By Bill Allmond, Vice President of Government and Public Relations
There are policies our government can and should pursue, or not pursue, to help American companies be more competitive and expand their markets. Clearly, there are ways it can be a hindrance to growth, such as overregulation and higher taxes. In executing our strategy for 2013, here are a few areas in which we plan to advocate in the new Congress and a second Obama administration.
An August 2012 study by the Manufacturers Alliance for Productivity and Innovation provides solid evidence as to why and how chemical manufacturing is among the most regulated industries in the U.S. Of great concern is the research found that chemical manufacturing output could fall by 9-10 percent per year on average over the next decade as a result of the cost of government regulation. It also found, not surprising to our industry, that EPA imposes the largest burden on manufacturers with respect to cost of regulations, which is $117 billion. It’s very important that government officials understand how regulations hold back our industry in terms of productivity and innovation. We know, as a U.S. industry, we must abide by many more regulations than our competitors in Asia, South America and even Europe. Many of these regulations are intended to serve noble purposes, such as safer workplaces and lower toxic emissions. However, we also know there are a number of regulations, from environmental to economic, that are duplicative or unnecessary. Congress needs to take steps to reform our regulatory process, as well as compel the federal government to review and, where necessary, revoke regulations that are duplicative, contradictory or clearly prevent our industry from leading the world in innovations, not inhibitions.
To help publicly highlight the growing number of regulations imposed on our industry, last summer SOCMA launched ReiningInRegulations.com. We share this web address with members of Congress and their staff to better educate them on how our membership is disproportionately impacted by regulation, both as a chemical manufacturer and small business.
Congress rightfully extended the federal research & development (R&D) tax credit as part of the “fiscal cliff” agreement struck on New Year’s Day. This tax credit is very important to SOCMA members and chemical manufacturers in general. Because of the highly innovative nature of specialty, custom and batch manufacturing, much research and investment is devoted to developing a product before it’s sold in the marketplace. On average, manufacturers claim approximately 70 percent of R&D credit amounts. The credit is needed to keep the U.S. competitive in the global race for R&D investment dollars. But because Congress repeatedly drags its feet in renewing the tax credit, which creates much uncertainty among SOCMA members that rely on it, we need Congress to make this credit permanent.
Intellectual Property Protection
More than 70 percent of the world’s intellectual property resides with U.S. companies. It’s no wonder we are often the target of corporate espionage and intellectual property theft. As a highly innovative manufacturing sector, SOCMA members are particularly at risk. We occasionally hear from members that have had their IP stolen by a foreign entity. In most cases, their violator’s government merely slaps the company on the hand with little to no consequence other than to our members, who see their proprietary information copied and sold in the marketplace. In other cases, we hear from members who learn that foreign competitors claim to customers they are making our members’ products — and selling them at a lower price — when, in fact, the product is fraudulent. The violation of companies’ IP affects not only current profits, but also long-term sustainability of their business because of unfair competition.
Congress and the administration need to hear more from us before we are the victim of IP theft and advocate for a stronger hand with governments that permit or participate in the stealing of U.S. chemical manufacturing IP.
Confidential Business Information Protection
For many years, EPA has protected CBI claims for products regulated under the Toxic Substances Control Act. However, today the agency has a proposal awaiting White House approval that would force chemical manufacturers to reveal highly proprietary details of new chemicals even before they are sold in the marketplace. If finalized, this action would deal a significant blow to our industry’s ability to maintain innovative competitiveness. Competitors would no longer need to steal this information, but merely mine EPA’s public website for characteristics that were previously protected.
SOCMA has met with the White House about this potentially harmful proposal, and we’re confident we won’t see EPA’s idea come into fruition any time soon.
Free Trade Agreements
Trade agreements continue to be a way for our members to fairly access foreign markets and positively contribute to growth of the U.S. economy. These agreements support domestic manufacturing jobs by offering access for our competitive, innovative products. SOCMA continues to push for movement of the trade policy agenda, advocating for high standard free trade agreements, such as those with Korea, Colombia and Panama, which will save U.S. chemical manufacturers billions of dollars.
In summary, the government can do things that can severely harm our industry’s competitiveness, such as overregulation and outdated tax systems, but it can also help us better compete by strengthening policies that make growth and innovation a top priority.