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Leo W Gerard: China Protects its Workers; America Doesn’t Bother

Confronted with a dire situation, a world power last week took strong action to secure its domestic jobs and manufacturing.

That was China. Not the United States.

China diminished the value of its currency.  This gave its exporting industries a boost while simultaneously blocking imports. The move protected the Asian giant’s manufacturers and its workers’ jobs.

Currency manipulation violates free market principles, but for China, doing it makes sense. The nation’s economy is cooling. Its stock market just crashed, and its economic powerhouse – exports – declined a substantial 8.3 percent in July ­– down to $195 billion from $213 billion the previous July. This potent action by a major economic competitor raises the question of when the United States government is going to stop pretending currency manipulation doesn’t exit. When will the United States take the necessary action to protect its industry, including manufacturing essential to national defense, as well as the good, family-supporting jobs of millions of manufacturing workers?

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While China lowered the value of its currency on three consecutive days last week, for a total of 4.4 percent, the largest decline in two decades, a respected Washington think tank, the Economic Policy Institute, released a report detailing exactly how the United States lost 5 million manufacturing jobs since 2000.

The report, “Manufacturing Job Loss: Trade, Not Productivity is the Culprit,” clearly links massive trade deficits to closed American factories and killed American jobs. U.S. manufacturers lost ground to foreign competitors whose nations facilitated violation of international trade rules. China is a particular culprit. My union, the United Steelworkers, has won trade case after trade case over the past decade, securing sanctions called duties that are charged on imported goods to counteract the economic effect of violations.

In the most recent case the USW won, the U.S. International Trade Commission (ITC) finalized duties in July on illegally subsidized Chinese tires dumped into the U.S. market. The recent history of such sanctions on tires illustrates how relentless the Chinese government is in protecting its workers.

Shortly after President Obama took office, the USW filed a complaint about illegally-subsidized, Chinese-made tires dumped into the U.S. market. The Obama administration imposed duties on Chinese tire imports from September 2009 to September 2012.

Immediately after the tariffs ended, Chinese companies flooded the U.S. market with improperly subsidized tires again, threatening U.S. tire plants and jobs. So the USW filed the second complaint.

Though the USW workers won the second case as well, the process is too costly and too time consuming. Sometimes factories and thousands of jobs are permanently lost before a case is decided in workers’ favor. This has happened to U.S. tire, paper, auto parts and steel workers.

In addition, the process is flawed because it forbids consideration of currency manipulation – the device China used last week to support its export industries.

By reducing the value of its currency, China, in effect, gave its export industries discount coupons, enabling them to sell goods more cheaply overseas without doing anything differently or better. Simultaneously, China marked up the price of all imports into the country. American and European exporters did nothing bad or wrong, but now their products will cost more in China.

Chinese officials have contended that the devaluation, which came on the heels of the bad news about its July exports, wasn’t deliberate. They say it reflected bad market conditions and note that groups like the International Monetary Fund have been pushing China to make its currency more market based.

Right. Sure. And it was nothing more than a coincidence that it occurred just as China wanted to increase exports. And it was simply serendipity that in just three days, “market conditions” wiped out four years of tiny, painfully incremental increases in the currency’s value.

If the value of the currency truly is market based and not controlled by the government, then as Chinese exports rise, the value should increase. That would eliminate the artificial discount China just awarded its exported goods. Based on past history, that is not likely to happen. So what China really is saying is that its currency is market based when the value is declining but not when it rises.

China did what it felt was right for its people, its industry and its economy. The country hit a rough spot this year. Though its economy is expected to grow by 7 percent, that would be the slowest rate in six years. Its housing prices fell 9.8 percent in June. Car sales dropped 7 percent in July, the largest decline since the Great Recession. Over the past several months, the Chinese government has intervened repeatedly to try to stop a massive stock market crash that began in June.

In the meantime, the nation’s factories that make products like tires, auto parts, steel and paper continue to operate full speed ahead and ship the excess overseas. As a result, for example, the international market is flooded with underpriced Chinese steel, threatening American steel mills and tens of thousands of American steelworkers’ jobs.

This is bad for the U.S. economy. The U.S. trade deficit in manufactured goods rose 15.7 percent ­– by $25.7 billion ­– in the first quarter as imports increased and exports slipped. In the first half of this year, the trade deficit with China rose 9.8 percent, a total of $15 billion.

As EPI points out, that means more U.S. factories closed and U.S. jobs lost. If China had bombed thousands of U.S. factories over the past decade, America would respond. But the nation has done virtually nothing about thousands of factories closed by trade violations.

The United States could take two steps immediately to counter the ill-effects of currency manipulation. Congress could pass and President Obama could sign a proposed customs enforcement bill. It would classify deliberate currency undervaluation as an illegal export subsidy. Then the manipulation could be countered with duties on the imported products.

The second step would be to include sanctions for currency manipulation in the Trans-Pacific Partnership trade deal that the administration is negotiating with 11 other Pacific Rim countries. The deal doesn’t include China, but it could join later. The deal does, however, include other countries notorious for currency interventions.

American manufacturers and American workers demand rightful protection from predatory international trade practices.

New AFL-CIO Report Highlights Reasons Why TPP Is Not the Answer to Trade Issues with China

Read the report here

(Washington, DC) – On a conference call today, AFL-CIO Policy Director and Special Counsel Damon Silvers and Roosevelt Institute Senior Economist Adam Hersh described the reasons why the Trans-Pacific Partnership (TPP) is not the solution to improving China’s trade policies.

The U.S.-China Economic Relationship: The TPP is Not the Answer,” report explains why the TPP will have no effect on the way China sets its trade policy. It debunks claims that failure to pass TPP will allow China to set the rules of international trade.

“From what we know about the TPP, it’s a low-standards agreement from the perspective of working people.  It would solidify a model of globalization that drives wages and public interest policies down, it wouldn’t address job killing currency manipulation, and it could allow China to reap the benefits of the agreement without joining,” said Silvers. “It would undermine efforts to raise wages in China and to revive U.S. manufacturing. Congress must reject the notion that ‘TPP at any cost’ is worth it.  A corporate-driven TPP cedes important American values and hurts working families in the process.”

“The argument that TPP can counterbalance China’s rising economic power in the region holds no water,” said Hersh.  “In fact, Chinese policymakers are eager to see TPP completed for the opportunity to expand their economic footprint across Asia.”

A digitized replay of the call is available from today at 12:30 pm to 5/21/15 at 12:30 pm EST.

Telephone:   (USA) (800) 475-6701     (International) (320) 365-3844        Access Code: 360686

Read the report here.

Leo W Gerard: Bad Trade Leads To More Jobs Lost

By Leo W Gerard
President of the United Steelworkers

Sucker punched by massive, illegally subsidized imports, American steel producers laid off thousands of workers in bedrock communities from Ohio and Illinois to Texas and Alabama.

That’s in just the past three months.

The families of furloughed workers are struggling to pay mortgage bills. The communities, losing tax dollars, are canceling needed road work. The companies are talking about the similarities between now and the 1990s when half of the nation’s steel firms disappeared. Members of the Congressional Steel Caucus are worrying about the effect on national security if America can’t make its own steel for guns and tanks.

Virtually everyone who testified last week at a Congressional hearing on the state of steel fingered bad trade as the culprit in the current collapse. Lawmakers, steel company executives, industry group leaders and a vice president of the United Steelworkers (USW) union all agreed on this. Foreign firms, particularly those operating in non-capitalist countries, are violating international trade regulations. Those rules also require American companies, communities and workers to forfeit a pound of flesh before trade enforcement can occur. They’re failing America.

Photo of Save Our Steel Jobs rally in Pittsburgh in May 2014 by Chelsey Engel

Photo of Save Our Steel Jobs rally in Pittsburgh in May 2014 by Chelsey Engel

Just seven days into 2015, U.S. Steel said it would lay off 636 workers at its Lorain, Ohio, tubular plant. Before January’s end, the company announced it would furlough 2,000 workers at three locations in Alabama and Texas. In February, U.S. Steel disclosed plans to close its Gary, Ind., coke plant, displacing 300 workers. Early in March, U.S. Steel revealed the loss of another 83 jobs at its Gary Works, for a total of 780 there this year, as well as 412 at one of its iron-ore operations in Minnesota. Later in March, the company said it would indefinitely shut down its Granite City, Ill., milland lay off 2,080 workers.

It’s relentless. And that’s just U.S. Steel. Other U.S. producers furloughed workers too.

Steel executives told lawmakers last week that the job cuts are a direct result of foreign companies dumping steel in the U.S. market. “American steel companies are being irreparably harmed by illegal trade practices,” U.S. Steel CEO Mario Longhi said.

China produced as much steel last year as the rest of the world combined. It continued doing so despite dwindling demand within China as both its real estate development and economy cooled.

China sends the excess steel overseas. Last year, China exported more steel than any country this century. And the numbers are still rising. China’s steel exports rose 63 percent in January from a year earlier.

The USW and U.S. producers have won trade case after trade case involving Chinese-made steel because it violates international regulations forbidding government subsidization of exported products. Those improper subsidies lower the price. When trade regulators determine that Chinese producers violated international rules and place tariffs on a particular steel product increasing its price, China ships a different one. In addition, though it’s not considered in trade cases, China manipulates the value of its currency so that its exports are cheaper.

At the Congressional hearing last week, John Ferriola, CEO of Nucor, a non-union steel company, described the situation this way:  “Blatant foreign government support of their steel industries has resulted in a glut of global steel production. A brazen disregard for international trade rules has led to the dumping of steel products in our market. As a result, one in three tons of steel sold in the U.S. today is produced abroad by less efficient, less safe, and less environmentally friendly countries. Our government must take a much tougher line with countries that break the law.”

This is not whining from uncompetitive producers. The European Union, Korea, Australia, even low-labor-cost India, are investigating whether China is dumping steel in their countries in ways that violate international law.

U.S. Steel’s Longhi talked about the consequences for national security if nothing is done.  “We do not build a steel plant in an emergency,” such as war, he told lawmakers last week. Instead, he said, “we rely on it” to already exist and quickly fulfill national needs.

He noted that during World War II, his company produced 90 percent of the steel used to make 21 million military helmets.

“In a moment of exceptional need for the steel required to maintain its strength, America makes a local call,” he told the Congressmen. It doesn’t call China.

Dumping means companies like U.S. Steel and Vallourec USA that have invested billions in modernizing and expanding their American mills face financial difficulty. The same is true of furloughed workers and their communities.

Granite City Mayor Ed Hagnauer said that while the U.S. Steel plant in his town was shut down in 2008, ten times as many residents sought help at food banks. Granite City business owners are concerned about U.S. Steel’s indefinite shut down beginning in May because mill jobs pay good, middle class wages that 2,080 laid off workers will not have to spend.

The lost jobs also mean lower tax revenues for towns and school districts. In Lorain, Ohio, now hit by layoffs at Republic Steel and U.S. Steel, Mayor Chase Ritenauer saidthat to balance the budget he would have to consider scaling back city projects and leaving job vacancies open.

For this to stop, USW Vice President Tom Conway told the Congressmen at the hearing, trade laws must be fixed. “I understand aggressive enforcement of trade laws, but aggressively enforcing a lousy law does not get you much,” he said.

“The continual failure and weakening of our laws is killing us, and it is time to rewrite our laws,” he added.

The laws should not require draconian damage before trade sanctions can be imposed, he said, and Congress must stop the swindle called currency manipulation.

No new trade deals, such as the proposed Trans-Pacific Partnership (TPP), should be approved without these changes, he said. In addition, Congress certainly should not prohibit itself from amending proposed trade agreements by fast-tracking them, he said, because the price of bad trade is too high.

Do Free-Trade Agreements Create Jobs?

Written by Dave Johnson (Senior Fellow at Our Future)
Originally posted on OurFuture.Org

global deal free trade

The corporate push to get Congress to approve the Trans-Pacific Partnership (TPP) trade agreement is about to begin. Again and again we have been promised that these trade agreements “create jobs” and grow the economy. So do they?

“Free-Trade” Claims

Proponents of current corporate-negotiated trade agreements claim that the agreements increase jobs and boost economies. For example Time today has a column, Voters Won’t Like It, but We Have to Bring Back Free Trade, by Michael Schuman. Schuman claims that these agreements are “beneficial for economies overall — boosting exports, enhancing efficiency and reducing prices for consumers.”

Is this what actually happens? Let’s look at what has happened as a result of past agreements.

NAFTA

Negotiated by the George HW Bush administration and pushed by President Clinton, the North American Free Trade Agreement (NAFTA) went into effect January 1, 1994.

Ross Perot famously said we would hear a “giant sucking sound” as NAFTA took jobs from the US and he was right. According to the Economic Policy Institute (EPI) briefing paper Heading South: U.S.-Mexico trade and job displacement after NAFTA, “As of 2010, U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,900 U.S. jobs.” (That is net jobs, taking into account jobs gained.)

The EPI study did not look into NAFTA’s effect on US wages (but a 2001 EPI study found wage decreases). Clearly, however, NAFTA enabled companies to close American factories and move production to low-wage factories, putting downward pressure on everyone’swages.

Public Citizen’s document, NAFTA’s Broken Promises 1994-2013: Outcomes of the North American Free Trade Agreement points out that over one million Mexican campesino farmers were driven out of business (and likely driven north to the US) by subsidized US corn from our giant industrialized farms.

China

China became a member of the World Trade Organization (WTO) in 2001. Americans were promised this would expand market opportunities for U.S. companies, thereby increasing jobs and American prosperity. How has this worked out?

In August, 2012 EPI estimated that the US lost 2.7 million jobs as a result of the U.S.-China trade deficit between 2001 and 2011, 2.1 million of them in manufacturing. Aside from job losses wages US wages fell due to the competition with cheap Chinese labor costing a typical household with two wage-earners around $2,500 per year.

Last month our country’s humongous trade deficit with China was $30.1 billion. That translates to a yearly deficit of more than $360 billion drained straight out of our economy.

Korea

In spite of the obvious problems with these trade agreements, the US approved an agreement with Korea that took effect March 15, 2012.

EPI reported in July, 2013 that the US-Korea free trade agreement had already cost the US 40,000 jobs and increased our trade deficit by $5.8 billion. According to EPI,

The tendency to distort trade model results was evident in the Obama administration’s insistence that increasing exports under KORUS would support 70,000 U.S. jobs. The administration neglected to consider jobs lost from the increasing imports and a growing bilateral trade deficit. In the year after KORUS took effect, the U.S. trade deficit with South Korea increased by $5.8 billion, costing more than 40,000 U.S. jobs. Most of the 40,000 jobs lost were good jobs in manufacturing.

So How Did They Work Out?

Again and again these trade agreements resulted in loss of jobs, particularly in higher-wage sectors of our economy like manufacturing, and big increases in the trade deficit. Yes, exports increased adding jobs in some sectors but imports increased more, costing more jobs than those gained. And the sectors that lost jobs tended to be higher-wage, like manufacturing.

While honest and fair trade is a good thing, these trade agreements are written to promote the interests of the giant and powerful multinational corporations over the interests of working people, smaller competing corporations, citizens groups, democracy and the environment. These “free-trade” deals increase unemployment, drive down wages and harm the environment while dramatically increasing the wealth and power of the 1%.

Again, fair trade is great. But trade deals written of by and for a few giant, multinational corporations are good for those corporations and the billionaires behind them — and onlythose corporations and the billionaires behind them.

The Worst Effect: Widespread Job Fear

When our government just lets companies close a factory here and move production to a country where people have few rights and can’t do anything to make their situation better, what do you think that will do to wages and rights here? When your boss can threaten to lay you off and move your job out of the country, what are you going to say? Are you going to complain about the job and demand a raise?

Job fear is rampant in today’s economy, so everything is sold as a promise to create jobs. Heck if eating bugs will “create jobs” I’ll try it. And you can be sure that the fried bug industry lobbyists are going to promise just that.

So these giant-corporate-promoting trade deals are sold with the promise that they will “create jobs” even though we see again and again that the opposite occurs. Ironically, the job fear so many of us experience is the result of these trade agreements that enabled corporations to close factories here, ship the equipment out of the country, make the same stuff there and bring it back here to sell in the same stores to the same customers. (For some reason that is called “trade.”)

These Agreements Reign In Our Democracy

Now the giant corporations are working on the Trans-Pacific Partnership (TPP). Only a small part of this agreement covers “trade.” Much of it is about “investor rights.” This means that countries that enter into the agreement will not be able to do things that limit the profits of corporations. This includes trying to enforce environmental regulations, trying to get low-cost medicine to sick people, etc. It won’t matter if we call ourselves a sovereign country and a democracy — we will not be allowed to pass the laws that we want to if they interfere with the “rights” of the owners of the giant corporations.

These trade agreements are negotiated by giant multinational corporations along with government officials who understand they will get lucrative jobs with those corporations. They benefit only the 1% and the billionaires behind these corporations. They have not helped our economy and have not increased jobs. In fact they have led to massive trade deficits that are draining our economy, massive job loss and wage loss, and job fear for those still working.

We must insist that trade from now on agreements be negotiated with all of the stakeholders at the table in a process that guarantees their interests have equal weight with the interests of the giant corporations. Representatives of environmental organizations, human rights groups, labor groups, consumer groups and all other stakeholders must be included in these negotiations.

We must also insist that existing agreements be renegotiated so that We the People benefit, instead of just the billionaires behind the giant corporations.

Race to the Bottom: another view of what “cheap labor” looks like

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Today’s New York Times has another tale of “cheap labor” in China:

The cry for help, a neatly folded letter stuffed inside a package of Halloween decorations sold at Kmart, traveled 5,000 miles from China into the hands of a mother of two in Oregon.  Scrawling in wobbly English on a sheet of onionskin paper, the writer said he was imprisoned at a labor camp in this northeastern Chinese town, where he said inmates toiled seven days a week, their 15-hour days haunted by sadistic guards.

[Prison officials] buy small-time offenders from other cities on a sliding scale that begins at 800 renminbi, or about $130, for six months of labor.

Do the math.  The Chinese prison buys their labor for $5 a week.  And those inmates are working 105 hours a week.

How on earth can US workers compete with that?

The really bad news is: prison labor isn’t just a problem in China.  It’s a problem here in the US, too.  Read “The Hidden History of ALEC and Prison Labor” in The Nation here.

Just one example:  Arizona inmates working for private agricultural companies are paid a “whopping fee” of “more than 50 cents an hour.”  Read “How US prison labour pads corporate profits at taxpayers’ expense” in The Guardian here.

How on earth can US workers compete with that?

AFL-CIO President Trumka On Currency Exchange Reform Act

Statement by AFL-CIO President Richard Trumka on the Currency Exchange Rate Oversight Reform Act of 2013

The Currency Exchange Rate Oversight Reform Act of 2013 sends an important message that this nation will no longer tolerate currency manipulation by other governments. This wrongful and unfair practice distorts the global economy and disadvantages countries like the United States that follow international trade rules. The growth of these illegal actions has cost far too many jobs over the past several years. We call on the House and Senate to take action on this issue without delay.

Working people are proud of the leadership from Senators Sherrod Brown (D-OH), Jeff Sessions (R-AL), Charles Schumer (D-NY), Richard Burr (R-NC), Debbie Stabenow (D-MI), Bob Casey (D-PA), Lindsey Graham (R-SC) and Susan Collins (R-ME) to introduce this important the bipartisan legislation.

In addition to supporting this bill, the AFL-CIO supports companion legislation in the House, The Currency Reform for Fair Trade Act of 2013 (H.R. 1276). Considering the continuing job-destroying impacts of currency manipulation, there should be strong bi-partisan support in both the House and Senate.

When foreign governments manipulate currency, they give producers in their country an unfair advantage.  When a country’s currency is devalued by 25 percent, that means US exports are 25 percent overpriced by comparison, while our imports from that country are underpriced by the same amount. Not only does this unfair practice severely damage the US manufacturing sector, it also means that workers in those countries suffer from reduced purchasing power themselves.  The result on the U.S. trade deficit has been devastating—last year, the U.S. ran a trade deficit of more $315 billion dollar in trade in goods with China alone.

Congress must stand up for American manufacturing and put an end to the trade war being waged against the working families and communities. Our country needs to create millions of good jobs now. We can no longer afford to be passive in the face of these illegal job-killing practices.

NH Congresswomen Weigh In On The So-Called “Full Faith and Credit Act”

Carol Shea-Porter_Official.2010-300x288WASHINGTON, D.C. – Today, the House of Representatives voted on H.R. 807, a bill that would ensure Chinese bondholders are paid before American soldiers in the case of a government default.

After the vote, Congresswoman Carol Shea-Porter issued the following statement:

“I strongly oppose this deeply irresponsible legislation. Middle class families can’t pick and choose which bills to pay, and neither should Congress. 

“H.R. 807 guarantees that if Republicans push our nation into default, bondholders from China and the Cayman Islands would be paid before America’s veterans, Medicare providers, and small businesses. 

“Instead of playing chicken with our nation’s credit rating, Congress should act responsibly and pay the bills that it has incurred.  I, once again, call on Speaker Boehner to appoint budget conferees so Congress can compromise on a sensible budget that ends sequestration, helps create jobs, and responsibly reduces the deficit.”

Congresswoman Annie Kuster also released a statement after her vote:

Ann kuster head shot LG“This bill is nothing more than a plan to default on our nation’s obligations, plain and simple,” Kuster said. “It sets the stage for yet another manufactured crisis that would prioritize payments to China and other foreign creditors over our obligations to seniors on Medicare, veterans, and the men and women of our Armed Forces.”

“Rather than simply bracing for default, both parties need to work together to reduce the deficit in a balanced way that will help create jobs, grow the economy, and strengthen the middle class,” Kuster added. “As we do, Congress must reassure creditors and the American people that our government will continue to meet its obligations and avoid a catastrophic default. Any suggestion that we would even consider doing otherwise would be irresponsible, undermine confidence in our government, and put our credit rating at risk.”

 

Telling the Truth About Unions And Hurricane Sandy

photo by Dan DeLuca via Flikr
Have you heard the story about non-union utility crews getting turned away, after Hurricane Sandy?

The story isn’t true – but it’s still being spread.

It started before the election.  The story spread so far and so fast that five utility companies issued public statements saying it wasn’t true.

A full week later, the story was still being spread – by an anti-union newspaper, the Las Vegas Review-Journal.

Does this remind you of anything?  Maybe Mitt Romney’s infamous allegations about Jeep moving production to China?  Again, that story was immediately and thoroughly debunked – by the company – but Romney’s campaign kept spreading it, through television and radio ads.

Truth? Romney’s pollster said it didn’t matter:  “We’re not going to let our campaign be dictated by fact checkers.”

Yes, there’s a connection here.  Romney’s campaign was funded by many of the same people and corporations that have invested millions in the “union avoidance” industry.  Take a few minutes and read this analysis of the 2010 electionsIt’s the very same players, now:

  • Karl Rove, of election night meltdown fame, toured the country in 2009 opposing the Employee Free Choice Act;
  •  “Americans for Job Security” is a secretive group run out of a mail-drop box in a UPS store, but they spend millions on false advertising attacking candidates who support labor unions;
  •  “Americans for Prosperity” is run by the Koch brothers, spends tens of millions on misleading ads; and in 2009 sponsored a multi-state publicity tour opposing the Employee Free Choice Act;
  • and the list goes on, and on.

The “union-avoidance” industry doesn’t care about the truth – it just cares about results.  Haven’t heard of the industry before?  Read more about it here and here.


Looking for the truth about how labor unions responded to Hurricane Sandy?
  Read more here and here, and updates on the Teamster’s blog here.

 

[Top image of ConEd workers is by Dan DeLuca via Flickr/Creative Commons]

 

Slave Labor a Thing of the Past, Or Is It????

Most of us are familiar with Union and Labor history.  In the industrial revolution people were treated terribly and forced to work 12-16 hours a day for pennies.  Most of the people could not afford to live on the pay they were given and were forced to live in mill housing, and buy from mill grocery store.  By the end of the month workers ended up with a fraction of the money they earned.  Last week we talked about the Bread and Roses Strike, this was a big part in that strike.

In America we have grown and thanks to the Labor Unions strength over the years workers are no longer forced into these conditions.  This is not the case in other parts of the world.  This video is from the Daily Show with John Steward.  It is a Comedy News program however the information they are talking about is true.  Workers in China, are essentially what Americans endured in the early 1900s.

This is what deregulated industry without unions looks like.

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