Industry Responds Favorably to New Trade Deals

U.S. government approval of two trade deals this week has drawn favorable response from the electronics industry. Trade organizations applaud the USMCA agreement and characterize a “phase one” deal with China as a good first step.

Here’s what the IPC said:

“The electronics manufacturing industry welcomes the U.S.-China "phase one" trade deal being signed in Washington, and the pathway it offers to resolution of broader issues,” said Chris Mitchell, vice president of global government relations at IPC. “The deal leaves many issues unaddressed including cyber security, structural economic reforms, and the high level of tariffs that are still in place on many products that are traded in our industry. "

As documented in a recent IPC study, many IPC members are feeling the pain of higher costs, supply chain disruptions, administrative hassles, and reduced access to the Chinese market as a result of the U.S.-China trade conflict.

The industry applauds the U.S. Senate for approving the U.S.-Mexico-Canada Agreement (USMCA) with broad bipartisan support, Mitchell said in a different release. “As soon as President Trump signs the legislation, which is expected within days, it will enter into force.”

With electronics exports making up over 30 percent of U.S. exports of manufactured goods, natural resources and energy exports to Mexico and nearly 20 percent of such exports to Canada, USMCA will pave the way to continued prosperity for electronics manufacturers, U.S. workers and consumers, Mitchell added.

“The pact will bolster the industry’s confidence in making investments in human resources and equipment in all three nations.”

Last May, IPC released a study that found the total value of U.S. electronics trade with Canada and Mexico was $155.5 billion in 2017, with trade in electronic systems and components being especially important to the North American automobile industry. Mexico imports 34 percent of U.S. printed circuit board production—larger than the next four largest markets combined.

Comments from the SIA:

The Semiconductor Industry Association (SIA) applauded Senate approval of the U.S.-Mexico-Canada Agreement (USMCA), which passed with strong bipartisan support.

SIA represents U.S. leadership in semiconductor manufacturing, design, and research, with members accounting for approximately 95 percent of U.S. semiconductor company sales.

“Congressional approval of the USMCA is a major win for free trade and America’s global leadership in semiconductors and the technologies they enable,” said John Neuffer, SIA president and CEO. “The agreement will help ensure that more products researched, designed, and made in America – including semiconductors – can flow to customers around the world. We applaud the Administration and Congress for negotiating and approving this landmark agreement.”

The USMCA incorporates several top U.S. semiconductor industry priorities, including new rules preventing parties from unfairly restricting trade of commercial encryption products, more robust protections for trade secrets and other types of intellectual property, commitments to protect the free and open flow of data across borders, and new rules aimed at ensuring state-owned enterprises compete fairly and transparently.

SIA also supports a range of USMCA provisions related to counterfeit enforcement, forced localization, competition policy, and trade facilitation, Neuffer added. "These new and higher-standard norms and disciplines will serve as important benchmarks for shaping global trade rules that preserve and strengthen the digital economy."

Canada and Mexico are strong U.S. trading partners in semiconductors and are critical players in the semiconductor supply chain. The U.S. has solid semiconductor trade surpluses with both Mexico and Canada at $6.77 billion and $1 billion, respectively.

“The ‘phase one’ trade agreement signed with China “helps ease uncertainty in the semiconductor industry, and we hope it provides a stepping stone to a more comprehensive deal between the world’s two largest economies,” Neuffer said in a separate release. “We applaud the important progress made today and urge both sides to continue negotiations to reach a phase two agreement that ensures a level playing field in China and tackles some of the thornier issues, such as state subsidies that can massively distort the marketplace.”