As the White House, government officials and businesses prepare for next week’s Washington visit of Saudi Arabia Crown Prince Mohammad bin Salman, manufacturers across America are calling upon the Saudi government to address a range of outstanding issues that are frustrating manufacturers seeking to export and grow in that market, activities that support good, high-paying jobs here at home.
The United States is Saudi Arabia’s second-largest trading partner, with nearly $35 billion in trade in 2016. In turn, Saudi Arabia is one of the United States’ largest and most important trading partners in the Middle East and the destination for more than $10 billion in investment across a range of business sectors.
Yet, manufacturers are urging the administration and others to raise outstanding commercial issues they face in Saudi Arabia that undermine that partnership and send the wrong signals about Saudi Arabia’s investment environment. Recent decisions by the Saudi Food and Drug Authority to promote local pharmaceutical manufacturing at the expense of U.S. products, for example, undermine Saudi Arabia’s attempts to promote innovation and transform its economy and raise questions about their compliance with both Saudi law and Saudi Arabia’s obligations under the World Trade Organization—questions that are important to a broad range of manufacturers, not just impacted industries.
Manufacturers also face other challenges in Saudi Arabia that directly impact manufacturing exports, such as problematic technical rules in areas from food to product testing as well as revised Saudi regulations that effectively exclude many international standards developed in the United States.
Removing these barriers and recommitting to a pro-business, pro-innovation investment environment must be a priority for these discussions. Manufacturers urge the crown prince and other members of his delegation to work within senior levels of their government to address these concerns and avoid similar steps in the future. These steps are an important part of affirming Saudi Arabia’s continued partnership with the United States.
Manufacturers in the United States depend on strong intellectual property (IP) protections at home and abroad that allow them to create new products, grow their businesses and thrive in the global economy. That was the core message delivered by the National Association of Manufacturers (NAM) yesterday in its detailed submission to the Office of the U.S. Trade Representative (USTR) about the need for government action to protect U.S. IP rights.
In his January 30 State of the Union address, President Donald Trump underscored the strategic importance of strong IP for manufacturers, noting that his administration “will protect American workers and American intellectual property, through strong enforcement of our trade rules.” Indeed, innovative manufacturing faces growing challenges, including increased global infringement of IP, including patents, trade secrets, trademarks and copyrights, in markets like China and India. These attacks on IP directly hurt the ability of manufacturers in the United States to innovate and create well-paying jobs.
The NAM’s submission for USTR’s Special 301 report identified IP problems in nearly 50 foreign countries and highlighted cross-industry trends that are harming manufacturers and jobs in the United States. These trends include problematic attacks on IP rights in international organizations and forums, increasing challenges to the legitimate use of patents and trademarks, weak trade secrets protection in key markets and rampant counterfeiting and piracy around the world.
The NAM spotlighted a group of 10 countries with major issues, asking the USTR to prioritize and designate them for priority action. Many of these countries, including China, India, Indonesia, Colombia and Russia, have long been in the NAM’s top-five countries of concern. This year’s report elevates the level of concern for Canada, due both to new negative developments impacting innovative manufacturers and to the lack of progress towards a strong, enforceable IP chapter in the North American Free Trade Agreement negotiations.
The NAM’s submission—and request to testify during the Special 301 Subcommittee’s February 28 hearing—will inform USTR’s Special 301 report, slated for release in April. In that report, the USTR will identify actions taken by other countries that deny adequate and effective IP protection and enforcement and cite particular countries for follow-up action.
Innovative manufacturing is central to the American success story, with IP serving as core assets that drive competitiveness of our manufacturing base. Manufacturers across the country call on the U.S. government to use every tool in the toolbox to promote strong IP protections. These include not only strong, enforceable IP protections in trade agreements but also active use of bilateral negotiations and a strategic, results-oriented use of domestic enforcement authorities consistent with the international rules-based trading system. U.S. government agencies must also actively engage with like-minded allies and international platforms and operate creative training programs with foreign governments to cultivate other pro-IP voices.
Given the scope of the barriers they face abroad, and the activity of foreign governments and actors, manufacturers in the United States demand nothing less than the full toolbox of actions to open new markets and break down barriers.
According to the World Bank’s recent Doing Business report, India jumped 30 spots from last year and now ranks 100 out of 190 countries. Manufacturers in the United States are pleased to see improvements to India’s business environment as a sign of progress, but their day-to-day experience in India shows there is still much work to be done to improve India’s trade and investment environment. Such work needs to cut through the red tape that often faces manufacturers in the United States trying to succeed in India.
The Doing Business report is based on quantitative indicators related to how easy or challenging it is for companies to start and operate a business in India. These include policies and practices related to areas such as starting a business, dealing with construction and other government permits, obtaining critical business inputs ranging from credits to electricity, protecting contracts and investors, paying taxes and resolving insolvency.
To be clear, India’s jump in the rankings reflects improvements in various areas. Most of these steps primarily benefit domestic Indian entrepreneurs and businesses, but these moves did include some changes that have a direct impact on manufacturers in the United States. India’s biggest jumps this year fall in a few specific areas: “getting credit,” “resolving insolvency,” “protecting minority investors” and “paying taxes.” These jumps can largely be traced to two high-level reforms over the past year: the passage of India’s Bankruptcy Law and ongoing efforts to reform India’s complicated tax system with the passage of the goods and services tax.
Both improvements have a broad enough impact on the commercial environment that they were listed among improvements in a recent letter to United States Trade Representative Robert Lighthizer from business groups, such as the Alliance for Fair Trade with India, stating that “U.S. businesses have seen small positive steps in the right direction, including foreign investment openings in a few sectors, fossil fuel and energy-efficiency policy initiatives, efforts to address infrastructure project permitting and licensing challenges and passage of legislation related to bankruptcy and tax reforms.”
While manufacturers welcome these changes, India must step up its efforts to accomplish Indian Prime Minister Narendra Modi’s repeatedly stated goal of reaching the report’s top 50. India still trails countries such as the Dominican Republic, Tunisia and Guatemala in the current rankings. Despite progress, India still ranks toward the bottom of the report in areas such as “starting a business” (156), “dealing with construction permits” (181), “registering property” (154), “trading across borders” (146) and “enforcing contracts” (164). Moreover, India fell in the rankings for some of these areas, including cross-border trade, property registration and business start-up. Many of these areas, particularly cross-border trade and enforcing contracts, rank among the most troublesome areas for manufacturers from the United States.
In addition to the focused business indicators listed in the report, manufacturers in the United States still face a wide array of longstanding and new trade barriers in India that make it extremely difficult to do business and undermine India’s efforts to rebrand itself to attract trade and investment. These trade barriers prevent fair access to its markets and ultimately stunt innovation and economic opportunities for both U.S. and Indian manufacturers. Examples of issues include new price controls on innovative medical devices and agriculture products, a series of forced localization policies across high-value industries and ineffective protection of patents, copyrights and trade secrets.
India’s efforts to climb the rankings of the Doing Business report must be applauded, but it clearly still lags behind most large economies, and even other emerging economies, such as China, in terms of its business climate. To boost foreign direct investment and truly position India as a leader in trade and innovation, Prime Minister Modi must take this jump in the rankings not as a victory lap, but as a reason to accelerate reforms and concrete actions to eliminate trade and investment barriers preventing manufacturers in the United States from investing and operating in India.
Innovative manufacturers in the United States welcomed positive news out of Canada on the eve of national holidays in both countries: the Supreme Court of Canada struck down an intellectual property approach that had stymied innovation and investment. Such inventiveness, secured by intellectual property, remains fundamental to the competitiveness of modern manufacturing in the United States and the millions of American jobs it supports.
Canada’s troubling “promise doctrine” originated from the fallacy that patents that do not fulfill their “promise”—as arbitrarily construed by the courts, often years after the patent was filed—are invalid, even if they meet internationally accepted criteria for patentability. Canadian courts began freely applying the rule in 2005 and have since revoked 26 patents, intended to help millions suffering from cancer, osteoporosis, diabetic nerve pain and other serious conditions.
In a unanimous decision, Canada’s highest court concluded that the “application of the promise doctrine” fails to determine the utility of patents and is “incongruent” with both the words and the approach of Canada’s Patent Act. This decision affirms the need for Canada and other countries to align their intellectual property policies and practices with global norms.
At a time when Canada and the United States are preparing for modernizing negotiations within the North American Free Trade Agreement, developments like this resolve remaining barriers that encumber North American manufacturers. The Supreme Court of Canada’s decision supports stronger bilateral ties, investment and innovation in Canada and good, high-paying jobs for innovative American manufacturers.
The Office of the U.S. Trade Representative (USTR) focused attention on the significant challenges that manufacturers in the United States face around the world in protecting their intellectual property (IP) today with the release of this year’s Special 301 report. IP protection is a top issue for manufacturers in the United States: innovation drives U.S. global leadership and high-paying jobs in manufacturing. Foreign governments and competitors, however, often seek to appropriate American IP or fail to protect it fully, endangering American jobs, innovation and competitiveness. Read More
Manufacturers thrive on technological change, integrating new and disruptive technologies in products and operations ranging from smart factories to autonomous vehicles, from Internet of Things platforms to biometrics. They know that innovation and emerging technologies play a critical role in promoting manufacturing growth and investment, allowing them to maintain their competitive edge in a challenging global marketplace and support high-paying jobs in the United States. Read More
The National Association of Manufacturers (NAM) yesterday urged the U.S. government to boost its efforts to protect U.S. manufacturing innovation against the threat of intellectual property (IP) theft globally in a detailed submission to the Office of the U.S. Trade Representative (USTR). Innovation and IP remains the foundation for a globally competitive manufacturing sector in the United States. Yet, global infringement of IP, including patents, trade secrets, trademarks and copyrights, hurts the ability of manufacturers in the United States to not only innovate but also to sustain and create well-paying jobs. The NAM looks forward to working closely with the Trump administration on stepped-up and vigorous efforts to combat IP theft and to protect and secure strong enforcement of IP rights both at home and abroad. Read More