Innovation, Investment—Not Market Access Barriers—Must Be Pillars for U.S.–Saudi Relationship

By | General, Shopfloor Policy, Trade | No Comments

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.

EPA Clears the Way for Cleaner Equipment at Manufacturing Facilities

By | General, Shopfloor Policy | No Comments

This morning, Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a guidance memorandum fixing ambiguities in the air permitting process that have thwarted manufacturers from installing cleaner equipment. Today’s action clarifies how to properly account for project emissions under step 1 of New Source Review (NSR), a federal air permitting program under the Clean Air Act that applies to new facilities or major modifications to facilities. Until today, the EPA would allow only consideration of emissions increases when determining whether NSR applies, even for projects that had a net emissions decrease because old equipment was being upgraded to new equipment.

As the National Association of Manufacturers (NAM) told the Senate in testimony last fall:

An NAM member company manufactures gas turbine upgrade technology that could improve the vast majority of in-service gas turbines by 2.6 percent and reduce their total CO2 emissions per MWh by 6.5 percent; however, many manufacturers are choosing not to install this equipment simply because it triggers NSR. The same can be said for steam turbine upgrades, which would ensure higher grid efficiency, lower emissions and reduced wear and tear that is occurring from a rapidly changing electric grid.

There is no good reason for the permitting process to create unnecessary obstacles for a manufacturer that wants to make efficiency upgrades or install modern pollution control equipment. In fact, manufacturers have been leaders in this space, working to successfully reduce emissions while adding to the overall economy. The NAM has made NSR a priority in its regulatory reform filings with the EPA and the White House. It’s clear that Administrator Pruitt agrees and is committed to fixing the permitting process for manufacturers.

NAM: U.S. Must Step Up Efforts to Protect Innovation as “Lifeblood” of Manufacturing

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Manufacturers large and small are facing growing threats around the world to their intellectual property (IP) and need stronger, smarter U.S. government actions to protect it. Speaking today to an interagency U.S. government panel focused on global IP challenges, the National Association of Manufacturers (NAM) stressed that IP remains the lifeblood for American manufacturers and is fundamental to U.S. manufacturing, economic growth and high-paying, high-skill jobs.

Today’s public hearing was convened by the Special 301 subcommittee as part of the Office of the U.S. Trade Representative’s (USTR) formal process for drafting its Special 301 report. The hearing follows the NAM’s February 6 detailed written submission that highlighted challenges facing manufacturers in nearly 50 countries around the world. The USTR’s final report, slated for release next month, will identify actions taken by other countries that deny adequate and effective IP protection and enforcement. Notably, the report classifies countries into different categories based on the level of U.S. concern with their IP practices, triggering follow-up dialogue and action with specific countries.

In a statement today, NAM Director of International Business Policy Ryan Ong stated, “Innovation and intellectual property (IP) are crucial to that [U.S. economic] success, and the foundation of a globally competitive manufacturing base… These strong [IP] protections are critical for manufacturers of all sizes, but particularly for small and medium-sized manufacturers, for whom the cost and complexity of defending their IP rights around the world can be prohibitively high.”

“Unsurprisingly, manufacturers face challenges in foreign markets from governments that flout international rules and restrict effective protection and enforcement for U.S. IP through their policies and activities,” Ong added. He highlighted specific cross-cutting issues impacting manufacturers around the world, including:

  • Increasing attempts to weaken the global IP framework through specific activities and initiatives in international organizations and forums;
  • New threats from countries seeking to undermine patent protections that support strong U.S. exports of innovative products;
  • Growing infringement of trade secrets and business confidential information, caused by weak trade secrets regimes and increasingly sophisticated infringers using both physical and electronic means; and
  • Growing counterfeiting and piracy in markets around the world.

Ong called upon the U.S. government to “make strategic use of all available options to promote and protect innovative American manufacturing.” These options must include strong, enforceable IP protections in trade negotiations, such as the North American Free Trade Agreement (NAFTA) and other bilateral dialogues. The United States must make strategic, results-oriented use of domestic tools, such as Special 301 and the Trade Facilitation and Trade Enforcement Act as well as World Trade Organization enforcement proceedings. Moreover, U.S. government agencies must also promote a pro-IP message in regional and multilateral forums, 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 strategic importance on strong IP protections voiced by President Donald Trump and members of his administration, manufacturers across the country call on the U.S. government to promote strong IP protections. Our manufacturing competitiveness depends on efforts by the U.S. government and the industry to use all available tools to open new markets and break down barriers, thus growing high-paying jobs in innovative manufacturing that we all want to see.

Manufacturers Unite with Retail, Labor and More to Call for Infrastructure Bill

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The National Association of Manufacturers (NAM), in partnership with the Associated General Contractors of America (AGC), led two Infrastructure Working Group (IWG) Hill Days on March 6 and 7 to build momentum on Capitol Hill behind a substantial investment in the country’s infrastructure. Over the past two days, representatives of manufacturers, organized labor, agriculture, retail, finance and local government held roughly 50 meetings with congressional leadership and members from the relevant authorizing committees. Some flew into D.C. from as far away as Texas and Iowa to make the case for upgrades to our nation’s infrastructure systems.

NAM President and CEO Jay Timmons and AGC CEO Stephen Sandherr authored an op-ed in The Hill, Manufacturing and construction are expanding and ready to take on infrastructure package. They said:

“In other words, if we want to keep the momentum going, then Washington needs to enact a substantial infrastructure package as soon as possible. It’s an important message and one we’re taking to Capitol Hill today as part of the Infrastructure Working Group, bringing together a wide range of viewpoints, from labor, to retail, to finance, to agriculture. We are united in our determination to demonstrate broad support for infrastructure and see the type of action we think is necessary.”

The IWG has been meeting monthly for the past year, hearing from key policymakers in Congress and the White House and discussing solutions to address our country’s inadequately funded infrastructure. The group launched its first advocacy initiatives this year. At the beginning of this year’s congressional session, the NAM led an IWG letter signed by more than 100 business groups to the Republican and Democrat leaders in the House and Senate, urging them to develop and advance an infrastructure bill. These Hill Days brought that message directly to key members of the House and Senate.

There’s no doubt we need a substantial infrastructure investment. Republicans and Democrats both recognize that America’s economic competitiveness depends on first-rate infrastructure systems. Key manufacturing, retail and labor leaders made the following statements of support below:

David Farr, NAM Board Chair, Chairman and CEO, Emerson

“The time is now to work together to pass a targeted, substantial investment in modernizing our nation’s infrastructure that includes a more reliable, user-based funding stream to keep building roads, bridges, transit systems and highways far into the future. We can create more jobs, boost growth, save lives and help secure America’s mantle of economic leadership in the process. Manufacturers are all in to get infrastructure done, and we stand ready to do our part and build to win.”

Sean McGarvey, President, North America’s Building Trades Unions

“The Infrastructure Working Group Hill Days will allow congressional leaders, both Republicans and Democrats, to hear from a broad and sizable coalition of stakeholders on the importance of investing in our nation’s infrastructure. The state of our infrastructure presents a real challengethe 14 affiliated unions of North America’s Building Trades know it, and the American people know it. It is now up to Congress to meet this challenge with a broad, robust, responsible bipartisan infrastructure package, and we are willing to work with our coalition partners and members of Congress to pass a bill that addresses our present infrastructure challenges and creates good job opportunities for the hard-working craft professionals of North America’s Building Trades Unions.”

Matthew Shay, President and CEO, National Retail Federation

“Representing some of the nation’s largest shippers, NRF continues to call on Congress to follow the president’s lead and act on infrastructure this year. If we keep kicking the can down the road, this urgent issue will become even more challenging and costly to address. We hope bipartisan discussions will produce the infrastructure solutions American retailers, workers and consumers have been waiting for.”

The NAM has been a national leader for years on infrastructure and enshrined manufacturers priorities in our “Building to Win” proposal. Manufacturers will continue to lead this push for results and work with lawmakers so that a bipartisan infrastructure investment makes it to the finish line.

Association Health Plans: Expanding Health Coverage, Reducing Health Costs

By | General, Regulations, Shopfloor Policy, Small Business | No Comments

For more than a decade, the National Association of Manufacturers (NAM) has supported efforts to increase small businesses’ health insurance options through what are known as Association Health Plans (AHPs), and today we officially filed comments with the Department of Labor that again underline that support. What’s an AHP? At its core, an AHP essentially enables associations and groups to band together to provide health insurance to member employers and employees. Given the increased purchasing power and wider insurance pool that comes from banding together, AHPs often offer the potential of better care and lower costs. It’s a great idea for small businesses and employees alike and, thanks to a wide-ranging executive order President Donald Trump signed in October promoting more choice and competition in the health care market, small businesses and their employees may soon be able to take advantage of them.

Manufacturers have a proud tradition of providing health care to employees—in fact, nearly 100 percent of our member companies do so—which is why the NAM is eager to advance additional market-based policy changes that can expand coverage even further while reducing health care costs at the same time. AHPs offer an important pathway to get there, and we believe it is time to make this health care option more widely available to smaller manufacturers and their employees. We appreciate all of the efforts of President Trump, his Labor Department and Congress in moving us one step closer to making that vision a reality. We will continue to be a partner along the way, so more manufacturing employees can thrive, be healthy and share in their sector’s success.

Little Understood Government Process Could—if Congress Acts—Provide Tax Cuts for Individuals and Manufacturers

By | General, Shopfloor Policy, Taxation, Trade | No Comments

Though many don’t know it, Americans pay both directly or indirectly about $1 million a day in government-imposed import taxes on products not made or available in the United States, including everyday items like swim goggles, smartphone cases and pepperoncini. Why? It’s a long story, but it essentially comes down to the fact that the United States has a very old tariff code, and it has been nearly a decade since Congress has gotten around to addressing these unfair, out-of-date, distortive and anticompetitive taxes by passing the so-called Miscellaneous Tariff Bill (MTB). Thankfully, the U.S. House of Representatives passed an MTB bill, the Miscellaneous Tariff Bill Act of 2018, on January 16 by a margin of 402 to 0. Now, it is the Senate’s turn to approve the legislation. It must do so without delay.

Here’s some important background on the issue.

Back in 2016, Congress took a major step toward modernizing the way products are considered under the MTB with its near unanimous passage of the American Manufacturing Competitiveness Act of 2016 (AMCA). The AMCA established a regularized process for Congress to consider the elimination of individual import taxes for products not made or available in the United States—and a few key elements from that rigorous and thorough process follow below:

  • Detailed petition. Each request for tariff suspension required a detailed petition, identifying the product and providing information that it is not produced or available in sufficient quantities in the United States. A total of 2,524 petitions were filed and reviewed in this process. (An additional 638 petitions were filed but later withdrawn.)
  • Public review, with comments. All petitions were posted online and comments were requested from the public, at the start of the process, on whether the petition met statutory requirements under the AMCA, including that there were no objections from domestic manufacturers of similar products. More than 800 comments were submitted on the petitions filed in 2017.
  • Review of all petitions for eligibility. Each of the petitions was reviewed by the U.S. International Trade Commission (ITC) with input from the U.S. Department of Commerce, U.S. Customs Bureau Protection and other executive branch agencies to determine if each petition met all the eligibility criteria. Several reports were released to the public summarizing these findings. Overall, more than 27 percent (or 697 petitions) were rejected as not eligible, including for reasons of domestic availability, as discussed below.
  • Broad U.S. government review of domestic production and availability. As required by the statute, the U.S. government review did not just look at identical products, but also products that were “directly competitive” with the product to ensure that no domestic industry was producing a similar product that might prefer to keep the tariff in place. U.S. government officials reviewed not only the comments received but proactively reached out to industry sectoral groups and individual businesses to ask if the same or competing product was available domestically. Nearly 500 petitions, or nearly 20 percent of the total, were not recommended by the ITC for inclusion in MTB legislation due to objections by domestic producers.

After all that work and more than nine months of engagement with stakeholders, a final package of eligible products was sent in August to the House and Senate, which also reviewed the products (with the ability only to strike products, not add them to the package). That rigorous process has produced a final MTB with nearly 1,700 products eligible for tariff elimination or reductions. Notably, such tariff relief is not permanent, as it only lasts for three years in case there are domestic manufacturers that want to produce any of these products and might prefer the application of the tariff. These products include both inputs used by many manufacturers throughout the United States (more than 75 percent of the products are inputs, according to National Association of Manufacturers (NAM) analysis), and some final goods that will directly benefit consumers and purchasers, in a manner that is fully consistent with the AMCA.

  • As one example, certain U.S. imports of performance footwear face tariffs ranging from 20 to 37.5 percent, which add unnecessary costs to U.S. consumers and harm our manufacturers and workers. Such imported performance footwear products incorporate made-in-America components, such as the GORE-TEX® laminate that is manufactured in Cecil County, Maryland. GORE-TEX® laminate is exported, incorporated into performance footwear and ultimately returns to the United States. Tariff relief for such footwear products, which are included in the MTB package, would support American jobs and incentivize continued investments in technology such as GORE-TEX.®
  • As another example, Lasko Products LLC is the only U.S. manufacturer of electric pedestal and desktop fans sold at retailers across the United States, but Lasko pays import taxes on fan motors not manufactured in the United States, making it more difficult for the company to compete with fans imported from China. These fan motors are also included in the current MTB package.

As required by international trade rules, these tariff suspensions also apply to all goods entering the United States from all countries. To do otherwise would invite retaliation and higher costs or barriers for U.S. manufacturers exporting overseas.

So, a lot of hard work has gone into addressing this issue, but we are not yet past the finish line. The NAM and manufacturers and other businesses across the United States are doubling-down to urge final congressional passage of the Miscellaneous Tariff Bill Act of 2018 as soon as possible so we can eliminate unnecessary taxes on families and manufacturers. Based on NAM analyses, the Miscellaneous Tariff Bill Act of 2018 would eliminate unnecessary import tariffs of more than $1.1 billion over three years, helping both consumers and manufacturers, with an estimated boost to U.S. manufacturing output of $3.1 billion.

The House already acted last month, and it passed this bill without a single vote in opposition. We are now urging the Senate to demonstrate its strong bipartisan support for the MTB by moving quickly to approve this important legislation.

Congress Sees the Importance of Addressing ACA Taxes Now, Not Later

By | Health Care, Shopfloor Main, Shopfloor Policy, Taxation | No Comments

When it comes to Obamacare (i.e., the Affordable Care Act, or ACA), Democrats and Republicans haven’t found much to agree upon. That’s why it was particularly notable when bipartisan consensus emerged last year around the need to do something about some of the law’s worst taxes: the medical device tax, the health insurance tax (or “HIT”) and the so-called “Cadillac” tax, which is a 40 percent tax increase on “high-quality” health benefit plans. Members in both parties said they believed these taxes at least needed to be delayed from their planned implementation dates, which is why it was so disappointing when legislation did not ultimately pass to do so. The good news is that Congress can still take action on the issue in the upcoming short-term government-funding bill, or CR, that the House plans to consider this week. Congressional passage would take a step in the right direction by allowing the implementation of these taxes to be delayed at various times.

The medical device tax, the HIT and the Cadillac tax were not designed to last due to their burdens, high cost and complexity. That’s why manufacturers have repeatedly urged Congress for much-needed relief from these job-killing taxes. A recent letter to House and Senate leaders can be found here. Unfortunately, the medical device tax and the HIT went into effect this year but the pressure to delay them did not let up. For the medical device tax, the first collection of the 2.3 percent tax comes later this month. Also, the HIT comes online in the form of higher health insurance premiums totaling $22 billion for more than 100 million Americans nationwide. Manufacturers are already planning for the 2020 Cadillac tax, with implementation beginning this year.

Manufacturers need certainty to negotiate health plans with affordable premium costs and best-in-class benefits for our employees. Ultimately, that means these taxes need to be repealed entirely. Members in both parties agree. We’ll continue pushing to get that result. But the CR that the House is prepared to vote on this week offers an important solution in the interim. While not a long-term solution for manufacturers or their employees, it is progress that the National Association of Manufacturers welcomes. We hope the House and Senate will pass this delay and continue working with us on a long-term solution.