A year ago, manufacturers were cautious, yet optimistic. Even with Democrats in control of Congress for the first time in 12 years, they thought they successfully could pursue an aggressive trade agenda, reinstate funding for the food-contact-notification program, and get the research and development tax credit extended or possibly made permanent.
But none of that happened. Besides failing to extend the credit and renew the food-contact program, Congress let the Trade Promotion Authority's ability to negotiate free-trade agreements lapse and did nothing with the Trade Adjustment Assistance program.
Congress approved a free-trade agreement with Peru, but pacts with three others - Colombia, Panama and South Korea - may have stumbling blocks that will prevent their passage in 2008. While some manufacturers see that as good news, others are growing impatient.
Getting Congress to approve the South Korean pact - which would have the most benefit for the U.S. plastics industry - is ``going to be really hard,'' said one Capitol Hill source. ``Some legislators have told us it is already dead because of its scope'' and its failure to address restrictions on auto and beef imports to the satisfaction of some in Congress. South Korea is the United States' eighth-largest trading partner.
``Our biggest issues on the federal level are the continuation of the R&D tax credit, the food-contact-notification program, energy and trade,'' Peter Jones, president of Wexco Corp. in Lynchburg, Va., said in a telephone interview. Jones also is a member of the public policy committee at the Washington-based Society of the Plastics Industry Inc.
Almost all of those priorities are in limbo, with an uncertain road ahead.
The future of the 7-year-old, $6 million food-contact-notification program - under which packaging materials are approved within 120 days unless the Food and Drug Administration objects - remains uncertain.
Left out of the budget two years in a row, the program got a reprieve as part of a continuing resolution, but was not part of the omnibus budget bill approved Dec. 19.
However, the approved FDA budget is $56 million higher than the previous year's, and the agency could choose to continue the program.
``Those who administer the [program] believe it will be continued, but they are required to wait until word comes down ... about how the funds they get will be allocated, and this will not occur until the budget is completely cleared,'' said Jerome Heckman, a founding partner of Keller & Heckman LLC law firm, and general counsel to SPI.
Depending on when the president signs the bill, that decision could linger through January. Even if approved, the industry will have to fight the same battle again in the next budget.
The R&D tax credit, which expired - but which has been extended 13 times since originally passing in 1981 - isn't likely to make it on the congressional agenda until spring. The absence of the credit is the equivalent of an $8 billion tax hike on business, according to the National Association of Manufacturers in Washington.
``The R&D credit is extremely popular and bipartisan,'' said Storme Street, government relations consultant for the Government Electronics and Information Association in Washington. ``Sentiment isn't the problem. The revenue offset under [pay-as-you-go] is the real hurdle right now. And next year will be particularly challenging.
``What we've seen in past years, unfortunately, is that once we pass the official expiration date there is no real sense of `deadline' until the end of the following year,'' she said. For example, the credit that expired Dec. 31, 2005, was not retroactively extended until December 2006.
``We certainly hope that will not be the case this time and will be working very actively on this as soon as Congress returns [later this month]. Retroactive extensions and short-term extensions are extremely difficult for companies to plan around, since R&D projects tend to be multiyear commitments involving significant resources.''
The tax credit allows companies to receive a 20 percent tax credit for qualified R&D expenditures in excess of a base amount.
``While there are promises on both sides of the political aisle that this will be addressed right away in the new year, it's an embarrassment ... to have our major tax credit ... expiring or being treated with benign neglect by Congress, or being treated like a political football,'' said NAM President John Engler.
``Whatever the excuse, whatever the reason, the expiration of this tax is a sobering message about the importance of innovation, really, to the bottom line'' of Congress.
While SPI supports a House bill by Tim Ryan, D-Ohio, and Duncan Hunter, R-Calif., that would make currency manipulation an unfair trade practice, others think differently.
``Nontariff barriers are more of a problem,'' said Engler. ``Trying to become more protectionist would only deny us access to a market with 5 million people.''
``We don't support Ryan-Hunter,'' said Mike Lynch, government affairs director at Glenview, Ill.-based Illinois Tool Works Inc. ``If Congress will cut the cost of doing business in America, we can be competitive, regardless of what China is doing with their currency.
``If we cut out all of the redundant regulation, bring some reality to our tort laws and some sense to our health-care system, and if manufacturers don't have to teach in the workplace what schools haven't done, we can compete better.''
Besides, he said, with the lower value of the dollar, ``our goods are more attractive'' as exports. ``Our government should focus on what it can do that won't draw the ire of our trading partners.''
Engler agreed. ``Congress would be better served focusing on ways to make U.S. manufacturing more competitive,'' he said. ``[Congress] could extend the R&D tax credit, fix the infrastructure and invest in training the workforce.''
The failure of Congress to increase energy supplies is what troubles Wexco's Jones.
``There is continued discussion about being green,'' he said. ``But we are sitting on a lot of oil and natural gas in the United States and there is no push to produce them.
``Our economy is based on fossil fuels and all we are doing is making ourselves more vulnerable. It is counterintuitive, as prices continue to go up, that we are not taking advantage of our own untapped resources.''