All Posts By

Linda Dempsey

Manufacturing workers using computer science to analyze data

In Geneva, As In Washington, Private-Sector Engagement Is Critical To Global Solutions

By | General | No Comments

Geneva is the nerve center for many multilateral organizations. It is home to an array of critical United Nations-related groups such as the World Health Organization, International Labour Organization, World Intellectual Property Organization, and World Trade Organization. These institutions play an important role in tackling many challenges at an international scale, pertaining to areas from global health and innovation to labor rights and advancing important initiatives such as the U.N.’s sustainable development goals.

Real, lasting progress towards these goals depends on broad approaches, innovative thinking, and inclusive strategies. The private sector has long supported a fair, stable, rules-based international system and effective international institutions. The private sector has already been a key partner in many of these efforts and continues to seek to work to collaborate on effective solutions to global challenges. With critical resources and expertise useful to both the development and the implementation of global initiatives, companies and business groups need to be part of the solution. As the complexity of these challenges increases, engagement and partnership between international organizations and the private sector will only grow in importance.

To this end, I am in Geneva this week leading an international business delegation that includes leading global businesses and associations from a variety of industries. We will be meeting with member state representatives from around the world to discuss public-private sector engagement and their missions’ leadership on international issues. We will also be engaging on issue priorities and ways to work more productively with key stakeholders, including international organizations, national governments, and others, towards more sustainable and inclusive efforts to address global issues.

While we will be discussing issues across multiple organizations, a major milestone of interest is the WHO’s upcoming World Health Assembly (WHA) taking place at the end of May. The WHO is an organization that has historically had many successes, notably thanks to proactive, inclusive mission-focused approaches to global health problems. For example, in the fight against polio, the WHO helped launch the Global Polio Eradication Initiative, a strong international public-private partnership whose actions have led to a 99.9 percent decrease in incidences of polio worldwide.

The timing is good, given the WHO’s current focus on reorganization and reform as well as the WHA’s packed agenda. Manufacturers in the United States support the common goal of a more effective, transparent and mission-focused WHO that is responsive to member state leadership and works towards consensus-based approaches to critical health challenges. The WHA agenda will provide another opportunity for the organization to work towards these solutions and to implement direction from its Director-General, Dr. Tedros Adhanom Ghebreyesus, to embrace public-private partnerships and inclusive, two-way dialogue with private sector groups in the development and implementation of public health initiatives.

On public health, as on an array of global challenges, manufacturers need to be at the table with their expertise to work with the WHO, national governments, and other stakeholders to find real solutions to pressing global issues and promote clear leadership in driving a sustainable agenda. Our Geneva mission trip is a key step in engaging those constructive voices that are looking for solutions.

 

Manufacturers in America Need a Modernized WTO

By | General, intellectual property, Shopfloor Policy, Trade | No Comments

Manufacturers and their workers across America depend on global commerce to grow U.S. production, provide innovative and high-value products to consumers at home and abroad and create well-paying jobs at home. Consider that nearly half of U.S. manufacturing production is exported and about six million manufacturing workers depend on U.S. manufactured goods exports for their jobs.

With international trade so important to health and growth of the U.S. manufacturing sector, it is no surprise that manufacturers have long relied on and been at the forefront of promoting a strong, respected and fair rules-based global trading system. Under the current system, embodied by the Geneva-based World Trade Organization, manufacturers in the United States have benefited broadly from the substantial reduction in tariffs and many other trade barriers in markets big and small around the world, as well as through the adoption and enforcement of stronger and fairer standards than existed before WTO was established in 1995.

Yet, the rules-based system is now at a crossroads. It has failed to deliver broad-based trade liberalization in more than 25 years, except in a few sectors, leaving substantial tariffs and other barriers in place. It has failed to update rules in important areas that are critical to a fair and fully-functioning global trading system, including on digital trade, state-led competition and other issues. Too often, countries ignore WTO requirements small and big and the dispute settlement system is overloaded and subject to serious levels of concern in the United States and elsewhere.

Manufacturers in the United States need a fully-functioning, trade-liberalizing WTO that is respected by all of its 164 members. That is why, this week, National Association of Manufacturers President and CEO Jay Timmons and I are in Geneva to meet with senior WTO officials. During our meetings, we will focus on the need for WTO reform and modernization across a number of critical areas, including negotiations, dispute settlement and full implementation of existing WTO commitments. 

It is also critical that the WTO serve as the central voice on trade policy issues and that it proactively engages with other organizations like the World Health Organization to prevent trade-harmful policy recommendations. The NAM formed the Engaging America’s Global Leadership (EAGL) Coalition to address just such issues.

There can be no question that the WTO system is in need of reform. Manufacturers are committed to being allies in that reform process. The NAM looks forward to working with stakeholders around the world on a constructive WTO modernization agenda to strengthen the WTO as an effective rules-based system that is respected by its members, provides appropriate and strong enforcement of its rules and moves forward trade liberalization broadly.

Why the NAM Urges the Senate to Get the Ex-Im Bank Back Up and Running

By | Shopfloor Main, Shopfloor Policy | No Comments

Securing a level playing field internationally is vital to manufacturers in the United States, which already export about half their production, supporting millions of workers across the country. While there’s been a lot of focus on foreign barriers that impede U.S. exports, one of the most concerning problems is of our own making: the Senate’s failure to confirm nominees to the Board of Directors of the U.S. Export-Import Bank. The U.S. Ex-Im Bank is a federal agency that provides loans and other tools to aid businesses in the U.S. seeking to export their products to foreign markets. Without these nominees, the Ex-Im Bank cannot even consider major deals over $10 million or even act on the reforms that Congress set out it when it last reauthorized the bank in 2015.

With the Ex-Im Bank severely weakened, manufacturers in the United States are losing sales to foreign competitors who are backed up by nearly 100 other export credit agencies around the world. Indeed, virtually every major country, from Canada to China and the UK to Ukraine, provides export financing tools that are being used to the detriment of manufacturers and workers in America. For example, China’s two Export Credit Agencies routinely help their companies out-muscle their U.S. rivals. Last year, China provided $45 billion in medium- and long-term investment support for projects around the world, more than the rest of the world combined.

While foreign countries are expanding their use of export credit, the United States has been essentially sitting on the sidelines since 2015, undermining U.S. manufacturing companies big and small and manufacturing workers across the nation. According to the National Association of Manufacturer’s estimates, manufacturers lost at least $119 billion in manufacturing output, translating into 80,000 fewer manufacturing jobs in 2016 and 2017 as a result of an inactive Bank.

This week, the NAM urgently called on the Senate leadership to come together in a bipartisan manner and vote to confirm well-qualified Ex-Im Board of Directors nominees that the Senate Banking Committee approved last week on a broad, bipartisan basis. That’s a positive step forward—and a sign that senators from both parties are ready to work together to get the Ex-Im Bank back up and running.  Now the full Senate must commit to the businesses and workers that rely on the Bank by confirming these nominees as soon as possible. The cost of inaction is already too great.

Annual Conference Highlights Bipartisan Support for Ex-Im Bank

By | General, Shopfloor Policy | No Comments

Over the past two days, leaders in business, policy and both political parties have joined together to discuss the importance of the Export-Import (Ex-Im) Bank at the EXIM Annual Conference 2018.

They heard from many keynote speakers like Secretary of Commerce Wilbur Ross, a Republican. Secretary Ross spoke on the importance of the Ex-Im Bank in helping U.S. small businesses sell more exports. He also warned how, without a functioning Ex-Im Bank, the United States would continue to cede jobs, growth and geopolitical power to China as Beijing expands in overseas markets at America’s expense. Another keynote speaker was Sen, Heidi Heitkamp, a Democrat. She agreed. “We have got to have the institution of the Ex-Im Bank up and running to be competitive,” Sen. Heitkamp said, noting that 82 other countries have a similar agency. Both Secretary Ross and Sen. Heitkamp, and the many other business and Hill voices, are absolutely right.

These latest bipartisan expressions of support for the Ex-Im Bank come on the heels of recent positive comments from policymakers as varied as Sen. Sherrod Brown (D-OH) and President Donald Trump, and they underline the critical role it plays for manufacturers in the United States—especially small manufacturers, given that more than 90 percent of the bank’s transactions in fiscal 2016 directly supported small businesses. The bank enables U.S. exporters to compete on a global scale for the 95 percent of consumers who are located outside our borders. In short, the Ex-Im Bank helps level the playing field for our businesses competing against foreign companies. But it cannot continue to level the playing field if it is not even allowed to function properly, which is the situation manufacturers face right now. Indeed, the bank lacks a quorum on its board of directors, and thus is unable to even consider many transactions much less support American jobs.

Manufacturers and the many Americans whose jobs depend on the Ex-Im Bank need the Senate to act to restore a quorum on the bank’s board of directors.  That’s what we have repeatedly urged. That’s what members of both parties understand and are echoing at this week’s conference. That’s what our country needs as soon as possible.

Small Manufacturing Leader Chuck Wetherington Testifies on State of Trade

By | General, Shopfloor Policy | No Comments

Today, the U.S. House Committee on Small Business heard from BTE Technologies President and NAM Executive Committee member Chuck Wetherington about how small business manufacturers like BTE can compete and succeed in markets around the world. Here were his key recommendations:

  • A positive outcome on NAFTA talks
  • Senate confirmation of the pending board nominees to return the Export-Import Bank to full functionality
  • More export promotion assistance programs

Wetherington—a leading voice for small manufacturers in America—also shared some of his own experiences competing overseas:

  • About how his company, which consistently focuses on expanding to new markets every two to four years, recently expanded to the Gulf Cooperation Council and saw its exports to those six Middle Eastern countries grow from virtually nothing to 20 percent of its exports in three years
  • About how he, having just returned from China—a country that recently undertook major overhauls to its medical device regulations but is rolling those updates out piecemeal and without any clear path to follow toward compliance—saw firsthand why regulatory harmonization needs to be an important part of U.S. trade strategy
  • About how BTE—like many other small business manufacturers—has benefited significantly from market-opening agreements like NAFTA and the U.S.–Korea Free Trade Agreement, with BTE alone seeing 130 percent growth in its exports to South Korea following ratification of our free trade agreement with that country.

Here’s his statement to the committee: https://smallbusiness.house.gov/uploadedfiles/4-11-18_wetherington_testimony.pdf

How Scott Garrett’s Nomination to Lead the Ex-Im Bank Is Already Putting Taxpayers at Risk

By | Economy, Shopfloor Main, Shopfloor Policy, Trade | No Comments

 

We already knew confirming Scott Garrett to lead the U.S. Export-Import (Ex-Im) Bank would be a terrible trade deal for American manufacturing workers. But now we’re learning even before he has had his nomination voted on in committee, Garrett is already causing problems for the agency and potentially putting taxpayers on the hook, too. As The Wall Street Journal reports today:

C.J. Hall, the government agency’s acting chairman, who is stepping down Saturday, said in an interview that the bank will likely become a drain on U.S. taxpayers next year if the Senate doesn’t act to fill its board, because it has stopped bringing in enough revenue through the fees it charges to guarantee financing deals for U.S. exporters.

The negative fiscal impact of not having a fully functioning Ex-Im Bank is deeply concerning and underscores why the agency cannot be led by someone like Garrett, who spent years trying to shut the bank down. The Wall Street Journal report also notes that Garrett currently does not have the votes to advance his nomination. So here’s the bottom line: Garrett’s toxicity is holding the confirmation process up and literally exposing taxpayers to increased federal deficits.

Given this fiscal reality and the apparent lack of votes to get Garrett’s nomination out of committee, it’s time for a new nominee to lead the Ex-Im Bank who believes in the agency’s mission and can rightfully earn senators’ support.

We need to have a stable, fully functioning Ex-Im Bank and the jobs and revenue that come along with it. A fully functioning Ex-Im Bank is good for manufacturers, good for workers and good for American global competitiveness. When fully functional, the Ex-Im Bank is a model agency that actually returns a surplus to the U.S. Treasury. As The Wall Street Journal notes:

The bank’s revenue comes primarily from its largest deals. If no such new deals are approved, the bank likely won’t be able to cover all of its expenses. Without a quorum, taxpayers also could lose out on about $492 million in surplus funds the bank projected it would otherwise send to Treasury.

That’s why the National Association of Manufacturers has steadfastly opposed Garrett’s nomination from the start and has also supported the president’s other four nominations to the Ex-Im Bank, who share the administration’s vigorous and outspoken support of American manufacturing workers and the agency.

Click here to learn more about Garrett’s reckless opposition to the Ex-Im Bank that has put manufacturing jobs in America at risk.

Why America and American Manufacturers Need a Pro-Investment and Pro-ISDS Enforcement Strategy

By | General, Shopfloor Policy | No Comments

Rules relating to investment overseas and the investor-state dispute settlement (ISDS) are back in the news. This morning, I had the opportunity to join several experts to explain some basics that seem to get lost in debate that seems to suggest that the sky will fall any day now:

1. Businesses invest at home and abroad to reach customers and participate in international projects. Most investment by U.S. companies is in fact domestic, helping companies reach customers here in the United States, the largest consumer market in the world. But 95 percent of the world’s consumers and more than 80 percent of global purchasing power is outside the United States. And that is why U.S. businesses invest not just here at home but in overseas markets to reach foreign customers. Indeed, investing close to your customers (as foreign companies do here in the United States) is often the best way to make a sale, including through activities to set up dedicated distribution networks and to tailor products to local consumer tastes.

In some areas, such as energy, natural resources or foreign infrastructure development, foreign investment is the primary way American manufacturers can participate and grow opportunities because that is where the resources and activities must take place.

The actual data collected by the Commerce Department’s Bureau of Economic Analysis confirms this basic, but often overlooked, fact: Year after year, decade after decade, the vast majority of sales by U.S. foreign affiliatesmore than 90 percentare made to foreign customers not returned to the United States.

2. The United States, its workers and businesses benefit enormously from U.S. investment overseas. U.S. companies that invest overseas are outsized participants in the U.S. economy and are stronger because of their access to foreign markets that help grow economies of scale and boost U.S. activity and wages here at home. The facts are clear. U.S. companies that invest overseas are America’s:

  • Largest exporters, exporting 47 percent of all U.S.-manufactured goods sold overseas ($660 billion in 2014);
  • Biggest producers, accounting for $1.363 trillion or nearly 65 percent of all U.S. private-sector value-added manufacturing output in 2014;
  • Most important innovators, expending nearly $269 billion on research and development in the United States in 2014 (of that, 68 percent (or $183 billion) was expended by manufacturers in the United States);
  • Largest investors in capital expansion, expending $713.5 billion or 24 percent of all investment in new property, plants and capital equipment in the United States in 2014; and
  • Highest-paying employers, paying U.S. manufacturing workers on average $96,030, or about 18 percent more than average U.S. manufacturing wages in 2014.

3. Having strong legal protections, backed up by ISDS, helps America win in a highly competitive global economy. For more than 30 years, U.S. administrations and Congress have strongly supported a pro-investment and pro-ISDS policy because it helps America, its businesses and its workers win. The investment rules—taken right out of the U.S. Constitution and other baseline U.S. laws for the protection of private property against discriminatory, unfair, expropriatory government action—set the basic rules to combat against foreign government market-distorting activities. For example, prohibitions on government forced localization measures and incentives (e.g., government mandates to buy local products or transfer technology in exchange for allowing an investment) help ensure that U.S. investment overseas can continue to support the growth of U.S. exports and jobs. And when governments violate these basic rules, ISDS is critical so that companies have access to a neutral venue to seek compensation.

4. The same anti-ISDS critiques have been leveled for decades, and the sky has not yet fallen. Those opposed to ISDS have been rehashing the same tired, false and discredited critiques for years, and they continue to be rejected by policymakers, including most recently in 2015 when a bipartisan majority strongly rejected Sen. Elizabeth Warren’s (D-MA) amendment to eliminate ISDS from Trade Promotion Authority; Consider the main critiques:

  • Types of cases: The vast majority of cases are about individual permit authorizations and the treatment of individual investors, not broad public interest regulation.
  • Types of claimants: Most claimants are individuals and small and medium businesses.
  • Impact on government regulation: ISDS panels can only order compensation, not a change in government policy. And not one case has ever found a violation of the investment rules through a nondiscriminatory, broadly applied public interest regulation.
  • Number of cases: Less than 20 cases have been filed against the United States in more than 20 years, even though the United States is the largest destination for foreign investment. Loud claims that the Korea–U.S. trade agreement would lead to hundreds of cases against the United States, for example, have continued to fall flat; not one case has been brought against the United States in the five years that agreement has been in force. Contrast that experience to the tens of thousands of cases filed in U.S. Federal Claims court every year on similar property claims.
  • Alternatives: Political risk insurance is a highly limited approach, far too expensive for small business and does not even begin to combat the broader investment rules that are vital to discipline foreign government market-distorting forced localization and other measures. When official government risk insurance is used, it would be the U.S. taxpayer, not the foreign government, bearing the cost of a foreign government seizure of America’s own property.
  • ISDS arbitrators: Arbitrators are chosen collectively by both sides in a dispute, are respected experts and held to strict ethical standards. If there is a bias, it is in favor of governments that win the vast majority of cases.

And as for letters, let us take a look at some from those who are experts in this field. Take a moment to look at this letter from academics whose actual expertise is in international law, arbitration and dispute settlement that strongly support the ISDS system. Or consider this statement of the International Bar Association, the world’s leading organization of international legal practitioners, bar associations and law societies, that felt the need to correct the record on ISDS because “erroneous information is subverting debate.”

As more than a hundred business groups representing millions of small, medium and large companies across every sector of the economy recently explained, investment rules and ISDS are very much in America’s interest as we all seek to grow manufacturing, well-paying jobs and U.S. competitiveness in the global economy.

More Than 100 Groups Agree: Administration Has Opportunity to Boost Enforcement

By | Shopfloor Main, Trade | No Comments

America exports a lot, particularly to our border neighbors, Canada and Mexico, which alone purchase more manufactured goods from the United States than the next 10 foreign countries combined. They purchase almost as much from the United States as we buy from them, even though together they are less than one-sixth of the size of the U.S. economy.

But beyond the cars and corn, the tractors and trailers and the steel and soybeans, America has also been exporting its most basic Constitutional values. Through the original NAFTA Chapter 11, the United States sought to guarantee many of the same basic private property protections that we honor in our own country—due process, equal protection and compensation when a government seizes or “takes” private property. Those core provisions of the U.S. Constitution and U.S. law are part of the original NAFTA and have helped protect U.S. property in both countries when their governments have treated American businesses unfairly.

Since these provisions are not fully part of Canadian or Mexican law, NAFTA also established a neutral enforcement mechanism, known as investor-state dispute settlement (ISDS), to ensure that individuals, nonprofits and businesses could all have the ability, as we have in the United States, to recover damages when those governments harm U.S. property. This enforcement mechanism is a neutral, internationally recognized arbitration found in more than 3,000 agreements worldwide and more than 50 other agreements signed by the United States.

Manufacturers, service providers, energy, technology and food and agricultural producers and their workers all have a stake in ensuring that these basic property protections and enforcement tools are not weakened in the upcoming NAFTA talks. To the contrary, the Trump administration has an important opportunity to improve the coverage of these rules so that all forms of U.S. property, including major resource and infrastructure contracts and intellectual property, are fully protected and that the ISDS enforcement tool is strengthened. For that reason, the NAM was joined by 112 groups representing millions of businesses across the manufacturing, services, technology, energy and food and agricultural sectors of the U.S. economy to urge the Trump administration to maintain and upgrade these basic provisions of the NAFTA.

Why does this matter for workers and businesses in the United States? Consider one early case already decided under NAFTA Chapter 11—Metalclad Corporation v. Canada. In 1993, California-based Metalclad Corporation invested more than $20 million to clean up and operate a waste facility that had more than 20,000 tons of hazardous waste contaminating local water supplies. Metalclad’s investment in Mexico included support from American workers and U.S.-produced materials.

Mexican federal and local officials supported Metalclad’s investment before the purchase and Metalclad received all the necessary Mexican federal authorizations and permits following government review and an environmental audit. Just before opening the facility, however, the local Mexican government blocked Metalclad from opening. Metalclad filed an ISDS case after which the local authority filed a so-called “ecological decree” to prevent the site from operating. An ISDS panel and later a Canadian court enforcing the award found that the Mexican government’s failure to allow Metalclad to operate the facility was in violation of one of the most basic property protections—that governments must compensate private property owners when they seize their property, as found in the Takings Clause in the Fifth Amendment to the Constitution. As a result of the ISDS claim, Metalclad was awarded compensation for a significant part of the investment that it had made.

There are many more instances of foreign governments that have wholly seized U.S. property and turned it over to local competitors or that have lured millions of dollars in infrastructure development, only to refuse to honor the contract to the detriment of U.S. businesses and their workers.

The Trump administration’s focus on ensuring fair treatment by foreign governments is a critical part of a robust U.S. trade agenda and maintaining and improving ISDS enforcement and the protection of U.S. property overseas is a critical tool in the toolbox. Businesses across the United States agree.

Share