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The Government Circuit: Government Policy Moves Are More Important Than Ever During a Pandemic

Isn’t it amazing how quickly and thoroughly the COVID-19 pandemic has changed the world?

As documented through a series of IPC member surveys and calls with member company executives, the impacts of COVID-19 on the electronics manufacturing industry have included ambiguous and conflicting restrictions imposed by multiple levels of governments, changes in operational requirements, disruptions in supply chains, and new strains on an already-tight workforce. IPC’s COVID-19 resources page—including industry reports, government resources, and IPC member stories—can be found at ipc.org/coronavirus.

Beyond the terrible human toll of this crisis, IPC views the current moment as an opportunity to think more broadly about how to come out of this downturn stronger and with a heightened appreciation for strengthening industry supply chains.

Here are several of the top stories of recent weeks from an IPC government relations perspective, including issues that we are continuing to work on.

North American Manufacturing Initiative

On April 15, IPC sent a letter to U.S. President Trump, Mexican President López Obrador, and Canadian Prime Minister Trudeau, urging them to launch a North American Manufacturing Initiative to coordinate pandemic response and strengthen the region's manufacturing competitiveness ^[1]. Specifically, IPC says the three governments should grow regional capacity for electronics manufacturing and create systems to monitor capacity in times of crisis. Additionally, they should set up metrics for industrial base resiliency with capabilities, capacity, and geographic diversity as key factors. Finally, government leaders should determine a regional definition of what is an "essential activity," which would make it easier for the industry to support the production of crucial materials, parts, and products across multiple borders.

The message apparently got through. Responding to calls from IPC and others, on April 24, the government of Mexico announced they would work with the United States and Canada to coordinate COVID-19 policies affecting essential manufacturing while addressing the longer-term economic recovery ^[2].

The North American Manufacturing Initiative is a key part of IPC’s Roadmap to Economic Recovery ^[3]. Electronics industry supporters can visit IPC’s Advocacy Page to send the roadmap to their elected officials with just a few clicks ^[4].

The U.S. Suspends Certain Import Duties

On April 19, consistent with the IPC Roadmap, President Trump authorized a 90-day deferral of payment of certain trade duties and fees for importers who can establish they are experiencing significant financial hardship related to COVID-19 ^[5]. The U.S. Trade Representative (USTR) has also been prioritizing the review of Section 301 tariff exclusion requests related to Personal Protective Equipment (PPE) and other medical-related products. More information can be found in one of my blog posts ^[6].

Many Electronics Manufacturers and Suppliers Have Received PPP Funding

In an IPC member survey in the last week of April, nearly 70% of executives reported having applied for a Payroll Protection Program (PPP) loan through their local banks. Roughly 44% of respondents reported having received funding, while 25% were still waiting to receive funding. About one in five said they have not and will not apply for a PPP loan, while nearly 10% reported they would apply for a PPP loan if additional funding becomes available. After the first round of funding ran out, the U.S. Congress approved another $310 billion, and the program reopened for applications on April 27.

Best Practices for Worker Health Protection

As part of IPC’s ongoing efforts to help member companies cope with the pandemic, we convened a webinar on April 21 on the topic of best practices for protecting workers’ health on the job. Three noted experts and more than 165 electronics industry members participated in the 90-minute webinar. All participants agreed there is no “one-size-fits-all” solution given the variety of geographic locations, facility sizes, workforce populations, and products manufactured across the industry. Regardless of that variety, all share the goal of continuing to protect worker health and safety. An IPC report stemming from the webinar can be found online ^[7]. An upcoming IPC report on the use of face coverings in our industry will be posted on our COVID-19 resources page at ipc.org/coronavirus in early May.

European Leaders Working on €540 Billion COVID-19 Package

On April 23, European Union leaders tasked the European Commission ^[8] to draft a proposal for a multi-trillion euro economic recovery fund that would “be of sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected.” The leaders also welcomed the European Council’s Joint European Roadmap for Recovery ^[9] and endorsed a €540 billion relief package ^[10] that is set to go into effect by June 1, including a safety net for companies through the European Investment Bank (EIB).

Meanwhile, there is a tug of war emerging between businesses that want to slow down the pace of new environmental regulations, and those that want to promote a green path out of the crisis. On April 10, the Confederation of European Business ^[11] urged the European Commission to “extend certain deadlines to implement EU legislation,” and to put on hold “all nonessential environment and climate-related consultations for stakeholder engagement.” But on April 21, a coalition of government, business, and nonprofit leaders formed a European Alliance for a Green Recovery and committed themselves to “massive” post-crisis investment plans prioritizing climate and biodiversity goals ^[12].

U.S. Issues New Export Control Rules on China, Other Nations

In a piece of important, non-COVID news, on April 28, the U.S. Department of Commerce issued two new export control rules affecting U.S. dealings with “countries of national security concern,” including China. One rule, EAR § 744.21 ^[13], expands licensing requirements on exports, reexports, and transfers (in-country) of items intended for military end-uses in China, Russia, or Venezuela. The rule also expands the definition of "military end-use,” expands the list of items that fall under licensing requirements, and imposes filing requirements for de minimis shipments. The other rule, EAR § 740.5 ^[14], will tighten licensing requirements for national-security-controlled items exported to Country Group D:1, which includes China, Iraq, Libya, Russia, and Ukraine.

Both rules are final and will go into effect on June 29, setting aside requests from IPC and other industry groups for the government to go through the usual rulemaking process, including public comments and changes before becoming effective. Will this change affect your business? If yes, we want to hear from you.

Is Your Company Affected by EPA Action on High-priority Substances?

In another important development affecting our industry, the U.S. Environmental Protection Agency (EPA) has released all 20 “scoping documents” for its upcoming reviews of high-priority chemical substances under the Toxic Substances Control Act (TSCA). Several of the substances are relevant to electronics manufacturing: flame retardants, phthalates, solvents, and formaldehyde. The comment period is currently open, and IPC is seeking industry input to ensure a thorough, accurate review. Delve into the full details in an IPC blog post written by Kelly Scanlon, IPC’s director of environment, health, and safety policy and research ^[15].

Critical Environmental Requirements for Electronics Manufacturers

IPC and the Information Technology Industry Council (ITI) are teaming up for our annual event to help you stay ahead of current and emerging environmental requirements. Join us for a four-hour virtual event, complete with a stellar line-up of experts and professionals who will help you stay current on global environmental regulations and issues such as RoHS, TSCA, eco-design, European Green Deal, and more. Sponsorship opportunities are available. Learn more and register on our website ^[16].

USMCA to Take Effect on July 1

On April 24, the Trump administration notified the U.S. Congress that Canada and Mexico had taken all measures necessary to comply with their commitments under the new United States-Mexico-Canada Agreement (USMCA), marking the final step necessary for the pact to enter into force on July 1 ^[17]. "The crisis and recovery from the COVID-19 pandemic demonstrate that now, more than ever, the United States should strive to increase manufacturing capacity and investment in North America,” said U.S. Trade Representative Robert Lighthizer.

Is Your Company Looking to Source Inputs from New Countries

Over the last year, electronics manufacturers have been adjusting their supply chains due to trade tensions, tariffs, and the belief that higher tariffs may become permanent. We see evidence of a “decoupling” between China and the United States and shifts to other sources of supply, such as Mexico, Vietnam, Indonesia, Taiwan, and India. Read a short blog post on this issue by IPC Chief Economist Shawn Dubravac ^[18]. And if your company is thinking about sourcing from new countries, we would be interested in hearing from you as part of our research and monitoring efforts.

On behalf of all of us at IPC, I hope this finds you and yours coping well.

References

1. IPC letter.
2. The Government of Mexico, “Gobiernos de América del Norte alistan plan para reapertura del sector automotriz en la region,” April 24, 2020.
3. IPC, “Roadmap to Economic Recovery.”
4. IPC Advocacy Team.
5. The White House, “Executive Order on National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments,” April 19, 2020.
6. C. Mitchell, “301 Tariff Update: U.S. Suspends Certain Import Duties,” IPC.
7. IPC, “IPC Special Report: COVID-19 and Best Practices for Worker Health Protection in the Electronics Manufacturing Industry,” April 21, 2020.
8. European Council, “Conclusions of the President of the European Council Following the Video Conference of the Members of the European Council,” April 23, 2020.
9. European Council, “A Roadmap for Recovery Towards a More Resilient, Sustainable, and Fair Europe,” April 21, 2020.
10. European Council, “Report on the Comprehensive Economic Policy Response to the COVID-19 Pandemic,” April 9, 2020.
11. BusinessEurope letter.
12. “Launch of the European Alliance for a Green Recovery.”
13. Federal Register, “Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End Use or Military End Users in the People's Republic of China, Russia, or Venezuela,” April 28, 2020.
14. Federal Register, “Elimination of License Exception Civil End Users (CIV),” April 28, 2020.
15. K. Scanlon, “Important Advocacy Opportunity: How Is Your Company Affected by US EPA Action on High-Priority Substances?” IPC.
16. IPC, “Critical Environmental Requirements for Electronics.”
17. S. Rodriguez, “North American Trade Deal to Take Effect on July 1,” Politico, April 24, 2020.
18. S. DuBravac, “Electronics Supply Chain in Flux Due to Tariffs, Epidemic, Other Factors,” IPC.

 Chris Mitchell is IPC’s VP of global government affairs. Contact him at ChrisMitchell@ipc.org.