2013 U.S. Public Policy Summary: SEMI Supports Opportunity for Members

Capitol Commentary

2013 U.S. Public Policy Summary: SEMI Supports Opportunity for Members

By Jamie Girard, senior director, North America Public Policy, SEMI

While Congress finds itself with a historically low approval rating as the clock winds down on 2013, there is widespread public perception that the abandonment of regular order and legislative activity has resulted in a complete suspension of work on all policy matters.  However, despite the talk of all the bad things in Washington this year, progress has been made on key issues that impact SEMI members.  As a key member benefit, SEMI maintains an office in Washington, D.C. so that the industry has “boots on the ground” when it comes to representing concerns that members face with regard to the federal government.  These issues include export control regulations, international trade, federal R&D funding, high-skilled immigration reform, taxes, and solar PV, amongst others. 

Export Controls

A top priority for SEMI and our members in 2013 has been the push to conclude the Export Control Reform (ECR) effort that was started by the Obama administration in 2009. The purpose of ECR began as a fundamental reform of the export control system in order to strengthen national security and the competitiveness of key U.S. manufacturing and technology sectors.  Throughout the ECR Initiative, SEMI has been in a close consultation with the Departments of State, Commerce, and Defense to ensure that policies affecting the export of equipment and materials are streamlined and simplified to the furthest extent possible under the law.  On October 15, the first sets of regulatory changes redefining the U.S. export control system went into effect.  Among the changes was a new definition of “specially designed,” a far-reaching term used to capture or release items from the control list.  With expected ECR conclusion in 2014, SEMI will continue to work with industry stakeholders and government officials on a simplified, progressive list of policies which govern our exports. 

Additionally, SEMI is currently in the process of initiating a Commerce Department Foreign Availability Assessment, based on evidence that comparable etch equipment is being manufactured on foreign soil.  A concurring determination by the Commerce Department would render current U.S. export controls on etch technology futile and drastically reduce the burdensome process US equipment makers must go through to sell their products. A five-month period of review by the Department is expected to begin in early 2014. SEMI will be in constant contact with officials throughout this process.

Once again this year SEMI organized and hosted two global trade compliance seminars in China in order to educate industry stakeholders and government officials on regulation changes, harmonization efforts, and export compliance activities. Programs in Shanghai and Beijing in November brought together Chinese and U.S. trade and customs officials to discuss recent developments with the business community. Presenting organizations included Intel, SMIC, SanDisk, Larkin Trade, and Covington and Burling.  In concert with partners TechAmerica and USITO, SEMI plans to increase trade compliance education in the U.S. and China in 2014, and welcomes member input on how to maximize the educational benefits of these events.

Trade

With nearly 1,900 members worldwide, SEMI is global, and because of this, international trade is of paramount importance to many of those members. A primary focus of SEMI advocacy efforts in 2013 with regards to trade is the Information Technology Agreement (ITA). Originally agreed to in 1996, the ITA is now in the final stages of an aggressive expansion effort which would eliminate duties on a multitude of ICT products, many of which originate from the SEM industries.  On behalf of members, SEMI fought to include nearly 60 items on the expansion list and has been a staunch advocate for their inclusion in the final agreement.  While it was originally targeted for a 2013 conclusion to ITA expansion, talks broke down in late November with Chinese negotiators refusing to alter their unjustified “sensitivities” hold on a number of items.  With the hope of swift resolution in 2014, SEMI will continue its support for SEM items in an expanded ITA. 

The U.S. is also currently negotiating the Trans-Pacific Partnership (TPP) with ten other Asia-Pacific countries committed to concluding a high-standard agreement on international commerce.  SEMI remains actively engaged with U.S. policymakers through our role on the IP and ICT task forces which serve as advisory committees for USTR negotiators throughout the process.  TPP is largely considered the future of global commercial engagement, as membership currently includes Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S., and Vietnam.  TPP aims to reduce both tariffs and non-tariff barriers, while also liberalizing economies such as China, which is expected to join the agreement in the coming years.

Similarly, the U.S. and the EU recently entered into negotiations on the Trans-Atlantic Trade and Investment Partnership (TTIP), a bilateral deal expected to refine global standards and remove technical barriers to trade.  SEMI engages with business and government stakeholders leading the creation of this next-generation investment structure, with a particular focus on strengthening global technology standards.  In removing barriers to the second largest destination for U.S. exports of goods, the TTIP will provide a $128 million economic boost for U.S. companies while setting a strong precedent for the use of global standards.  U.S. and EU negotiators are optimistic for a 2014 conclusion of the agreement, forecasted to be the largest bilateral accord in history.

Federal R&D Funding

On February 12, 2013 President Barack Obama appeared before a joint session of Congress to deliver the annual State of the Union address, and made a proposal to the nation in defense of federal support of advanced manufacturing:

“Our first priority is making America a magnet for new jobs and manufacturing… I ask this Congress to help create a network of 15 of these [manufacturing] hubs and guarantee that the next revolution in manufacturing is made right here in America…Now is not the time to gut these job-creating investments in science and innovation.  Now is the time to reach a level of research and development not seen since the height of the Space Race.  We need to make those investments.”

SEMI agrees with the President’s proposal and has spent much of 2013 working to implement the National Network for Manufacturing Innovation (NNMI) into law. 

In August, Sen. Sherrod Brown (D-OH), Sen. Roy Blunt (R-MO), Rep. Tom Reed (R-NY), and Rep. Joe Kennedy (D-MA) introduced the Revitalize American Manufacturing and Innovation (RAMI) Act. The bipartisan bill employs public-private partnerships, combining industry and academia to create a network of regional institutes across the country to coordinate education and training efforts. Under the bill, institutes will be selected for participation through a competitive, merit review process.

Jonathan Davis

Since the bills’ introduction, SEMI and its partners have met with over 80 Congressional offices to implore them to support the bill.  In addition, Jonathan Davis, SEMI Vice President, Industry Advocacy testified as part of the U.S. House Manufacturing Caucus event to voice industry support for the legislation, and SEMI North America Advisory Board (NAAB) member Terry Brewer, president and founder of Brewer Science, testified before the Senate Commerce, Science and Transportation Committee in support of the bill as well.

SEMI will continue to advocate for the creature of the NNMI as a way for the government to support industry-led initiatives to bolster advanced manufacturing in the U.S.

Immigration Reform

2013 started off with much promise on an issue that has been at the top of SEMI members concerns for many years: High-skilled Immigration Reform.  The results of the 2012 election brought about much talk in Washington that this was the year that comprehensive immigration reform would finally be accomplished.  With high-tech, labor, conventional industry, and human rights groups all pushing in the same direction, hopes were high for swift passage of a ball.

Although the process wasn’t without its problems the U.S. Senate passed a comprehensive bill by a vote of 68-32, with members of both parties support the bill.  Thanks to the Hatch-Schumer amendments that were added to the bill, the H1-B skilled visa were strengthened, with up to 185,000 H1-B visas available in good economic times.

While the Senate has acted, the House is a different story and will be the crucial part to getting a comprehensive bill passed into law. The House Judiciary Committee is working on a series of smaller bills as compared to the on big bill that was passed by the House. While the high tech section is less generous with only 155,000 H1-B visas and 55,000 STEM Green cards, it still would represent an improvement over the status quo.

Speaker of the House John Boehner he wants to pass an immigration reform bill, and after the government shutdown, President Obama listed the passage of this reform effort as one of his top priorities.  With the approaching elections in 2014, it will be harder and harder to pass such legislation as Election Day draws closer, but hope remains that a broad deal can be accomplished.

Taxes

While the promising talk of comprehensive tax reform to start the year hasn’t materialized, Sen. Max Baucus (D-MT) and Rep. Dave Camp (R-MI) have continued to push the need for an overhaul of the system, in both individual and corporate taxes.  SEMI supports comprehensive corporate tax reform as a way to make doing business in the U.S. more attractive for SEMI members.  As such, SEMI’s North American Advisory Board has approved a set of tax reform principles that they believe should be the guidelines for any corporate tax reform effort.  These three principles are:

1)     Lower the top corporate tax rate from 35%

2)     Retain tax incentives which promote innovation

3)     Shift to a territorial tax system

In addition, the “fiscal cliff” deal that was agreed to on New Year’s Day extended the R&D tax credit until December 31, 2013.  Action on extending the credit once again may be considered in December, but more likely will need to be retroactively instated as part of a budget deal to keep the government from shutdown by the January 15, 2014 deadline.

Solar PV

Even in the face of great industry challenges this past year, SEMI has advocated for strong, effective, and enforceable policies to promote the deployment of solar PV as an answer to energy challenges.  In the global marketplace, and within domestic markets, it is imperative that solar companies are allowed to compete on the basis of quality, technology, and service.  To that end, SEMI is currently engaged in a series of outreach efforts in support of predictable and responsible policies which strengthen PV sustainability in the U.S. and abroad. In response to global trade disputes within the solar industry, particularly with regard to anti-dumping and countervailing duty investigations between the US, EU, and China, SEMI has recommended a plan for conflict resolution.  Furthermore, SEMI actively promotes the adoption of U.S. legislation to bolster production and installation in the domestic market.

In Brussels in February 2013, SEMI released Global Trade War and Peace: Unified Approaches to a Global Solar Energy Solution. This white paper offered a unique framework with which to restore order to the global PV trading system.  The paper was met with positive response from European Commission and US Senate officials and industry stakeholders alike.  The paper can be found at: (http://www.pvgroup.org/sites/pvgroup.org/files/docs/PV-Trade_wp_PQ.pdf)

In Washington, SEMI has taken an industry lead on advocacy for two vital pieces of legislation. The Renewable Energy Parity Act (HR 2502), which would allow solar projects to qualify for the Investment Tax Credit as soon as they break ground, currently has 55 co-sponsors.  The Master Limited Partnership (MLP) Parity Act (HR 1696), which would extend the tax-free investment structure enjoyed by many fossil fuels producers to solar projects, has 27 co-sponsors.  It is our hope that these bills will considered in both the House and Senate in the coming year.

Conclusion

SEMI will continue to work on behalf of its members in Washington, D.C. to advocate for the needs of the industry within the federal government.  While progress in working within the system may be much slower than private industry, it remains a necessary process to engage policymakers on the issues of the day to maximize the collective influence of our important industry.  If you have any questions regarding SEMI’s U.S. public policy efforts, please contact Jamie Girard, senior director, Americas Public Policy at jgirard@semi.org

December 5, 2013