All posts by Stephen Ezell
With the summer recess winding down and Congress returning to session next week, legislators will have their plates full with budget, tax, immigration, and trade issues. But also commanding legislators’ attention this Fall should be several proposed bills designed to revitalize America’s manufacturing competitiveness. In particular, the bi-partisan Revitalize American Manufacturing and Innovation Act of 2013 introduced in August as S. 1468 in the Senate by Senators Sherrod Brown (D-OH) and Roy Blunt (R-MO) and as H. R. 2966 in the House by Representatives Joe Kennedy (D-MA) and Tom Reed (R-NY) would authorize and appropriate $600 million in funding for the establishment of a National Network for Manufacturing Innovation (NNMI). The Act authorizes the establishment of up to 45 Institutes of Manufacturing Innovation (IMIs), each to be proposed by industry and initially co-funded jointly by industry and government.
As ITIF writes in A National Network for Manufacturing Innovation: Why America Needs It and How It Should Work, NNMI is poised to play a pivotal role in spurring U.S. industrial competitiveness and revitalizing American manufacturing by bringing together industry, small and medium-sized manufacturers, research institutions, businesses, universities, and the states … Read the rest
With the 19th round of negotiations toward completing the Trans-Pacific Partnership (TPP) free trade agreement underway in Brunei, time is rapidly running out to finalize a deal before the member countries’ self-imposed deadline of the end of this year. But with the recent entry of the world’s third largest market, Japan, into the TPP and key sticking points like intellectual property (IP) protections and enforcement provisions remaining to be negotiated, one is forced to ask: What’s the rush?
It shouldn’t be all that surprising that the TPP has not progressed as fast as many would have hoped this year. We had an acting U.S. Trade Representative for several months before Michael Froman was confirmed by the Senate. And a 12-nation agreement that comprises approximately 40 percent of global trade was always going to be an ambitious lift, with each country having its own priorities. But as negotiators scramble to finish an historic free trade agreement that has been years in the making and could reshape global trade rules, perhaps they should take a step back and revisit the reason behind that deadline. At this late stage, it will be … Read the rest
Scientific Researchers at Asian Universities Attracting More Industry Funding than American Counterparts
A report released last week by Times Higher Education, the World Academic Summit Innovation Index, finds that university scientific researchers from many Asian nations—including Korea, Singapore, Taiwan, and China—are attracting substantially more industry funding per researcher than their American counterparts. For example, the report finds that on average Korean researchers receive four times as much industry funding as their American peers, with the average value of industry funding per researcher in Korea totaling a world-leading $97,900, compared to just $25,800 for American researchers, which placed the United States 14th in the thirty-nation study. What makes this all the more striking is that American researchers tend to cost more than their Korean counterparts, and yet the latter still receive more funding.
Unfortunately, this report merely continues to present evidence from a long and troubling trend of faltering industry investment in university research in the United States. As ITIF found in its 2011 report University Research: The United States is Behind and Falling, from 2000 to 2008 the United States ranked just 23rd among 30 leading economies in percent change in business-funded research performed in the higher … Read the rest
Last week, China precipitated a suspension in global negotiations to expand the Information Technology Agreement (ITA) by asking for the removal of about 100 products from ITA expansion negotiations. Originally signed in 1996, 75 nations now participate in the agreement, which completely removes tariffs on eight categories of information and communications technology (ICT) goods covering hundreds of products. But as the agreement has not been updated since it took effect in 1996, negotiators have been working over the past year to add coverage to the myriad products invented since then—such as multi-component (MCO) semiconductors, GPS systems, and video game consoles—or ones that were not originally included in the agreement—such as flat screen TVs, DVD players, audio speakers, and video recording equipment.
In fact, negotiators have identified 256 ICT product lines for possible ITA inclusion. But when countries began identifying “sensitive” items they either wanted to exclude from the agreement or reserve for tariff phase-outs over several years, China identified 148 products, including 106 it wanted to remove outright. In contrast, the European Union identified ten sensitive products, the United States one, and Canada zero. The next biggest “sensitivities” list was … Read the rest
Negotiations toward completing the Trans-Pacific Partnership (TPP) continue this week in Malaysia. While this potential trade agreement would tie the United States more closely to several key Asian markets, a number of important details still need to be negotiated among the nations at the bargaining table. Perhaps the most important of these issues is the intellectual property protections that will be included in the final agreement.
As this marks the first round of negotiations since new United States Trade Representative Michael Froman was confirmed by the Senate, the United States needs to seize the opportunity to make an aggressive push for the inclusion of strong intellectual property rights in the TPP. While some developing nations condone or enact lax enforcement of intellectual property rights as a means of accelerating growth, in the long run strong intellectual property rights benefit all economies. The promise of economic reward that comes with intellectual property rights incentivizes innovation, enhances the development of domestic industries, and can ultimately help transform nations from developing to developed.
Given the size and scope of the nations in the agreement, the TPP will likely serve as the standard against … Read the rest
U.S. Vice President Joe Biden’s trip to India today (Monday, July 22) marks the highest-ranking U.S. official to visit India in four years. It couldn’t have come at a better time. In recent years, U.S.-India economic relations have been significantly strained by a range of policies that India’s government has implemented that favor domestic producers at the expense of foreign competitors.
Such policies include India’s Preferential Market Access (PMA) mandate for electronic and information and communication technology (ICT) products, a “forced localization” policy which requires that a specific share of each product’s market in public (and possibly also private) procurement of electronic goods must be filled by India-based manufacturers. India’s introduction of local content requirements on wind turbines and solar cells if firms are to receive significant government subsidies is another. So are India’s imposition of compulsory licenses on biopharmaceutical products, as in the case of Bayer’s anti-cancer drug Nexavar, and India’s denial of or revocation of existing patent rights, as in the case of Novartis’s Glivec or Pfizer’s Sutent drugs, respectively. In short, India has been steadily shutting out foreign competition and making it increasingly difficult for U.S. businesses … Read the rest
On Monday, July 8, the Indian Prime Minister’s office, after consultations with India’s Department of Telecommunications and Department of Electronics, announced it would conduct a four-week review and reevaluation of the country’s controversial Preferential Market Access (PMA) mandate. The mandate imposed local content requirements on procurement of electronic products with “security implications for the country” by government and private sector entities. If the PMA had been implemented as originally envisioned, a specified share of each electronic product’s market—anywhere from 30 percent, rising possibly up to 100 percent by 2020—would have to be filled by India-based manufacturers, a requirement that could have eventually affected as much as half of the $50 billion spent annually on information and communications technology (ICT) products and services in India. In announcing the policy review, the Indian Prime Minister’s office acknowledged that, “Concerns have been raised in many quarters on different aspects of the PMA Policy, particularly relating to procurement by the private sector for electronic products with security implications.”
India conceived its PMA rules in an attempt to bolster domestic manufacturing of electronic products in India, a goal India has sought both to boost employment … Read the rest
The Patient Protection and Affordable Care Act (ACA) is in the news again, with the announcement that the White House has delayed until 2015 the employer mandate, which requires that all employers with more than 50 employees provide health coverage to their workers. While most of the attention toward the ACA has centered around debate regarding the individual and employer mandates, what’s often missed is that certain provisions in the Affordable Act Care threaten to damage two of America’s most important innovative life sciences industries: medical devices and biopharmaceuticals.
Regarding medical devices, as of January 2013 the Affordable Care Act began to impose a 2.3 percent excise tax on the sales of medical devices, in order to offset a portion of the $1 trillion cost of the Act. (Specifically, the Joint Committee on Taxation estimates the tax will collect $29 billion over the 2013-2022 period.) Beyond the fact that raising costs is not the way to control them, the provision has had a deleterious impact on the competitiveness of U.S. medical device firms and threatened employment in the U.S. medical device industry. Some, including former chief Labor Department economist Diana … Read the rest
As a number of recent press articles, including this one from Reuters, attest, the U.S. business community is increasingly taking note of Indian trade practices that impose onerous localization trade barriers and compromise the interests of foreign intellectual property rights holders. In light of this, representatives from a diverse range of business and manufacturing sectors recently sent a letter to President Obama urging him to take a more forceful stand against India’s increasing embrace of “innovation mercantilist” trade policies. For example, as the letter argues, India’s recent “Administrative and court rulings have repeatedly ignored internationally recognized rights—imposing arbitrary marketing restrictions on medical devices and denying, breaking, or revoking patents for nearly a dozen lifesaving medications.”
It’s encouraging to see more organizations raising the profile on this important issue. ITIF has been monitoring India’s trade practices for some time now. In March, we submitted testimony to the U.S. House of Representatives’ Hearing on U.S.-India Trade Relations and last month we hosted a media teleconference during which ITIF called on the U.S. government to take a harder stance with India regarding protections for foreign intellectual property rights holders. We have also commented … Read the rest
As ITIF documents in 25 Policy Recommendations for the 2013 America COMPETES Reauthorization, Congress is currently considering a wide range of options for reforming U.S. high-skill immigration policy. The Senate Gang of Eight’s immigration reform legislation would create an additional 25,000 visas for foreign students graduating from U.S. universities with a Masters or Ph.D. in science, technology, engineering, and mathematics (STEM) fields. And the Startup Act 3.0 would make it 50,000 such visas for STEM graduates and introduce a “startup visa” for qualified immigrant entrepreneurs. As the Kauffman Foundation finds in Give me Your Entrepreneurs, Your Innovators: Estimating the Employment Impact of a Startup Visa, immigrant-entrepreneur founded startups could generate as many as 1.6 million new jobs after ten years (assuming that 75,000 visas are granted and that half the startups are technology or engineering companies).
To be sure, a startup visa could have a beneficial impact on U.S. economic and employment growth, but why limit this dynamic only to foreign entrepreneurs looking to invest in starting new businesses? Why not extend visas to foreign individuals investing substantially into ongoing federally funded research and development (R&D) activities at … Read the rest