Improved Trade Policies Will Foster Indian Innovation and Opportunity

While there are many variables that factor into a country’s development, the ability for businesses and individuals to innovate is key to empowering economic growth and fostering opportunity. When countries like India embrace innovation, they can create new jobs, expand trade opportunities and strengthen international relations.

There is reason to hope that the government of newly elected Prime Minister Narendra Modi will improve the India’s innovation environment and reverse a worrying downward trend in the protection and enforcement of intellectual property rights. Case in point, India was ranked 76th in the annual Global Innovation Index (GII) Survey published earlier this week by Cornell University, INSEAD, and the World Intellectual Property Organisation. With a drop of 10 spots from last year, India was the worst performer among the BRICS nations and the only BRICS member that did not improve its position from last year.

Part of this drop in rankings is the result of protectionist policies that undermine international trade norms and unfairly prop up domestic markets by closing off markets to foreign competition. For example, India has implemented retail investment caps that require stores to purchase from Indian producers as well as domestic manufacturing requirements that mandate certain materials be manufactured within India. As a result of these harmful policies, this is the fourth consecutive year that India has dropped in the GII rankings.

Ultimately, these policies create barriers to cutting edge technologies and harm domestic companies by restricting innovators’ access to next generation technologies. Rather than creating false protections for domestic producers at its own economic expense, India should incentivize ingenuity and entrepreneurship by implementing policies that reward the invention and creativity of its citizens.

Manufacturers hope the Indian government will continue on a path toward productive trade negotiations that will ultimately lead to policies that incentivize innovation and foster creativity. We are ready to work with Indian businesses to share best practices and improve operations to grow economic opportunity and create jobs in both of our nations.

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Investment Is Critical to an Ambitious and Successful T-TIP

As the United States and EU meet this week in Brussels to continue the Transatlantic Trade and Partnership (T-TIP) talks, U.S. and EU officials are not engaged in any formal discussion on the biggest economic driver of the transatlantic partnership – cross-border investment. Cross-border investment tops $4 trillion between the United States and the EU, making it the largest investment partnership in the world.

The EU had asked to put T-TIP investment talks on hold while it reviews the input it had requested and received from its investment public consultation, which closed on July 13.

On July 7, the NAM submitted detailed comments regarding the investment provisions in the T-TIP, Investment emphasizing that:

  • Investment is a critical driver of economic growth and jobs in both the United States and EU, and in third countries around the world.
  • The United States and EU have an important opportunity to set high standards for the protection of property and investment through the T-TIP that reflect our own core principles and help influence investment instruments being negotiated around the world.
  •  The investment treaties and experience of EU member states and the United States has been highly positive, reinforcing basic rule of law standards with our international partners.
  • While a lot of critiques have been made, the facts are very clear. U.S. and EU investment instruments are not a threat to good  government; in fact, they promote it and promote growth and jobs as well.

The United States and EU members states have long negotiated provisions recognizing core principles of their own legal systems – the protection of private property, fairness, non-discrimination and an independent and neutral venue for the resolution of disputes. The NAM and many organizations representing businesses that create millions of jobs on both sides of the Atlantic are strongly urging the EU and the United States to include high-standard investment access and protections, backed up by investor-state dispute settlement, in the final T-TIP.

While the U.S.-EU investment relationship is vibrant, that relationship will benefit from common rules and disciplines, similar to the way that the extensive trade in goods and services will also benefit from trade-agreement provisions. Including a strong investment chapter will create greater confidence and opportunities between the United States and EU, and also set an important example of the type of standards that the EU and its stakeholders hope to achieve with major economies around the world.

As negotiators begin planning the next T-TIP round, the NAM is expecting investment to be back on the table so that the United States and EU can realize the ambitious T-TIP that they began just a year ago.

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On MTB, the Time for Talk has Expired; Manufacturers Need Action NOW

A year ago today, House Ways and Means Chairman Dave Camp (R-MI) introduced Miscellaneous Tariff Bill (MTB) legislation, H.R. 2708, along with his colleagues, Representatives Sander Levin (D-MI), Devin Nunes (R-CA), and Charles Rangel (D-NY). Unfortunately, the House has not taken any further action on MTB legislation and neither has the Senate.

It has been 562 days since the 2010-passed MTB expired and manufacturers have been calling on Congress to extend it ever since. It is long past due time that both chambers of Congress act on critical MTB legislation. As a result of Congressional inaction on an MTB package, manufacturers in America have been facing higher taxes that substantially increase their production costs and concretely threaten their competitiveness as well as their ability to retain and create new manufacturing jobs for American workers.

While some members of Congress provide explanations as to their inaction, there is no excuse. The MTB passed in 2010 enjoyed broad bipartisan support and sailed through the House by a vote of 378-43 and the Senate by unanimous consent. If both chambers acted on this crucial jobs legislation today, we would expect a similar show of support from both sides of the aisle.

In response to inside-the-beltway concerns that MTB provisions resemble earmarks, even stalwart conservatives like Grover Norquist, President of Americans for Tax Reform, has emphasized the importance of passing the MTB, saying that MTB measures “are not spending bills; they are tax cuts, period….While earmarks favor only a special few, the tariff-cuts benefit wide swaths of American industry and help create U.S. jobs and economic growth.” Mr. Norquist aptly points out that, without Congressional action, “the United States is applying a tax that only makes it harder for American companies to compete with their foreign competitors – and harder for them to create or even maintain existing jobs and economic growth.”

Job creators like PING, Bayer, BASF, and Lasko Products cannot afford to wait any longer for this cost-cutting legislation to be enacted.  If Congress is serious about supporting manufacturing in the United States, they will move MTB legislation without further delay.

Members of Congress can call the MTB whatever they like, but for manufacturers, it is nothing less than a jobs bill and it is time that Congress act on it now to support American manufacturers and workers.

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Manufacturers Welcome Renewed U.S.-India Dialogue, Urge Concrete Results

Regular engagement on both common priorities and bilateral disputes is essential to build and sustain trust and constructive ties between any two countries, and that’s certainly true for the sometimes troubled relationship between India and the United States.

As NAM President and CEO Jay Timmons remarked at a recent event co-hosted by the Weekly Standard, “India and the United States won’t see eye to eye on every issue. That’s not unusual. It must, however, become normal in the U.S.–India relationship to talk about those differences and work through them, not avoid or ignore them.”

That’s why NAM was so pleased to see trade representatives from the United States visiting India this week to prepare for a meeting of the U.S.-India Trade Policy Forum, which has not met since 2010. These talks follow a high profile meeting between Indian Prime Minister Narendra Modi and U.S. Deputy Secretary of State William Burns and precede an expected meeting between President Obama and Prime Minister Modi in September.

There are reasons for optimism. Modi’s government is rightly focused on incentivizing foreign investment to drive growth, create jobs, cut government debt and improve the nation’s infrastructure. In his recent budget speech, Indian Finance Minister Arun Jaitley proposed raising foreign investment caps for defense and insurance to 49 percent and charted a better way forward on difficult tax matters.

Yet it remains to be seen how the Modi regime will deal with prohibitively high tariffs in the auto and textiles sectors and with forced localization policies imposed by the last government that are blocking trade in telecommunications solar power generation equipment. Recent decisions to deny patents and uphold compulsory licensing of cancer medications have the troubling look and feel of business as usual.

Resumption of long-dormant dialogues is an important and long-overdue step in the right direction. But for this partnership to succeed, both the United States and India must not only engage constructively, but also deliver concrete progress and real results toward a more open business climate that promotes competitiveness and values innovation.

With progress and results, manufacturers can contribute importantly to India’s policy goals and to a fresh start for the bilateral commercial partnership. We will be watching to see whether promising talk and early steps achieve outcomes that can grow businesses and jobs in both countries.

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Global Manufacturing Economic Update – July 11, 2014

Here is the summary for this month’s Global Manufacturing Economic Update: 

The global economy improved slightly in June, showing some signs of stabilization from weaknesses in prior months. The J.P. Morgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 52.1 in May to 52.7 in June, its fastest pace since February. Various measures of activity were mostly higher, including new orders, production and employment. Behind this figure, the data also reflected economic progress in countries such as China, Hong Kong and Japan, each of which shifted from a contraction in May to slight growth in June. As a result, just 2 of the top 10 markets for U.S.-manufactured goods had PMI values below 50 in June, an improvement from the five that registered contracting levels in May. Our largest trading partner’s values, the RBC Canadian Manufacturing PMI, increased from 52.2 to 53.5, reaching its highest point since December.

Europe dominated economic headlines on July 10, with worries about a large Portuguese bank and falling industrial production figures for France (down 1.7 percent), Germany (down 1.8 percent) and Italy (down 1.2 percent). Indeed, European growth has continued to ease, with the Markit European Manufacturing PMI down from 52.2 to 51.8. On the positive side, manufacturing activity has now expanded for 12 straight months, but the economy in the Eurozone remains subpar overall. Real GDP was up just 0.2 percent in the first quarter and is expected to increase around 1 percent in 2014 as a whole. Still, growth varied widely from country to country. France sits on one end of the spectrum, with manufacturing sentiment worsening and falling to a six-month low. Meanwhile, Ireland and Spain experienced multiyear highs for sales growth, and new orders in the United Kingdom expanded rather robustly (up from 59.5 to 61.0).

In the emerging markets, manufacturers in Brazil, Russia, South Korea and Turkey reported contracting levels of activity in June, although Russian production grew for the first time in six months and South Korean exports began to stabilize. Overall, however, manufacturing activity in the emerging markets expanded for the second straight month, spurred higher by better news in some Asian economies. Stronger sales and output resulted in increased manufacturing PMI data for China, India, Indonesia and Taiwan. India also benefited from greater export growth. Next week, we will get new data on Chinese GDP, industrial production, fixed-asset investment and retail sales. Real GDP is expected to pick up slightly, from the 7.4 percent annualized growth rate experienced in the first quarter, with a consensus estimate of around 7.5 percent. While this is a marginal improvement, it also continues to reflect decelerating rates of growth from what was experienced in the past.

Looking at U.S. trade flows, petroleum helped to narrow the U.S. trade deficit in May, with more exports and fewer imports improving the headline figure. This continues a trend seen over the past few years whereby improved energy production in the United States has slightly helped balance the trade picture. Outside of petroleum, the numbers were less favorable. The average monthly deficit so far in 2014 reached $43.65 billion, higher than the $39.70 billion average for all of 2013. In addition, U.S.-manufactured goods exports continue to grow at a disappointing rate, up just 0.5 percent year-to-date versus this time last year using non-seasonally adjusted data. Nonetheless, exports of manufactured goods increased to all five of our largest trading partners through the first five months of this year: Canada, Mexico, China, Japan and Germany. That is an encouraging sign, even if we would like to see faster growth in our international sales overall.

On the policy front, the congressional debate on reauthorization of the Export-Import (Ex-Im) Bank continues to move forward, while action on other trade legislation is currently stalled. The World Trade Organization (WTO) officially began environmental goods negotiations, while both the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) continue. The U.S. trading relationship with key partners, including India, China and Russia, continues to be a focus.

Chad Moutray is the chief economist, National Association of Manufacturers. 

china pmi - jul2014

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Manufacturers Urge Effective Measures to Restore Stability in Ukraine

Today, the Senate Committee on Foreign Relations held a hearing on ‘Russia and Developments in Ukraine.’ During the hearing, Senators from both sides of the aisle expressed concern over the escalating situation in Ukraine. Manufacturers agree, and we remain deeply concerned over the ongoing tensions between Russia and Ukraine. We continue to support the Administration’s efforts to pursue multilateral approaches that will effectively resolve this crisis. Just as in the international economic arena, countries must abide by and not flout longstanding and widely agreed international norms.

The NAM disagrees strongly, however, with those that propose that the United States go it alone and impose unilateral economic sanctions that would cut off U.S. commercial engagement with industry sectors in Russia. As recognized by Assistant Secretary of State Victoria Nuland and Assistant Secretary of the Treasury Daniel Glaser and Senators from both sides of the aisle at today’s hearing, unilateral sanctions are far less effective because foreign companies can quickly backfill. As a result unilateral sanctions result in highly negative costs to American industry and the American economy.

Time and again, U.S. unilateral economic sanctions have been shown to impose little, if any, cost on the targeted country, while disproportionately harming U.S. industry and workers. These negative commercial effects usually continue for years, if not decades. For these reasons, the NAM has long opposed unilateral sanctions and continues to do so today. While some Senators talked about the urgency of action, action that does not increase stability in the region or promote a resolution of this conflict is not action worth taking.

As the United States continues its work, we all must also recognize that our international partners have an obligation to step up and work jointly with the United States to develop the type of multilateral approach that will be effective. The longstanding bipartisan and business consensus for multilateral approaches calibrated to resolve this crisis must remain strong.

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NAM Supports Official Launch of Environmental Goods Agreement Talks in Geneva

I was pleased to attend yesterday’s official launch of the Environmental Goods Agreement (EGA) negotiations at the World Trade Organization (WTO) here in Geneva. USTR and their thirteen negotiating counterparts – Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland, and Chinese Taipei – kicked off the first round of talks during a press event. Manufacturers welcome these efforts to build on the progress already achieved by the APEC forum in 2011 to eliminate and reduce tariffs on green goods.

The Coalition for Green Trade, co-chaired by the NAM, National Foreign Trade Council (NFTC) and U.S. Council for International Business (USCIB), was launched this week and released a global sign-on letter by a broad range of international industry associations in support of the EGA talks.

The NAM believes that, in order to address and eliminate trade barriers, the United States must leverage all available tools by securing ambitious, high-standard commitments in ongoing trade agreement negotiations – including in the WTO EGA negotiations. On behalf of our nearly 13,000 member companies, the NAM strongly supports the negotiation of a high-standard, ambitious EGA that significantly reduces and eliminates tariffs on a wide range of green goods and technologies.

With global tariffs on environmental products as high as 35 percent in some nations, a significant reduction or elimination of these trade barriers will have a substantial, positive impact on manufacturers in the United States who develop and produce goods aimed at solving environmental challenges, enhancing their ability to decrease the cost of their products to consumers both inside and outside the United States, thereby, growing sales and creating new manufacturing jobs. A strong EGA will have other significant benefits, as well, from improving access to important green and energy efficient technologies for businesses and consumers worldwide, to improving manufacturers’ ability to enhance their sustainability.

For manufacturers such as The Coca-Cola Company, the EGA represents a significant opportunity to eliminate tariffs on the environmentally sustainable goods they procure in their global supply chain.  As a company that operates in more than 200 countries around the world, their procurement system is committed to environmental sustainability.  A global trade agreement on “green goods” will allow The Coca-Cola Company and many others to build out supply chains that bring environmentally friendly technologies to markets and consumers that might not otherwise find them cost-effective. Three priorities in these negotiations for The Coca-Cola Company are: 1) systems that help to provide clean drinking water; 2) lower emission, more efficient refrigeration units; and, 3) plant-based PET plastics for their bottles.

The NAM supports APEC’s list of 54 environmental goods eligible for duty reduction or elimination; however, we believe that list is far too limited given the breadth and significant growth in this sector. Therefore, we believe it is critical that these negotiations substantially broaden the list of goods eligible for tariff liberalization across a broad range of industries whose products improve energy efficiency, sustainability and serve other environmental remediation purposes.

Yesterday the NAM is participating in two roundtable events with stakeholders to discuss shared goals and objectives for the EGA talks and to advocate for strong outcomes that will ultimately tear down barriers to trade and help manufacturers grow their exports. We are working closely with our industry counterparts from other participating nations, as well as with U.S. and foreign government officials to build a strong foundation of support for the EGA and to start early towards building critical mass for key elements of an ambitious agreement.

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Manufacturers Deeply Concerned With Situation In Ukraine

The NAM is deeply concerned about the rising tensions between Russia and Ukraine and supports the Administration’s efforts to pursue multilateral approaches that will effectively resolve this growing crisis. Just as in the international economic arena, countries must abide by and not flout longstanding and widely agreed international norms.

At the same time, the NAM remains concerned that we continue to hear active discussions that the United States may go it alone and impose unilateral sanctions that would cut off U.S. commercial engagement with industry sectors in Russia.

Unilateral sanctions have been tried before and have proven far less effective than other approaches. When the United States imposes unilateral economic sanctions, foreign industries quickly move in to fill the void in the wake of disengagement by U.S. industry. As a result, the pain imposed by such sanctions is much less, if at all, on the targeted country, but falls disproportionately on U.S. industry and workers. These effects usually continue for years, if not decades. For these reasons, the NAM has long opposed unilateral sanctions and continues to do so today.

In light of these concerns, the NAM has joined with the U.S. Chamber of Commerce in full-page ads that began running today in major newspapers stating our position.

In emphasizing these longstanding concerns, it is important for all to bear in mind that a U.S.-only approach is unlikely to increase security in the region or be effective in resolving this conflict.  Our international partners have an obligation to step up and work jointly with the United States to develop the type of effective and multilateral approach that is required. We believe that longstanding bipartisan and business consensus for multilateral approaches calibrated to resolve this crisis remains strong.

To view the NAM and Chamber ads, click here.

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Exporters for Ex-Im: Leveling the Playing Field for U.S. Businesses

For more than 145 years, The Babcock & Wilcox Company has been dedicated to developing and producing innovative energy products for the advancement of American industry and national security. In 1865, cofounder Stephen Wilcox patented the first water tube boiler. Forty years later B&W’s water tube boilers would be used to power Teddy Roosevelt’s Great White Fleet, circumnavigating the globe and demonstrating America’s naval prowess to the world.

Today, the company has expanded their expertise to include nuclear, renewable, waste-to-energy and fossil fuel fired power generation technologies and employs over 12,000 workers across the world. Headquartered in Charlotte, NC, B&W’s commitment to advancing clean power technologies is rivaled only by their dedication to ensuring these same technologies are helping to bolster and maintain our country’s national security.

Through the services of the Export-Import Bank (Ex-Im), the company has gained access to customers in various parts of the world where Ex-Im financing is necessary and where they might not have had the opportunity otherwise.  Just as it does for thousands of businesses each year, the services the Bank provides have helped to support the firm’s growth and bolstered its international presence.

Paul Scavuzzo, Vice President and General Manager of   Babcock & Wilcox Power Generation Group’s Global Power Division, believes the Bank is a critical component of job growth in the U.S.

“Bringing national finance to any power plant project is often a pre-condition to bid,” Scavuzzo said. “If there were no Ex-Im, we would effectively be excluded from many contests.”

“Reauthorization of the Ex-Im Bank is critical not just for saving jobs in the U.S., but for sustaining them. Additionally, B&W has been impacted by policy that restricts the Bank’s ability to finance new coal projects overseas,” he said. “Concurrent with reauthorization of the bank’s charter, we’d like to see easing of restrictions on financing for coal plants. This could be part of a bi-partisan compromise on reauthorization.”

Historically supported by both sides of the political aisle, the Bank is a fundamental driver of American business and ultimately supports our reviving economy. This past year, the Bank sent more than $1 billion in revenue to the U.S. Treasury.  As the U.S. economy continues to move toward a recovery, Scavuzzo says, “pro-business is an ideal that deserves bipartisan support. Members of Congress should find areas of agreement in preserving the Bank’s important mission while protecting American commerce.”

As foreign competition grows, the Bank’s services are leveling the playing field and enabling U.S. businesses to benefit from a growing export business. Supporting thousands of jobs at no cost to the tax-payer, the Ex-Im Bank is an important tool for companies of all sizes as they embark upon the global marketplace.

“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit

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Time is Up: Manufacturers Need Congress to Act on the MTB

Today dozens of manufacturers are on Capitol Hill delivering a message to lawmakers: pass the MTB. It’s been more than 530 days since the Miscellaneous Tariff Bill expired, resulting in a huge tax increase on manufacturers both large and small.

Congress’s failure to act has resulted in an unnecessary $748 million tax on manufacturing in the United States. As a result of Congressional inaction, not only have manufacturers’ costs jumped, but their competitiveness has also been damaged, threatening their ability to retain and create new jobs.

While the MTB enjoys broad bipartisan support in both chambers of Congress, it remains hamstrung by inside-the-beltway politics. Congress’s failure to act on this jobs bill couldn’t come at a worse time, as manufacturers struggle to regain their footing in a still-struggling economy.

The MTB is exactly the type of bill Congress needs to consider without delay; it cuts costs for America’s job creators and strengthens their competitiveness in a challenging global economy. Congress’s continued failure to act has added to manufacturers’ uncertainty and inability to plan for future investment and job creation.

Manufacturers will not give up until this critical jobs bill is enacted. We will continue telling Congress to act on the MTB now!

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