Document JJxZaVYnKLLnkv0xMKGb2a2v

AGENDA CMA EXECUTIVE COMMITTEE MEETING 8:30 a.m., Tuesday, April 5, 1983 CMA Executive Conference Room Washington, D. C. 1. Call to Order and Approval of Minutes of Meeting, March 8, 1983 -- Chairman Fernandez 2. Treasurer's Report -- G. C. Herrman 3. Report of Nominating Committee -- Chairman Simeral 4. Report of Membership Committee -- C. G. Caldwell Novacor Chemicals Ltd. Sodyeco Division, Martin Marietta Chemicals 5. CMA Committee Nominations -- B. M. Barackman 6. Report of the President -- R. A. Roland 7. Hazardous Waste Management 8. Public Compensation 9. Industry Grass-roots Network -- D. L. Rooke 10. CMA Position re Administration's Budget for Fiscal 1984 -- Glenn W. White, The Dow Chemical Company 11. CMA Position on the Generalized System of Preferences -- M. T. Foveaux 12. Amicus Participation in Waste Industries Case -- D. F. Zoll 13. New Business 14. Adjournment SCHEDULE OF EVENTS FOR REMAINDER OF TUESDAY, APRIL 5, 1983: 10:30 a.m. Meeting of Board of Directors CMA Board Conference Room 12 Noon CHEMICAL FORUM Luncheon Dolley Madison Ballroom, The Madison 15th & M Streets, N.W. Note: Transportation to The Madison and return to CMA will be provided. 2:00 p.m. Board Meeting - continued TAB 1 2 3 4 5 6 CMA 064784 MINUTES OF MEETING CMA EXECUTIVE COMMITTEE 8:30 a.m. , Tuesday, April 5, 1983 CMA Headquarters, Washington, D. C. 1. The meeting was called to order at 8:30 a.m. by Chairman Fernandez. There were present: Louis Fernandez, Chairman Dexter F. Baker Harry W. Buchanan Alec Flamm Alexander F. Giacco James B. Henderson Edwin C. Holmer A. Clark Johnson Robert A. Roland David L. Rooke George J. Sella, Jr. William G. Simeral Bruce M. Barackman, Secretary Gary C. Herman, Treasurer David F, Zoll, General Counsel By Invitation: David L. Baird, Jr., Exxon Chemical Company Geraldine V. Cox, CMA John E. Dull,- E. I. du Pont de Nemours & Company ' Robert C. Forney, E. I, du Pont de Nemours S Company Myron T. Foveaux, CMA Jon C. Holtzman, CMA Victor H. Peterson, CMA James B. Senger, Monsanto Company William M. Stover, CMA Glenn W. White, The Dow Chemical Company 2. Minutes of the Last Meeting meeting were approved as distributed. The minutes of the March 8, 1983 3 . Treasurer1 s Report Additionally he advised that: Mr. Herman' s report is attached as Exhibit A. Current year revenue and expenses continue to track closely to the amounts as projected in the budget with an anticipated positive contribution to reserves of somewhat over $1 million. Budget changes as discussed at the last Finance and Executive Com mittee meetings have been incorporated in the proposed budget mailed to the Board of Directors who will be asked to approve it later today. Total expenses of $12,535,200 are projected. Funding will be pro vided by the fee schedule as increased by 26%. A deficit of $465,900 is anticipated. -T CMA 064785 -I- Attention was invited to a correction to the budget document. Under tab 13, page 60, the first sentence following Incinerator Regulations Comments should read, "Incinerators are becoming an increasingly im portant disposal option." 4. Report of Nominating Committee Reporting as Chairman of the Nominating Committee, on which Messrs. Fernandez and Holmer also served, Mr. Simeral presented the slate in Exhibit B. This was approved for presenta tion to the Board. As a matter of information, Mr. Simeral reviewed the com position of the Executive Committee and Finance Committee, Exhibit C, which will be presented for approval at the Organizational Meeting of the new Board on June 9 at The Greenbrier. 5. Report of Membership Committee In the absence of Chairman Caldwell, Mr, Barackman advised that Novacor Chemicals Ltd.; Sodyeco Division, Martin Marietta Chemicals; and Nuodex Inc,, following approval by the Membership Committee, will be recommended for election to membership in the Association at the Board meeting later today. 6. Committee Appointments Exhibit D were approved. The committee appointments listed in 7. Report of the President Mr. Roland distributed Exhibit E to those present. This summary of what is happening at the state level in the area of public compensation was requested at the last Executive Committee meeting. A visit to the White House by the CEOs of certain companies on behalf of the chemical industry has been in the planning stage for some time. The purpose would be to enhance the understanding of the chemical industry and its relevance to the nation's eco nomic strength. This will proceed at the appropriate time. B. Hazardous Waste Management During the discussion of this issue the question was raised as to whether CMA should try to take a more active role and whether such a role could be defined. It was noted that, being a consensus group, there are limitations as to what the Association can do. Meanwhile, there is much that member companies are doing and can do in re gard to waste site cleanup. A sharing through CMA of the intelligence which individual companies severally develop could prove helpful, leading perhaps to something more formal. The view was expressed that programs undertaken must be coordinated with EPA. An effort to establish a dialogue with EPA pointing toward the clean up of waste sites at reasonable cost would be constructive. This would be a private sector initiative which would enhance the credibility of both EPA and the chemical industry. CMA 064786 T' -3- 9. Public Compensation chairman Fernandez reviewed the activities of the Strategic Options Work Group, suggested it was time to move toward de veloping an action program, and requested comments on how test to proceed. Following discussion it was agreed that: Since the Strategic Options Work Group has completed its analytical assignment, and the information is in the hands of the Executive Committee for further action, the group is disbanded. However, tasks in progress by sub-groups will be pursued to completion 'and, to the fullest extent possible, folded into standing committees as appro priate. CMA's officers will meet to consider the hazardous waste management and public compensation issues. Specific recommendations will then be presented to the Executive Committee for review. 10. Industry Grass-roots Network Mr. Rooke's report is attached as Exhibit F, Its work having been completed, the "committee of one" was discharged with appreciation for its efforts in initiating the ongoing development of a co ordinated grass-roots federal legislative communications system for CMA. 11. CMA Position re Administration's Budget for Fiscal Year 1984 Following presentation by Mr. White and discussion by the Executive Committee, Exhibit G was approved by voice vote with Mr. Henderson recorded as opposed. 12. CMA Position on the Generalized System of Preferences posed policy on GSP as set forth in Exhibit H was approved. The pro 13. Amicus Participation in Waste Industries Case Amicus participa tion in the Waste Industries case as set forth in Exhibit I was approved. Certified correct: / iOuiy/ Fernandez, Chairman CMA `Executive Committee Bruce M. Barackman Vice President-Secretary CMA 064787 EXHIBIT A TREASURER'S REPORT Ten Months Ending March 31, 1983 This report will be prepared and distributed following the end of the month. For your reference-, the following is provided: The originally approved and amended budget and funding for the fiscal year beginning June 1, 1982 and ending May 31, 1983. The approved budget for the separately funded Biomedical and Environmental Special Program area as amended. Additionally, the proposed budget for fiscal year 1983/84 has been mailed under separate cover. This document presents the most recent projection of actual expenses against budget for the current fiscal year along with the proposed budget for the next fiscal year. CMA EC - 04/05/83 BD - 04/05/83 r 1 1 -2- CHEMICAL MANUFACTURERS ASSOCIATION ORIGINALLY APPROVED AND AMENDED BUDGET AND FUNDING FOR THE Fiscal Year Beginning June 1, 1982 and ending May 31, 1983 REVENUE: Membership Dues Investment Revenue Revenue from (or Dues Support to) Special Program Areas Communications Program Assessment (reduced 40% to 20%) Full Use of Previously Accumulated Communication Program Funds Meetings (net of expenses) TOTAL REVENUE Original 1982-83 Annual Budget 5 9,860,600 1,050,000 (77,500) 3,746,600 20,600 209,000 $14,809,300 I 1 Amended ( 1982-8] 1 Annual Bu^.j , $ 9-525,00fj 1,250,oo; 1 (77,5c:j 1,886,1c 581,1c 147,801-! $13,312,5CC DIRECT PROGRAM ACTIVITIES: General Counsel Government Relations International Trade Activities State Activities Program Chemical Industry's Communications Program Technical Administration Health, Safety S Chemical Regulations Environmental Activities Distribution, Energy, Engineering Chemtrec Outside Legal Fees Outside Consulting TOTAL $ 971,700 800,700 246,100 251,200 4,963,900 273,600 780,400 737,600 450,100 642,500 1,600,000 795,000 512,512,800 $ SS4,4:J 755,SC: 231, ic: 333,SC 3,565,9GC 266,3C: 711, ICC 699,90:) 4 0 0,90c' 618.00C 1,600,00: 795,OOC 510,861, ecu UNALLOCATED MANAGEMENT AND GENERAL SUPPORT ACTIVITIES: Executive Department Accounting & Business Services Printing, Distribution, Computer & Information Services TOTAL TOTAL EXPENSES $ 1,291,200 513,100 492,200 $ 2,296,500 514,809,300 5 1,254,5C: 499,3C( 4 5 2,200 5 2,206,001: 513,067,60' Contribution to (Use of ) Reserves S-- $ 2 44, AUTHORIZED PERSONNEL 147 146 Note: The above budget and funding does not include the activities and 16 staff of the separately funded Biomedical and Environmental Special Programs area. CMA 064789 -T -3- CHEMICAL MANUFACTURERS ASSOCIATION APPROVED BUDGET AND FUNDING FOR BIOMEDICAL AND ENVIRONMENTAL SPECIAL PROGRAMS Fiscal Year Beginning June 1, 1982 and ending May 31, 1983 REVENUE: Overhead Reimbursement Investment Revenue Publication Sales TOTAL REVENUE 1982-83 Amended Annual Budget* $ 676,500 225,000 1,000 s 902,500 EXPENSES: Salaries & Related Expense Employee Benefits Travel & Staff Training Dues, Subscriptions & Publications Outside Printing & Graphics Meetings & Workshops Direct Postage, Freight & Delivery Direct Supplies & General Office Taxes S Insurance Rent & OccupancyCommon Cost Expenses Administrative Support: Technical Administration Accounting Office of General Counsel Printing & Distribution TOTAL EXCESS REVENUE (EXPENSES) $ 451,700 85,800 11,100 1,700 700 1,100 23.500 26,200 80,900 48.100 74.500 32.300 27.300 75,000 40.100 S 980,000 $ (77,500) *At its September meeting, the Executive Committee approved an increase in authorized personnel to 16 principally because of the recently added Methylenedianiline program, the cost of which will be recovered from per hour program charges. AUTHORIZED PERSONNEL 16 CMA 064790 EXHIBIT B MEW DIRECTORS Term ending May 31, 1986 Max S. Bass, President and Chief Executive Officer, M&T Chemicals Inc. Drummond C. Bell, Chairman of the Board and Chief Executive Officer, National Distillers and Chemical Corporation Kenneth E. Davis, President and Chief Operating Officer, Stauffer Chemical Company Carl R, Eckardt, Senior Vice President, GAF Corporation Robert C. Forney, Executive Vice President, E. I. du Pont de Nemours & Company A. Clark Johnson, President, Allied Chemical Company Sidney M. Leahy, Group Vice President, Minnesota Mining and Manufacturing Company Richard H. Leet, President, Amoco Chemicals Corporation Charles S. Locke, Chairman of the Board, President and Chief Executive Officer, Morton Thiokol, Inc. John D. Macomber, Chairman of the Board and Chief Executive Officer, Celanese Corporation Robert H. Malott, Chairman of the Board and Chief Executive Officer, FMC Corporation C. Robert Powell, Chairman of the Board and Chief Executive Officer, Reichhold Chemicals, Inc. Thomas E. Reilly, Jr., President, Reilly Tar & Chemical Corporation J. R. Street, Executive Vice President, Shell Chemical Company, A Division of Shell Oil Company Fred M. Wells, Vice President, The Procter & Gamble Company Term ending May 31, 1984 W. H. Clark, President and Chief Executive Officer, Nalco Chemical Company CMA EC-4/5/83 CMA 064791 ~T EXHIBIT C EXECUTIVE COMMITTEE Edwin C. Holmer, Chairman - Exxon Chemical Company Louis Fernandez - Monsanto Company Alec Flamm - Union Carbide Corporation Robert C. Forney - E. I. du Pont de Nemours & Company Ray R. Irani - 01in Corporation A. Clark Johnson - Allied Chemical Company John D. Macomber - Celanese Corporation Robert H. Malott - FMC Corporation Robert A. Roland - CMA David L. Rooke - The Dow Chemical Company George J. Sella, Jr. - American Cyanamid Company Harold A. Sorgenti - ARCO Chemical Company, Division of Atlantic Richfield Company J. R. Street - Shell Chemical Company, A Division of Shell Oil Company FINANCE COMMITTEE Harold A. Sorgenti, Chairman - ARCO Chemical Company, Division of Atlantic Richfield Company W. H. Clark - Nalco Chemical Company Kenneth E. Davis - Stauffer Chemical Company Joseph P. Flannery - UNIROYAL, Inc. Vincent L. Gregory, Jr. - Rohm and Haas Company Richard H. Leet - Amoco Chemicals Corporation John S. Ludington - Dow Corning Corporation Raymond H. Marks - Tenneco Inc. C. Robert Powell - Reichhold Chemicals, Inc. Allan J. Tomlinson - Diamond Shamrock Corporation Fred M. Wells - The Procter S Gamble Company CMA EC-4/5/83 CMA 064792 "T COMMITTEE NOMINEES EXHIBIT D A. Effective June 1, 1983 1. Chemical Regulations Advisory Committee Chairman: J. Ronald Condray, Monsanto Company Vice Chairman: Anthony Di Battista, CIBA-GEIGY Corporation Term ending May 31, 1986: . Georjean L. Adams, Minnesota Mining and Manufacturing Company Donald L. Heywood', Union Carbide Corporation ' Raymond W. Hussey, The Lubrizol Corporation Carl W. Umland, Exxon Chemical Americas A. S. West, Rohm and Haas Company 2. Communications Committee Chairman: John F. Hussey, Monsanto Company Vice Chairman: Richard F. Blewitt, Velsicol Chemical Corporation Term ending May 31, 1986; Lawrence W. Burke, Georgia-Pacific Corporation Joy L. Chambers, Vulcan Materials Company, Chemicals Division Gerald J. Hickman, Gulf Oil Chemicals Company Richard K. Long, Dow Chemical U.S.A. Michael E. Thompson, Standard Oil Company (Indiana) 3 . Distribution Committee Chairman: Harry Shrank, FMC Corporation Vice Chairman: D. G. Griffin, PPG Industries, Inc. Term ending May 31, 1986: Lowell E. Anderson, Amoco Chemicals Corporation M. A. Crane, Ethyl Corporation Roland H. Dunlop, Monsanto Company John G. Wainwright, Exxon Chemical Americas 0. Max Watson, Olin Corporation 4. Energy Committee Chairman; Thomas A. Gamble, Hercules Incorporated Vice Chairman: Lawrence L. Saphier, Dow Chemical U.S.A. Term ending May 31, 1986: R. David Damron, Celanese Chemical Company, Inc. Gary S. Furman, American Cyanamid Company Thomas J. Novack, ARCO Chemical Company George E. Knowles, Diamond Shamrock Corporation Walter F. Allaire, Allied Corporation --T CMA 064793 2- - 5. Engineering Advisory Committee Chairman; Jack S. Bardin, Allied Chemical Company Vice Chairman: George E. Murray, Dow Chemical U.S.A. Term ending May 31, 1986: William W. Crehore, Mobil Research and Development Corporation Walter W. Young, ICI Americas Inc, Donald J. Kirchberger, Occidental Chemical Corporation Roger L. Sandstedt, Monsanto Company William K. Wakefield, FMC Corporation 6. Environmental Management Committee Chairman: will D. Carpenter, Monsanto Company Vice Chairman: Lynn D, Johnson, Rohm and Haas Company Term ending May 31, 1986; Paul M. King, PPG Industries, Inc. John M. Rademacher, Velsicol Chemical Corporation Joseph F. Terenzi, American Cyanamid Company Anthony J. Diglio, Air Products and Chemicals, Inc, John H. Mahon, Calgon Corporation 7, Government Relations Committee Chairman: Charles T. Marck, Dow Chemical U.S.A. Vice Chairman: [to be named) Term ending May 31, 1986: Robert L. Healy, Atlantic Richfield Company Charles T. Marck, Dow Chemical U.S.A. Harris C- Miller, Occidental Chemical Corporation Kenneth Y. Millian, W. R. Grace & Co. St. Clair J. Tweedie, American Cyanamid Company 8. International Trade Committee Chairman: Robert E. Lory, Exxon Chemical Company Vice Chairman; (to be named) Term ending May 31, 1986: ' Thomas W. Hall, Phillips Chemical Company William J. Hargreaves, Dow Corning Corporation Hedi Kinnard, Great Lakes Chemical Corporation George W. Phillips, Union Carbide Corporation Edward Pollack, Olin Corporation CMA 064794 -3- 9. Occupational Safety and Health Committee Chairman: Charles L. Richards, Gulf Oil Chemicals Company Vice Chairman: Harry A. Eschenbach, W. R. Grace & Co. Term ending May 31, 1986: Harry A. Eschenbach, W. R. Grace & Co. Thomas F. Evans, Monsanto Company James Filan, M.D., The Procter & Gamble Company Gary A. Sunshine, ICI Americas Inc. Brad T. Garber,- Olin Corporation 10. Patent and Trademark Committee Chairman: Richard C. Witte, The Procter & Gamble Company Vice Chairman: John E. Maurer, Monsanto Company Term ending May 31, 1986: Jordan J. Driks, Rohm and Haas Company Louis N. French, Phillips Petroleum Company Gene Harsh, Mobay Chemical Corporation Thomas I. O'Brien, Union Carbide Corporation Frank A. Sinnock, Exxon Chemical Company 11. Tax Policy Committee Chairman: Glenn M. White, The Dow Chemical Company Vice Chairman: William M. Bellamy, Jr., Union Carbide Corporation Term ending May 31, 1986: William M. Bellamy, Jr., Union Carbide Corporation Richard W. Brust, Minnesota Mining and Manufacturing Company Robert J. Moody, FMC Corporation Richard A. Overton, Monsanto Company Richard S. Payne, Celanese Corporation John W. Rakow, Stauffer Chemical Company Paul E. Sullivan, Exxon Chemical Company 12. Special Programs Advisory Committee Chairman: Gary A. Sunshine, ICI Americas Inc. Frank A. Bower, E. I. du Pont de Nemours & Company Harry Hunter, Jr., Exxon Chemical Americas Charles L. Sercu, Dow Chemical U.S.A. 13. State Affairs Special Committee Chairman: James V. Murray, Union Carbide Corporation CMA 064795 -4- B. Effective April 5, 1983 1. Chemical Regulations Advisory Committee Ellen. W. Spitz, Mallinckrodt, Inc. -- Term ending May 31, 1984 (replacing Hal K. Latourette, FMC Corporation) 2. International Trade Committee G. Montgomery Spindler, UNIROYAL, Inc. -- Term ending May 31, 1984 (replacing Edward H. Boll, Carus Corporation) 3. Patent and Trademark Committee Robert Sullivan, Stauffer Chemical Company -- Term ending May 31, 1984 (replacing Lloyd L. Mahone, same company) Michael J. McGreal, W. R. Grace S Co. -- Term ending May 31, 1985 (filling vacancy in Class of 1985) 4. State Affairs Special Committee George A. Rodenhausen, Celanese Corporation 5. Tax Policy Committee James D. Knox, Hercules Incorporated -- Term ending May 31, 1983 (replacing Eldin H. Glanz, same company) CMA EC-4/5/83 BD-4/5/83 CMA 064796 T EXHIBIT E STATE PUBLIC COMPENSATIONS PROPOSALS Several states have initiated public cctnpensation proposals during the early stages of the 1983/1984 legislative sessions. These proposals can be divided into two categories. In the first are comprehensive proposals that encompass the central public compensation issues such as strict, joint and several liability for personal injuries; changes in the rules of causation and burden of proof; and creation of industry financed funds to pay personal injury claims. In the second category are proposals that impact the public compensation issue but are not comprehensive in nature and do not address the central issues such as funds, liability and causation. States which are considering comprehensive approaches include: Minnesota. Both the House and the Senate have passed out of committee bills that would impose retroactive strict, joint and several liability for personal injuries alleged to be caused by the release of hazardous substances. These bills were modeled after the original federal Superfund proposals and are very broad in scope. They also include provisions changing the rules of causation and easing the burden of proof. Access to the jury would also be made easier. These bills are being amended on an almost weekly basis so it is impossible at this point to predict exactly how they will turn out. However, it is almost a certainty that some type of legislation will be passed in Minnesota well before the end of the year. Missouri. The Missouri House passed Superfund legislation on March 3 and that legislation is now being considered in Senate committee. The current version contains provisions for payments frcm an industry financed fund for medical expenses (physical and psychological) for alleged victims of hazardous waste exposure. Although earlier versions contained strict, joint and several liability, those provisions have been deleted in the current draft. Wisconsin. The Assembly Environmental Resources Carmittee has been working on drafts of various proposals to address groundwater contamination allegedly caused by pesticide applications. Al though the original proposals were limited to pesticide problems, subsequent discussions have enconpassed hazardous wastes and/cr substances as well. Major provisions include creation of a fund financed by an excise tax on pesticide sales that would be used to provide alternative drinking water supplies and payments for all types of personal injuries except emotional damages. In addition, strict, joint and several liability would be imposed with a CMA 064797 T Sindell market share scheme for allocating that liability. Ccrmittee hearings were held throughout March and will conclude on April IS. Icwa. A Senate Bill has been introduced (SF 129} that would provide diagnostic testing for "toxic chemical victims" and would impose strict liability for both property and personal injury damages. The costs of the diagnostic testing program would be paid for though an industry financed state fund. Tennessee. Although the present version of the State Superfund legislation has deleted all liability and compensation language, an earlier version had contained provisions incorporating a California type compensation fund for hazardous waste injuries. In addition to these mjor proposals, other states are considering legislation that would impact on the public compensation issue. These bills relate to statutes of limitation/repose for toxic substance injuries; birth defect and cancer registries; changes in occupational disease laws for asbestos victims; agent orange studies and compensation; and creation of statutory presumptions in workers compensation/occupational disease laws where toxic substances are involved. States with these type of proposals include New Jersey, Massachusetts, Connecticut, Oregon, Virginia, New York, Indiana and Rhode Island. In and of themselves, most of these bills present no major threat. However, they are indicative of possible trends beginning in these states to take up the broader issues involved in public compensation. Finally, there are a number of states which do not have comprehensive legislation yet this session but which are likely to address this issue before the year is out. Paramount among these is California. The state Hazardous haste Management Council has ccrrrdssioned studies on both the status of liability law in California and on possible compensation schemes. Another state with a significant likelihood, of surfacing a proposal before the session is out is New York. CMA EC-4/5/83 -- T" ` CMA 064798 I i exhibit f STATUS REPORT: DEVELOPMENT OF CMA GRASSROOTS PROGRAM At the March 8 Executive Ccrmittee meeting Mr. David Rooke and Mr. Robert Dupree of Dow reported on progress toward the development of a coordinated grassroots federal legislative communications system for CMA. In subsequent weeks, additional steps have been taken. The first meeting of an "ad hoc" advisory group took place April 4. This group consists of government relations and public affairs professionals who will advise the association on the development and operation of the grassroots system. CMA staff have collated and organized the facilities inventories submitted so far, and the ad hoc group is reviewing this information. A more detailed update will be presented during the CMA Board of Directors meeting today. ACTION NEEDED: None - Information Only CMA EC - 4/5/83 CMA 064799 EXHIBIT G PROPOSAL FOR A CMA POSITION ON PRESIDENT REAGAN'S BUDGET FOR THE FISCAL YEAR 1984 At the March 8 meeting of the Executive Committee, Tax Policy Committee Chairman Glenn W. White presented the Committee's proposal for a CMA position on President Reagan's budget for the Fiscal Year 1984. After Mr. White's presentation and a general discussion, the Executive Com mittee remanded this matter with instructions to: 1. separately and strongly state our opposition to energy taxes; 2. show more certainty in the view that tax increases will be needed. The revised position of the Tax Policy Committee is summarized below: POSITION: 1. CMA agrees with the underlying assumption of the Budget that there is a compelling need to balance Federal spending and revenue policies. In the first instance, this should be accomplished by reducing Federal expenditures in accordance with the first concurrent resolutions on the budget for Fiscal Years 1982 and 1983. We note that in these Budget Resolutions, Congress made a commitment to reduce outlays by $53.55 billion in Fiscal 1983, and by $65.07 billion in Fiscal 1984. In contrast, the Congressional Budget Office estimates that the savings in spending outlays realized from Congressional action through February 3, 1933, will fall approximately $16 billion short of the promised reductions. 2. We do not support the adoption of a standby or contingent tax increase on incomes. A contingent tax increase makes sound investment planning difficult and may impede early economic recovery. 3. We strongly oppose the concept of an energy tax. Energy taxes present serious problems with respect to foreign competition for U.S. industry, and particularly the chemical industry. Increased energy taxes would make it difficult for U.S. industry to compete against foreign producers both in the domestic and export markets. The chemical industry would be particularly injured by increased energy taxes due to its heavy dependence on oil and gas for both feedstock and fuel purposes. CMA 064800 --T 4. A major tax increase was enacted in 1982. Even if the spending cuts promised in the 1982 and 1983 Budget Resolutions are adopted, further revenues will be needed. We believe that further spending reductions should be adopted to help meet the revenue shortfall. After these reductions are appropriately identified and committed to, tax increases should then be considered. We recommend that the initial steps of those increases be effected through deferral of tax cuts already scheduled for the future. However, these deferrals should not include deferral of the tax rate cut for individuals scheduled to take effect in 1983. If additional revenues are needed, they should be raised through a broad-based consumption tax. 5. We believe that the long-term growth and recovery of the economy are dependent upon the continued willingness of the Federal Government to eliminate waste and unnecessary spending. ACTION REQUIRED: Approval CMA EC 4/5/83 C/WA 064801 exhibit h GENERALIZED SYSTEM OF PREFERENCES The Generalized System of Preferences (GSP) provides duty-free treatment for imports into the United States of a wide variety of products, including chemicals, from some 140 of the world's developing countries. The program has been in effect since 1976 and is scheduled to expire on January 3, 1985. Legislation to reauthorize the program is likely to be introduced very soon. In order to draft a bill which will have broad support of the business community, the Office of the U.S. Trade Representative will hold public hearings on GSP during the month of April in Washington, DC, New York, NY, and San Francisco, CA. The following proposal for a CMA policy on GSP was developed jointly by CMA, the Synthetic Organic Chemicals Manufacturers Association, and the Society of the Plastics Industries. If approved by the three organizations, it will be a policy of the Office of the Chemical Industry Trade Advisory (OCITA), a coalition of the three trade associations staffed and managed by CMA. The chemical industry favors the reauthorization of the Generalized System of Preferences (GSP), but feels some revisions are needed to correct flaws in the program. The attached position statement outlines these specific problem areas and offers appropriate remedial actions. These recommendations include the following: o devise a graduation procedure which is automatic rather than allowing administrative discretion; o lower the requirements necessary to satisfy the competitive need limit (the competitive need limit automatically provides a one-year suspension of duty-free treatment for products which exceed specified levels of importation); o institute new requirements for identifying individual compounds classified in so-called "basket" categories; o provide for more timely review of GSP imports to insure that harm is not occurring to domestic industry; o deny GSP benefits to countries who violate intellectual property rights or engage in fraud or trade in counterfeit goods. The CMA International Trade Committee has approved the policy and recommends it for approval by the Executive Committee, The proposal follows. ACTION REQUIRED: Approval CMA EC 4/5/83 BD 4/5/83 CMA 064802 --T DRAFT - March 17, 1983 GENERALIZED SYSTEM OF PREFERENCES BACKGROUND The Generalized System of Preferences (GSP) was created the Trade Act of 19 7 4.1/ (the Trade Act). It provides duty free treatment to a large number of imported articles from specifically designated countriesThe program is due to expire on January 3, 1985, unless reauthorized by Congress. by The GSP grew out of a recognition by industrialized countries of an imbalance in the relative wealth of the countries of the world, many of which had gained independence for the first time in the wake of World War II. This imbalance threatened to worsen unless the industrially developed countries adopted certain programs which would enable their less fortunate neighbors to raise their level of economic activity and enter the world markets with a growing variety of manufactured -goods. The proceeds from such accelerated trade could lessen the need for external assistance, raise the developing countries' internal standards of living, and create a better economic balance among developed and developing countries. It is for this reason that the United States and several other industrialized countries adopted a preferential tariff system vis-a-vis imports from designated developing countries. In the United States, this system took the form of the GSP program. It was the intent of this program from the beginning, however, that economic advantages would not be offered to developing countries at the expense of established U.S. industry./ In I960, there was a mid-term assessment of the efficacy of the GSP program, resulting in a report from the President to the Cougress_/ and changes in the administration of the GSP program. However, CKA believes that problems have arisen in the administration of the GSP program. Furthermore, we believe that the program is not fulfilling its intended goal of integrating y 19 C.S.C. 2101, et sec. y 19 0.S.C. 5 2461. y IS U.S.C. 2102(4); 15 C.F.R. S' 20 0 7 . 1 ( a ) ( 5 ) (v i i i ) and 2QQ7\2(e); S. REP. 93-1298, 93d Cong,, 2d Sess., reprinted in [1 9 7 4] U.S. CODE CONG. & AD. NEWS 735 3; and PRESIDENT'S REPORT TO THE CONGRESS ON THE FIRST FIVE YEARS' OPERATION OF THE.U.S. GENERALIZED SYSTEM OF PREFERENCES (GSP), 96th Cong., 2d Sess. (W.M.C.P.: 96-58, 1980) [hereinafter Five Year Report], at 64. A/Fiv e Year Report. CMA 064803 ""T- 2 the economies of developing countries into the global trading system without significant impact on the economy of the United States. In this regard, CMA makes the following recommendations which we believe would alleviate existing problems. I. GRADUATION AND ELIGIBILITY A. Problem The GSP, as administered , does indeed provide significant benefits to some of the roughly 140 designated beneficiary countries and territories. Nevertheless, the distribution of these benefits has been highly uneven, with seven, of the more advanced developing countries accounting for at least three quarters of all GSP imports. 1 The unevenly distributed benefits under the program gave rise to considerable criticism in industry and the Congress. There inequities also caused the Administration, as a result of the Five Year Report, to initiate a graduation progr am designed to remove beneficiaries which have reached a level of economic growth and industrial diversification sufficient to render them competitive .iu the international trading system. Since 1981, graduation has become part of the Administration's annual review process. However, CMA believes that the graduation measures have been inadequate and far too slow to bring about the desired redistribution from the more advanced developing countries to the less advanced ones. Furthermore, CMA believes that new GSP eligibility should not be extended to countries exhibiting a recent high level of economic growth which has given them the potential to shortly achieve a highly competitive capacity within a given product sector (as defined by the 2-digit SIC "major group" code). B. Recommendations The graduation process should be made subject to specified standards that involve less administrative discretion. Those standards should provide generally that an article from a GSP beneficiary country would, upon petition by a U.S. company or I/" Articles" (or "products") by the practices of the Office of the U.S. Trade Representative (tJSTR), have been items as defined by a 5-digit classification number listed in the Tariff Schedules of the United States (Annotated) (IS US A). This 5-digit TSUSA item could be either a single unique article or could be a "basket" category (see definition in footnote iJ) containing numerous items which are similar in nature. For the purpose of discussion in this paper, "article" is defined to be a single chemical, individually and specifically provided for by a 7-digit TSUSA number. " CMA 064804 3 industry producing such article, be graduated from GSP treatment when preferential access is no longer needed. More specifically, the standards should provide that a prima facie case for graduation is made in any of the three situations described below, whichever occurs first in a given calendar year. Furthermore, the standards should not require the U.S. industry to show that it has suffered injury. (The withdrawal of GSP benefits should also be available in other situations, of course, upon a showing of import sensitivity. [see p.6]) 1. Graduation on a sectoral basis. When, in any one calendar year, imports of articles in a "product sector" (as defined by the 2-digit SIC "major group" code) from a country exceed a set percentage of total value of imports of articles in that product sector from all countries, or exceed a set dollar amount (indexed to the U.S. GNP), imports of all articles in that product sector from that country should be graduated from GSP treatment . 2. Graduation on a product basis. (a) When, in any one calendar year, a country exports to the United States a quantity that exceeds a specified amount^/ adjustable to it should be removed from the group of eligible respect to that article; o r beneficiary of any article the U.S. GN? , count r ie s with (b) When, in any one calendar year, a beneficiary country imports into the United States quantities of a GSPdesignated article sufficient to cause the import penetration ratioZV of such article from that country to increase by 5 percentage points or more over the import penetration ratio for either of the two preceding years, that country should be graduated from GSP treatment with respect to that article. Moreover, if all GSP beneficiary countries export to the United States during one calendar year a quantity of any article sufficient to cause the import penetration ratio of such article from all GSP beneficiary countries to increase by 10 percentage points or more over that import penetration ratio in either of the two preceding years, all GSP beneficiary countries should be graduated from GSP treatment with respect to that article. 3. Eligibility. CMA believes that to extend beneficiary treatment to countries rich in hydrocarbons or other significant sources of raw materials used in the manufacture of chemicals would be to ignore the intent of Congress in the establishment of a GSP. Accordingly, we would recommend against extending eligibility to such countries for the chemical industry product sector as defined by SIC Code 28. ^.^This amount should be in excess of the amount specifie'd in Recommendation 2 under competitive need on page 4. Z.'^Iriport penetration ratio is defined as the dollar value of imports of an article as a percentage of the value of domestic production of the article. CMA 064805 4 I I . COMPETITIVE KEEP A . Problem . The so-called "competitive need"/ limits -ere included in the program iron its inception due to an awareness that the GS? was not intended to aid imports that encountered essentially no threat from other more developed producing countries. The limits were also intended to deny GS? benefits to any article which entered the U.S- market in such large volume as to indicate by i't s sheer size alone that the exporting country had reached a stage of industrial development which required no further assistance through GSP . . As to the mandatory exclusion of thos& imports that have, within one year, exceeded the indexed upper value limit, there is a strong belief that this upper limit has risen to an excessive level. Furthermore, it seems inappropriate to apply one uniform upper value limit to all product sectors (as defined by the two digit SIC "major group" code). . E. Recommendations 1. The "competitive need" provisions should be applied on the basis- of 7-digit TSUSA items, so that when, in any one year, imports of a 7-digit item from a country exceed a set amount (indexed to the U.S. GNP) or -exceed 50 percent of all imports of that 7-digit item, GSP benefits should be suspended with regard to imports of that article from that country. i/lhe GS P statute stipulates that the competitive need limit on any imported item is exceeded when either of two conditions occur during a calendar year. The first condition is met any time the dollar amount of any given 5-digit TSUSA item exceeds a value which bears.the same relation to $25 million as the GNP of the United States for the preceding calendar year bears to the GNP of the United States for the calendar year 1974. This value for 1983 is $53.65 million. The second, and more commonly used, condition is met when any one country accounts for more than 50 percent of the dollar value of the imports of any given 5-digit TSUSA item. If either condition occurs, GSP benefits ere suspended on all imports from the given country for the specific 5-digit TSUSA item for the following calendar year. During the one-year suspension, if the competitive need limit is not exceeded, GSP benefits can be reinstated. Permanent graduation occurs only at the discretion of the USTR. While some items have been graduated since 1981, the vast majority continue to be reinstated. As stated herein, CMA favors the removal of discretionary authority toward graduation. . -- 'T -.............. CMA 064806 11 5 2. In addition, the current dollar amounts applicable under both the $25 million "cap" (indexed to the U.S. GKP)^./ and the $1 million "de Eir.inis" exception (also indexed to the U. S . GNP )SLI> included in the GSP "competitive need" ' limitation provisions should be revised downward to reflect the change from 5-digit to 7-digit analysis. 3. Moreover, the reinstatement procedures applicable after suspension under the competitive need limitations should be modified so that a country can be re instated to GSP treatment only 'at an intermediate tariff level (for example, one-half of most-favored nation (MFN) rate). If a country does exceed the limitation for a second year (consecutively or not), that country should permanently be graduated from GSP treatment with respect to that article. All of the above criteria for activating the competitive need provisions are to be superseded by any applicable graduation provisions. 111. BASKET CATEGORIES A. Problem The competitive need limits frequently fail to function. The major reason is the existence within the TSUSA of " ba s ke t " categories which usually contain a large number of different articles. Many of these articles account for a significant amount of.trade and would, if separately classified, likely trigger the 50 percent competitive need limit, thereby removing that article from the list of eligible articles for at least one year. Because there exists no mechanisms to easily remove articles from basket categories, the competitive need limits are effectively bypassed. Moreover, it is difficult for the domestic industry to petition for graduation of an article in a basket because of the lack of data on imports. Accordingly, some method of breaking out significant products from baskets should be included in renewal legislation. j^29 U.S.C. 2464(c)(1)(A). ' 19 U.S.C. 246 2 (d) . -LI/ "Basket" categories are those classifications within the TSUSA in which multiple items which have similar chemical characteristics are listed. In general, there is insufficient trade in any one item to warrant its being specifically provided for. An example is a class of organic compounds called ketones. The TSUSA provides specifically for four ketones: acetone (('427.6000), ethyl methyl ketone (4 427.6200), isopherone - ((; 427.6410) and methyl isobutyl ketone ((' 427 . 6420). Ail other ketones are classified in the "basket" of TSUSA 44 27 . 64'30. CMA 064807 .--T. B . Recommendat ion. 6- Upon the request of a representative of an interested domestic industry, the U.S. Government should break out of a basket category and give a separate 7-digit TSUSA numerical designation to any article in that basket category. IV. TIMELINESS OF RESPONSE TO INTERESTS AND CONCERNS OF U.S. INDUSTRY A. Problem There is a need for greater and more timely responsiveness to the interests of domestic producers. Although tire GSP program was designed to ensure that granting of GSP duty-free status to articles would have no adverse effect on U.S. producers of competitive items, there are at present no sufficiently explicit criteria to safeguard those interests. B . Recommendations (1) The Administration should be obliged to judge import sensitivity by specific criteria. Administrative discretion should be reduced in the review procedure. Instead , the Administration, should have clearly defined, specific criteria to judge import sensitivity (e.g. an increase in the import penetration ratio measured by the relationship of imports to domestic production, the decline of employment in the United States, and other equally relevant criteria). (2) The GSP procedures should provide for emergencybasis consideration by the USTR of petitions to suspend or eliminate GSP benefits. In this regard, a provision should be included in the GSP rules under which a petition by a representative of a domestic industry seeking to have GSP treatment withdrawn from an article will be given immediate "fast- track" consideration by the USTR upon a showing that conditions exist that warrant such treatement. RELATED ISSUES V . UNFAIR TRADE PRACTICES A . Problem There is growing concern within the chemical industry and other industries that duty-free access to the U.S. market benefits countries which do not adhere to the internationally recognized trading rules set forth by the General Agreement on Tariffs and Trade (GATT). in CMA 064808 7 B . Recomniendat ion Any beneficiary country which violates internationally recognized intellectual or industrial property rights, commits fraud (or sanctions fraud by its resident companies) in the conduct of its trade relations with the United States, or trades in counterfeit goods (or sanctions such trade by its resident companies) should be denied GSP benefits for all articles imported from that country into the United States. VI. RECIPROCITY A . Problem f A question has arisen as to whether the Administration should be granted authority to negotiate bilateral reciprocity agreements with developing countries by which the United States would refrain from graduating a developing country for GSP benefits if that country lifted barriers to U.S. exports. B. Recommendation The basic concept of GSP should be to encourage developing countries to industrialize by giving them preferential access to the U.S. market. The Administration should not be given authority to negotiate reciprocity agreements pursuant to which the United States would refrain from graduating a country found no longer to need preferential access to the U.S. market in exchange for certain other concessions. CMA EC-4/5/83 BD-4/5/83 _T,... CMA 064809 CMA's Amicus Participation in Waste Industries exhibit I In United States v. Waste Industries, No. BO-04-Civ-7 (E.D.N.C. Jan. 3, 1983), the district court held that the injunctive provisions of RCRA could not be applied retro actively to force responsible parties to clean up hazardous waste sites. The government has already informally indic ated that it will appeal the decision. The holding in the' Waste Industries is nearly identical to the favorable holding in the Wade case, except that the Waste holding only addresses RCRA and not CERCLA. CMA's amicus participation has already been authorized in Wade. Preparation of the Waste Industries amicus brief would be handled primarily by CMA staff counsel, with outside counsel participation limited to some editing and review of the draft brief. > This decision is very important to the chemical industry because it confirms the Wade decision in another judicial district, thereby providing additional precendential support for CMA's position. The decision also limits further the government's ability'to compel non-necligent off-site gene rators to perform remedial actions at inactive sites. More over, because the appeal will be heard by the Fourth Circuit Court of Appeals, it will be before a court more- ideologically receptive to the positions we espouse than some other judicial circuits. RECOMMENDATION: Because of the importance of the case to the chemical industry and the need to support our advocacy efforts in Wade, it is the recommendation that amicus partic- icipation in the appeal in VJaste Industries be authorized. ACTION REQUESTED: Approval of CMA's amicus participation in the Waste Industries case. CMA EC-4/5/83 CMA 064810 _T BACKGROUND MEMORANDUM REGARDING CMA'S AMICUS CURIAE PARTICIPATION IN THE WASTE INDUSTRIES CASE In United States v. Waste Industries, the court held that Section 7003 of the Resource Conservation and Recovery Act (RCRA) is not retroactive and therefore may not be used to com pel responsible parties to take affirmative action to clean up an inactive hazardous waste site. That holding is consistent with the district court's decision in United States v. Wade, No. 82-1715 (3d. Cir.), currently on appeal, in which CMA has already filed an amicus curiae brief in support of the district court's opinion. The question before us is whether we should ' participate as an amicus in the appeal in Waste Industries. The holding in Waste industries is very important to the chemical industry. Primary drafting responsibility for the brief would be with CMA staff counsel, with outside counsel's participation limited to an editing role, resulting in the minimization of costs.- For these reasons and for the reasons discussed below, it is the recommendation of CMA's General Counsel's Office that CMA participate as amicus curiae in Waste Industries. Section 7003 is the RCRA counterpart to Section 106 of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), and provides that the Government may sue to en join the disposal of any solid waste or hazardous waste when such disposal may present an "imminent and substantial endangerment to health or the environment." 42 U.S.C. 6973(a) (1976). The Waste Industries suit was filed against the site owner, the operator, and other non-generator parties not relevant here. The United States never amended its complaint to include a count under Section 106 of CERCLA. Although the government has not yet finally determined to appeal the case, that decision is all but certain. A notice of appeal was filed on March 2, 1983. Importance of the Case. Although this case does not involve generators and does not involve CERCLA, which have been the primary focus of our advocacy efforts to date, the Waste Industries precedent has significant implications for the chemical industry..The holding that Section 7003 is not retroactive will be equally applicable to cases filed against generators. The language in the opinion is quite broad and will apply to generators as well as owners and operators. See e.g. 18 ERC at 1525. If Section 7003 were construed to be retroactive, it would completely undercut our efforts in Wade to restrict the applica bility of Section 106 of CERCLA. This is because if RCRA Section 7003 is available to order generators to clean up sites, our hoped for success in precluding use of CERCLA Section 106 for such cleanups will be nullified. Moreover, as in the case of cleanups under Section 106, any cleanup ordered under Section 7003 would not be subject to the cleanup standards of the National Contingency Plan. Cleanup may be even required to "no detectable level of any contaminant." CMA 064811 -2- Likelihood of Success on Appeal. The district court opinion is exhaustive and well reasoned and stands a good chance of being affirmed. The court's discussion of the legislative history is extensive and persuasive. In addition, because the appeal will be heard by the Fourth Circuit, we will probably be before a panel of judges more ideologically receptive to the positions we espouse. On the negative side, because this is an owner/operator case, it will be a harder case to argue than if it involved a nonnegligent off-site generator. In addition, although the opinion is unclear, the operator may have violated its state waste site permit. This factor creates some negative equities in the case that may influence the court of appeals in its evaluation of the case. CMA's Amicus Curiae Participation. If we were the party who is deciding whether or not to appeal this case, the factors mentioned above would have some bearing on whether we should file the appeal. This appeal will go forward, however, with or with- out us. Therefore, the only question is whether being affiliated with a case that might be decided adversely presents too great a risk to us. It is my judgment that the adverse effects, if any, would be minimal and do not justify our not participating. J J j ] * Participating as an amicus curiae in the case will not have any binding effect upon us_in any future litigation. The only potentially negative effect is the possible adverse reaction in the trade from our participation. This reaction would not, however, seem likely and should not be the basis for our decision ' not to participate. Moreover, our participation could be very helpful for the parties involved. They are represented by local counsel with probably limited experience in national environmental issues. Our participation will also allow us to address some of the broader issues that affect the chemical industry as a whole. . ' ) j ) | . j Summary. In short, it appears that we stand to gain much from participating in this litigation. It addresses an issue of national scope and impact that directly affects our members. Moreover, an adverse decision has the potential for undercutting our analogous efforts in the Wade case under CERCLA. In addition, our involvement in Waste Industries would pose little or no downside risk. Accordingly,it_is-therecommendation of the General Counsel's Office that weparticipate in theappeal as an amicus curiae. i I | . I ) . J ) I I CMA | EC-4/5/83 ' r CHEMICAL MANUFACTURERS ASSOCIATION April 13, 1983 TO MEMBERS OF THE EXECUTIVE COMMITTEE Gentlemen: Please be advised that Board Chairman Simeral, following consultation with the other officers, has cancelled the Executive Committee meet ing previously scheduled for Tuesday, May 3. If an urgent matter should arise which you feel must be addressed prior to the June 8 meeting, please let me know. It can be accommodated through other procedures. The next meeting of the Executive Committee will be at The Greenbrier on June 8, at 3:30 p.m. -- not 4:00 p.m. -- as previously announced. Sincerely, Bruce M. Barackman Vice President-Secretary cc: Mr. Paul F. Oreffice Formerly Manufacturing Chemists Association --Serving the Chemical Industry Since 1872. 25Q1 M Street. NW Washington. DC 20037 Telephone 202/887-1100 Telex 89617 (CMA WSH) CMA 064813