FOREIGN COMPETITION AND DEPARTMENT OF DEFENSE IMPACT

What does the Aerospace Industries Association think should be done about some of these issues? We have a statement in which we set forth most of these, where we note that foreign competitors in the international market are often strengthened by government incentives, and even by government partnerships. If our government is to help meet this competition it must give sufficient national priority to exports and to effective implementation of policies and practices designed to increase sales in the international marketplace. We see a need for export tax incentives to offset the tax advantages of our foreign competitors. For decades most developed nations have recognized that economic survival is critically dependent on exports. Accordingly, they have forged an array of incentives -- financing facilities and trade devices to assist their industries to promote exports and jobs and other economic consequences therefrom. Such supportive measures not similarly available to American exporters put U.S. industry at a distinct disadvantage in international competition. Specifically, we recommend an expansion rather than a reduction in the one principal program that we have available to us, commonly referred to as the DISC program (the Domestic International Sales Corporation). This is an effort to offset in part the tax advantages enjoyed by our foreign competitors. We would amend the U.S. tax system as a means of expanding exports, with emphasis on depreciation, investment tax credit, and other incentives helpful to the export community. We also see a need for firm action against those countries that provide preferential credit terms or impose tariff or non-tariff barriers in violation of the MTN agreement. In countries where an industry is owned or controlled by its national government many important factors can be manipulated, not the least of which is financing of their foreign purchases; indeed they are being manipulated. This puts countries such as the United States at a distinct disadvantage. (Author)