Donald Manzullo

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise today in support of H.R. 775, the Security and Fairness Enhancement for America Act of 2003, or SAFE for America Act. I am proud to be a cosponsor of this important piece of legislation, which eliminates the visa lottery program from the Immigration and Nationality Act. Family connections play an overwhelming role in current immigration law. As a result of most immigrants coming from a few areas of the world, Congress established the visa lottery in the Immigration Act of 1990 to diversify the immigration pool. Approximately 50,000 foreign nationals per year are randomly selected and awarded visas to come and live permanently in the United States under this visa lottery program. Immigrant visas are typically issued to individuals who already have some existing connection with a family member lawfully residing in the United States or with a U.S. employer. Millions of people apply for these visas through the lottery program, and the program requirements do nothing to ensure that the applicants have the skills they will need to participate in our modern economy. The recipients of these visas are selected based on luck, not by merit or existing ties with the U.S. This visa program is also problematic because it is unfair to those immigrants who have patiently waited and complied with our immigration laws. Most family-sponsored immigrants currently wait years to obtain a visa, yet the visa lottery program allows 50,000 random immigrants to pass ahead of these family-sponsored immigrants each year with relatively no wait. Finally, and what is perhaps most troubling are the numerous cases reported by the State Department that show that lottery winners often file fraudulent visa information. Because the lottery accepts visa applications from a variety of individuals and only requires credentials after selection, there is often a rush to find false documents once the winners are notified. False documentation is bad enough when applicants lie about education or work experience. With the amount of terrorist threats against our country, these immigration loopholes can create devastating consequences. Mr. Speaker, in this atmosphere of ambiguity, it would be wise to closely examine the flow of legal immigration into the United States in order to implement more comprehensive screening and naturalization measures.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, we all know that this body could not function without the able assistance of our staff members. I wanted to bring to the attention of the House that the Small Business Committee will soon lose to retirement the services of the Chief Clerk, Nancy Piper. Nancy will officially retire tomorrow on April 30, 2004 after over 28 years of unselfish, dedicated public service to Congress in various capacities--both in the minority and in the majority--to five Republican leaders of the House Small Business Committee. Nancy graduated from Sweet Briar College in Virginia and has a Legal Assistant Degree from George Washington University. Nancy began her career on Capitol Hill in the Nation's bicentennial year of 1976 working for her Congressman, Jack Wydler, from Garden City on Long Island, New York. At that time there were only 145 Republicans in the House of Representatives. Starting in 1983, she began working for the Small Business Committee for the then ranking minority Member Joseph McDade in Pennsylvania. Since then, Nancy worked for four other Republican leaders of the House Small Business Committee, including Andy Ireland of Florida, Jan Meyers of Kansas, and Jim Talent of Missouri. She has certainly seen a lot of changes over the years on how Capitol Hill operates, including the pivotal year of 1994, when her role dramatically changed to a majority staff person. Nancy is one of the many unsung staff members of the Small Business Committee that makes sure many of the administrative functions of the committee run smoothly. Without her service and her institutional memory, the committee simply could not function. Nancy makes sure that everything associated with a committee hearing or a bill markup proceeds without a hitch. Mr. Speaker, Members who serve on the Small Business Committee or who have once served on the committee all experienced Nancy's professionalism and pleasant demeanor. While they will miss her, I know that they will want to join me in wishing Nancy all the best as she leaves the frantic pace of Capitol Hill to enjoy her well-deserved retirement. My wife, Freda, and I express to Nancy Piper our very fondest personal wishes to her and her husband, Chris, and her two daughters, Kate and Elizabeth, as she embarks on her new journey in life.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, on March 31, 2004, the House took up consideration and passed H.R. 4062, a bipartisan bill to resolve problems associated with the restrictions imposed by the Small Business Administration on loans made pursuant to Sec. 7(a) of the Small Business Act. The bill was then passed by the Senate and signed into law by the President. Since the bill was taken directly to the floor, no committee report accompanies the bill. As Chairman and on behalf of the Ranking Democratic Member, Nydia M. Velazquez, I am submitting for insertion into the Record, the attached explanation of the bill by its sponsors. We would expect the Administrator, in implementing the provisions of H.R. 4062, to accord the enclosed explanation the same weight in divining congressional intent that the Administrator would give to a committee report on a bill that first went through a mark-up prior to floor consideration. Joint Explanatory Statement on H.R. 4062 Filed by Chairman Manzullo for himself and Ranking Democratic Member Velazquez Section 1. Additional Temporary Extension of Authorization Temporary authorizations are needed to ensure continued operation of certain programs authorized by the Small Business Act and Small Business Investment Act of 1958. This section extends those programs while the House and Senate work out their differences on a broader reauthorization package. Section 2. Extension of Certain Fee Authorizations The qualified state and local development company (referred to in this statement as ``certified development company'' or ``CDC'') program authorized by Title V of the Small Business Investment Act of 1958 operates on fees charged by the Administrator to lenders. Those fees need to be reauthorized to prevent the program from ceasing operation. Given the complexity of the financing arrangements loans made pursuant to Title V, CDCs and small businesses need sufficient time to develop the appropriate financing packages and submit applications to the Administrator. To accommodate the needs of lenders and borrowers under Title V, the sponsors determined that an extension of the fee authorization through the end of the fiscal year would be appropriate. Furthermore, the sponsors believe that if the recent problems in the loan programs authorized by 7(a) of the Small Business Act were resolved through the end of this fiscal year, equity demands that CDCs be able to operate unencumbered for the same period. Section 3. Fiscal Year 2004 Purchase and Guarantee Authority under Title III of the Small Business Investment Act of 1958 The Small Business Investment Company (``SBIC'') program operates without the use of appropriated funds. Fees and profits are used to cover the cost of the program, including coverage of losses in investment portfolios. While the sponsors believe that the fees authorized for the purchase of securities and debentures would allow the program to continue full operation without modification to the authorization levels, clarification to ensure that the program could continue operations was an appropriate course of action. To avoid any possible confusion or action by the Administrator to curtail the operation of the program, the sponsors extended the authorizations for both the purchase of participating securities and guarantees of debentures at FY 2003 levels for the rest of the fiscal year. Section 4. Combination Financing For a number of years, the Administrator authorized the use of so-called piggyback financing when using the loan program authorized by 7(a) of the Small Business Act. The Administrator defines ``piggyback financing'' as a situation in which ``one or more lender(s) provides more than one loan(s) to a single borrower at or about the same time, financing the same or similar purpose, and where the SBA guarantees the loan secured with a junior lien position.'' Small Business Administration, Standard Operating Procedure 50-10(4)(E), at 20. Furthermore, the Administrator notes that the determination of ``piggyback financing'' requires an assessment of both the lien position and the commonality of purpose. Id. Earlier in the year, the Administrator, presumably pursuant to the authority set forth in Sec. 7(a)(24) of the Small Business Act, made certain policy changes to the operation of the guaranteed loan program. In particular, the Administrator prohibited the use of piggyback financing. The sponsors believe that ``piggyback financing'' plays a valuable role in the provision of capital to small businesses. This is particularly the case for small businesses requiring larger loans in cyclical sectors of the economy. The financing technique is quite similar to that statutorily authorized in Title V of the Small Business Investment Act of 1958. Section 4 creates, for the rest of fiscal year 2004, a temporary combination-financing program by adding a new paragraph (31) to Sec. 7 of the Small Business Act. The provisions sunset at the end of the fiscal year, i.e., at the end of the day on September 30, 2004. The sponsors adopted the more formal language ``combination financing'' rather than the term ``piggyback financing.'' The sponsors define ``combination financing'' as a loan consisting of both a commercial loan and a guaranteed loan. A commercial loan is defined as one that has no portion guaranteed by the government. The sponsors intend the term ``combination financing'' to have the same characteristics as ``piggyback financing'' as that term is used in the Small Business Administration's Standard Operating Procedure already cited in this statement. The authorization of combination financing is limited to those situations in which the small business concern (borrower) obtains both a guaranteed loan pursuant to Sec. 7(a) of the Small Business Act and a commercial loan. Again the sponsors intend that the provision should operate in a manner similar to the Small Business Administration's determination that the commercial and guaranteed loans are obtained for the same or similar purposes and the loans are originated and disbursed (in whole or in part) at about the same time. To ensure that the public fisc is protected even when the Administrator's lien is subordinate to the commercial loan, the sponsors restricted the size of the combination loan to that of the guaranteed loan. In other words, there is a one- to-one ratio between the commercial and guaranteed loans. While the commercial loan cannot exceed the size of the guaranteed loan, the sponsors do not intend to prevent a commercial loan from being smaller than the guaranteed loan. The sponsors authorize the commercial loan may be made by the lender that is making the guaranteed loan. However, the sponsors also permit the commercial loan to be made by a different lender as long as the loans meet the simultaneity of time and purpose already limned. In addition, the sponsors also authorize lenders designated as ``Preferred Lenders'' by the Administrator to make the commercial loan in such combination financings. The sponsors also authorize lenders designated as ``Preferred Lenders'' by the Administrator to make the commercial loan in combination financings. In order to expedite the processing of combination financings in these circumstances, it is the sponsors' intent that the Administrator process applications for combination financings submitted by such ``Preferred Lenders'' through the Preferred Lenders Program Processing Center. The sponsors explicitly authorize the commercial loan to be secured by a lien senior to that of the guaranteed loan. Nothing in this provision prevents the Administrator from continuing or discontinuing this practice after September 30, 2004 unless directed otherwise by statute. In normal commercial transactions, lenders that take a subordinated lien position on an asset are compensated for the additional risk through additional upfront fees or by a higher interest rate. The Administrator did not require any additional payments or modification of applicable interest rates for taking a junior position in its ``piggyback financing.'' Section 4 requires the Administrator to charge an upfront fee equal to 0.7 percent of the amount of the commercial loan as reimbursement for the risk associated with taking a subordinate lien position. The sponsors expect that the lender that is benefiting from senior lien position to pay the fee. While lenders pay all fees charged pursuant to Sec. 7(a) of the Small Business Act, some fees are recoverable from borrowers. Lenders may obtain reimbursement of the upfront fees mandated by Sec. 7(a)(18) of the Small Business Act from borrowers but are prohibited from recovering from borrowers the annual ongoing fee mandated by Sec. 7(a)(23) of the Small Business Act. Since the ultimate beneficiary of the combination financing as authorized by this section is the bank making the commercial loan, the sponsors determined that the lender should be prohibited from recovering that fee and imposed the restriction set forth in Sec. 7(a)(23)(B) of the Small Business Act on the payment of the commercial loan fee. The cross-reference to the provision in Sec. 7(a)(23) ensures that the lender will be unable to recoup the 0.7 percent from the borrower. The Administrator had procedures in place for combination financing (styled in the Standard Operating Procedures as ``piggyback financing'') on October 1, 2003, and the Administrator processed combination loan financings in the normal course of business on October 1, 2003. To ensure that the Administrator accept and process combination financing loan applications, the sponsors imposed a requirement that the Administrator must process those loan applications as those loans were processed under the ``piggyback financing'' procedures in effect on October 1, 2003. The sponsors did not believe that it would be prudent to mandate the issuance of regulations to implement a temporary program, which will sunset in about six months. In fact, the sponsors were concerned that the promulgation process would be sufficiently lengthy and the program would sunset before any regulations were in place. The sponsors recognized that the Administrator would be approving combination financings under the rubric of ``piggyback financings'' in accordance with already extant standard operating procedures. The sponsors believe that these provisions are adequate for immediate issuance of combination financing loans. The sponsors therefore authorize the Administrator to use the standards already in existence upon enactment without the necessity of formal rulemaking. The provision has the additional benefit that industry is well aware of the procedures and standards for business eligibility in the standard operating procedures. The sponsors recognize that additional standards may be necessary to determine business loan eligibility under this section. The sponsors authorize the Administrator to adopt such additional standards as may be necessary (in order to reduce risk to the government and increase transparency to the private sector) so long as those standards do not unreasonably restrict the availability of combination financing as was available prior to the issuance of any additional standards. Thus, the sponsors expect that the Administrator will make reasonable decisions that may in some ways restrict the availability of combination financing. However, standards that prohibit or reduce by a significant number the combination financings made after the adoption of additional standards would not be within the intention of the sponsors. The sponsors do not expect any new standards adopted by the Administrator to impose significant restrictions on combination financings. The 0.7 percent fee sufficiently compensates the Administrator for the additional risk. Any additional standards should focus on the procedures for processing combination financings or resolving situations that are not adequately addressed under current procedures for ``piggyback financing.'' Section 5. Loan Guarantee Fees In late December of 2003 and early January of 2004, the Administrator, in part pursuant to the Anti-Deficiency Act, temporarily ceased lending under the loan program established pursuant to Sec. 7(a) of the Small Business Act. Shortly after the Administrator halted lending, funds were reallocated enabling the program, but with a mandatory loan cap of $750,000. This restriction continues to impede the ability of small businesses to obtain capital, expand their businesses, and create jobs. The sponsors recognized the need to reopen the program to its fully authorized levels ($2 million loan maximum with a guarantee up to $1 million). Two options were available for doing this. The first would require additional appropriations. The second would be to raise fees associated with the lending program authorized by Sec. 7(a) of the Small Business Act. The sponsors were not sanguine about the prospect of obtaining additional appropriations for fiscal year 2004. So the sponsors reluctantly turned to the second option. The approach adopted by the sponsors raise, through the end of fiscal year 2004, the annual ongoing fee charged to lenders. The reduction was reauthorized in Pub. L. No. 107- 100. The statutory fee is currently set at a 0.5 percent but was reduced temporarily, to encourage the creation of new jobs, in the last reauthorization bill to 0.25 percent. Section 5 raises that level from 0.25 percent to 0.36 percent. The sponsors also eliminate the authority of lenders to retain 0.25 percent of the ongoing fee for loans of less than $150,000. According to the Administrator and the Office of Management and Budget, these fee changes, along with other temporary modifications, raise sufficient funds to operate a guaranteed loan program at a $12.55 billion level without any restrictions on combination financing or caps on loan size. Section 6. Express Loan Provisions Section 7(a)(25)(B) authorizes the Administrator to create pilot loan programs. In exercising that authority, the Administrator created an ``Express Loan Pilot Program.'' The program authorizes lenders to use their own forms in submitting requests to the Administrator for the issuance of guarantees. Two significant restrictions are imposed by the ``Express Loan Pilot Program;'' the guarantee cannot exceed 50 percent of the loan and the maximum loan amount is $250,000. According to the Administrator and the Office of Management and Budget, expansion of the ``Express Loan Pilot Program'' to authorize lenders to make loans up to the statutory maximum of $2 million would contribute to a significant reduction in the subsidy rate. The sponsors adopted this concept to ensure that sufficient funds were made available to reopen the program at expected loan volumes. Section 6 defines the term express lender as a lender authorized to participate in the ``Express Loan Pilot Program.'' The sponsors do not intend that the Administrator need change any of the requirements for designation as an express lender but is authorized to do so. Section 6 defines an ``Express Loan'' as one in which the lender utilizes, to the maximum extent practicable, its own analyses of credit and forms. The sponsors fully expect that the conditions under which express loans are made will not vary significantly from those conditions that currently exist under the ``Express Loan Pilot Program.'' However, the sponsors recognize that the Administrator may want to impose some additional conditions on the use of forms or analyses for larger express loans. Nothing in H.R. 4062 prohibits the Administrator from imposing these additional requirements. Section 6 codifies the existing concept of the Administrator's ``Express Loan Pilot Program.'' In other words, the pilot program is one in which lenders utilize their own forms and get a guarantee of no more than 50 percent. Subsection 6(b) restricts the program, including the increased loan amount, to those lenders designated as express lenders by the Administrator. Designation as an express lender does not limit the lender to making express loans if the lender has been authorized to make other types of loans pursuant to Sec. 7(a) of the Small Business Act. Although a lender may only seek status as an express lender, this subsection was included to ensure that the Administrator not limit the ability of an express lender to seek other lending authority from the Administrator. Nor is the Administrator permitted to change its standards for designating an express lender in a manner that only authorizes the lender to make express loans. To the extent that the lending institution wishes to offer a full range of loan products authorized by Sec. 7(a) and is otherwise qualified to do so, the Administrator shall not restrict that ability on the lender's status as an express lender. Subsection 6(c) prohibits the Administrator from revoking the designation of any lender as an express lender that was so designated at the time of enactment. This prohibition does not apply if the Administrator finds the express lender to have violated laws or regulations or the Administrator modifies the requirements for designation in a way that the express lender cannot meet those standards. The sponsors do not expect that the Administrator will impose new requirements for express lenders that prohibit them from making loans under other loan programs authorized by the Small Business Act for which they have approval from the Administrator. Subsection 6(d) temporarily expands the Express Loan Pilot Program to $2 million. After September 30, 2004, the sponsors expect the Administrator to operate the Express Loan Pilot Program according to the standards that were in effect prior to the enactment. Since the Administrator had the authority to modify or alter the pilot program prior to the enactment of this Act, nothing in the Act restricts the Administrator from taking appropriate regulatory action with respect to the program after the authority vested in this Act terminates. The President's FY 2005 budget request for the Small Business Administration did not include any funding for the loan programs authorized by Sec. 7(a) of the Small Business Act. Administrator Barreto testified at a full Committee hearing that the loan programs should be self-funding with a subsidy rate of zero and, as a result, the Sec. 7(a) lending programs would be on the same footing as the CDC and SBIC programs. Administrator Barreto's suggested mechanism for achieving a zero subsidy rate was through a mandatory expansion of the Express Loan Pilot Program to incorporate almost all smaller loans (initially all loans under $250,000 but in subsequent years could increase if needed to maintain a zero subsidy rate). The mandatory nature of the proposal did not garner much acceptance among members of the House or Senate Small Business Committees. Given Administrator Barreto's stated preference for resolving the funding crisis associated with the Sec. 7(a) lending programs through an expansion of express loans, the sponsors are concerned that the Administrator will take regulatory actions that unduly favor express lending over other types of lending authorized by Sec. 7(a) of the Small Business Act. As such, the sponsors determined that it was appropriate to impose certain restrictions on the Administrator's operation of the expanded Express Loan Pilot Program in order to prevent actions that unnecessarily and unduly favor express lending. Any significant policy change in the operation of the lending programs authorized by Sec. 7(a) of the Small Business Act requires notification to the House and Senate Small Business Committees. Subsection 6(e) does not limit the restrictions imposed on the Administrator's regulatory discretion to those matters that would require notification pursuant to Sec. 7(a)(24) of the Small Business Act. The most significant restriction is that the Administrator cannot take any action that directly forces a lender to make an express loan for any level. Thus, if a lender wishes to make an express loan for $1.5 million dollars and is a designated express lender, the lender may do so. If the same lender is qualified to make other types of loans and wants to make a $1.5 million dollar loan at a 75 percent guarantee, the Administrator may take no action that forces the lender to select the 50 percent guarantee over the 75 percent guarantee. One mechanism for demonstrating favoritism is to impose conditions on loan programs other than express loans that have the effect of coercing lenders to make express loans. Paragraph (2) of subsection 6(e) ensures that the Administrator imposes like terms and conditions on both express and other lending programs authorized by Sec. 7(a) of the Small Business Act. The sponsors intend that this requirement apply to all of the terms and conditions of loans made pursuant to Sec. 7(a) of the Small Business Act, including collateral and the likelihood of repayment standards. Even if the terms and conditions on the loans are identical, the Administrator has other mechanisms for demonstrating favoritism of express lenders over other types of Administrator-designated lenders. For example, the Administrator could delay processing of 75 percent guarantee loans, i.e., loans other than express loans, such that lenders would, for all practical terms, be required to do express loans. Thus, paragraph (3) of subsection 6(e) prevents the Administrator from making any personnel changes or altering the application of resources (be it personnel, equipment, or funding) that increases the loan processing and disbursement times for all loans authorized by Sec. 7(a) of the Small Business Act as those were in effect on October l, 2003. For example, if the time for disbursement of an express loan was five days and the time for disbursement of a 75 percent guaranteed loan was seven days, the Administrator may take no action that increases the relative disparity between the express loan and the 75 percent guarantee loan. Nothing in this subsection shall be interpreted to prevent the Administrator from improving the overall processing, approval, or disbursement rates of all loans except that any such improvements must affect all lenders and all lending programs operating pursuant to Sec. 7(a) of the Small Business Act in an identical manner. To ensure that the sponsors' intent is clear that the expansion of the express loan is optional and the Administrator shall take no action that has the practical effect of making it mandatory, the sponsors incorporated a catchall requirement that the Administrator not take action to create incentives that would favor express loans over other types of loans. The sponsors believe that the determination of the appropriate nature of a loan should not be made by regulatory fiat but by the sound judgment of lenders, borrowers, and the Administrator's commercial loan officers. The dramatic expansion of the express loan program, even on a temporary basis, may shed dramatic light on the purposes for which such loans are made. That information will be critical in resolving, on a long-term basis, the funding issues associated with the Sec. 7(a) lending programs. Therefore, the sponsors requested, to the extent practicable, monthly reports on the types and purposes for express loans made in excess of the current pilot program cap of $250,000. Subsection 6(g) terminates the effectiveness of various subsections after September 30, 2004. Subsection (d) has its own internal sunset provision. No sunset is made on subsection (a), as it simply codifies existing practice of the Administrator with respect to definitions related to express loans. Nothing in subsection (g) is intended by the sponsors to constitute a permanent change in any program authorized pursuant to Sec. 7(a) of the Small Business Act. Section 7. FY 2004 Deferred Participation Standards As already noted, the sponsors are concerned that regulatory or other administrative changes in loan programs could have the practical implication of forcing lenders to make express loans. The sponsors determined that by freezing all terms and conditions of loans as they existed on October l, 2003 would be a sound means of deterring favoritism for express lending. The sponsors intend this provision to require, upon enactment, the lifting of the cap on loans made pursuant to Sec. 7(a) of the Small Business Act that are currently in place. Section (7) does permit the Administrator to modify those terms and conditions if needed to ensure continued operation of the program within the amounts appropriated. Although the sponsors, based on assertions by the Office of Management and Budget, believe that the Administrator will have sufficient funds through the end of the fiscal year to operate without any regulatory restraints, the sponsors do not want to prevent the Administrator from taking actions needed to prevent violations of the Anti-Deficiency Act. In other words, the sponsors fully expect the terms and conditions of October 1, 2003 to apply unless unusual and very unexpected consequences occur. Should such changes be necessary, nothing in H.R. 4062 repeals, either implicitly or explicitly, the notification requirements set forth in Sec. 7(a)(24). Section 8. Temporary Increase in Loan Limit Access to capital is vital to the growth of small businesses. Particularly for manufacturers and high technology research and development businesses, typical amounts of capital available under the loan programs authorized by Sec. 7(a) of the Small Business Act often are inadequate. If these manufacturers and high technology companies are investing to increase their productivity, the job creation requirements of Title V of the Small Business Investment Act may make it difficult, if not impossible, to obtain that type of financing. Therefore, the sponsors determined that it would be appropriate to temporarily increase the amount of the loan guarantee from $1 million to $1.5 million. No additional changes were made in the overall statutory cap of a gross $2 million loan. The sponsors did not believe that was necessary because any additional gaps in financing can be addressed using combination financing, under the terms of this Act. Given the fact that borrowers are getting an additional increment in loan guarantees, the sponsors determined that it would be appropriate to require an additional 0.25 percent fee for the amount of guarantee in excess of $1 million. Thus, on the amount of the guarantee between $1 million and $1.5 million, the upfront fee authorized pursuant to Sec. 7(a)(18) of the Small Business Act increases from 3.5 percent to 3.75 percent. This is consistent with typical commercial lending practices of charging fees that are commensurate with the lenders' exposure to risk.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I have no further speakers. I would ask the gentlewoman if she has any further speakers

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, this bill is a bipartisan work product between the gentlewoman from New York (Ms. Velazquez) and me and is a result of the commitment made on the House floor earlier this month to provide a fix to the problem in the main flagship guaranteed lending program of the Small Business Administration. This legislation would not only restore the overall 7(a) program to full strength, but also expand its outreach to help more small businesses grow and create more jobs. Earlier this year, a funding shortfall unfortunately required the SBA to temporarily suspend the program for a week, reduce the maximum loan size to $750,000, and prohibit combination or piggyback loans. In this compromise, the annual lender ongoing fee on 7(a) loans would increase from 0.25 percent to 0.36 percent. The lender would also pay a 0.70 percent up-front fee for combination or piggyback loans. For loans under $150,000, the lender would no longer be allowed to retain the 0.25 percent ongoing fee. Instead, this bill, under the provisions in it, the SBA will keep that fee. H.R. 4062 raises the 7(a) guaranteed limit from $1 million to $1.5 million with an additional risk premium fee of 0.25 percent imposed on the borrower over and above the 3.5 percent fee they currently pay on loan amounts over $1 million. Finally, H.R. 4062 allows lenders the option to make loans up to $2 million under the SBA Express program, which has a 50 percent guarantee rate; but banks can use their own paperwork. Currently lenders can only make loans up to $250,000 under the SBA Express program. I want to make it clear, however, that I intend that this provision must be truly optional on the part of the lenders. The SBA should not do anything in its internal policies or procedures that tilts this rule in favor of SBA Express at the expense of the rest of the 7(a) lending program. All together, these provisions will provide an additional $3 billion in lending to small businesses for the rest of fiscal year 2004 to reach a total of 7(a) program level of $12.55 billion without requiring any additional appropriations or reprogramming funds from other key areas within the SBA. When this bill is passed by Congress and signed into law, SBA assures me it will provide enough lending authority for the SBA to remove the current loan cap of $750,000 and also allow combination or piggyback loans. By increasing the 7(a) programs lending authority, SBA estimates that through their lending partners they will be able to offer 30,000 additional guaranteed loans, which could create or retain as many as a half million jobs by the end of September. In addition to fixing the 7(a) program, the bill authorizes the SBA to charge fees under the 504 Certified Development Company program and the Small Business Investment Company program until the end of the fiscal year or September 30, 2004. Both these programs operate solely on the basis of user fees and do not require an annual appropriation. Currently, the authority to charge these fees expires on May 21. Finally, the general extension of SBA programs not covered by an appropriation such as the surety bond program, SBA's cosponsorship authority, and several very small procurement assistance programs, will move from the current deadline of April 2 to June 4 of 2004. This bipartisan bill has the support of both the minority and majority sides of the Committee on Small Business. It has the support of the administration. And finally, it represents the consensus position of those who use the 7(a) program, both borrowers and lenders. I urge my colleagues to support H.R. 4062. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, I yield back the balance of my time.

Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4062) to provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958 through June 4, 2004, and for other purposes.

Mr. MANZULLO. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on this legislation.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I yield back the balance of my time.

Mr. MANZULLO. I thank the ranking member. I will be willing to enter into a colloquy. I will assure the ranking member that I will work with her to make changes to the 7(a) lending program by April 2, 2004 that will resolve the problems currently affecting the 7(a) program through the end of fiscal year 2004. I make the sincerest assurance that these negotiations will involve all relevant parties, including House leadership and the White House and that the gentlewoman and her staff will be involved in such negotiations. I truly believe that we can solve this problem together.

Mr. MANZULLO. I would like to thank the ranking member from New York for entering into this colloquy and resolving this issue amicably.

Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, this is a short and simple bill. H.R. 3915 authorizes a general extension of all programs under the Small Business Act and the Small Business Investment Act from its current ending date of March 15, 2004, until April 2 of 2004. This will allow SBA programs that expire on Monday to continue to operate. In particular, these include the surety bond program which enables small businesses to obtain surety bonds in order to bid on government contracts, cosponsorship authority so that the SBA can host events or print publications with the private sector, and procurement of assistance that is provided to certain small businesses. H.R. 3915 as amended also authorizes the SBA to charge fees for the 504 loan program with a certified development company until May 21 of 2004. This program operates solely based on the fees charged by the SBA to certified development companies. If such fees are not extended, there will be no way for certified development companies to make the type of long-term loans that small businesses rely on to create new jobs. The 504 program operates totally upon user fees and has not received an appropriation since 1996. Unless H.R. 3915 is signed by the President soon, the 504 program will shut down on Monday. The ranking minority member and I have been working together on finding a solution to the 7(a) problem. Due to a variety of reasons, unfortunately, that solution is not part of this legislation. I pledge to the gentlewoman from New York (Ms. Velazquez) that I will do everything in my power to see to a resolution in the 7(a) problem as soon as possible. I urge my colleagues to support H.R. 3915. Mr. Speaker, I reserve the balance of my time.

Mr. MANZULLO. Mr. Speaker, will the gentlewoman yield?

Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3915) to provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958 through May 21, 2004, and for other purposes, as amended.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I want to thank Chairman Sensenbrenner and Chairman Lamar Smith for their very important changes for small entities and other Patent and Trademark Office users. I also want to thank their dedicated and excellent staffs, Phil Kiko, Steve Pinkos and Blaine Merritt. I also want to thank the majority leader and his staff led by Brett Loper for crafting a very excellent amendment to this bill that as the chairman of the Committee on Small Business I am satisfied that the small inventor is protected.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise today in tribute to my colleague and friend in Illinois, David A. Wirsing, State Representative from the 70th district. Dave went home to be with the Lord suddenly on Sunday, November 16, 2003. He leaves a loving wife of over 40 years, Nancy, four grown children--Mark, Steven, Angela and Susan--and 11 grandchildren. Dave Wirsing was a friend in the truest sense of the word. He was a man of deep personal faith, a loving and faithful husband to Nancy and a wonderful father to his four children. He spent the majority of his life in agriculture as a former pork producer and grain farmer. He and Nancy had the same phone number their entire lives, and their address always ended with ``Sycamore, Illinois''. Then, in 1992, he decided to enter public service and run for State Representative of the 70th district. Mr. Speaker, I want to pay tribute to Dave today not only for his selfless public service to the people of Illinois, but to Dave as a friend. Before Dave ever ran for public office, he was simply a husband, father and grandfather. He raised his children with a sense of humor, a stern discipline, high moral standards, a deep and abiding faith in God and taught them leadership skills and simple common sense. Mostly, he raised his children and provided his wife, Nancy, with love. Few knew at this point how much he would impact the lives of so many people or that so many would seek his counsel. His children never dreamed that the man they simply called ``Dad'' would become the man many would call ``great.'' Dave Wirsing was a friend to many. His small and large acts of kindness are unfathomable to some. However, to Dave, it was just the way he was meant to live his life. He was a humble man, never quite understanding why people outside of his family would honor him for achievements that to him were just what he was supposed to do. He was a man who dedicated his life--indeed, his heart and soul, to serving others--his family, his neighbors, his friends, his constituents. Dave led by example--he lived by the Golden Rule, and yet he never expected anything in return for his kindness and compassion. He loved being around people--be it the company of his wife and family or in the presence of colleagues, acquaintances and even strangers. He was able to laugh at himself--a trait seldom seen these days. He dedicated his life to serving others. He helped his children grow, learn and prosper; he helped his neighbors in times of need; he helped his friends to resolve problems; he helped his colleagues see both sides of an issue and then beyond that to a resolution; he helped his constituents obtain the assistance and guidance they had a right to; he helped many young people grow in life through his wisdom, his gentle and jovial encouragement, his love and respect for each person as an individual, and his high regard for bettering oneself. Mr. Speaker, Dave Wirsing's accomplishments were many, but most importantly, not a day went by that he did not share himself with someone. Solutions and advice came to him from principle and philosophy. He was not out to make a name for himself, he just wanted to make things right in his part of the world. If he did not have the skill necessary to help someone, he sought it out. He lived by the philosophy that if you always tell the truth, you won't have to remember what you said. Dave Wirsing did not live his life to achieve great moments, but instead had a lifelong commitment to a set of values and ideals. As I reflect today on the whole of his life, that is his greatest accomplishment. He leaves behind a legacy of faith, kindness, compassion and love for his family, friends and constituents. He will be deeply missed.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise in support of the Overseas Private Investment Corporation Amendments Act of 2003 (S. 1824), which will reauthorize the vital programs of the Overseas Private Investment Corporation (OPIC) for another four years. As the author of the previous OPIC reauthorization bill in 1999 (P.L. 106-158), I am pleased to strongly endorse S. 1824. Since 1971, OPIC-supported projects have facilitated $145 billion worth of investments in hundreds of projects that have helped developing countries and emerging economies of the former East Bloc improve their standard of living. In addition, OPIC-supported projects have helped to create or sustain 254,000 American jobs and $65 billion in exports; expanded economic development; encouraged political stability; and promoted free market reforms around the world. As an additional benefit, OPIC operates at no net cost to taxpayers by charging fees for its services. It has earned a profit in each year of operations--$175 million in 2002--and built its substantial reserves to more than $4 billion. I wish every government agency operated like OPIC by producing a profit for the taxpayer. All of OPIC's guaranty and insurance obligations are backed by OPIC's own substantial reserves and by the full faith and credit of the U.S. Government. As chairman of the Small Business Committee, I am particularly pleased that under the current leadership of OPIC President and CEO Peter Watson, OPIC has launched two significant initiatives to encourage greater use of OPIC's programs by small business exporters to fulfill the mandate contained in P.L. 106-158 to expand OPIC's small business efforts. First, in July 2003, OPIC announced the establishment of a new department focusing on small and medium-size businesses. The Small and Medium Enterprise Department will be responsible for OPIC's Direct Loan program, which provides financing to U.S. businesses with annual revenues under $250 million. The Small Business Center will also be part of the new department. Small businesses looking to participate in the global marketplace have unique requirements. Lack of resources to pursue opportunities abroad, concern over political risks, or the inability to find private sector support can prevent U.S. small businesses from expanding overseas. The Small Business Center at OPIC will help meet these needs by providing financing and political risk insurance to small businesses with annual revenues of less than $35 million. Second, OPIC and a small business lender. WorldBusiness Capital, Inc. (WBC) of Hartford, Connecticut, in July 2003 entered into a historic cooperative agreement that will expand support for U.S. small businesses investing overseas and enhance the activities of OPIC's Small Business Center. Under the agreement, OPIC will provide loan guarantees for WBC projects pursuant to a risk-sharing arrangement. WBC will make loans with its own funds, and will continue to monitor and service each loan. WorldBusiness Capital, Inc. intends to make OPIC- guaranteed loans of between $250,000 and $10 million to U.S. small businesses expanding into overseas markets. Hopefully, this private- public partnership will set an example for other banks to enter into similar arrangements to publicize and maximize the leverage of OPIC's programs to small business exporters. Delegated authority lenders and preferred lenders are quite common programs at the Export-Import Bank of the United States and the Small Business Administration. The same should hold true for OPIC. Mr. Speaker, it is a privilege and honor for me to support the Overseas Private Investment Corporation Amendments Act of 2003. I commend my good friends, Chairman Henry Hyde of Illinois and ranking minority Member Tom Lantos of California of the House International Relations Committee for working so hard on this bill and bringing it to the floor in a timely manner. My only regret is that my duties on the Small Business Committee prevented me from taking a more active role in the OPIC reauthorization process this time around. I urge my colleagues to support S. 1824.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I rise in strong support of the Toomey amendment. The amendment offered by my good friend and Committee on Small Business subcommittee chairman makes perfect sense. The amount of competition that the FPI would bring against small business in set-aside procurements goes against the very intention of having a small business set-aside in the first place. Common sense tells us that the small businesses will have to unfairly lower their prices to match the levels that the FPI can offer. Also, knowing how Federal procurement works, I can predict that contracting officers will tailor their acquisitions in such a way as to guarantee that FPI will win when that is the outcome the contracting office wants, even though they may still carry it out under a small business set-aside. With specifications written for products the FPI has experience and economy of scale in making, of course, they will undercut the small businesses and win such an unfair competition. A small business cannot survive by buying in on a contract at a loss, but the FPI could do business indefinitely by using such a strategy. The final irony of all this is that the administration is valiantly trying to increase opportunities for small businesses by unbundling large procurements and giving them a chance to win a contract of a size they can handle. Turning around and letting the FPI get into the small business-sized contracts would negate whatever progress we would be making on that front, and we would end up right where we started. I would remind my colleagues that the government has not obtained its 23 percent goal for contracting with small businesses for several years. With a workforce of over 20,000, FPI is a large business, and FPI should be competing with other large contractors. Let us keep them out of the sort of procurements we set aside for mom-and-pop small businesses. I do not want to be holding hearings investigating why the FPI is winning one small business set-aside after the other. Let us solve this problem once and for all and support the Toomey amendment.

Mr. MANZULLO

Mr. MANZULLO. Madam Chairman, I offer an amendment.

Mr. MANZULLO. Madam Chairman, I rise to introduce this amendment to close a loophole that is allowing Federal funding under this bill to purchase foreign-made steel for bridge construction. In 1940 Congress established the Alteration of Bridges program that enabled the Coast Guard to ensure open navigation of waterways. Under this program the Coast Guard can require bridge owners to alter bridges that pose an unreasonable obstruction to navigation. The Coast Guard contributes a portion of the bridge alteration costs based on modifications or replacement related to ensuring improved navigation. I cite two recent examples: Even though 80 to 90 percent of the construction funds to alter a railroad bridge over the Mississippi River in Burlington, Iowa, came from the Coast Guard, the Coast Guard argued that the Buy American Act did not apply because the bridge was owned by a non-Federal entity. This project used 3,400 tons of steel. The agency made the same argument for a $44 million railroad bridge replacement project in the Port of New Orleans. The Coast Guard's share of the project's cost came to 94 percent; yet they still determined the Buy American Act did not apply. The Buy American Act was intended to ensure that when the taxpayers' money was spent on Federal projects that the materials and goods used came from American production, to stimulate our production in the jobs- producing aspect of the project. The Coast Guard's refusal to follow the intention of the act because of its legalistic determination circumvents the act's intent. Let me illustrate the economic impact of this. It takes an average of 25 man-hours of labor to fabricate a ton of steel. The 3,400 tons required for the Burlington bridge equals about 85,000 hours. That is over 40 full-time jobs for 1 year. And these are exactly the kind of high-wage jobs, averaging $17 an hour plus benefits that pay enough for people to buy a home and support a decent standard of living. The steel bridge industry fabricates on average about 500,000 tons of steel a year. That is over 12 million man-hours of labor. Now we are talking about 6,000 jobs. With an average price of steel at about $2,000 a ton, this means a billion-dollar manufacturing industry. These are the jobs directly related to fabricating the beams and girders. When the Coast Guard circumvents the Buy American Act, it uses taxpayer dollars to pay the steelworkers of Japan and Korea. The problem here today is not with the Buy American Act, but with the multiple efforts being used to get around it. This amendment closes one of the loopholes and makes it clear that federally funded public works will be expected to adhere to the intent of the act as Congress envisioned. The Coast Guard is our first line of defense in homeland security, guarding our shores and waterways. We should not allow the Coast Guard to undermine our economic security, the very jobs of our citizens that pay the taxes that allow us to have a Coast Guard in the first place. A similar amendment was adopted by the other body to the appropriations for the Department of Homeland Security and passed into law. I urge the adoption of the amendment to make this permanent law.

Mr. MANZULLO. I yield to the gentleman from New Jersey.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, our manufacturing base is slowly evaporating before our very eyes. Just last week, Rockford, Illinois-- the main city I represent--lost 3 facilities. Over 1,200 workers in a town of 150,000 lost their job last week. Over 2.8 million manufacturing jobs have been lost since July 2000. Manufacturing now just makes up 14 percent of our Gross Domestic Product. Yet, few people in Washington, D.C. are truly aware of this problem because this town doesn't produce much except paper. There are many causes to the problems facing manufacturing: high health care and energy costs; legal liabilities; a staggering tax and regulatory burden; an outdated export control system; a government procurement system that thinks that it is OK to buy abroad; and an unfair global trading system. I am proud to stand with Representative Phil English today in trying to bring about some relief in the trade area. The United States faces huge challenges with China. We all recognize and appreciate the difficulties the Chinese face as they integrate into the world economy. China is to be commended for going down a path towards more free markets and away from a planned economy. They have over 1.2 billion people and tens of millions of people enter their workforce each year. China must grow about eight percent a year just to keep even as they try to integrate new workers into the economy and also provide real employment for former workers at failed state-owned enterprises. However, while acknowledging these challenges, we also must not allow the nations of the world to expect the United States to be the only global economic growth engine. It is in China's long-term best interest to address the real problems contained in this resolution. It is time for China to promote economic growth within their country mainly by selling the products made in their nation to their own people--not using the United States as a pressure relief valve. Plus, China should take a cue from one of our great industrialists-- Henry Ford--and pay their workers sufficient wages so that they can afford the products they are making for U.S. consumers. Yes, China has honored many of its WTO commitments. But it has also not lived up to all of its commitments to the WTO. We have given China the benefit of the doubt for too long. While we are grateful for China's willingness to buy more U.S. products, this is not enough. Now is the time to ratchet up the pressures and if necessary bring a trade case through the WTO process to force full compliance of China's commitments. Our manufacturers have taken it on the chin for too long now. For example, having very low taxes imposed on Chinese semi-conductor manufactures but taxing imported semi-conductors at a much higher rate is outrageous. We're struggling to replace our Foreign Sales Corporation/Extraterritorial Income tax regime due to a WTO challenge from Europe; however, this Chinese tax discrimination policy hasn't been challenged in the WTO system yet. Does that make any sense? The National Association of Manufacturers has many more examples, which I ask unanimous consent to include in the Record. I'm also grateful to Representative English for including a good deal of the language in H. Res. 414 dealing with Chinese currency manipulation from the legislation I authored along with my good friends and colleagues Representatives Mike Rogers, of Michigan, Charlie Stenholm of Texas, and Baron Hill of Indiana. I am especially pleased that the House of Representatives will go on record today in opposition to these policies that place up to a 40 percent tax on U.S. exports to China and up to a 40 percent discount on Chinese imports into the United States. Is it any wonder why our manufacturers are crying out for relief? This resolution is a good first step towards final action on H. Con. Res. 285, which, if diplomacy fails, calls for initiating a Section 301 trade case to impose trade sanctions against nations that manipulate their currencies for a trade advantage. Let me also remind my colleagues that China is not the only nation that deliberately undervalues its currency. Japan, Korea, and Taiwan also vigorously intervene in currency markets to prevent their currency from strengthening against the U.S. dollar. Passage of this resolution today should not undermine our resolve to combat the problem of unfair foreign currency manipulation of other nations. Prior to his departure for the Asia Pacific Economic Council conference, President Bush said we must make sure that ``currency policies of a government don't disadvantage America. Fair trade means currency policies [are] fair.'' We should strongly support passage of H. Res. 414 today. But we should also work towards ensuring passage of H. Con. Res. 285 if timely progress is not made towards accomplishing the goals set out in this resolution and if countries including Japan, Korea, and Taiwan do not halt the practice of undermining the value of their currency to boost their export potential. Again, Mr. Speaker, I urge my colleagues to support H. Res. 414. National Association of Manufacturers, September 10, 2003. Review of China's Compliance With Its WTO Accession Commitments Areas of Concern Currency undervaluation; Subsidized exports; Counterfeiting and IPR violations; Discriminatory VAT taxes; Unjustified product labeling requirements; Inappropriate standards and concerns about CCC mark procedures; Restrictions on trading rights; Lack of action on auto financing regulations; Problems with Tariff Rate Quotas; and Slow progress on transparency. Overview The National Association of Manufacturers (NAM) welcomes the opportunity to comment on China's compliance with obligations accepted as a WTO member and commitments made in conjunction with accession to open its internal market to foreign products and services. The NAM supported China's membership on the condition that it would take meaningful steps to adhere to these obligations and commitments and become a responsible participant in the international trading system. Trade with China is of immense importance to many U.S. manufacturers. The Chinese market is set to become one of the largest in the world within the next several years. Chinese imports are expected to exceed $380 billion in 2003, making China the world's third largest importer after the United States and Germany. At the same time, China is rapidly becoming a major exporter of industrial goods, and the range of industrial products exported has continued to grow at a rapid pace. China's expanded participation in the global marketplace, then, offers both important new commercial opportunities as well as challenges resulting from increased competition in the U.S. and foreign markets. NAM members want the United States to have a positive trade relationship with China. However, they also want a level playing field for competition. In that regard, we are hearing increasing concerns about unfair Chinese trade and currency practices and China's failure to provide the same kind of access to U.S. goods and services in the Chinese market that Chinese goods and services enjoy in the U.S. market. As China concludes its second year as a WTO member, its compliance record is decidedly mixed. While U.S. exports to China continue to increase (by 24 percent in the Jan.-June 2003) and a growing number of U.S. companies are trading and investing there, the NAM has also received far more complaints about unfair Chinese practices than in the previous year. NAM members recognize that China is still in transition to a market economy and in the process of phasing in certain WTO market-opening commitments. However, because China has quickly becomes such an important global importer and exporter, it is vital that the United States work to ensure that China complies as fully as possible with all WTO obligations and particularly those that have a significant impact on U.S. economic interests. NAM member companies and affiliated organizations have reported the following concerns regarding China's WTO compliance. currency manipulation By far, the NAM has received the greater number of complaints about China's deliberate policy of undervaluing its currency to gain unfair competitive advantage over U.S. producers and those of other WTO member countries. Economists have estimated that China's currency could be undervalued by 40 percent or more. The Chinese yuan has remained pegged to the dollar at 8.28 for the past eight years despite an extended period of robust economic growth, continuing trade surpluses and a large build-up in foreign exchange reserves, which exceeded $350 billion in July 2003. Chinese officials have acknowledged that the pegging of the yuan to the dollar is part of a deliberate strategy to support Chinese industry and boost exports. This kind of currency undervaluation for commercial gain goes against the intent of the General Agreement on Tariffs and Trade (GATT), which seeks to remove trade barriers and allow markets to determine trade flows. Article IV, for examples, states that ``Contracting Parties shall not, by exchange action, frustrate the intent of the provisions of this Agreement . . .'' China's undervalued currency, in effect, acts as an additional trade barrier to U.S. exports and an unfair subsidy for all Chinese exports. We believe that Chinese exchange rate policies do not comply with WTO obligations. subsidized exports We continue to receive reports from different industries (e.g., tool-and-die, metal forming, steel and chlorinated isocyanurates) that Chinese products are being sold in the United States at prices so low that they could not even cover the cost of raw materials and shipping much less full production and marketing costs. A tool-and-dye company, for example, reports that a Chinese competitor was selling a product similar to one made in the United States for $40,000, compared to the U.S. producer's price of $100,000. The U.S. company maintains that the cost of the raw materials alone would amount to $40,000, not including shipping, duties and other costs. A U.S. producer of chlorinated isocyanuratrs, which is used as a cleaning agent in swimming pools, reports a similar situation. As a result of pricing which appears to be below cost, Chinese exporters are expected to increase exports of this product by 400 percent in 2003 over 2002 levels. These reports suggest the likelihood of widespread use of subsidies, either direct or indirect, to help Chinese exporters gain unfair competitive advantage in the U.S. market. They merit further investigation by USTR and the Department of Commerce. One source of indirect subsidy is continued bank leading to money-losing and insolvent Chinese manufacturers, often state-owned or state-controlled enterprises. Since the Chinese banks providing these loans are either state-owned or state-controlled, the Chinese government bears responsibility for their lending practices. U.S. steel producers note that the Chinese steel industry is the largest-recipient of interest-rate subsidies authorized by the national government. Since many of the companies that benefit from either directed bank lending or subsidized interest rates are engaged in international trade, they have an unfair competitive advantage vis-a-vis U.S. based companies, which must rely on private financing at market rates. counterfeiting and ineffective enforcement of ipr protection While Chinese laws on intellectual property rights (IPR) have improved considerably, the lack of effective enforcement of the IPR protection remains a serious problem. Violations of trademarks through product counterfeiting is rampant and on a massive scale. The violations involve a wide range of products, including consumer hygiene and health care products, athletic footwear, pharmaceuticals, food and beverages, motorized vehicles and even entire automobiles. Pharmaceutical counterfeiting is now, according to U.S. industry representatives, a serious public health concern in China. We believe that the lack of criminal penalties for counterfeiting, including jailing, prevents effective enforcement of trademark and labeling violations. We are also concerned about reports that local government authorities are actually promoting the expansion of local industry dedicated principally to counterfeiting. At a minimum, local authorities are knowledgeable of counterfeit production and taking no action to halt it. There appears to be no mechanism for the national government to prevent local governments from aiding and abetting counterfeiting by local industry. In addition, the Chinese customs service has not cooperated in blocking exports of counterfeit products even when solid evidence of counterfeiting was provided. It is claimed that, since the ``exporting'' of counterfeit products does not constitute a ``sale'' of the products, the relevant Chinese law did not apply. Other IPR violations are also common. They include unauthorized duplication of computer software, music films; copying of designs; unauthorized use of patented technology; and unauthorized use of U.S. product certification logos. The makers of air conditioning and refrigeration equipment note that the ARI (Air-Conditioning and Refrigeration Institute) certification symbol was being used without authorization by a Chines company. Efforts to have the Chinese government stop this unauthorized use proved ineffective. The pharmaceutical industry does, however, also report improvements in intellectual property protection, notably by the promulgation of a new regulation on data exclusivity for clinical trials, as required in TRIPS and committed in China's accession package. Manipulation of VAT and Other Taxes We have reports that China is manipulating the application of taxes, notably the Value-Added Tax (VAT), to both restrict imports and indirectly subsidize exports. For example, the scrap recycling industry has told us that Chinese users of imported copper and other scrap metals are deliberating undervaluing their invoices to pay less VAT on the imported metal. When the finished metal products are exported, however, Chinese producers claim a rebate of the VAT based on the metals' real import price. This results in a substantial subsidy for the exported product that translates into lower prices in the U.S. market. It also enables Chinese scrap metal users to pay higher prices for scrap metal than their U.S. competitors. Chinese customs and tax authorities have not taken action to investigate these practices. A major U.S. producer of semiconductors has also expressed concern about continuing Chinese discrimination in the application of the VAT on imported and domestically produced semiconductors. China levies a 17 percent VAT on imported integrated circuits. Domestically designed and produced integrated circuits are taxed at VAT rates ranging from 3-6 percent. Integrated circuits produced in China but designed abroad are taxed at 11 percent. This discriminatory treatment of domestic and foreign ``like'' products violates Article 3 of the GATT. Unjustified Labeling Requirements In 2002 the Chinese Ministry of Health promulgated a new regulation mandating the labeling of all genetically modified (GM) food products. While the implementation of the regulation was subsequently suspended indefinitely, the fact that it remains on the books is already having significant adverse economic effects and creating barriers to trade. Some producers have ceased shipping these products in anticipation of the regulation going into effect. U.S. food producers have questioned whether the Health Ministry's action was in conformity with China's WTO obligations. The ministry did not provide a justification for the labeling requirement based on an assessment of health risks, which is a requirement of the Agreement on Sanitary and Phytosanitary Measures. The Technical Barriers to Trade Agreement (TBT) also suggests inadequate attention to the treatment of ``like products,'' the question of whether the labeling requirement addresses a ``legitimate objective'' and the requirement to base technical regulations on ``performance'' rather than ``design'' characteristics. Inappropriate standards and concerns about CCC mark system Several NAM members have raised concerns about application of technical standards and the CCC Mark system. With regard to standards, China is requiring that certain products (e.g., electrical products) be manufactured only to ``international standards'' as determined in the ISO or IEC. Other ``international standards,'' notably those developed in the United States and widely used in the global marketplace, are not allowed. This does not conform with the WTO TBT Committee interpretation that ``international standards'' need not be limited to ISO or IEC standards. A second set of standards concerns relates to the CCC mark system. China introduced the CCC mark system to comply with WTO requirements for a single mark for like domestic and imported products. It is, in that sense, a step forward on standards and mark requirements. However, the inconsistent, non-transparent and inflexible application of the CCC Mark on a variety of products (e.g., electrical products, air conditioning and refigeration equipment, and tires) has created market access barriers and needlessly raised the cost of importing products into China. Generic problems include: the high cost of having Chinese inspectors audit factories in the United States and other foreign countries on compliance with the standards; continued delays in allowing U.S. testing and certifying bodies to certify compliance for the CCC mark; and lengthy delays and relatively high cost of obtaining testing and certification for the CCC mark in China. Several other specific problems were noted. A major tire company reported that several types of its bus tires that are standard sizes in countries around the world cannot obtain the required CCC mark because these sizes are not listed in the Chinese National Standards. Another type of tire widely on Chinese trucks is also not on the list and thus cannot be sold by the U.S. company in China. Efforts to resolve this problem with Chinese standards authorities and Chinese customs have thus far been unsuccessful. In addition, the company reports that local inspection offices appear to be abusing their authority by requiring the re-inspection of the company's Chinese-produced tires and confiscating tires which they determine to be ``non-complaint'' with the CCC mark standards. Restrictions on Trade Rights of Joint Ventures China is not fulfilling its commitment to allow foreign joint ventures to import and sell products (e.g., tires, automobiles, auto parts and industrial equipment) in China, which was to have gone into effect on Dec. 10, 2002. A major tire company, for example, reports that the Chinese government has imposed additional restrictions on its trading rights that were not anticipated when this concession was negotiated. They include allowing only new joint ventures to have this right and requiring the Chinese and foreign partners to have separately done U.S. $30 million in trade with China over each of the three preceding years. lack of action on auto financing regulations The Chinese government has committed to publish new regulations governing the financing of automobile purchases. Several NAM member companies have expressed concern about slow progress on the regulations that were explicitly promised in China's accession agreement. The U.S. government should press for their prompt issuance to comply with WTO obligations. problems with tariff rate quotas and import certificates Complications in implementing tariff rate quotas (TRQs) are creating non-tariff trade barriers to U.S. feed products, notably corn and wheat. Chinese authorities have delayed issuance of regulations on the administration of the TRQ system and introduced unreasonable licensing procedures. There has also been a lack of transparency in the process which makes it difficult to know which companies are granted quotas. China has also violated its accession agreement by redirecting quotas reserved for non-state companies to state- owned companies. A related problem that has affected soybean exporters is the narrow window for using import permits under the AQSIQ permit system. U.S. exporters have only 90 days to purchase, transport and unload their products in China. These restrictions are not only limiting U.S. commodity exports sales but also restricting the operation of soybean processing plants in China. lack of transparency in trade regulatory process Many companies complain about the lack of transparency in the trade regulatory process and the difficulty in obtaining current laws and regulations governing trade and business operations. This is a continuing problem that should lend itself to solutions in a relatively short time frame. The U.S. government should press for concrete steps that improve transparency at all levels. William Primosch, Director, International Business Policy, National Association of Manufacturers.

Mr. MANZULLO

Mr. MANZULLO. Mr. Chairman, I was prepared to introduce an amendment. There will be a better time under the rules to do that, but I will just take a couple of minutes to explain what that amendment would have done, if that is okay with the gentleman from Arizona (Mr. Kolbe). The amendment that we had been prepared to introduce, and which, actually, we will execute in another way as the chairman of the Committee on Small Business regards the reporting requires of H.R. 3289, and, essentially, what we are trying to do here is two things. The first thing is to have the reporting requirement so that every 60 days the Federal Government will have to file a written report with the United States Congress stating the nature of these contracts that are being used for the reconstruction of Iraq, the country of origin of incorporation or entity getting the contract and the country of origin of the services or manufactured items. There is a very rich opportunity in this country to help restore the crumbling manufacturing base by taking the $21 billion in money to rebuild Iraq and to target that at United States' manufacturing companies which have lost nearly 3 million workers in the past 2\1/2\ years. The present reporting requirements of H.R. 3289 are not adequate for Congress to perform the oversight functions. The present bill requires no reporting to Congress where a foreign company wins a contract to assist Iraq in a free and open competition. The bill, however, does require a report to Congress where a contract is awarded on the basis of restricted competition such as a small business set aside awarded to U.S. small business. The issue here is accountability and, essentially, the issue is under Article I of the Constitution, section 9, where it says, No money shall be drawn from the Treasury but in consequence of appropriations made by law, and a regular statement and account of the receipts and expenditures of all public money shall be published from time to time. We simply would have asked in the amendment, had it been ruled in order, for the United States Congress to follow the constitutional mandate of reporting. So we will find another time to do that. Meanwhile, Mr. Chairman, what we have going on in this country is 93,000 manufacturing jobs have been lost in the past 60 days in America. The slide has continued for over 3 years at the rate of about 57- to 60,000 manufacturing jobs per month, and this Congress should step up to the bat and say if we are going to spend $21 billion in taxpayers' dollars, let us at least use it to help keep the jobs of the hard-hit manufacturing sector in this country. I want to thank the gentleman from Florida (Chairman Young) for the opportunity to speak, look forward to working with him. I will be writing to the people in charge of the conference to ask them to consider this extremely important amendment. Another amendment that we would have introduced, had it been in order, would have been at least to request the people buying supplies in Iraq with American taxpayers' dollars to prefer American manufacturers and American suppliers of services. We need to find a way to help create jobs, to help stop the ebb of service sector jobs and manufacturing jobs in this country. We should be using this process to rebuild Iraq for that opportunity. Amendment Offered by Mr. Reyes

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, I rise today to recognize Stephanie Flood of McHenry County, Illinois, in the district I am proud to represent. Stephanie is a remarkable 16-year old who suffered from cancer but was fortunate enough to have been cared for by the doctors and staff at Children's Memorial Hospital in Chicago. When Stephanie was nine years old, she was diagnosed with a brain tumor. Since her initial diagnosis, she has undergone radiation, chemotherapy, and four separate surgeries. In the spring of 1997, when Stephanie was in fourth grade, she began having flu-like symptoms--headaches and nausea. The symptoms persisted for nearly three weeks. When she visited her pediatrician, he looked through her eyes and could see pressure on her brain. He immediately ordered a CAT scan of her brain, which confirmed that the pressure he saw was in fact a brain tumor. Her pediatrician then referred Stephanie and her family to Children's Memorial Hospital in Chicago because he felt the hospital had the best neurosurgeons available. At Children's Memorial Hospital, Stephanie and her family met with Dr. Tomita and Dr. McClone who immediately planned for her surgery. At the time, her parents were struggling with their small business and had let their health insurance lapse. Dr. Tomita, however, insisted that Stephanie would have the best care available. They said the tumor was at the base of her brain stem. This extremely dangerous tumor could have left her blind, deaf, paralyzed or handicapped due to the tumor's close proximity to her nerve endings. Dr. Tomita carefully removed the tumor. After weeks of struggling with math due to memory loss associated with the brain tumor, Stephanie soon found herself getting straight A's in math class. She then went through six weeks of radiation treatments after the operation. Her radiologist, Dr. Marymount, skillfully administered the radiation, with Stephanie's only hair loss being where her incision was located. Unfortunately, Stephanie's tumor was an ependymoma, meaning it would eventually grow back. Three years later, when she was 12 years-old, something showed up on her routine MRI again. Dr. Tomita performed another surgery, but he and her Oncologist, Dr. Goldman, decided to try a new type of chemotherapy in an attempt to get rid of the tumor once and for all. The chemotherapy was called Temazolamide, and Stephanie was one of 17 other people ever to use it. Unfortunately, the tumor returned again, and Dr. Tomita suggested a new type of treatment, Gamma Knife radiation. Stephanie thought she would try this treatment which would be much easier than another brain surgery again. A team of doctors screwed a metal plate into her head with hundreds of little holes. They then sent radiation directly into the area where the tumor was located, hoping to shrink it. The Gamma Knife procedure was successful in helping shrink the tumor for a short period of time, but another MRI eventually showed its regrowth. Dr. Tomita and Dr. Goldman suggested another new type of treatment called Intrabeam Radiation for Stephanie, who was only the fourth patient in the nation to ever use it. The tumor was again removed by Dr. Tomita, and the remaining cancer cells where the tumor originated were irradiated. Thus far, it has been eight months, and Stephanie is extremely hopeful that this final procedure will rid her of the tumor permanently. Stephanie is extremely fortunate to be under the care of such wonderful doctors. She is also very proud to be part of a brand new study in hopes that she will help other children who suffer as she did. Cells from her tumor were actually taken from her tumor and are currently being studied at the Children's Research Center in Chicago in order to discover how and why the tumor continued to regrow. Without Children's Hospital, this incredible story would not have been possible. Mr. Speaker, I wish to extend my support to Stephanie and the many other children who are fighting such difficult battles. I commend Children's Memorial for all of the work they have done for her. I would also ask that we continue to work hard to support children's hospitals in order to save more children just like Stephanie. It is my hope that with continued research into new lifesaving treatments, children all over the country will be given the precious gift of life.

Mr. MANZULLO

Mr. MANZULLO. Mr. Speaker, manufacturing is an endangered species that we must work now to protect. Some say manufacturing is no longer vital to our economy, the service industries will compensate. I agree with Henry Kissinger when he says, ``I think that a country has to have a massive industrial base in order to play a significant role in the world. And to that extent, outsourcing of jobs concerns me.'' What made the American economy strong was industrial innovation. America led the world in new production methods and increased efficiency. How can we be innovators if we have no industry left? With our strong industry, we built the most impressive fighting force the world has ever seen, a military that keeps us safe and the world free, but when our satellites are made in China, bomb parts made in Switzerland, night vision crystals in France and the Pentagon now wanting to buy 30,000 flight jackets with Pakistani goat hair, as opposed to U.S. goat hair, are we defending our economy or supporting the economies of other countries? In some sectors of defense, we have been forced to recognize foreign technology is now vastly superior to our own. We must, we must stand by U.S. manufacturing to maintain a strong defense base.