Today, the United States Trade Representative (USTR) released a report on their Section 301 investigation into "Vietnam's Acts, Policies, and Practices Related to Currency Valuation." The Federal Register notice is here. The report draws three conclusions:

• Vietnam's acts, policies, and practices in regards to currency valuation are "unreasonable;"
• Vietnam's acts, policies, and practices "burden or restrict U.S. commerce"; and
• These acts, policies, and practices are actionable under Section 301 of the U.S. Trade Act.

Notably, however, USTR chose not to take any steps towards imposing tariffs or other measures to remedy these issues. There had been some suggestion that USTR was considering levying tariffs against all imported products from Vietnam.

That means the incoming Biden Administration will be able to craft their own response, rather than being forced to deal with hastily implemented tariffs at the end of an outgoing administration. There are numerous ways that the new USTR may choose to deal with the currency valuation issues, and tariffs may still be levied at a later date. However, the delay gives industry an opportunity to engage with the incoming USTR staff, including USTR-designate Katherine Tai. 

U.S. imports of electronics from Vietnam nearly doubled from 2018 to 2019, as the U.S. and China ramped up their tariff war.

The U.S. Department of Defense (DoD) released this month its annual report to Congress on industrial capabilities. The report reflects ongoing (DoD) concern about the challenges facing the nation’s industrial base and recommends “continued and accelerated national focus over the coming decade” to preserve American leadership. Importantly, it warns that advancements in 5G, artificial intelligence, autonomous systems, and quantum computing will not “wave away” the underlying issues confronting DoD readiness and superiority.

In a snapshot of the electronics industry, the report concludes that foreign dependency and diminishing manufacturing sources and materials shortages (DMSMS) continue to be the primary risks. The “decline of the U.S. printed circuit board” manufacturing also gets called out as does IPC-1791 and federal efforts to establish a trusted supply chain for PCBs and PCBAs.

The U.S. Environmental Protection Agency (EPA) is wading ever deeper into regulatory deliberations under the Toxic Substances Control Act (TSCA), and the next several steps will have major ramifications for electronics manufacturers, who need to focus on this issue now.

As previously reported by IPC, the EPA’s process for assessing and managing risks from existing chemicals has three basic steps: prioritization, risk evaluation, and risk management.

Currently, there are two cycles of this three-step process happening at the same time, for two different sets of existing chemicals. In the first cycle, EPA is nearing the completion of 10 risk evaluations; in the second cycle, EPA is just beginning the risk evaluations for 20 more high-priority chemical substances.

Just over the horizon, the EPA will begin to consider and then propose actual risk management strategies for the first 10 of these chemicals. By law, the EPA is required to take action to address such risks within two years after a risk evaluation is published, which means 2021 and 2022 will be full of related actions.

Which Chemicals Are We Talking About?

From June 2020 through mid-January 2021, the EPA has published 10 final risk evaluations, and in four cases, it identified unreasonable risks to health and/or the environment in connection with chemicals used in electronic manufacturing and products:

• For methylene chloride (CAS 75-09-2), the EPA has determined that the use of this chemical as a solvent in industrial processes where electronics equipment, appliance, and component manufacturing takes place presents an unreasonable risk of injury to workers and occupational non-users.
• For 1-bromopropane (CAS 106-94-5), the EPA has determined that the use of this chemical as a solvent for cleaning or vapor degreasing in the manufacturing of electrical equipment presents unreasonable risks of injury to workers and occupational non-users.
• For cyclic aliphatic bromide cluster chemicals (CASRN 25637-99-4, 3194-55-6, and 3194-57-8), specifically hexabromocyclododecane (HBCD), the EPA has determined that the use of this chemical in solder paste or flux presents an unreasonable risk to the environment.
• For n-Methylpyrrolidone (NMP) (CAS 872-50-4), the EPA has determined that the use of this chemical in paint and coating additives used in computer and electronic product manufacturing and semiconductor manufacturing and the use of this chemical as a solvent for cleaning and degreasing in semiconductor manufacturing and other electronics manufacturing presents unreasonable risk of injury to worker health.

To manage unreasonable risks, the EPA has several regulatory options at its disposal, including the ability to prohibit, limit, or otherwise restrict their manufacture, processing, or distribution for particular uses; to regulate the manner or method of their disposal; to regulate how risks are communicated to consumers and various supply chain actors; and/or to require monitoring, testing, and recordkeeping.

If you have information that is relevant to these proceedings, we need to hear from you. Specifically, if you have information on safe and essential uses; on safe and effective alternatives; or on uses that have been phased out or can be phased out; then now is the time to get ready to work with IPC and engage with the EPA. 

New Rules on PBTs Take Effect on February 5

In addition to the current slate of risk evaluations, the EPA has finalized five final rules for persistent, bioaccumulative, and toxic (PBT) chemicals to reduce risks and exposures to the extent practicable. The final risk management rules go into effect on February 5, and at least one of the five PBTs has a history of use in the electronics industry.

Decabromodiphenyl-ether (decaBDE) is a flame retardant in plastic enclosures for electronics products and in wire and cables for electronic equipment. The final rule prohibits the manufacture, import, and processing of decaBDE; prohibits its use in products and articles effective 60 days after publication of the final rule; and prohibits distribution in commerce of products and articles containing decaBDE one year after the effective date of the rule.

Throughout the TCSA regulatory process, your IPC Government Relations team will facilitate and coordinate a unified industry response. Ultimately, the EPA needs our knowledge and expertise to arrive at solutions that protect human health and the environment and enable our industry to thrive.

On January 14, U.S. President-elect Joe Biden announced a $1.9 trillion “American Rescue Plan” to change the course of the COVID-19 pandemic. The bipartisan relief package that Congress passed in December was a step in the right direction, but more needs to be done, he said.

Among the plan's provisions that may affect our industry's workforce and operations are:

• $50 billion toward Covid-19 testing
• $20 billion toward a national vaccine program in partnership with states, localities and tribes
• Direct payments of $1,400 to most Americans, bringing the total relief to $2,000, including December's $600 payments
• Increasing the federal minimum wage to $15 per hour
• Increasing the federal, per-week unemployment benefit to $400 and extending it through the end of September
• Extending the eviction and foreclosure moratoriums until the end of September
• $350 billion in state and local government aid
• $170 billion for K-12 schools and institutions of higher education

The plan is intended to be Biden’s first step in an aggressive, two-step plan for pandemic relief and recovery. Another major initiative, expected in February, will address longer-term goals, including creating jobs, reforming infrastructure, combating climate change, and advancing racial equality.

The 100-Day Outlook

“Joe Biden is entering the White House with an expansive agenda that includes taming the coronavirus, reshaping the economic recovery, overhauling climate policy and rethinking the power of tech companies,” Politico reports.  Read their complete analysis here, and see this blog by IPC’s Chris Mitchell on what Biden’s plans could mean for the electronics manufacturing industry.

One “wild card”: The impeachment trial of outgoing President Trump could create fresh obstacles to moving swiftly on Biden’s priorities.

IPC is working towards scheduling meetings ASAP with incoming administration officials to discuss the critical needs of the U.S. electronics manufacturing industry. Please let us know if you have any input on IPC’s message, and stay tuned for a slew of new proposals and advocacy opportunities in the weeks ahead.

The obligation to submit data on substances of very high concern (SVHC) in articles applies as of January 5.  This obligation applies to all companies placing articles containing SVHCs on the EU market.  Read more here: http://bit.ly/3oKdjVx.

We’re a week-and-a-half into the new requirements and welcome your feedback on usability. Are you submitting through system-to-system or manual methods?  Are you using a centralized or decentralized approach to manage data entry? Do you have the resources to meet the requirements?  We welcome your feedback! Send an e-mail to IPC’s EHS policy and research director, Kelly Scanlon at KellyScanlon@ipc.org.

As global supply chains have grown increasingly complex, policymakers, industry, and civil society have been looking for ways to use supply chain requirements to reduce the negative environmental and social effects of the products we consume.

In Europe, several European Union Member States have already implemented due diligence legislation requiring companies to avoid problems such as forced labor, corruption, discrimination, occupational health and safety violations, and pollution in their supply chains. The European Commission is also preparing a proposal, which would likely introduce EU-wide binding due diligence requirements for all economic sectors, coupled with liability and enforcement mechanisms. 

Meanwhile, the German government is drafting its own due diligence law, known as the Supply Chain Act, which has been delayed due to concerns over liability mechanisms and the economic impact on businesses. The German Christian Democratic Union (CDU), the leading partner in Germany's coalition government, has presented a sector-by-sector and company-by-company approach. At the center of its proposal is the implementation of a digital supply chain register, which would list companies that supply EU industries and have a certified, robust, due diligence system in place. As part of the due diligence obligation, companies operating within the EU that meet certain turnover and import volume thresholds would have to ensure they source goods and services from companies in the register. The register would be introduced sector-by-sector, likely starting with the textile and automotive industries. Non-EU suppliers would be incentivized to go through the certification process.

Germany's CDU and the CDU delegation in the European People’s Party, the largest political party in the European Parliament, have shared the idea for a digital supply chain register with EU Commissioner Didier Reynders as the commission drafts its proposal, which is expected in the second quarter of this year. The commission believes that EU-wide legislation would be most effective in addressing this complex issue.

IPC is actively engaging with policymakers to ensure that any upcoming due diligence legislation is feasible for the electronics industry and minimizes the administrative burden for our member companies, in particular for small and medium-sized enterprises. We are currently preparing an IPC response to the commission’s request for public input. For further information, see this recent IPC blog, and contact me if you have any questions or concerns.