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The Government Circuit: U.S. and European Lawmakers Eyeing Changes That Would Affect Our Industry

The seasons may be changing, but IPC’s commitment to advocating for the electronics manufacturing industry remains constant as we look to position our industry for success in the coming year. 

In Washington, D.C., the upcoming November elections have legislators hustling to secure last-minute wins. We are monitoring congressional activity closely, especially negotiations on a defense authorization policy bill and potential new coronavirus recovery package. And, of course, the outcome of the elections will have a major impact on the policy agenda for next year. 

In Europe, more chemicals are being considered for regulation, including polymers and substances used in soldering flux and paste. 

Here are some highlights of the top issues IPC is focused on this month. 

How Is COVID-19 Affecting the U.S. and European Electronics Industry?

The global economy has improved somewhat over the last month, but momentum is slowing, and near-term growth may harder to come by. IPC Chief Economist Shawn DuBravac recently released IPC's September Economic Outlook Report ^[1]. Six months into the pandemic, the electronics manufacturing industry appears to have weathered the downturn rather well. According to the latest data, production is up in recent months and positive on a year-over-year basis in both the United States and Europe. However, demand is anything but certain; DuBravac cautions that “economies are extremely fragile right now, and any policy blunders will stymie the recovery.” 

Please let us know if you find this report useful and what else you would like to see from IPC. 

U.S. Defense Bills Would Bring Greater Resiliency to Electronics Supply Chains

For more than two decades, the United States has turned a blind eye to its shrinking electronics manufacturing base, even as experts in and out of government have warned that the decline has weakened the country’s national security. 

In response, both the U.S. House and Senate have included provisions in the Fiscal 2021 National Defense Authorization Act to bolster the resiliency and security of the electronics manufacturing ecosystem, including printed circuit board fabrication and printed circuit board assembly. Specifically, the legislation would require a rising percentage of bare and assembled PCBs and PCBAs used in sensitive defense systems to be purchased from trusted U.S. or allied sources. 

However, several groups, including the U.S. Chamber of Commerce and Aerospace Industries Association, recently opined to Congress that the measures would be overly restrictive and would drive up costs. IPC responded to the opponents in a blog post ^[2]. 

It is notable that, in addition to electronics industry support, the provisions have more than four dozen supporting members of Congress from both sides of the aisle in the House and the Senate, while no members of Congress have risen in opposition. 

High-level talks are actively occurring, and a resolution is expected soon. IPC will continue to advocate for measures to shore up supply chains for electronics related to essential governmental functions, including defense.

IPC Calls for COVID-19 Recovery Bill With Pro-Industrial-Base Provisions

Elsewhere in Washington, the prospects of a new coronavirus relief package are back from the dead. Following the passage of a slimmed-down relief package offered by House Democrats ^[3], U.S. Treasury Secretary Steve Mnuchin said he is “hopeful” about reaching an agreement before the November elections. 

IPC is continuing to call on Congress to include provisions of importance to the electronics manufacturing industry. In a lettersent to the top four leaders in Congress ^[4], IPC urged Congress to support the following measures: 

• Modified unemployment insurance benefit to continue essential support for laid-off workers, helping to maintain consumer demand while reducing disincentives to return to work
• Common-sense liability protections shielding businesses that have taken “reasonable steps” to comply with government workplace safety guidelines
• Paycheck Protection Program extension and the Safe and Healthy Workplace tax credit
• Supplementary funding to sustain and rebuild the defense industrial base
• Aid to state and local governments to ensure essential services are maintained

Enactment of a bill before the November elections remains unlikely, but with reelection at stake, many members of Congress are feeling greater pressure to act. When they do, we will continue to advocate for our industry’s needs and to keep you posted.

Buzzword of the Month: Decoupling Between the U.S. and China

In the United States, the Trump administration has been encouraging U.S. companies to leave China and remove Chinese products from their supply chains, while it also has been blocking Chinese investment in the United States. Chinese leaders are also calling for efforts to “decouple” their economy from America’s. The dilemma for many U.S. companies, particularly in the ICT sector, is that Chinese companies are both customers and competition.

Experts believe the “decoupling” trend is likely to continue regardless of possible changes in leadership on both sides. Read more on this issue from our friends at the Center for Strategic and International Studies ^[5].

In the most recent example of “decoupling” turning into action, on August 13, a new interim final rule took effect in the United States that will bar contractors from receiving federal contract awards if they use certain Chinese telecommunications and video surveillance equipment or services. The rule, which adopts the Section 889 ban ^[6], will impact new contracts and contract renewals and will cover all contractors, including electronic manufacturers.

Companies in the electronics industry are advised to review purchase orders and documents to determine whether the equipment they have is from affected Chinese companies. While the public comment period has passed, any new submitted comments will still be evaluated. You can read more about the Section 889 Rule from our friends at Holland & Knight ^[7–8]. Please let us know if you have any questions or concerns about decoupling.

European Commission Eyes More Chemicals for Regulations

In Europe, the march toward a greener economy continues even amid the current economic difficulties.

For example, the European Chemicals Agency recently proposed that tetraethylene glycol dimethyl ether (CAS 143-24-8) be added to the Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) Candidate List of substances of very high concern. The chemical is used in the manufacturing of soldering fluxes and solder pastes used in electronic equipment. The public comment period on the proposal runs until October 16 ^[9]. Let us know if you have any questions or input.

On another front, the latest draft Chemicals Strategy for Sustainability ^[10] confirms that the European Commission is actively considering extending the REACH registration requirements to polymers. According to a recent study ^[11], an estimated 33,000 polymers could be targeted. On September 11, an expert group advising the commission on this matter held its first meeting ^[12], discussing effective grouping, identification, and registration of chemicals. The group’s proposal will likely be published by 2022. How would this potential move impact your business? 

Our Industry Wins When You Are Active and Engaged

Are you interested in policy and politics? Do you have any pressing government policy concerns?

The IPC Government Relations team is composed of experienced professionals working for you year-round. However, the success of our work depends on the active participation of IPC members like you. Visit the IPC Advocacy Team website ^[13], take our five-question survey, register to receive advocacy alerts, and join our efforts in one of the following ways: 

• Be in contact with your elected representatives. Send emails, make phone calls, or say hello if you see them in person. IPC’s Government Relations team can help arrange meetings/calls and provide you with talking points and handouts. The IPC “A Team” platform ^[13] can help you contact U.S. officials, and these next links can direct you to Members of the European Parliament ^[14] and of the Canadian Parliament ^[15].
• “Host” an elected official at one of your facilities. While in-person meetings may be limited, you can still offer a virtual tour, an online briefing, and/or a chance for them to speak to your employees. Learn more ^[16] and contact our staff for support.
• “Meet” with officials in Washington or Brussels. Our IMPACT events give IPC member company executives a chance to meet with top government officials to discuss the issues we care about. We hope to be back to in-person meetings soon, but until then, we are meeting with government officials by video call. If your company does business in Europe, mark your calendar for IMPACT Europe ^[17], coming up on November 18–19.
• Make a plan to vote in upcoming elections and encourage your colleagues and employees to do the same.

And speaking of the 2020 U.S. elections, the IPC Political Action Committee (IPC PAC) ^[18] is a vehicle for pooling our campaign contributions and supporting pro-manufacturing federal candidates in both major parties. IPC invites you to learn more by visiting the IPC PAC website and filling out a prior authorization form ^[19]. This form does not obligate you or your employees to support the IPC PAC; it simply authorizes us to send you information. Please note that a company can only authorize one association PAC per year, and the form must be signed by someone with the authority to do so—generally the CEO or another C-level executive.

Until next month, take care, everyone!

References

1. Shawn Dubravac, “Economic Outlook: September 2020,” IPC.
2. John Mitchell, “U.S. Defense Bills Would Bring Greater Resiliency and Security to Electronics Supply Chains,” IPC.
3. Shelby Brown, Clifford Colby, Erin Carson, and Alison DeNisco Rayome, “Trump cancels stimulus negotiations including check? What we know and what it means,” CNET, October 6, 2020.
4. Chris Mitchell, “Letter to the top four leaders in Congress,” IPC, August 4, 2020.
5. William Alan Reinsch, “Decoupling: Separation or Divorce?” CSIS, September 28, 2020.
6. Acquisition.gov, “Interim Rule Issued by DoD, GSA, and NASA.”
7. Eric S. Crusius, Mary Beth Bosco, Gordon Griffin, Christian B. Nagel, Ronald A. Oleynik, Kelsey M. Hayes, and Jason Klitenic, “Rule Banning Chinese Telecommunications Equipment is Released,” Holland & King, July 13, 2020.
8. Eric S. Crusius and Mary Beth Bosco, “Interim Rule Banning Huawei and Other Chinese Companies Released,” Holland & King, August 12, 2019.
9. ECHA, “Substances of very high concern identification.”
10. European Commission, “Chemicals – strategy for sustainability (toxic-free EU environment).”
11. CIRCABC, “PRRS Under Reach-Final Report Wood_RED.PDF,” Version 1.1, July 6, 2020.
12. European Commission, “Competent Authorities for Registration, Evaluation, Authorisation, and Restriction of Chemicals (REACH) and Classification, Labelling and Packaging (CLP) (main group).”
13. IPC Advocacy Team.
14. IPC, “Contact Elected Officials: European Union Parliament.”
15. Canadian Parliament.
16. IPC, “Getting Involved: A Guide to Conducting a Successful Plant Tour.”
17. IPC, “IPC IMPACT Europe, Virtual Event.”
18. IPC, “IPC PAC: A United Voice for Advanced Manufacturing.”
19. IPC, “IPC Political Action Committee (IPC PAC) – Prior Authorization Form.”

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