first place is I think that we need a barometer in terms of 
when we use that term ``savings'' and making yourself more 
competitive. I want to see where wages are in the company 
before and after. There is no law that we can pass to do that, 
but it would certainly lead to the solvency of the program. We 
have, you know, 3 years; every 3 years we vote on this.
    So the point of the matter is the results need to be 
somewhere that we can measure, and we are not just talking 
about feelings here. I know you are not. We need to talk about 
what is measurable in terms of helps the stagnant wages in the 
United States of America, besides providing you with the 
ability to be a little bit more competitive. Thank you.
    Thank you, Mr. Chairman.
    Chairman REICHERT. Thank you.
    Ms. Jenkins.
    Ms. JENKINS. Thank you, Mr. Chairman, for holding the 
hearing. And I thank the panel for your testimony this 
afternoon.
    Mr. Chairman, this new MTB process has yielded a workable 
and transparent report with more than 1,800 recommendations of 
tax cuts for American consumers and manufacturers, increasing 
our competitiveness abroad, while creating and saving jobs here 
at home.
    For example, the ITC's final report contains two specific 
provisions that directly affect my district with positive 
impacts. Both of these provisions would benefit Goodyear's 
manufacturing plant in Topeka, where the company manufactures 
truck as well as off-the-road tires used for earth-moving and 
mining equipment.
    With more than 1,700 employees, Goodyear is one of the 
largest private manufacturing employers in eastern Kansas, and 
its Topeka manufacturing facility has been in operation in the 
State since 1945. Additionally, the plant covers 69 acres under 
one roof, making it easily one of the largest tire 
manufacturing plants in the world.
    One of Goodyear's petitions is for segmented compression 
tire molds greater than 25 inches. Goodyear's workers use these 
molds for curing the type of off-road earth-moving tires made 
right there in Topeka. These molds are used in the curing 
process to apply both heat and pressure to give a tire its 
final shape. And as the ITC report reflects, molds of this size 
are simply not produced in the United States and must, 
therefore, be imported.
    The second petition is for a certain chemical input that is 
one of the key raw materials in Goodyear's production of an 
antioxidant used in tire manufacturing by all of Goodyear's 
tire plants throughout the United States, including the Topeka 
plant. Again, this input is so specific and domestically 
unavailable that the ITC has recommended it for swift tariff 
relief.
    As I mentioned before, relief for these products and the 
hundreds of other products included in the report will help 
companies like Goodyear, in my district, better compete 
globally and create jobs across the country.
    Mr. Chairman, I was pleased to support the American 
Manufacturing Competitiveness Act back in 2016, and today, I am 
pleased to see this MTB process moving forward, to provide 
benefits for Kansans and for the rest of the Nation.
    And with that, Mr. Chairman, I will yield back.
    Chairman REICHERT. Thank you, Ms. Jenkins.
    Mr. Kind.
    Mr. KIND. Thank you, Mr. Chairman. Thanks for holding this 
hearing. And I appreciate the witnesses' testimony here today.
    Mr. Ratchford, when you were mentioning the various States 
that W.L. Gore has a presence in, I couldn't help but wince, 
because you had a great facility in the heart of my 
congressional district in Eau Claire, Wisconsin, for a while 
that was sold. But that was when I got to meet now-Senator 
Chris Coons, when he was working for Gore at the time, and got 
to know him really well. But we appreciate hearing your 
feedback.
    And with all due respect to the witnesses, this is kind of 
a boring hearing because it is not that controversial. It has 
been 7 years since we have been able to move an MTB, and it is 
long overdue. And I think we have a nice process put in place 
now with the ITC petition process and the vetting that takes 
place as well as the standards that will clear. And hopefully, 
we will be able to move forward on this, just realizing the 
economic impact that it could bring. But it is another 
indication of why working on a proactive trade agenda, that 
tears down barriers, that provides for a freer flow of goods 
and products and services, is so important for the 
revitalization of our economy right here at home.
    And, Mr. Chairman, I know this is a Trade Subcommittee 
hearing, but given the amount of time that we have in committee 
apparently these days, I think it would be wonderful if we at 
least try to tee up a few hearings on the comprehensive tax 
reform that we are working on these days, because this stuff 
gets complicated real fast, and I have a feeling that each one 
of you as witnesses could probably come and offer some insight 
on the tax provisions that are being discussed, or at least 
thought about.
    I mean, Ms. Smith, you mentioned that your company is still 
family-owned. I presume you are an S corp right now, so a pass-
through entity when it comes to tax liability purposes?
    Ms. SMITH. [No verbal response.]
    Mr. KIND. Yes, that is right. Well, one of the challenges 
we are facing is how not to leave the pass-throughs behind in 
reform and so it is not just corporate tax relief at the end of 
the day. And how do we do that and politically justify it with 
people back home without providing a huge windfall to the 
private equity or the hedge fund dudes on Wall Street who are 
billionaires?
    And these are things that we are wrestling with. And I 
think it would be very helpful, that getting feedback and some 
vetting from all of you too before we make a terrible mistake 
by trying to rush something to the floor without proper 
vetting, without proper hearing, and then suffer the 
consequences a little bit later on.
    So it doesn't sound, Mr. Chairman, as if that is in the 
cards. It sounds like this is all going to be done behind 
closed doors and then we are going to have a two- or three-
night markup on it before it comes to the floor. But I think 
without the proper vetting, it is going to be difficult to 
produce good policy with that process.
    My question, though, for you on this measure is, how hard 
do each of your respective companies look for a domestic source 
for the product that you need rather than just worrying about 
the MTB tariffs and trying to reduce those?
    And, Mr. McAssey, you said you guys import molders from 
China. I mean, are you approaching domestic manufacturers of 
molders and saying, hey, this is what we need. Can you supply 
us and what would the cost be?
    Mr. MCASSEY. Yes. We continually do that. We are, you know, 
concerned about even the stability of supply in China. Up until 
2000, we made a motor. It wasn't as energy-efficient as what we 
are able to get in China. We weren't competitive with it. But 
we made it ourselves. We were the last people to make this. In 
the 33 years that I have been with the company, I would venture 
to say that I haven't seen anyone able to do this in over 25 
years other than ourselves.
    Mr. KIND. Really. The type of quality, efficiency that you 
are getting from China and what they are making?
    Mr. MCASSEY. Yes, yes.
    Mr. KIND. So there are some economies of scale, certain 
comparative advantages that they enjoy there for some reason 
that we can't duplicate here domestically.
    Mr. MCASSEY. I mean, you know, before I came with the 
company, we always had, you know, a good livable wage. We had 
healthcare; we had a pension; now we have a 401(k). But, you 
know, with that, you know, we are competing against people that 
a lot of times don't have these benefits and the regulation, 
the safety.
    You know, I have traveled to China. I have seen the plants. 
Granted, it has gotten better. But, you know, the environment, 
the safety, you know, the ability to select workers and that 
process, you know, all things that we enjoy as Americans that 
they don't have there, and, you know, we compete against that.
    Mr. KIND. Are you confident that the company you are doing 
business with in China has certain respectable standards that 
live up to our principles?
    Mr. MCASSEY. Yes, yes. We definitely--we have a process 
where we vet that. We audit that. And we have accountability to 
our customers, to their standards.
    Mr. KIND. Okay. Thank you.
    Thank you, Mr. Chairman.
    Chairman REICHERT. Mr. Kelly.
    Mr. KELLY. Thank you, Mr. Chairman, and thank you all for 
being here.
    I am going to go a little different direction, because I 
know you all compete globally and you rely on a global supply 
chain, because you don't have access to everything you need for 
your finished product being made right here in the States.
    But where I want to come from is a question that we all 
worry about, and that is revenue. And I am not talking just 
about what the company pays. I am talking about what you also 
pay in wage taxes, you and your associates, how that helps out 
when it comes to Social Security, your real estate taxes that 
you pay, your economic impact, because all the people that 
supply you in addition to the folks overseas are also part of 
this whole economic picture.
    So I know that you can't do it right now, but if we don't 
start looking at the economic impact, when we start to lose 
American jobs and we have American companies leaving because 
they just no longer can stay in America and compete globally, 
then I think we are missing the entire boat. We are always 
looking for revenue. And we can't cut our costs, so we have to 
go after you to supply the revenue. And we know where the 
revenue comes from, okay, it comes from companies that are 
profitable and people who are working. That is the only place 
it comes from.
    So if you can, if you can get back to us with each of your 
companies, to let me know the economic impact not only on the 
communities that you are in, but also with your global 
suppliers, because you have other people right now in the 
States that are helping you also.
    So I think it is incredibly important that we recognize 
that. And I know, listen, I don't know of anybody who is in 
business anymore that can say, you know what, we are in a 
pretty good spot because we don't have to compete against 
anybody and we have a product that everybody has to own and 
they have to buy it at our price. There is nobody else on the 
shelf but us.
    So I think, again, the economic impact, total economic 
impact of what you are able to do is incredibly important, not 
only to this Committee, but to the communities you are in, the 
States that you are in, and the country that we all are trying 
to keep going. So if you can get back to us with that, I would 
really appreciate it.
    Other than that, I want to thank you for taking time out of 
your lives to come here and to sit before us, to let us know 
where it is right now that you are sitting and the competition 
that you face. I am also from the private sector. Listen, it is 
hard. And I don't know anybody that doesn't have anything but 
razor-thin margins. It is just that close. When you said 20 to 
30 cents, the difference between somebody picking your product 
or somebody else's product, I think most people would say, oh, 
no, that is impossible. The business I am in--I am in the 
automobile business--is $5 a month that can make the difference 
between us being able to sell a car to somebody and somebody 
else being able to sell a car to somebody.
    So I am really concerned about where you sit and what it is 
you are trying to do. So I know you can't answer my question 
right now, but if you get back to us, I think it is really 
critical that everybody sitting on this panel understands the 
total economic impact of what it is that you do.
    Also, if you wouldn't mind, how about including some of the 
contributions you make to the communities you are in that help 
out. Things like the United Fund and other fundraising things 
and charities that you all compete in or produce. I would 
really appreciate that.
    So, Mr. Chairman, thank you. And thank you all for being 
here. Listen, it is tough. It is tough out there. We are all 
trying to get to the same place. So thank you so much for being 
here. I yield back.
    Chairman REICHERT. Mr. Levin.
    Mr. LEVIN. Thank you. Thank you, Mr. Chairman.
    You know, as we sit here, I think it is perhaps useful to 
just think back a bit as to how miscellaneous tariff issues 
were handled in the past, because some of those who worked on 
this aren't here now. But there was a real effort on a 
bipartisan basis, going back many years, to provide 
transparency, to make sure that everything was aboveboard, to 
make sure that any impact on domestic producers was clearly 
known. Those were the days when we very much tried to work 
together.
    And what happened was that there was some conflict with 
rules within the Republican Conference, and essentially all the 
work that was done in previous years--and I think at least one 
of you benefited from the miscellaneous tariff, all of you did 
before. So what happened was that we changed it so that instead 
of Members filing bills, essentially, people would file on 
their own, it would go to the ITC.
    And I have mixed feelings about that. There was some 
feeling that perhaps some Members were making political points, 
but I don't think that was true, basically. I think they were 
motivated by knowledge of what was going on within their own 
districts, in most cases. And so this has become part of kind 
of the separation of Members of this House from activities in 
their districts. And I think when it was abused, it needed to 
be addressed, but the end of this process, I think, also tended 
to disconnect Members of Congress from what was going on within 
their own districts.
    So I think we just need to take a look at that as we 
proceed. And just remember how hard this Committee worked to 
try to change a process that was not transparent and where 
there, perhaps, wasn't abuse, to make sure that everything was 
aboveboard.
    And let's remember if any single person disagreed on this 
Committee with proceeding with a bill, it was automatically 
discarded. It took just a single person, I think, among those 
who were either ranking or on the Subcommittee entirely.
    So I also want to say it is useful to have this hearing, 
but I want to reiterate what Mr. Kind said. There is an irony 
in our coming together and spending an hour, an hour and a half 
on this important issue that I think is essentially in good 
shape, and not having a single hearing on what is today the 
main mystery of Washington, the tax bill.
    And I would urge Republicans on this Subcommittee to try to 
help the leadership. I finish with this: The Miscellaneous 
Tariff Bill has always been--not always, but in recent years, 
has been hallmarked by transparency. And essentially, we are 
going to take up a tax bill that to date has no transparency 
whatsoever.
    I yield back, and again thank the witnesses for being here. 
And continue to tell us how it is working, because we wanted to 
be sure that industrial efforts continued as long as it 
benefited the workers of this country and its companies. I 
yield back.
    Chairman REICHERT. Mr. Paulsen.
    Mr. PAULSEN. Thanks for holding this hearing today, Mr. 
Chairman. This is an issue that is essential to the success of 
manufacturing in my home State of Minnesota, as well as the 
rest of the country. Just take a look at both the past and the 
future. First, in the past, since the last MTB expired at the 
end of 2012, we have seen $748 million in additional taxes for 
American manufacturers every year, and an almost $2 billion hit 
to the economy. And the MTB package in 2010 supported 90,000 
U.S. manufacturing jobs, increased production by $4.6 billion, 
and expanded U.S. GDP by $3.5 billion.
    And now the future. The ITC's report contains more than 
$350 million in much-needed tariff relief for our American 
manufacturers this next year, and $1 billion over the next 3 
years. As far as government programs go, this one has a pretty 
good return on investment: Thousands of jobs, billions of 
dollars in economic gains for what boils down to a few million 
dollars in tax relief for American manufacturers every year.
    It is important to note that this tax relief does not come 
at the expense of other American producers. The International 
Trade Commission must determine that the materials that are 
receiving tariff reduction or elimination through the MTB 
process are not produced domestically. So in the end, this is a 
win-win situation. Our manufacturers get well-deserved tariff 
relief on materials that aren't produced here in America, and 
American consumers get the lower prices when they go to the 
store. So I am excited that this process is now up and running 
once again. I look forward to getting this MTB legislation 
across the finish line later this year.
    Let me ask a question: We do know that, according to the 
International Trade Administration, every $1 billion in 
exports, American exports, supports about 5,000 domestic jobs. 
Your testimony today, from all of you, highlights the 
importance of the MTB to American businesses and American 
consumers and the wide-ranging benefits that process offers.
    Now, the other way to help boost American competitiveness, 
including reduced tariffs on inputs not available in the United 
States and better market access for American-made products, is 
through more trade agreements, free trade agreements.
    Do you believe, do you agree--and I will start with you, 
Ms. Smith--that it is important for the United States to 
maintain its existing trade agreements, and to also work on 
negotiating additional agreements?
    Ms. SMITH. Thank you. I do believe existing trade 
agreements are important. I think the position of agriculture 
is pretty well-known about their belief about trade agreements. 
As you talked about, we export a lot of agricultural products 
from the United States. Our business is a supportive one of 
U.S. agriculture, so we are fully supportive of anything that 
helps U.S. growers sell their products overseas.
    So I would say yes, the trade agreements that we have in 
place are very critical for agriculture. Any work we do on 
trade agreements, we should first look at, you know, what is 
the impact to U.S. business, right, and make sure we do no harm 
to U.S. business.
    Mr. PAULSEN. Mr. McAssey.
    Mr. MCASSEY. Yes, Mr. Paulsen. In our case, the existing 
trade agreements have been a net positive for us, mainly the 
NAFTA. At this point, the global exports to the rest of the 
world with the thin margins, it is just not there for us. But 
in our own case, you know, we have had a substantial increase 
in our shipments into Mexico and to Canada from the existing 
trade agreement.
    Mr. PAULSEN. Selling American to Mexico?
    Mr. MCASSEY. Selling from America into Mexico and into 
Canada.
    Mr. PAULSEN. Mr. Ratchford.
    Mr. RATCHFORD. Mr. Paulsen, I agree with my colleagues. I 
mean, FTAs are very important. I mean, they provide certainty 
for the business community out there. They open up markets for 
us and it provides a level playing field. As long as those free 
trade agreements are, you know, fairly negotiated and 
adequately enforced, we would continue to be supportive of 
that.
    Mr. PAULSEN. Would you say in this modernization of NAFTA, 
which is going on right now, that it is important for stability 
and confidence as a part of your expert knowledge, or 
continuing that track down the road, that you are counting on 
that, it is important?
    Ms. SMITH. Yes. I think it is--I talked about it a little 
bit in my testimony. Certainty is critical, right? And 
understanding what those trade agreements say today and what 
they may or may not say in the future is critical. I think 
getting input from those who are impacted is essential so that 
you have a firsthand understanding of what those impacts are.
    I mean, we do crop protection products, but we also grow 
dates. We export our dates to Canada, Mexico primarily. We have 
an impact on a number of different levels from those 
agreements. So I think it is essential, yes.
    Mr. PAULSEN. Thank you very much, Mr. Chairman.
    Chairman REICHERT. Mr. Holding.
    Mr. HOLDING. Mr. Chairman, thank you very much for holding 
this hearing on the Miscellaneous Tariff Bill. I am sure none 
of you will be surprised to learn that North Carolina has more 
MTBs recommended by the ITC than any other State. Of the 1,800 
petitions from the ITC, over 330 of those were submitted by 
North Carolina businesses. Those petitions represent an 
estimated duty savings of over $70 million in 2018 alone.
    MTB legislation would benefit a wide variety of 
manufacturers in North Carolina, such as textile manufacturers 
like Glen Raven, or crop science companies around the Research 
Triangle Park, or appliance manufacturers in Charlotte. All of 
these benefit underneath the plan. This represents a tax cut 
that not only benefits the individual importing the product, 
but, of course, it also benefits downstream producers, 
distribution service providers, but, most of all, it benefits 
consumers.
    So I think this is an incredible opportunity to cut those 
duties, which are taxes, and have the opportunity to reinvest 
them in our communities. As we all know, it has been nearly 5 
years since the last MTB has expired, and this caused U.S. 
businesses and consumers to face hundreds of millions of 
dollars in higher tariffs with no domestic relief resource.
    So I appreciate the witnesses taking the time to share 
their stories with the Committee, and I am sure their thoughts 
will be echoed across the Nation, especially in North Carolina, 
as we examine the potential impact of MTB legislation. So I 
look forward to working with you, Mr. Chairman, and continuing 
this process, and I appreciate the opportunity to have this 
hearing.
    With that, I yield back.
    Chairman REICHERT. Thank you. Mr. Doggett.
    Mr. DOGGETT. Thank you, Mr. Chairman. This hearing, like 
the last hearing we had in the Subcommittee, is really an 
alternative to bringing anyone from the Trump administration 
here to explain the totally confusing Trump trade policy on 
NAFTA, and on other trading arrangements with the rest of the 
world.
    We will meet privately with the trade ambassador later this 
afternoon, but it has to be in a private session so secret that 
for any staff member to attend, they need to have a top secret 
security classification. And I can understand, given the total 
contradictions in the Trump trading policy, why they would be 
reluctant to come to this Committee.
    As my colleagues have noted, it is also peculiar that we 
are considering a tax cut bill today in a public hearing, a tax 
cut bill, the total amount of which is hardly a footnote to the 
monstrosity that we were told will be dropped on America next 
Wednesday, with a 1,000-plus page bill, where, again, all 
efforts to secure hearings on that tax bill have been thwarted.
    We have been here in September, in October. We will get to 
November 1 without having a single hearing, with a total 
unwillingness to have anyone from the Trump administration come 
and be held accountable, to answer any questions, to explain 
their tax bill, because the idea is, having learned nothing 
from the failed healthcare repeal, to force this bill through 
with as little opportunity for comment from affected businesses 
like yours that have to decide are we better off expensing or 
losing our deduction for interest in the process?
    What happens to our retirement plans? How are some 
different industry sectors affected from others? So it is 
really unfortunate that the only tax bill we get a hearing on 
is this modest one.
    Now, the Miscellaneous Tariff Bill, when it is reviewed, 
when these tariff concessions are reviewed by the International 
Trade Commission, the Commission is not charged with 
determining the impact on the public interest with reference to 
each of these matters.
    And let me ask you. I appreciate your testimony. You sound 
like all-American companies, each of whom will benefit in a 
constructive way from the reductions that are proposed. Are any 
of your companies affiliated with a foreign enterprise? Are you 
a subsidiary of any foreign business?
    Ms. SMITH. No.
    Mr. MCASSEY. No.
    Mr. RATCHFORD. No.
    Mr. DOGGETT. Well, we don't apparently then have a 
representative here of companies that are. And there are a 
number of companies that are scheduled to get benefits. The 
pharmaceutical industry gets about $12 million to $13 million a 
year in proposed benefits if the bill is approved as it has 
been filed.
    And it looks like kind of a mini United Nations there. I 
see a company from Japan, a couple from Germany, from Sweden, 
from Korea, from Switzerland, from the United Kingdom, 
certainly not the kind of small businesses that your companies 
represent, that are scheduled to get benefits.
    One of the more curious ones in here is the proposed 
reduction of a tariff on aspirin, and why it is that that will 
lead to any benefit for the American consumer is hard to 
understand. Indeed, the report language on the original 
Miscellaneous Tariff Bill talks about the advantages to 
consumers of avoiding higher prices.
    But we have no explanation of how pharmaceutical 
manufacturers who are engaged in some of the most outrageous 
price gouging in the country, in interfering with consumers 
who--I talked to one woman recently who said she had to choose 
between breathing and eating because of the cost of her asthma 
medication, how any of those consumers will see a dime of 
benefit from this reduction, and why it is that a bill and a 
process that is designed to help small businesses in America 
targets so many of its benefits on companies that are really 
just foreign affiliates of manufacturers from abroad.
    So this may grow jobs for these companies in Germany or 
Sweden or Korea, but it is not clear how it will grow jobs 
here, or how it will save American consumers a penny on these 
pharmaceuticals.
    And I yield back.
    Chairman REICHERT. Mr. Meehan.
    Mr. MEEHAN. Thank you, Mr. Chairman.
    And I am very grateful for the presence of these companies 
who have made such a commitment to our Nation with the work 
that you are doing. And I am grateful for my good friend from 
New Jersey, Mr. Pascrell, and his participation in this 
process. He got me a little hungry. I want to know what 
restaurant we are going to go to to take advantage of all of 
those things you were protecting from that Italian sandwich you 
were describing.
    But I am aware, as you said, that your companies that are 
really competing, you are competing in a margin, in a very, 
very tight margin.
    Mr. McAssey, I appreciate the presence that you have right 
there in my district and the great work that you do preserving 
those jobs there.
    When you are taking advantage of a program like this, I 
know you are working on very, not just tight margins, but tight 
timeframes. How important is it to you that this MTB is 
expeditiously done? What impact does it have if you have delays 
and things of that nature in the process?
    Mr. MCASSEY. Thank you, Mr. Meehan. Yes, I lost track of 
the time and I wanted to cover that in my testimony. But we are 
a seasonal business. You know, fans are sold, you know, in the 
spring and summer. We just got done quoting our customers for 
the upcoming year in 2018. And the certainty, you know, of 
getting back to--if we had known, you know, where we stood on 
this issue, we feel pretty good, but we have been, you know, 
very close to the finish line before and haven't been able to 
get it done. So, you know, timing is very important in our 
case.
    Mr. MEEHAN. So it is not just timing as well, but one of 
the things that I have noted is, you identified that you have 
issues with competition from China.
    Mr. MCASSEY. Yes.
    Mr. MEEHAN. And this enables you to be able to beat that 
competition currently. Can you speak a little bit to your 
relationship with China? If, in fact, you believe that in 
addition to this benefit that you are getting from the MTB, are 
you seeing any other kinds of trade practices that are being 
conducted in the industry in a predatory way or otherwise 
coming out of China?
    Mr. MCASSEY. Well, you know, I want to only speak to what I 
can prove, but we have seen, in the last couple of years, a 
concentration. Instead of a very fragmented Chinese supplier 
base, it has become much more consolidated and driven toward 
our products. You know, we make a lot of fans, and we are 
always, you know, looking. You know, we feel like we have a 
bull's eye on our back.
    Mr. MEEHAN. When you say consolidated supplier base, can 
you help educate me on what you are referring to? A supplier 
base that you are competing with China for access to or----
    Mr. MCASSEY. Competing with in China.
    Mr. MEEHAN. And are they doing anything in a predatory way 
to shut down competition in those suppliers that makes it 
harder for you to get components?
    Mr. MCASSEY. No. I mean, we have been able to go to 
suppliers that are not part of that finished good, you know, 
basis. We have been able to work with suppliers that primarily 
will make the motors and motor assemblies. But I am not aware 
of any specific predatory practices other than very, very low 
prices.
    Mr. MEEHAN. Right. Well, thank you for what you are doing, 
keeping the jobs here in the United States with the great 
workforce that you have and the great product that you produce.
    Mr. MCASSEY. Thank you.
    Mr. MEEHAN. And, Mr. Ratchford, thank you as well with your 
presence very close and around my district, and I think in a 
number of others districts here in the United States. You have 
also identified, in your comments, this process, but you also 
talked about--some of it is working, maybe some improvements. 
Can you give me some insights into how this is working for you? 
If you have some suggestions now that we have been down this 
road for just a very short window, what your experience has 
been, and how you think it might be able to be improved?
    Mr. RATCHFORD. Sure, Mr. Meehan. So with any new process, 
there is going to be kinks in the process. And we appreciated 
the opportunity to work with the agencies involved, and the 
folks involved were great. So if I had a couple of suggestions 
right off the bat, it would be, first, that the initial portal 
was somewhat rigid. That if you had to amend a petition, you 
had to start from scratch and put in a new one, you couldn't, 
like, edit it, so that made it a little bit difficult.
    Mr. MEEHAN. Did it have any kind of impact on you in terms 
of time and things of that nature?
    Mr. RATCHFORD. Sure. Sure. You would have to reenter the 
whole thing, and the folks who do that, it was sort of a 
frustrating experience. Again, I am not blaming anyone, it was 
just the way it was constructed. It is sort of remarkable they 
got it up and running as fast as they did.
    And then, second, the ITC was great and it was an 
opportunity to have a dialogue. So you got down the line--there 
were issues raised by Customs and Border Patrol about the 
ability to administer provisions of it. And it would have been 
more helpful to have had that dialogue--a similar dialogue with 
CBP that had been had with the ITC.
    Again, the definitions that are provided are highly 
technical, and they are worried about, can they enforce this, 
can they administer it. So as we go forward, it is increasing 
that level of transparency, increasing that level of dialogue, 
would be two things that I would suggest.
    Mr. MEEHAN. Thank you. Well, thank you for your very, very 
good suggestions. I know they will be taken into consideration 
by the Committee. Thank you for your testimony here today.
    Chairman REICHERT. Thank you. Mr. Davis.
    Mr. DAVIS. Thank you very much, Mr. Chairman. And I, too, 
thank the witnesses for being here. I am proud to know that 
AkzoNobel is a global Fortune 500 company that is listed on the 
EuroNext Amsterdam and NASDAQ stock exchanges. The company is 
also listed on the Dow Jones sustainability indexes. AkzoNobel 
is a multinational organization that serves customers 
throughout the world with human and animal healthcare products, 
coding, and chemicals.
    An employer of more than 61,000, it is divided into 13 
business units, and maintains operating subsidiaries in more 
than 80 countries. It is one of the world's leading chemical 
producers. Its chemical division specializes in pulp and paper, 
polymers, functional and base chemicals. AkzoNobel has a 
portfolio of more than 2,000 different chemical products that 
are used as raw material, and intermediate materials for the 
manufacture of everyday items. Of course, it is an American-
based company that is located in my district. And I know that 
they have five petitions approved by the International Trade 
Commission.
    Mr. McAssey, you mentioned that you do joint manufacturing 
with interest in China. Could you tell me, if you know, how 
many of those kind of joint manufacturing items that you might 
produce--that your company produces?
    Mr. MCASSEY. Yes, sir. So we use the motors on the fans 
that we sell in the United States--that we manufacture in the 
United States, which is, I think, roughly 60, 65 percent. So 
every one of them does have a motor that is coming from the PRC 
right now.
    Mr. DAVIS. And do you have that kind of manufacturing 
activity with other countries, or in other countries as well?
    Mr. MCASSEY. No, sir. We don't own any factories in the 
United States. We have explored other countries, but, you know, 
we have not been able to find one that can provide what we 
need. I think long-term the next step for us would be, you 
know, if we can establish the volume base and--I have long-
termed the--the next step for us is to look at making them in 
the United States, going back to it.
    Mr. DAVIS. If I could ask each one of you quickly, what 
kind of trade policy do you think helps your company the most?
    Ms. SMITH. What kind of trading policy? Is that what you 
said?
    Mr. DAVIS. Yes.
    Ms. SMITH. Clearly, a fair trading policy, right, that 
considers what the impacts are for us, but I think, as Mr. 
Kelly was suggesting, that all of us are in a business that has 
impacts beyond what we do, right? So who we sell to, who we buy 
from, and what we do in our communities must all be considered. 
So I think it has to be a broad consideration of what the 
impacts are to make sure that we can remain competitive as 
American companies, family-owned businesses, in small 
communities competing on a global scale, I think all of us 
globally.
    Mr. DAVIS. Thank you.
    Mr. RATCHFORD. To those comments, I would add protection of 
intellectual property in trade agreements, and counterfeiting 
is another issue there. But respect for that rule of law and 
intellectual property protection would be things that I would 
add to what Cindy said.
    Mr. DAVIS. Yes.
    Mr. MCASSEY. And protection of our jobs, you know, in terms 
of a level playing field. You know, the trade policies we have 
can certainly be tweaked, but they are helping us right now, at 
least in North America.
    Mr. DAVIS. Thank you all very much.
    Mr. Chairman, I have about half a minute left and I would 
like to yield that to Mr. Pascrell.
    Chairman REICHERT. Mr. Pascrell.
    Mr. PASCRELL. Thank you, Mr. Davis. And thank you, Mr. 
Chairman. I would like to comment in response to my friend, Mr. 
Doggett's concerns, regarding the inclusion of pharmaceutical 
products in the MTB. We all agree that we support the aim of 
supporting low cost for medicines, but is keeping tariffs on 
products the way to do that? If anything, removing tariffs 
provides an incentive for lower costs.
    On the issue of aspirin, there was a thorough public 
comment process for stakeholders to weigh-in on their views on 
that particular subject, legitimate subject, but not a single 
objection was filed, not from a public interest group or a 
domestic manufacturer.
    So, Mr. Chairman, the tariff relief provided by this bill 
will only last 3 years anyway. The bill lasts 3 years. So any 
impact this bill might have on domestic manufacturing would 
only be temporary, if any. Moreover, aspirin was included in 
the MTB that we voted on back in 2010. You voted for it, Mr. 
Doggett, and I voted for it. My friend voted for it and I voted 
for it in favor of both of the bills.
    So I hope that we can avoid--it is an easy target when we 
get into the area of trade. It is such a sensitive issue. 
Needless to say, pharmaceuticals is a very sensitive issue, one 
of the primary reasons for the increase in health costs. But I 
don't think this is the avenue to deal with that.
    Thank you and I will yield back.
    Chairman REICHERT. Thank you, Mr. Pascrell, for your 
comments.
    Mr. Rice is recognized.
    Mr. RICE. Thank you, Mr. Chairman, for holding this 
hearing. MTBs have certainly come to the aid of a number of the 
businesses in my district. They are very important. My 
district, Mr. Ratchford, was--I am in northeastern South 
Carolina, and there was a fair number of textile companies in 
my district before--up until the 1980s, and now all those 
buildings are sitting there empty, but a few of them have 
survived and continue to thrive. One in particular in Cheraw, 
South Carolina, called Highland, makes fairly advanced and 
technical textile materials, even things that go into rocket 
engines and such. So I am very proud and happy to have them.
    But I am curious, in your capacity as Chairman, or as a 
member of the National Textile Council.
    Mr. RATCHFORD. So we are a member of the National Council 
of Textile Organizations. We are a member of a couple different 
associations.
    Mr. RICE. Can you give me some more specific examples of 
how MTBs help our remaining textile companies in America to 
compete globally?
    Mr. RATCHFORD. So let me talk a little bit about Gore's 
participation in NCTO. We are members of that for purposes of 
our military fabrics business. And so certainly protecting the 
Berry amendment is very----
    Mr. RICE. Could you pull that microphone a little closer, 
please. Thank you.
    Mr. RATCHFORD. Sorry about that. As I was saying, we are a 
member of NCTO. We are in NCTO because of our military fabrics 
business, and so we are protective of the American textile 
industry there.
    Mr. Rice, I don't have the specifics on it. I can get those 
to you. But I do know at the time this due process was 
launched, I believe that NCTO did make a comment in support of 
the process going forward.
    Mr. RICE. Okay. Mr. Chairman, with that, I will yield back.
    Chairman REICHERT. Thank you. Thank you again for your 
presence here and taking time out of your busy schedule and for 
your testimony, and then also for your answers to the questions 
that we posed to you. As you can tell, this is one of those few 
moments where there is a sense of bipartisanship, that you have 
created this opportunity for us, provided us with good news, 
even to the point where there are two Members probably headed 
to New Jersey later this week for an Italian sandwich. So, you 
can leave Washington D.C. feeling good about that positive 
outcome. But more than that, you can feel good about your 
testimony because you have represented many, many companies 
across this country that benefit from MTBs that, as you have 
described, provide so much for, not only your companies, but 
then, proceeding through the revenue that you generate that 
goes back into your company to your employees. And then even 
out into the community, as Mr. Kelly spoke to so eloquently; 
and then also, finally, to the benefit of U.S. consumers for 
less expensive products.
    So this is a priority for us to complete this year. And its 
timely renewal is critical, as well as the generalized system 
of preferences, the GSP. So, again, I appreciate your testimony 
and your time here with us today.
    Please be advised that Members will have 2 weeks to submit 
written questions to be answered later in writing, if you 
would, please. Those questions and your answers will be made a 
part of the formal hearing record. Our record will remain open 
until November 8th, and I urge interested parties to submit 
statements to inform the Committee's consideration of the 
issues discussed today.
    The Committee is adjourned. Thank you.
    [Whereupon, at 3:30 p.m., the Subcommittee was adjourned.]
    [Submissions for the Record follow:]
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