All posts by Stephen Ezell
“Abdominal pain comes first. After three days, the kidneys fail. After five days, neurological dysfunction leads to paralysis and breathing difficulties. Patients who survive will be dialysis-dependent for the rest of their lives. But in the end, most will die.” That’s from ITIF Trade Policy Analyst Michelle Wein’s gripping monograph, The Devil Wears Counterfeit Prada—And Sells Fake Glycerin: The True Cost of Global Trade in Illicit Goods, which leads by describing the mass poisoning of 100 Panamanian children in 2006 caused by Chinese exports of counterfeit glycerin that was really poisonous diethylene glycol. Unfortunately, that’s just one example: each year, approximately 1 million people around the world die from counterfeit drugs, which account for 30 percent of global drug sales. And that’s just the damage from one category of counterfeited products. It doesn’t even count the damage caused by counterfeit foods, pet medications, electronic products, or the over 1,800 cases of suspected counterfeit electronic parts recently found across a wide range of U.S. weapons systems, according to a 2012 Senate Armed Services Committee report. In fact, the total value of the global counterfeit goods trade now tallies $1.8 trillion
With Export-Import (Ex-Im) Bank reauthorization once again before Congress—its current authorization expires on June 30, 2015—it’s a good moment to take stock of the critical role the Bank plays in ensuring the competitiveness of America’s traded sector companies and industries. As the official export credit agency of the United States, the Ex-Im Bank plays a fundamental role in ensuring the global competitiveness of U.S. exporters, as ITIF described in its 2014 report The Export-Import Bank’s Vital Role in Supporting U.S. Traded Sector Competitiveness. Specifically, the Ex-Im Bank fills two key roles. First, it provides financing—in the form of loans or loan guarantees—to foreign purchasers of American products and services for export transactions that might not otherwise occur when private commercial lenders are unable or unwilling to provide financing to foreign purchasers of U.S. exports. Second, the Bank levels the playing field for U.S. exporters by matching the credit support that other nations provide, ensuring that U.S. exporters are able to compete based upon the price and performance of their products.
Put simply, the Bank makes possible U.S. exports that otherwise would not occur without its assistance. In FY 2013,
On Wednesday, October 29, the Information Technology and Innovation Foundation hosted an event exploring whether the United States needs a new approach to Trade Promotion Authority (TPA), which featured keynote remarks from U.S. Representative Jim Moran (D-VA) and remarks from former Congressman Phil English, now Senior Government Relations Advisor at Arent Fox; former Deputy U.S. Trade Representative Miriam Sapiro; Grant Aldonas, Principal Managing Director, Split Rock International; and Tim Keeler, a Partner at Mayer Brown.
ITIF believes that Trade Promotion Authority plays an important role in enabling the United States to pursue 21st century trade agreements—such as the Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (T-TIP)—that support and create U.S. jobs while helping American manufacturers and service providers increase U.S. exports and compete in a highly competitive, globalized economy.
These next-generation trade agreements matter particularly because, as an economy, U.S. comparative advantage increasingly lies in innovation-based industries—such as life sciences, information and communications technologies (ICT), digital services, music and film, aerospace, advanced manufacturing, etc.—and these agreements are being intentionally designed to ensure that America’s innovation-based enterprises can fairly compete and thrive in global markets.
They do so
Over the past week, critics of the Trans-Pacific Partnership (TPP) Agreement—a free trade agreement (FTA) currently being negotiated by the United States and 11 of its trading partners across the Asia-Pacific region—have made a large hue and cry regarding a draft chapter of the agreement leaked on WikiLeaks pertaining to the TPP’s intellectual property (IP) provisions. Critics have lodged a litany of complaints against the TPP in general and the IP sections of the agreement in particular, including that the TPP has been negotiated “in secret,” that America’s TPP negotiators are attempting to surreptitiously circumvent existing U.S. law in negotiating the agreement, that the “onerous” protections for innovative products such as novel biologics would compromise access to medicines in the developing world, and that the TPP is likely to lead to much greater surveillance by Internet service providers (ISPs) on citizens’ online surfing habits. Yet each of these criticisms is either downright unfounded or significantly overblown, and the reality is that the “leaked TPP IP chapter” is really much ado about nothing, despite its scandalous trumpeting by those who wish to sow fear, doubt, and uncertainty regarding the TPP.
Indian Prime Minister Narendra Modi’s historic election was viewed with a great deal of optimism by much of the world, including here in the United States. His campaign platform—putting economic growth front and center—championed the kinds of policies needed to get India’s economy back on track. With the Modi Administration having been in office for just about four months now, and as he embarks on his first official visit to the United States, it’s a good moment to take stock of the Modi Administration’s accomplishments to date—and areas where we hope to see continued progress toward improving the state of U.S.-India economic and trade relations.
On the positive side, the Modi Administration has announced a number of promising economic reforms. In particular, it has:
- Retired India’s Planning Commission, a vestige of centralized state planning;
- Eased some restrictions and limitations on foreign direct investment (FDI), notably in the defense and railway sectors (with the FDI ceiling in the former raised to 49 percent and in the latter to 100 percent);
- Committed to renewed infrastructure investment in power generation and transportation networks;
- Set a year-end target to complete long-pending implementation of a
Late yesterday (September 15, 2014), the U.S. House of Representatives passed the Revitalizing American Manufacturing Innovation (RAMI) Act of 2013 (H.R. 2996 in the House; S. 1468 in the Senate). ITIF commends the U.S. House of Representatives for passing this important legislation and calls upon the U.S. Senate to follow suit in quick order. The RAMI legislation calls for one-time funding of $300 million over seven years for the Secretary of Commerce to establish several Institutes for Manufacturing Innovation (IMIs), collectively known as the National Network for Manufacturing Innovation (NNMI). The IMIs represent unique public-private partnerships between the federal government, local governments, universities, research institutes, and industry designed to accelerate manufacturing innovation in technologies with commercial applications by leveraging resources to bridge the gap between basic research performed at U.S. universities and research laboratories and product development by U.S. manufacturers.
Four IMIs have already been established, including America Makes, focusing on additive manufacturing (i.e., 3D-printing) in Youngstown, Ohio; the Next Generation Power Electronics National Manufacturing Innovation Institute in Raleigh, North Carolina; the Digital Manufacturing & Design Innovation Institute (DMDII) at the University of Illinois; and the Lightweight & Modern Metals
In July 2014, ITIF’s Stephen Ezell testified before the Senate Finance Committee regarding the importance of manufacturing to America’s economy and the role that U.S. trade and technology policy plays in supporting American manufacturing. As part of his testimony, Ezell cited data describing the rapid decline of U.S. manufacturing employment to demonstrate the severity of the challenges faced by America’s manufacturing industries. For the reality is that, particularly since 2000, America’s manufacturing sector has been in a steep decline, with job losses outpacing those in many peer countries.
Following the hearing, Marc Levinson, a Section Research Manager with the Congressional Research Service, produced a report countering some of the data in Ezell’s testimony, and suggesting that there is not a clear cause for alarm regarding employment losses in the American manufacturing sector. However, Levinson’s account does not fully present all of the facts and only succeeds in further muddying this important policy debate.
One critique Levinson makes is charging Ezell with bias in selecting base years, which can have a sizable impact on analytical results. Levinson presents data using the years 1991 to 2000 and then the years from 2001
This Friday morning, July 25, the House Committee on Space, Science, and Technology will hold a full Committee markup of H.R. 2996, the Revitalize American Manufacturing and Innovation (RAMI) Act of 2013. This is the House’s companion legislation to Senate Bill 1468, which passed out of the Senate Commerce, Science, and Transportation Committee by voice vote in May.
The legislation would provide authorization, using existing funding of up to $300 million, for the Secretary of Commerce to establish up to 15 Institutes of Manufacturing Innovation (IMIs), public-private partnerships that would focus on developing advanced manufacturing product and process technologies, facilitating their commercialization, and developing workforce skills around advanced manufacturing technologies. As ITIF writes in Why America Needs a National Network for Manufacturing Innovation (NNMI) and How It Should Work, these Institutes would play a pivotal role in enhancing U.S. industrial competitiveness by supporting development of technologies that will enable U.S. manufacturers to compete in the global marketplace. The additional IMIs would join four already chartered focusing on additive manufacturing, next-generation power electronics, digital manufacturing and design innovation, and lightweight and modern metals manufacturing, all of
In mid-May, the world cheered as India elected its new Prime Minister, Narendra Modi. Many believed his election foreshadowed a new beginning for India, as Modi and his BJP party ran on a pro-growth, business-friendly platform in an attempt to improve the environment for doing business and open the country up to greater foreign direct investment, further transforming the country into a robust, 21st-century economy. Sworn in at the end of June, Prime Minister Modi has been in office for a little over a month and, while still in its early stages, his desired tone and policies are beginning to take hold.
As ITIF wrote in The Indian Economy at a Crossroads, Modi’s election heralded a potential turn away from India’s recently growing embrace of “innovation mercantilist” policies, such as local content requirements for manufacturers and arbitrary patent denials and revocations, which were one of many factors contributing to Indian economic growth sinking to decade-low levels in 2013. For example, Modi’s campaign platform included specific provisions regarding intellectual property reforms, demonstrating that he understood that fostering an innovative environment in India would be the key
Amidst a growing debate about the future of the U.S. Export-Import (Ex-Im) Bank, along comes fresh evidence that foreign export credit competition continues to intensify even as U.S. competitiveness at providing export credit assistance continues to weaken compared to leading competitor nations. The 2014 Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United States (released Wednesday, June 25) documents clearly how virtually all U.S. competitors are investing significantly more as a share of their GDP than the United States in providing export credit assistance in the form of loans and guarantees to help foreign buyers purchase their nations’ products and services.
As the figure below shows, virtually all the world’s leading export economies—including the ones which U.S. manufacturers compete most closely against—invested more in new export credit assistance as a share of their economy than the United States in fiscal year (FY) 2013. For example, China’s investment in new medium- and long-term export credit assistance exceeded the United States’ by 5.7 times in FY 2013, while Germany’s level outstripped the United States’ by over 7 times. Korea invested 14 times as much as