• United States and Mexico reached a preliminary bilateral deal as part of NAFTA renegotiations.
• Auto rules would require 75 percent North American content for duty free treatment.
• New requirements mandate most steel, glass and aluminum come from North America.
• A portion of each vehicle must be built in qualifying high wage factories.
• IPC supports a modernized NAFTA and continues advocacy for strong electronics supply chain provisions.
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.
The deal accelerates negotiations by establishing initial terms before Canada rejoins talks to finalize a trilateral agreement.
The agreement raises required North American content to 75 percent and adds sourcing rules for steel, glass and aluminum.
It ensures a portion of vehicle manufacturing occurs in higher wage facilities, influencing regional labor and production patterns.
• Trump Administration proposed rules implementing key parts of the 2017 Tax Cuts and Jobs Act
• New guidance clarifies which pass-through entities qualify for the 20% income tax deduction
• Treasury proposed rules allowing full expensing of new equipment placed in service after Sept. 27, 2017
• Expensing begins phasing down in 2023 unless made permanent
• Proposed repatriation regulations set taxes of 15.5% on liquid overseas assets and 8% on other assets
• IRS is accepting public comments on all proposals for 45–60 days
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.
The proposed pass-through rules clarify which companies qualify for the 20% deduction and how businesses with multiple legal entities can aggregate to claim it.
It allows companies to deduct the full cost of eligible new equipment in the year it is placed in service through 2022, with a phase-down beginning in 202
The repatriation rules apply a 15% tax on overseas liquid assets and an 8% tax on all other foreign earnings, payable over eight years.
By Chris Jorgensen, director, technology transfer If you can't measure it, you can't manage it! In the IoClothes 30 in 30 podcast, “Tackling Standards & Testing,” IPC D-70 E-Textiles Committee Vice Chair Ben Cooper has some questions for industry. Watch this installment free in the IoClothes Community Discussions and be sure to leave your comments for Ben and the other community visitors. Ben will also tackle this and many other topics at IPC E-Textiles 2018. Register today.
By Nicolas Robin, Senior Director, IPC Europe
• EU and U.S. leaders agreed to pursue WTO reforms focused on unfair trading practices, with concerns centered on China.
• Both sides committed to work toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods.
• An Executive Working Group was created to assess tariff measures and improve commercial exchanges.
• Reactions in Europe varied, with some Member States praising progress and others expressing skepticism due to existing tariffs.
On July 25, EU Commission President Jean-Claude Juncker and U.S. President Donald Trump struck an agreement on transatlantic trade during President Juncker’s visit to Washington D.C. after three and a half hours of negotiations. Most interestingly for IPC, both parties agreed to work together on a reform of the WTO to address unfair trading practices, including intellectual property theft, forced technology transfer, industrial subsidies, distortions created by state owned enterprises and overcapacity. These priorities have been clearly set having China in mind. The EU and U.S. also committed to work towards zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods, strengthen their cooperation on energy and establish a dialogue on standards in order to ease trade, reduce bureaucratic obstacles and slash costs. President Juncker resisted US demands to include agricultural products in the scope of products that should be subject to zero tariffs, arguing he did not have the mandate from EU Member States for doing so while stressing the EU would ask for the abolition of the ‘Buy American Act’ in return.
In addition, the two sides agreed to immediately set up an Executive Working Group to facilitate commercial exchanges and assess existing tariff measures. This body will be chaired by Commissioner for Trade Cecilia Malmström and the USTR Robert Lighthizer. Both parties pledged to hold off from imposing further tariffs on each other as long as negotiations are ongoing. Yet, no deadline has been set to finalise the negotiations to Juncker’s satisfaction, while this working group is due to finalise its work in the coming months. The view from Europe The news was welcomed by the European Automobile Manufacturers’ Association, which noted this is a step in the right direction towards de-escalation, adding that there are still a number of issues to be worked out. BUSINESSEUROPE, the group representing European employers, voided its support for a reform of the WTO with modern and more effective rules in order to improve the world trading system. Reactions at the Member State level varied, with Germany praising the deal as a breakthrough, while France voicing skepticism, focused on the continuing of “illegal tariffs imposed by the U.S on steel and aluminium”, as well as the closed US public procurement market.
Towards a new TTIP? These announcements mark a detente in the transatlantic relationship, which have considerably deteriorated in recent months after President Trump imposed tariffs on nearly all U.S. imports of steel and aluminium, including those from the EU, and threatened to impose a 20% tariff on cars imported from the EU. The EU had responded by imposing retaliatory tariffs on roughly €2.8 billion ($3.3 billion) of U.S. goods, including products like blue jeans, motorbikes, boats and bourbon and by launching legal proceedings against the U.S. in the WTO. President Trump’s sudden openness to compromise seems to stem from the fact that EU, Chinese and Mexican countermeasures have impacted the revenues of U.S. car manufacturers and farmers, who called this week to put an end to ongoing trade wars. The points agreed between the EU and the US (reduced custom duties, bringing technical standards closer through regulatory collaboration and removing bureaucratic obstacles) strongly resembles those of the Transatlantic Trade and Investment Partnership (TTIP), halted after President Trump took office in January 2017. However, the scope of the agreement is limited to industrial goods and does not encompass agriculture and services. Moreover, it is not intended to include a chapter on investments and arbitration tribunals, a point receiving widespread condemnation by NGOs and civil society. In the meantime, questions remain in Europe over the legality of such an agreement, as the European Commission can only engage in trade talks, following a mandate by Member States. There are also questions as to the legal form this agreement will take. Once further elaborated, this transatlantic trade deal will still have to be endorsed by EU trade ministers and voted on by the Plenary of the European Parliament to enter into force. Following up from the July discussions between the two Presidents, Jean-Claude Juncker’s chief trade advisor Léon Delvaux and another senior EU trade official travelled to Washington on 20th August to advance preparations for bilateral trade talks. They sought to agree on the content and scope of the future trade agreement until November, so that actual negotiations can begin afterwards. Officials from different levels may be visiting the United States in the coming weeks. Could this be the beginning of a renewed EU-US trade dialogue? Will the two sides manage to iron out the details of their agreement and find a way to implement them? As the devil is in the details, there are key outstanding questions that could make or break the seemingly new rapprochement in transatlantic trade relations.
They agreed to cooperate on WTO reform, reduce trade barriers on industrial goods and create a working group to support negotiations.
It targets unfair practices such as intellectual property theft, forced technology transfer and industrial subsidies that both sides link to China.
Reactions were mixed, with some groups welcoming reduced tensions and others concerned about ongoing U.S. tariffs and procurement limits.
It mirrors TTIP themes like reducing duties and aligning standards but excludes agriculture, services and investment provisions.