[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[Extensions of Remarks]
[Pages 1929-1930]
[From the U.S. Government Publishing Office, www.gpo.gov]



     PROVIDING TARIFF RELIEF FOR MACHINERY AND COMPONENTS USED TO 
               MANUFACTURE DIGITAL VERSATILE DISCS (DVDs)

                                 ______
                                 

                            HON. MAC COLLINS

                               of georgia

                    in the house of representatives

                        Wednesday, March 1, 2000

  Mr. COLLINS. Mr. Speaker, I am pleased to introduce today legislation 
that would provide tariff relief on machinery and components for use in 
the manufacture of digital versatile discs (DVDs).
  DVD, using cutting-edge optical disc technology, provides consumers 
the highest quality audio and video reproduction. Used both in DVD 
players as part of a home theater system and in DVD-ROM-equipped 
computers, these discs have grown enormously in popularity since their 
introduction in 1997. I have used this technology myself and certainly 
understand its rapid growth. In the short time since the introduction 
of DVD hardware, demand for discs that play on these machines has grown 
from 8 million annually to an expected 394 million in 2000. In fact, it 
is expected that DVD technology will replace both videocassette tapes 
and video laser discs as the preferred medium for presentation of 
movies in the home.
  There are at least 17 domestic producers of DVDs, including such 
electronics and entertainment companies as Time Warner, Panasonic, 
Sony, and JVC. Panasonic is also a major employer in the state of 
Georgia, with over 1000 employees in my district alone. In 1997, 
Panasonic opened the first disc replication facility in the United 
States to dedicated exclusively to the production of DVDs. Nine hundred 
Panasonic employees in the United States now produce over four million 
video discs per month for such movie companies as Universal, Fox, and 
Paramount. In total, companies in the United States produce 16.6 
million discs a month, all using imported machinery.
  DVDs are the ``next generation'' recorded video media in the 
marketplace, succeeding video laser discs (VLDs) that were produced in 
the early 1990s. These machines consist of several components 
(including a master recording system, injection mold machine, laser 
encoder, and finishing line) that function together to produce DVDs. 
Machines that produce DVDs use essentially the same technology as 
machines used to produce VLDs--a laser encoder creates the desired pits 
on optical disc media (plastic or glass disc substrates). Recent 
advancements in technology enable DVDs to hold more recordings on 
smaller discs than VLDs.
  In 1994, Congress passed new, duty free tariff legislation for VLD 
manufacturing machines. This legislation helped companies like Time 
Warner (WEA Manufacturing) create and save jobs in the U.S. that were 
being lost as a result of foreign production of CDs and VLDs. 
Importantly, this legislation did not adversely affect any U.S. 
industry because optical disc technology, such as that used in VLDs and 
DVDs, was first developed overseas and there was no domestic 
production.
  Shortly after passing duty free legislation on VLDs, however, home 
video entertainment shifted to DVDs. Companies shifted production of 
VLDs to DVDs using substantially the same systems, and companies like 
Panasonic began manufacturing DVDs in the U.S. DVD manufacturers import 
the machines used to make DVDs, purchasing them from the same foreign 
companies that produced VLD manufacturing machines. Under the 
established legal principal that legislation should be interpreted to 
take into account advancements in technology, DVD manufacturing 
machines should be classified under than same duty free provisions as 
VLD manufacturing machines. Customs, however, has ruled that DVD 
manufacturing machines are not classified under the duty free 
provisions for VLDs, and that the components of DVD manufacturing 
machines should be classified under 11 separate tariff headings, with 
an average duty of three percent. This ruling has had the effect of 
negating the benefits of Congress' 1994 legislation on VLDs.

[[Page 1930]]

  My legislation would provide tariff relief on imported DVD machinery 
and components, thus reducing the cost of production for domestic 
manufacturers. Competition from Taiwan, Japan, and the European Union 
is very strong. A recent internal study indicated some overseas 
competitors are trying to sell their DVD discs in the U.S. as low as 75 
cents each, compared to a cost of $1.61 for domestic production.
  Reduced production costs would help the seventeen U.S. producers of 
DVD discs be more competitive and ensure the continued employment of 
American workers in those companies. Indeed, duties on the discs 
produced using DVD manufacturing machines actually are lower than the 
duties now imposed on DVD manufacturing machines. The proposed 
legislation would remove such inequitable and inverted tariffs, thereby 
promoting U.S. jobs and manufacturing of DVDs in the U.S. New DVD 
products are being released each year. Recordable DVDs will be 
available in 2001. As U.S. consumers respond to the superior quality of 
digital sound and images, this legislation will help companies fulfill 
the demand for digital products and help increase jobs associated with 
the popularity of this important information technology media.
  This legislation also will protect U.S. intellectual property rights. 
Movie studios have invested heavily in the protection of movie content 
for DVDs. Keeping production of DVDs in the U.S., rather than in 
countries that have weaker intellectual property laws and enforcement, 
will help prevent the mass piracy of software that occurs overseas.
  The enactment of this legislation for DVD machinery and components 
would not injure any domestic producer, and it would ensure the 
continued growth of jobs and investment in the United States while 
protecting against the potential loss of valuable intellectual 
property. I urge my colleagues to support this legislation.

                          ____________________