Washington, D.C., February 9, 2006 - In testimony today before the House Government Reform Committee, Electronic Industries Alliance (EIA) President and CEO Dave McCurdy argued that the best hope for the U.S. in maintaining its edge against global competition is to develop an infrastructure that fosters and expands the nation's most prized intellectual asset: innovation. Click here to read Dave McCurdy's testimony.

"As a passionate advocate of innovation I am careful not to hype or overstate the challenge we face," McCurdy said. "In my opinion, we are not in a `crisis'. As the title of our 2004 policy playbook -- The Technology Industry at an Innovation Crossroads -- indicates, we believe America is at an important national juncture."

The U.S. still enjoys a superior advantage compared to other nations, thanks in large part to an economic tradition that has long supported innovation and creativity, McCurdy pointed out to the Committee. This advantage has fueled considerable American growth and prosperity for decades. But the rest of the world is emulating the U.S. "Other nations have read the blueprints of America's success and are attempting to duplicate our model," he argued. "Accordingly, we cannot and should not rest on our laurels. It is absolutely imperative that we continue to renew the innovation pipeline and infrastructure to remain the preeminent leader of technology development."

EIA first called for the development of a national technology and innovation vision and strategy in its policy playbook (to download, go to www.eia.org/playbook). In today's testimony, McCurdy noted some elements of that strategy, including an environment more conducive to doing business in the U.S, an expedited visa process, a permanent and modernized R&D tax credit, an improved STEM-oriented education system, and continuous worker training. He also stressed that these staples "should be considered together, not each in its own vacuum."

McCurdy urged Congress to review the strengths and weaknesses of doing business in U.S., especially the tax implications for companies trying to innovate and create jobs in America. "It costs $1 billion more to build and operate a semiconductor factory in the U.S. than it does outside our borders," McCurdy noted, "and the biggest factor - about 70% of that $1 billion difference - is taxes."

EIA called on policymakers to develop a system to expedite visas more efficiently as well, in order to allow skilled foreign workers to continue creating and refining American innovative products and services. "While we must foster the skills and talents of our own citizens, as well, we cannot afford to turn away the best and brightest from all corners of the world," McCurdy said. "By facilitating expedited visa processing [that ensures] a reasonable balance between security and our historical acceptance of foreign talent, the U.S. can still lead."

McCurdy also recommended that Congress revitalize one of the most important incentives for new innovation available to the U.S. high-tech industry: the R&D tax credit. "The expiration of the R&D tax credit at the end of 2005 meant as much as a 7.5% increase in the cost of doing qualifying R&D in the U.S. for many companies, potentially leading to a shift in R&D to other countries with more generous tax incentives," he pointed out. "R&D planning requires a long-term view. Strengthening the credit will provide companies with a strong reason to undertake and increase domestic research work, and we endorse the idea advanced by the President and others to modernize the credit, in addition to making it permanent."

EIA has advanced a strong technology and innovation-oriented economic agenda for several years on behalf of the U.S. high-tech industry. The Alliance also lauded President Bush's recent focus on competitiveness in his State of the Union Address, as well as bipartisan efforts in the Senate to improve U.S. competitiveness. The Alliance is also encouraging similar efforts by leaders in the House. Many of the approaches outlined in the President's American Competitiveness Initiative, Senators Ensign and Lieberman's 2005 National Innovation Act, and the Protecting America's Competitive Edge (PACE) bills introduced earlier this year by Senators Alexander, Bingaman, Domenici and Mikulski reflect several of the 40 recommendations made by EIA in its 2004 playbook.

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About EIA: The Electronic Industries Alliance (EIA) is the leading advocate in Washington, D.C., for the U.S. high-tech industry. The Alliance, which traces its origins to the Radio Manufacturers Association (chartered in 1924), is a partnership of electronic and high-tech associations and companies whose mission is to promote the market development and competitiveness of the $400 billion U.S. high-tech and electronics industries through domestic and international policy efforts. EIA's corporate members - nearly 1,300 - provide products and services ranging from microscopic electronic components to state-of-the-art defense, space and industry high-tech systems, as well as the full range of telecommunications and consumer electronics products. Headquartered in Arlington, Va., the Alliance is made up of the Electronic Components, Assemblies & Materials Association (ECA); the Government Electronics & Information Technology Association (GEIA); JEDEC; the Telecommunications Industry Association (TIA); and leading consumer electronics companies who participate in EIA's Environmental Issues Council. EIA is also heavily involved in cyber security issues through the Internet Security Alliance (ISAlliance), and education issues, through the National Science & Technology Education Partnership (NSTEP).