On Friday, October 19, more than 40 industry executives participated in a day-long discussion on the defense electronics industrial base in Bannockburn, Illinois. IPC—in partnership with WHMA and ECIA—organized the event to support the ongoing effort by the Department of Defense (DoD) to assess the U.S. defense electronics industrial base. Pursuant to Section 845 of the FY19 National Defense Authorization Act (NDAA), DoD is required to provide this assessment to Congress by January 31, 2019. IPC was the primary champion for this provision during congressional consideration, and the provision is reflective of the comprehensive evaluation of the defense electronics supply chain that IPC has long called for. The October 19 discussion focused on five segments of the industry that are sometimes overlooked by policymakers, namely PCB, EMS, cable/wire harness, connectors, and passive components. The event kicked off with Dr. Robert Irie, who oversees electronics for the DoD’s Industrial Policy Office, offering remarks on the recent White House report on the overall defense industrial base and the important and complementary purpose of the defense electronics assessment now underway. IPC Director of Research Sharon Starr delivered the results and analysis of an IPC/WHMA/ECIA survey, which underscored many issues facing the industry, including shortages in skilled workers and suppliers. Participants then divided into their industry segments for focused discussions on a range of issues that DoD is required to assess. In the afternoon, participants came back together to report on their perspectives and conclusions. Dr. Irie and officials from the Executive Agent for PCBs at Naval Surface Warfare Center Crane were on hand to listen and ask questions. If you are interested in this initiative, it is not too late to offer your perspectives. IPC will soon release a report on the workshop, affording IPC members one last opportunity to provide their input. Please contact Chris Mitchell, IPC’s Vice President of Global Government Relations, if you would like more information.

IPC, in collaboration with WHMA and ECIA, has organized a workshop to support the U.S. Department of Defense (DoD) in its ongoing assessment of the defense electronics industrial base. DoD is required by law to undertake this assessment and must deliver its report to Congress by January 31. This assessment affords the electronics industry a meaningful and well-timed opportunity to help shape U.S. policies to strengthen the domestic manufacturing base. To ensure that the report is reflective of the industry’s concerns, the DoD needs your help! DoD wants information and insights from you and your peers about key segments of the industry, including PCB, EMS, cable/wire harness, connectors and passive components. DoD officials will be on hand to listen to industry discussion, and Dr. Robert Irie of DoD’s Military Industrial Base Policy Office will offer remarks to attendees. IPC and its members have worked hard to raise concerns about the state of the U.S. defense electronics supply chain. We now have DoD’s attention. Let’s not miss this opportunity to communicate directly with DoD about the needs of the electronics industry. Please register for this free event and please share the invitation with peers who may be interested in attending as well.  

By Chris Jorgensen, director, IPC technology transfer IPC and the American Association of Textile Chemists and Colorists (AATCC) will host a joint session, Get Hands-On With E-Textiles Standards and Test Methods, Monday, November 12, 3:00-5:00 pm (ET), prior to the AATCC Fall Committee Meetings. During this session, IPC and AATCC will provide an overview of the standards projects of the IPC D-70 E-Textile Committee and AATCC’s various working groups. You will also learn how IPC and AATCC are working together and how to get involved with our activities. The forum will include a standards and test methods brainstorming session for you to bring your organization’s ideas, needs and issues that can be resolved through industry standards. Anything is up for debate! IPC and AATCC staff will present your ideas to committee leadership as potential new projects by IPC D-70, AATCC or a joint standard working group. Unique to any other standards meeting you will attend, AATCC will also have e-textiles materials and testing equipment available for attendees to get a hands-on experience with standards and test methods. AATCC also invites all IPC D-70 Committee members to attend the RA111, Electronically-Integrated Textiles meeting or any other committee meeting that interests you. Register for the IPC/AATCC joint session and AATCC committee meetings at https://www.aatcc.org/evnt/meetings/.

Late last night, just hours before the Trump Administration’s self-imposed deadline, the United States, Canada and Mexico came to agreement on a new trade accord to replace the North American Free Trade Agreement (NAFTA). The new deal is being referred to as the U.S.-Mexico-Canada Agreement (USMCA). The leaders of the three countries expect to formally sign the USMCA on November 29, although it will not come before Congress for a vote until spring 2019. The Administration has released the full text of the agreement, and they are beginning to issue fact sheets to explain its benefits to the American economy. In striking the deal, trade negotiators tackled thorny issues including dairy import restrictions, dispute settlement procedures, tax-free online shopping, and automotive rules of origin. Trade experts warn that passage by Congress is not guaranteed, and the results of November’s midterm elections could determine its future. Lawmakers from both parties are expected to scrutinize the agreement’s provisions related to dispute settlement procedures, intellectual property protections, and labor and environmental standards. They will also seek to understand how stricter automotive rules of origin could constrain and complicate North American manufacturing. We are continuing to review the agreement to evaluate its impact on the electronics industry, but our initial estimation is that this agreement appropriately modernizes NAFTA, allowing for greater integration and growth of the North American marketplace. Please watch for our more in-depth analysis soon. The fast-track negotiation procedures utilized by the President include strict requirements and timelines. For more information about the timeline, please reference this informative blog post produced by Prime Policy Group, our Washington, D.C. lobbying firm. Statement – John Mitchell On behalf of the electronics industry, I want to extend my congratulations and appreciation to the governments of the U.S., Mexico and Canada for their many months of tireless negotiations on a new trilateral trade agreement. The North American electronics supply chain has grown steadily over the last 25 years. In striking an agreement that modernizes NAFTA to address the current trade concerns of all three countries, USMCA promises to deliver another 25 years of sustainable, mutually beneficial trade. The USMCA promises to spur even greater integration among the North American economies and strengthen the entire region’s stature as a formidable global manufacturing base. Improving the manufacturing competitiveness of North America, in turn, will unlock more economic growth and job creation, benefiting communities across the continent. As always, IPC will be working to assess the deal’s likely impacts on our industry, and we will continue to advocate for our members’ interests as the debate goes forward.

IPC is collecting member views on the ongoing European Commission public consultation on the Interface between chemical, product and waste legislation (CPW Interface). This EU initiative will have significant impacts on business through the supply chain as it looks at tracking substances of concern (which are yet to be defined), on top of ECHA’s upcoming database on SVHCs. The consultation is based on the Commission Communication on the Interface, which was released in January 2018 as part of the Circular Economy mini-package. It aims to get stakeholders’ views on 4 issues posing obstacles to ‘the safe uptake of secondary raw materials’ and a number of related challenges: lack of information on substances of concern in products and waste, presence of substances of concern in recycled materials, difficulties in applying end-of-waste criteria as well as unclear application of EU waste classification methodologies. To contribute your views to IPC, please contact Nicolas Robin, IPC’s Senior European Director, at NicolasRobin@ipc.org.

In May 2019 European elections will bring a large shake-up to the EU system. The composition of the new Parliament will be considerably different in terms of numbers and ideologies. Given these massive changes, this election will be decisive for the future of the EU. This infographic charts the twisted path to choosing a new EU government.

Late last month, the U.S. and Mexico announced they had reached a preliminary bilateral agreement to update their portion of the North American Free Trade Agreement (NAFTA). U.S. discussions with Canada are ongoing, but senior officials have repeatedly suggested that they are prepared to move forward without Canada if necessary. U.S. Trade Representative Robert Lighthizer has again conceded this week that “large issues” remain and Canadian Prime Minister Justin Trudeau has said that he won’t be rushed into a deal. The Trump administration is racing to meet a self-imposed deadline to finish NAFTA negotiations with Canada by Sept. 30 in order to sign the deal before Mexican President Enrique Peña Nieto's last day in office on Nov. 30. Moving forward without Canada would set up a showdown with Congress—many members of which represent communities that rely on trade with Canada. Canada is the largest foreign market for U.S. goods. Trade experts also question whether a U.S.-Mexico bilateral deal is compliant with Trade Promotion Authority (TPA). We will provide updates as developments occur.

This is an update to August 21 blog item In North America, the Trump administration prioritized one-on-one talks with Mexico, which produced a “handshake agreement” that was announced by President Trump today, August 27. Canadian negotiators are in Washington, D.C. this week to rejoin the talks, with the hope of reaching a trilateral deal very soon. Both Mexico and Canada have insisted that any new deal must be negotiated among all three partners. Because U.S. law requires a 90-day notice to Congress before any trade deals can be voted upon, President Trump needs to notify Congress of any new trade deal no later than September 1, if he wants to complete all action before a new Mexican president takes office on December 1. Details of the agreement reached by the United States and Mexico are scant. However, we do know the new agreement would require 75 percent of auto content to be made in North America in order to qualify for duty-free treatment; NAFTA currently requires 62.5 percent. The new agreement also would require 70 percent of steel, glass, and aluminum used in imported autos to come from North America. Additionally, a substantial portion of each vehicle would be required to be manufactured in a "high wage factory." IPC is open to a NAFTA 2.0 and is working to secure stronger investor dispute-settlement protections. Over the summer, IPC has been participating in congressional advocacy with other industry associations, underscoring the importance of the North American electronics market and supply chain. We will continue to monitor developments closely and share information with IPC members and industry.

In a series of steps to implement the U.S. Tax Cuts and Jobs Act of 2017 (TCJA), the Trump administration recently proposed several implementing regulations. Pass-Through Entities: On August 8, the U.S. Treasury issued proposed regulations defining the types of companies and professionals eligible to qualify as “pass-through” entities and receive a 20 percent income tax deduction. The rules provide guidance to address a variety of uncertainties, including how businesses that operate through multiple legal entities can aggregate those entities in order to take advantage of the 20 percent deduction without reorganizing themselves for tax purposes. The public will have 45 days to offer comments on the proposal. Expensing: Also in August, the Treasury Department released proposed rules on full expensing. The accelerated cost recovery that was enacted under Section 168(k) of the TCJA lets companies claim full deductions for new equipment in the same year it is bought. Equipment put into service after September 27, 2017 and before January 1, 2023 is eligible, with an annual phase down of 20% each year thereafter. The IRS will be accepting comments on this proposed rule for the next 60 days. IPC is working with other industry groups to advocate for making this provision permanent. Repatriation: The Treasury Department also released proposed regulations on how to calculate and report the repatriation tax created by the TCJA. Simply put, the regulation would apply a 15.5% levy on companies' liquid assets (i.e. cash) overseas, and an 8% tax on everything else. Corporations would have up to eight years to pay the tax. The IRS will take public comment on this rule for the next 60 days. Please contact IPC’s government relations team in Washington, D.C. if you have any questions or information to share on how these tax regulations would affect your company.