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Executive Summary

SEC. 936 WAGE CREDIT PROPOSAL: TREASURY MAY BE HAVING SECONO THOUGHTS about the proposal, Pharmaceutical Mfrs. Assn. President Gerald Mossinghoff suggested at a PMA press briefing July 23. Asked if the assn. had received any feedback from the administration on its opposition to changes in Sec. 936, Mossinghoff stated: "There seems to be a feeling, and I think this is true even in Treasury, that the wage credit proposed at the last minute in Treasury II won't work." Mossinghoff reiterated the assn.'s position that the wage credit proposal would not work because it will drive out industries like the pharmaceutical industry that pay salaries "well above the minimum wage," and totally labor intensive industries will go to countries like Haiti where workers are paid "40 cents an hour as the average wage." In addition, Mossinghoff said PMA believes "there is a lot of enthusiasm being generated for the twin plant concept that was being pushed by [Puerto Rican] Governor Hernandez Colon." He noted that 16 of PMA's companies "have committed to additional investment in other locations in the Caribbean basin." With a twin plant investment, Mossinghoff stated, mfrs. "would have joint production facilities, where the more labor-intensive [activities] might be done at a plant in Dominique or Jamaica or Grenada and the results fed into the finishing plant in Puerto Rico, and in turn some of the investment that exists in the banks in Puerto Rico, 936 money, might be used to finance the twin plant concept elsewhere in the Caribbean basin." Mossinghoff also addressed the issue of foreign trade barriers to U.S. exports. He said PMA members are very concerned about two things in particular -- - "the lack of patent protection, particularly in developing countries, which really fosters a private industry in those countries, pirating the results of our research and development"; and unfair trade practices in certain countries that keep out U.S. exports. In testimony before a July 26 hearing of the House Subcmte. on Oversight and Investigations on the impact of unfair and illegal foreign trade practices on interstate commerce, Mossinghoff asserted that there are increasing trade restrictions in the more developed countries. He said such restrictions include "unreasonable price controls, restrictions on imports, discriminatory pricing treatment, performance requirements, preferential product approvals, and export requirements." For example, Mossinghoff noted that "Mexico requires pharmaceutical mfrs. to reach a 50% national integration level within three years of a product's start-up." In addition, he said "preferential treatment or market reserves for national companies in government purchases are often employed." Mossinghoff stated that "in recent discussions with Greek regulatory authorities, PMA officials were told that the Greek government wanted to guarantee 30% of the market for a combination of the Greek stateowned company and Greek national companies.

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