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MONDAY ECONOMIC REPORT
July 11, 2014
NAM/IndustryWeek Survey of Manufactures Business Outlook by Quarter, 2012-2014

The global economy improved slightly in June, showing some signs of stabilization from weaknesses in prior months. The J.P. Morgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 52.1 in May to 52.7 in June, its fastest pace since February. Various measures of activity were mostly higher, including new orders, production and employment. Behind this figure, the data also reflected economic progress in countries such as China, Hong Kong and Japan, each of which shifted from a contraction in May to slight growth in June. As a result, just 2 of the top 10 markets for U.S.-manufactured goods had PMI values below 50 in June, an improvement from the five that registered contracting levels in May. Our largest trading partner’s values, the RBC Canadian Manufacturing PMI, increased from 52.2 to 53.5, reaching its highest point since December.

Europe dominated economic headlines on July 10, with worries about a large Portuguese bank and falling industrial production figures for France (down 1.7 percent), Germany (down 1.8 percent) and Italy (down 1.2 percent). Indeed, European growth has continued to ease, with the Markit European Manufacturing PMI down from 52.2 to 51.8. On the positive side, manufacturing activity has now expanded for 12 straight months, but the economy in the Eurozone remains subpar overall. Real GDP was up just 0.2 percent in the first quarter and is expected to increase around 1 percent in 2014 as a whole. Still, growth varied widely from country to country. France sits on one end of the spectrum, with manufacturing sentiment worsening and falling to a six-month low. Meanwhile, Ireland and Spain experienced multiyear highs for sales growth, and new orders in the United Kingdom expanded rather robustly (up from 59.5 to 61.0).

In the emerging markets, manufacturers in Brazil, Russia, South Korea and Turkey reported contracting levels of activity in June, although Russian production grew for the first time in six months and South Korean exports began to stabilize. Overall, however, manufacturing activity in the emerging markets expanded for the second straight month, spurred higher by better news in some Asian economies. Stronger sales and output resulted in increased manufacturing PMI data for China, India, Indonesia and Taiwan. India also benefited from greater export growth. Next week, we will get new data on Chinese GDP, industrial production, fixed-asset investment and retail sales. Real GDP is expected to pick up slightly, from the 7.4 percent annualized growth rate experienced in the first quarter, with a consensus estimate of around 7.5 percent. While this is a marginal improvement, it also continues to reflect decelerating rates of growth from what was experienced in the past.

Looking at U.S. trade flows, petroleum helped to narrow the U.S. trade deficit in May, with more exports and fewer imports improving the headline figure. This continues a trend seen over the past few years whereby improved energy production in the United States has slightly helped balance the trade picture. Outside of petroleum, the numbers were less favorable. The average monthly deficit so far in 2014 reached $43.65 billion, higher than the $39.70 billion average for all of 2013. In addition, U.S.-manufactured goods exports continue to grow at a disappointing rate, up just 0.5 percent year-to-date versus this time last year using non-seasonally adjusted data. Nonetheless, exports of manufactured goods increased to all five of our largest trading partners through the first five months of this year: Canada, Mexico, China, Japan and Germany. That is an encouraging sign, even if we would like to see faster growth in our international sales overall.

On the policy front, the congressional debate on reauthorization of the Export-Import (Ex-Im) Bank continues to move forward, while action on other trade legislation is currently stalled. The World Trade Organization (WTO) officially began environmental goods negotiations, while both the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) continue. The U.S. trading relationship with key partners, including India, China and Russia, continues to be a focus.

Chad Moutray
Chief Economist
National Association of Manufacturers
Global Economic and Trade Trends

The global economy has shown signs of stabilization in June after weaknesses in previous months
In May, half of the top 10 markets for U.S.-manufactured goods had declining levels of manufacturing activity. Much of that stemmed from softness in countries such as China (up from 49.4 to 50.7), Hong Kong (up from 49.1 to 50.1) and Japan (up from 49.9 to 51.5), each of which shifted to slight growth in June. Nonetheless, Brazil (down from 48.8 to 48.7) and South Korea (down from 49.5 to 48.4) continue to experience contractions in their economy, with both seeing deteriorating activity in June. At the other end of the spectrum, manufacturers in the United Kingdom (up from 57.0 to 57.5) and the United States (up from 56.4 to 57.3) continue to see strong growth, each with healthy gains in new orders and output.

The J.P. Morgan Global Manufacturing PMI reflects the somewhat better conditions worldwide, with the headline index rising from 52.1 to 52.7. This marks the fastest pace since February, which had reached the highest level since May 2011. The underlying data were mostly higher. New orders (up from 53.1 to 54.1), production (up from 53.4 to 54.1) and employment (up from 50.8 to 51.0) each picked up for the month, and inventory stockpiles (down from 49.3 to 47.0) continued to be depleted. The one weakness of note was the easing in export sales a bit, down from 51.9 to 51.1.

Manufacturing activity has picked up slightly in Asia in June, particularly in China and Japan, after contractions in May
The HSBC China Manufacturing PMI rose from 49.4 in May to 50.7 in June, its first expansion since December. Increased new orders (up from 50.0 to 51.8) helped to fuel this improvement, with the pace of sales growth at its fastest level since March 2013. Output (up from 49.8 to 51.8) was also higher. At the same time, exports (down from 53.2 to 50.7) slowed to very modest growth, and hiring (up from 47.4 to 48.7) continued its negative trend even though it improved slightly for the month. The official government PMI data (up from 50.8 to 51.0) also reflect recent gains in the manufacturing sector. Overall, it appears that China’s economy has begun to stabilize, but it also continues to reflect some weaknesses from decelerating growth rates.

Next week, we will get new data on Chinese GDP, industrial production, fixed-asset investment and retail sales. Real GDP is expected to pick up slightly from the 7.4 percent annualized growth rate experienced in the first quarter, with a consensus estimate of around 7.5 percent. While this is a marginal improvement, it also continues to be slower than rates experienced in the past, with 10.3 percent growth seen as recently as the second quarter of 2010. Other indicators also illustrate a slower pace than in the past, including industrial production and private fixed-asset investments. Still, growth remains strong overall, even if these figures fall well below the rates many businesses have become accustomed to seeing.

Japanese manufacturers have also started to observe better activity levels in June, with the Markit/JMMA Japan Manufacturing PMI up from 49.9 to 51.5. New orders (up from 49.4 to 52.0) and production (up from 49.2 to 51.8) shifted to slight growth, but export sales (up from 48.2 to 49.0) and hiring (down from 51.0 to 49.8) dipped into contraction territory. Fortunately, exports moved in the right direction, even if they were still negative. Industrial production also improved, increasing 0.5 percent in May and growing for the first time in two months.

Nonetheless, retail sales were off for the second straight month, down 0.4 percent in May. Spending remained somewhat suppressed due to an increase in sales tax on April 1. In terms of real GDP, the Japanese economy grew 1.6 percent in the first quarter, or 2.8 percent on a year-over-year basis. This fared better than the 2.4 percent annualized pace experienced in both the third and fourth quarters of last year.

European growth continued to ease amid lingering deflationary worries; yet, manufacturers have now expanded for 12 straight months
The Markit Eurozone Manufacturing PMI eased for the second straight month to its lowest level of 2014, down from 52.2 in May to 51.8 in June. Activity decelerated across the board, including new orders (down from 52.3 to 51.9), output (down from 54.3 to 52.8), exports (down from 52.6 to 52.4) and employment (down from 50.5 to 50.3). Yet, each reflected modest expansionary levels for the 12th consecutive month—a sign that the continent continues to recover from its very deep recession. That alone provides a psychological boost.

With that said, growth varies widely. Growth in manufacturing activity in France continues to worsen, with its PMI down from 49.6 to 48.2, a six-month low. It remains one of the weakest of the European economies. Other areas of softness include Austria (down from 50.9 to 50.4) and Greece (down from 51.0 to 49.4), which both had contracting levels of new orders. In addition, Germany (down from 52.3 to 52.0), Italy (down from 53.2 to 52.6) and the Netherlands (down from 53.6 to 52.3) had positive, but eased growth for the month. In each of these three nations, though, exports showed strength. Meanwhile, three countries experienced jumps in manufacturing activity in June: Ireland (up from 55.0 to 55.3), Spain (up from 52.9 to 54.6) and the United Kingdom (up from 57.0 to 57.5). Ireland and Spain experienced multiyear highs for sales growth, whereas new orders in the United Kingdom expanded rather robustly (up from 59.5 to 61.0).

Overall, growth in the Eurozone remains subpar, with real GDP up just 0.2 percent in the first quarter and expected to increase around 1 percent in 2014 as a whole. New industrial production figures are expected to show declining output in May, down from the 0.8 percent gain experienced in April. Moreover, retail sales remained flat in May, with growth of just 0.7 percent over the past 12 months. The unemployment rate fell to 11.6 percent, its lowest level since September 2012. Still, unemployment remains quite elevated, with job and income growth worries pervasive. As a result, the ZEW Indicator of Economic Sentiment worsened somewhat in June, with nearly one-third of respondents saying that current conditions were bad and just 5.1 percent suggesting they were good.

Deflation continues to cause concern. Producer prices fell 0.1 percent in the Eurozone in April, with declines of 1.0 percent year-over-year. At the same time, annual inflation remained just 0.5 percent. Fears about deflation and slow growth have prompted the European Central Bank (ECB) to take actions at its June 5 meeting to further stimulate the Eurozone economy, cutting its main interest rate to 0.15 percent. In essence, the ECB will charge negative interest rates on bank deposits to spur lending, and there is some speculation that it might pursue a more aggressive asset-purchasing program in the future, if needed.

Canadian manufacturers reported increased activity in June
The RBC Canadian Manufacturing PMI increased from 52.2 to 53.5, reaching its highest point since December. New orders (up from 52.6 to 54.1) were also growing at their fastest pace of 2014, expanding modestly and helping to boost the top-line figure. Production (up from 51.8 to 53.8), export sales (up from 50.6 to 51.4) and hiring (up from 52.4 to 52.6) also moved in the right direction. With that said, Canadian real GDP slowed to 1.2 percent in the first quarter, down from 2.7 percent in the fourth quarter. In March, manufacturing output increased 0.3 percent, down from 0.6 percent in February and 1.6 percent in January. Earlier today, Statistics Canada reported that the unemployment rate rose from 7.0 percent in May to 7.1 percent in June, with the number of workers in manufacturing dropping 10,600 for the month.

Meanwhile, the HSBC Mexico Manufacturing PMI edged slightly lower, down from 51.9 to 51.8. The country’s manufacturing activity has now expanded for nine straight months, with an average of 51.8 over the past five. The underlying data for June, however, were largely mixed. New orders (up from 53.3 to 53.8) and output (up from 51.6 to 52.0) picked up somewhat, but exports (down from 53.2 to 52.0) slowed and hiring declined (down from 51.1 to 49.3). In terms of output, it was reported that industrial production in Mexico increased a disappointing 1.6 percent in May. Real GDP rose 1.8 percent on a year-over-year basis in the first quarter. Although better than the 0.7 percent pace observed in the fourth quarter of 2013, it represents a continued deceleration from the fourth quarter of 2012, when it grew at an annualized 3.4 percent.

The economic environment in the emerging markets marginally improved in some Asian countries
The HSBC Emerging Markets Index rose from 50.6 to 52.3, its highest level in more than a year. At the same time, the Emerging Markets Manufacturing PMI expanded for the second consecutive month, up from 50.3 to 50.8. Sales (up from 51.2 to 51.9) and production (up from 50.7 to 51.4) both accelerated, but exports (down from 52.4 to 51.1) eased. Employment growth (up from 49.0 to 49.6) remained negative, but declined at a slower rate. The index for future output (down from 64.7 to 63.3) continued to be relatively robust, even as it decelerated for the fourth straight month.

The better data stemmed largely from a few Asian economies, including China (up from 49.4 to 50.7), India (up from 51.4 to 51.5), Indonesia (up from 52.4 to 52.7) and Taiwan (up from 52.4 to 54.0). Stronger new orders and output growth helped in each of these countries, with export growth pushing India’s sentiment higher. The Czech Republic (down from 57.3 to 54.7) continued to expand at a decent pace, albeit at a slower rate, and Poland (down from 50.8 to 50.3) and Vietnam (down from 52.5 to 52.3) also grew at a decelerated pace last month. Pushing against this more positive data were a few countries with contracting levels of manufacturing activity. These included Brazil (down from 48.8 to 48.7), Russia (up from 48.9 to 49.1), South Korea (down from 49.5 to 48.4) and Turkey (down from 50.1 to 48.8). Even those nations, however, had “green shoots,” such as production expanding for the first time in six months in Russia and the decline in exports stabilizing in South Korea.

The trade deficit has been higher year-to-date in 2014, but it narrowed in May
The U.S. trade deficit narrowed from $47.04 billion in April to $44.39 billion in May. April’s deficit reached a two-year peak and was a bit of an outlier; the average monthly deficit so far in 2014 is $43.65 billion, higher than the $39.70 billion average for all of 2013. The smaller deficit in May primarily resulted from increased goods exports (up from $135.05 billion to $136.69 billion) and slightly fewer goods imports (down from $200.72 billion to $199.98 billion). The service-sector trade surplus also widened from $18.63 billion to $18.90 billion.

Furthermore, the improvement in the goods trade deficit in May came largely from petroleum shifts. The United States exported more petroleum (up from $11.79 billion to $13.12 billion) and purchased less from overseas (down from $29.84 billion to $28.33 billion). This continues a trend seen over the past few years whereby improved energy production in the United States has slightly helped to balance the trade picture. The non-petroleum balance, in contrast, widened ever so slightly (up from $46.63 billion to $46.98 billion).

Indeed, goods exports by sector saw relatively small shifts for the month. The largest increases came from automotive vehicles and parts (up $778 million), consumer goods (up $421 million) and industrial supplies and materials (up $170 million). Yet, the latter would have declined if not for petroleum, and non-automotive capital goods exports fell by $168 million. On the imports side of the ledger, higher volumes of automotive vehicles and parts (up $1.33 billion) and non-automotive capital goods (up $1.03 billion) levels were more than offset by reduced imports in industrial supplies and materials (down $1.72 billion), consumer goods (down $456 billion) and foods, feeds and beverages (down $198 million). Once again, the decline in petroleum imports dominated the industrial supplies figure.

Growth in U.S.-manufactured goods exports continues to disappoint
Year-to-date growth in manufactured goods exports increased from $486.20 billion in 2013 to $488.63 billion (using non-seasonally adjusted data) for a gain of 0.5 percent. As such, export growth for manufacturers continues to be lower than desired, with weaker global economic activity impacting our ability to grow international sales. (Note that using seasonally adjusted data from Trade Stats Express, manufactured goods exports growth ticked slightly higher for the first quarter of 2014, up 1.1 percent over last year, but still disappointing.)

Still, exports have increased in each of our top five markets in the first four months of this year relative to the same time frame last year: Canada (up $125.22 billion to $127.00 billion), Mexico (up from $92.73 billion to $98.26 billion), China (up from $45.75 billion to $49.31 billion), Japan (up from $26.57 billion to $27.66 billion) and Germany (up from $19.86 billion to $21.05 billion). Each of these figures is not seasonally adjusted.

International Trade Policy Trends

Ex-Im Bank reauthorization debate intensifies
As part of a broad advocacy and communications campaign, the NAM is leading a new “Exporters for Ex-Im” Coalition. You can join us online at www.exportersforexim.org and @Exporters4ExIm. This coalition was announced on June 23 with the release of a letter signed by more than 850 companies and associations urging Congress to act now. The coalition also released a new “Ex-Im 101” video that explains how the Ex-Im Bank helps small, medium and large companies across the country compete successfully in global markets and an infographic for those who want to learn about Ex-Im. Ex-Im released its 2013 Competitiveness Report in late June, noting the expansion of export credit in countries not bound by the rules of the Organisation for Economic Co-operation and Development Arrangement and the rapid growth of export financing from Asian competitors like Korea, Japan and China.

On the Senate side, Joe Manchin (D-WV) and Mark Kirk (R-IL) are preparing to introduce a bipartisan Ex-Im reauthorization bill, and the NAM will be working with its coalition partners to push for passage before the end of July. On June 25, the House Financial Services Committee held a hearing that ran seven hours, with a packed room and dozens of members in attendance to make statements and ask questions. You can find testimony for the eight witnesses who testified as well as the archived webcast online here. Click here for NAM President and CEO Jay Timmons’ June 25 press statement about why Ex-Im is critical to growing manufacturing in the United States. During the hearing, Rep. John Campbell (R-CA) announced a discussion draft of an Ex-Im Bank reauthorization bill. Rep. Denny Heck (D-WA) also introduced the Protect American Jobs and Exports Act of 2014 (H.R. 4950) with 201 cosponsors.

As described above, NAM members can raise their voice on the Ex-Im reauthorization in several ways. Contact the NAM’s Lauren Airey, (202) 637-3141, and Tiffany Adams, (202) 637-3118, if you need more information.

The NAM launches Coalition for Green Trade to push market-opening environmental goods agreement
The NAM, joined by the National Foreign Trade Council and the U.S. Council for International Business, launched the Coalition for Green Trade this week and released a global sign-on letter, with a broad range of international industry associations supporting the Environmental Goods Agreement talks. NAM Director of International Trade Policy Jessica Lemos participated in the launch and held meetings with U.S. and foreign delegations and other business organizations in Geneva.

Chief negotiators meet to move TPP talks forward as manufacturers press for tariff elimination by partner countries
Chief negotiators from the 12 TPP countries are meeting in Ottawa, Canada, July 3 through 12 to make progress on key issues. This morning, the NAM sent this letter, signed by 17 manufacturing associations, to U.S. Trade Representative (USTR) Michael Froman to ensure that our TPP trading partners will eliminate tariffs. The NAM continues to push for an ambitious, comprehensive, high-standard agreement with concrete market-opening provisions, strong protections for intellectual property rights and investment, and new disciplines relating to cross-border data flows and other issues. President Obama indicated that his goal is for the TPP talks to conclude by the end of this year, while House Ways and Means Chairman Dave Camp (R-MI) stated that Trade Promotion Authority (TPA) legislation is required before the strongest possible TPP agreement can be negotiated.

EU leadership and Parliament change hands and begin work while negotiators prepare for a sixth round of T-TIP talks
On July 1, Italy took over the EU presidency for the next six months, and the recently elected EU Parliament met for the first time to elect a new president (German Social Democrat Martin Schulz, who was reelected as the Parliament’s president). On July 7, the Parliament elected committee chairs and vice chairs and started to assign members to committees. On June 26, the European Council choseJean Claude Juncker, former Prime Minister of Luxembourg, as the President of the European Commission over objections raised by British Prime Minister David Cameron and Hungarian Prime Minister Viktor Orbán. The council will meet on July 16 to complete the nominations for other major commission positions.

The EU is hosting the sixth round of T-TIP talks in Brussels from July 14 to 18, including a stakeholder session on July 16. EU papers on its initial negotiating positions in a number of areas can be found here. The NAM submitted detailed comments on July 7 regarding the investment provisions in the T-TIP in response to the EU’s consultation on this issue. Note that the deadline for input to the consultation has been extended to July 13 if your company or organization would still like to submit comments.

The NAM calls for constructive leadership to strengthen U.S.–Indian ties
The NAM continues working closely with the Administration and members of Congress to promote constructive engagement with India’s new government and to resolve outstanding trade concerns. The NAM and others are meeting with federal agencies and Capitol Hill offices to gather information and to help shape a positive agenda that delivers real results as the Administration prepares for the September visit of Indian Prime Minister Narendra Modi to the United States and a planned meeting of the U.S.–India Trade Policy Forum later in the year. The NAM and other members of the Alliance for Fair Trade with India sent a letter to Ambassador Froman and Secretaries John Kerry and Penny Pritzker last month calling for U.S. and Indian leadership to “build a deeper and more reciprocal commercial relationship,” including through resumption of bilateral dialogues like the Trade Policy Forum. The NAM will continue working to promote a successful bilateral trade and investment partnership.

Tensions continue between Russia and Ukraine
Tensions have continued over the past several weeks between Russia and Ukraine. Ukrainian President Petro Poroshenko called off a cease-fire and ordered his country’s military to end the pro-Russian rebellion by force. Soldiers retook an important checkpoint at the Russian border, routed insurgents from the occupied city of Slovyansk and were closing in on the regional capital of Donetsk. Meanwhile, the Russian government appears to have stepped back from overt military action in the Ukraine. On July 9, the Senate Foreign Relations Committee held a hearing on “Russia and Developments in Ukraine,” with witnesses from the U.S. State and Treasury Departments and former national security advisors to previous Presidents. As indicated in the NAM Shopfloor blog that same day, the NAM remains deeply concerned by the ongoing situation but urges restraint by those policymakers who would seek to impose unilateral economic sanctions that would damage U.S. economic interests while failing to effectively achieve the outcomes desired.

The NAM continues push on Miscellaneous Tariff Bill (MTB)
The NAM is continuing to push for action on the long-stalled MTB. It organized a June 17 lobby day, visiting more than 40 key House and Senate offices to urge prompt action on the bill. The NAM prepared the following materials and took these action steps to further highlight the necessity of passing the MTB as soon as possible: MTB two-pager, testimonials, op-ed by Timmons, MTB rotator and MTB Manufacturing Minute featured on the NAM homepage, blog post and digital ads placed on 30 frequently visited websites—Ad 1 and Ad 2. The NAM also issued a press release and hosted a press conference call. It earned mentions in these stories: “Manufacturers Press for Tariff Bill,” The Hill; “Manufacturers Lobby Congress for Tariff ‘Tax Cut,’” IndustryWeek; “Manufacturers Hustle to Bring Back Tariff Relief,” Politico Pro; and “DuPont Seeks Tariff Relief from Congress,” Wilmington News Journal. We urge NAM members toshare this MTB Action Alert with your staff to increase contact by manufacturing employees with their members of Congress on the importance of the MTB. Please also use this social media cheat sheet to keep momentum going in favor of the MTB.

Renewal of Generalized System of Preferences (GSP) program and Customs Reauthorization legislation still on hold
GSP legislation expired on July 31, 2013, and congressional action is required to restore these trade benefits. While the NAM has been urging renewal of this program, there has not been movement on this legislation. On May 7, the President notified Congress of his intent to remove Russia from the list of beneficiary countries, which will be effective 60 days thereafter (in early July). Discussions have increased since then on potential pathways for passage. The biggest hurdle is that an agreement on the offset for this legislation has not yet been reached. The NAM also continues to urge action by the Finance and Ways and Means committees to move forward customs reauthorization legislation to cut red tape at the border, improve trade efficiency and ensure strong enforcement of our trade laws. There is no recent movement on this legislation either.

The NAM testifies on need to strengthen trade secret protection
.With the trade secrets manufacturers rely on to protect their proprietary production processes, formulas and data increasingly at risk around the world, the NAM is advocating for legislation, such as the Defend Trade Secrets Act, sponsored by Sens. Chris Coons (D-DE) and Orrin Hatch (R-UT), that would provide access to federal civil enforcement for trade secret theft and establish a strong foundation for U.S. trade agreement commitments. Efforts to win passage of that legislation took an important step forward during a June 24 House Judiciary Subcommittee on Courts, Intellectual Property and the Internet hearing. Members of Congress on both sides of the aisle expressed broad support for a House companion bill that would provide access to federal civil court for trade secret theft. NAM Senior Director of International Business Policy Chris Moore testified at the hearing and stressed the importance of strong trade secrets protection and enforcement for manufacturers small and large. At the same hearing, Thaddeus Burns, Senior Counsel for Intellectual Property and Trade for NAM member General Electric, testified in favor of stronger trade secrets protections. The NAM will continue to work with the House and Senate Judiciary committees and others to protect trade secrets at home and abroad.

Finance and Ways and Means committees hold trade hearings
The Senate Committee on Finance is holding a series of hearings on international trade issues, starting with the June 25 hearing on “Trade Enforcement: Using Trade Rules to Level the Playing Field for U.S. Companies and Workers.” Two NAM member companies testified at this hearing: Mario Longhi, President and Chief Executive Officer, United States Steel Corporation, and Bart Peterson, Senior Vice President, Corporate Affairs and Communications, Eli Lilly and Company. The NAM submitted a written statement for the record that emphasized that “both trade agreements and domestic trade rules are critical to manufacturers’ success in the global economy.” The Finance Committee has also announced a hearing on the “Role of Trade and Technology in 21st Century Manufacturing on July 17. The House Committee on Ways and Means held a June 11 hearing on expanding agricultural trade and is scheduling another hearing for July 16 to address behind-the-border barriers.

New export control rules issued for military electronics
On July 1, the State Department published revisions to U.S. Munitions List Category XI (Military Electronics). It amends U.S. Munitions List (USML) Category VIII (Aircraft and Related Articles) with respect to wing-folding systems and both Categories VIII and XIX to remove three paragraphs superseded by the revision of Category XI. The NAM previously submitted comments to the State Department on proposed revisions to USML Category XI. The Commerce Department published a corresponding rule to add to the Commerce Control List military electronics, technology and software that no longer warrant control on the USML. The Federal Register Notice also addresses comments concerning four options under consideration, to address items of limited military significance for which a license is required only if destined for a terrorist supporting destination or the People's Republic of China. These rules take effect on Dec. 30, 2014, with a few exceptions. The revision to §121.1, Category VIII(h)(4) takes effect August 15. The addition of software and technology for certain wing-folding systems is effective immediately.

United States and China hold sixth Strategic and Economic Dialogue (S&ED)
At this week’s S&ED meetings in Beijing, several key issues of importance to manufacturers were discussed, including negotiations regarding an expanded information technology agreement and a bilateral investment treaty, implementation of the Trade Facilitation Agreement and ongoing issues of concern related to market access in China, intellectual property protection and antimonopoly rules. The chair and ranking members of the Senate Finance and House Ways and Means committees sent a letter to the Administration highlighting these and other issues in the U.S.–China economic relationship. At the conclusion of the S&ED, Ambassador Froman emphasized that China had agreed to a timetable for the investment treaty discussions related to market access and that progress was made on trade secrets, competition and market access. He also noted there was “constructive discussion on the expansion” of the Information Technology Agreement. The Treasury Department released this fact sheet describing the outcomes of this meeting, and we expect to learn more details to be available in the coming days.

Implementation of the WTO Trade Facilitation Agreement hits hurdles
Implementation of the WTO Trade Facilitation Agreement (TFA) signed in December 2013 continues to run into difficulties, first from the African Union and most recently from India. The TFA established three categories for implementation timelines, and the report suggests a systematic approach to grouping and sequencing the 37 TFA commitments. Implementation of the TFA was threatened earlier this year when African trade ministers endorsed the concept of provisionally accepting the agreement but not implementing it until the conclusion of still-pending Doha Development Agenda items. At last week’s Preparatory Committee on Trade Facilitation (PCTF), U.S. Ambassador to the WTO and Deputy USTR Michael Punke warned that countries would be making a “dangerous miscalculation” if they think delaying implementation of the TFA will provide negotiating leverage in talks on completing the long-running Doha round of talks. Renewal of the African Growth and Opportunity Act (AGOA) preference program is pending, which could provide an incentive for African countries to reverse the earlier ministerial decision. Also at last week’s PCTF meetings, India indicated concerns over moving ahead with TFA implementation before making progress on the other Bali package items, most notably Bali’s “best endeavor” provisions relating to agriculture and development. Ambassador Punke also pushed back on those comments, noting the difference in the detailed implementation timetable for the TFA.

Exports in Action
U.S. Embassy in Uganda to hold catalog exhibition showcasing American products and services

Date: September 25
Location: Kampala, Uganda

The U.S. Embassy in Kampala, Uganda, will hold a one-day catalog exhibition on September 25 to showcase U.S. equipment, services and technology. The Buy America event will feature products and services made by American companies and will also display catalogues from companies interested in selling their products in Uganda. The fee to exhibit is $100. For more detailed information, contact Mary Masyuko, commercial specialist, at Mary.Masyuko@trade.gov.

Department of Commerce to host Infrastructure Business Development Mission to Morocco, Egypt and Jordan

Dates: December 3 to 11
Locations: Morocco, Egypt, Jordan

The U.S. Department of Commerce International Trade Administration is organizing an executive-led Infrastructure Business Development Mission to Morocco, Egypt and Jordan (with optional West Bank briefings) from December 3 to 11. The purpose of the mission is to introduce U.S. firms and trade associations to the three countries’ rapidly expanding infrastructure markets and to assist U.S. companies in pursuing export opportunities in these markets. Delegates will receive market briefings and participate in customized meetings with key port officials and prospective partners. A maximum of 20 companies will be accepted to participate. Registration deadline is September 12. To apply, click here.


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Questions or comments?
Contact Chief Economist Chad Moutray at cmoutray@nam.org.
A Publication of the National Association of Manufacturers
 
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MONDAY ECONOMIC REPORT
August 8, 2014
NAM/IndustryWeek Survey of Manufactures Business Outlook by Quarter, 2012-2014

The International Monetary Fund (IMF) predicts that world output will grow 3.4 percent in 2014, down from 3.7 percent in its April forecast. Much of the downward movement stems from weaker-than-expected data from the first quarter. In the United States, for instance, real GDP declined by a disappointing 2.1 percent, and even with a rebound in the second quarter, the economy expanded by just 0.9 percent in the first half. Fortunately, manufacturers are mostly upbeat about the second half, and the IMF predicts 1.7 percent and 3.0 percent growth in the United States for 2014 and 2015, respectively. Europe is anticipated to grow 1.1 percent this year, and the Chinese economy should increase by 7.4 percent. While the emerging markets as a whole have started to see signs of improvement, notable weaknesses still exist in Brazil, Russia and South Africa, to name just a few. Geopolitical risks abound, of course, with crises around the world also negatively impacting activity.

The good news is that global manufacturing activity continues to expand modestly, with the pace little changed in July from June. New orders, production and employment growth slipped a little for the month, but exports picked up. In July, 8 of the top 10 markets for U.S.-manufactured goods had expanding economies, with Brazil and South Korea contracting once again. Among the expanding nations, Canada and China saw accelerating levels of manufacturing demand and production in July, with relatively decent growth seen in both the Netherlands and the United Kingdom. At the same time, manufacturers in the United States have continued to rebound from softness earlier in the year. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) increased to its highest level since November on strong output and sales growth.

The Chinese economy has begun to stabilize, with manufacturers in China expanding for the second straight month. New orders, exports and production growth all strengthened in July, and we anticipate a pickup in industrial production and fixed-asset investment rates when they are released next week. China’s real GDP has increased slightly, from 7.4 percent at the annual rate in the first quarter to 7.5 percent in the second quarter. Meanwhile, Eurozone manufacturers have now expanded for 13 straight months, but activity has decelerated since January. Confidence measures have weakened, year-over-year inflation remains very low and the unemployment rate stayed elevated (even as it fell to 11.5 percent). Still, the latest industrial production and retail sales have reflected a rebound.

In general, we have seen the U.S. trade deficit narrow over the past couple years as we have become less dependent on foreign sources of energy. In June, the trade deficit was at its smallest level since January, as goods imports declined at a faster pace than goods exports increased. Still, we continue to see relatively slow growth for U.S.-manufactured goods exports, which have increased 1.7 percent year-to-date. Ideally, we will see improvements moving into the second half, as the current pace represents a deceleration from last year’s 2.6 percent rate of growth.

The last month saw important progress in ongoing trade negotiations with Europe and 11 Pacific Rim nations, as well as environmental goods talks in the World Trade Organization (WTO). However, India and others successfully blocked agreement on a global trade facilitation package that would add an estimated $1 trillion to the world economy, potentially setting up a last-ditch effort to revive the deal in September. Responding to rising tensions in the Ukraine, the United States and the European Union (EU) imposed fresh sanctions on Russia in the financial, energy and defense sectors.

With Congress now in recess for the month of August, manufacturers are engaging Senators and Representatives in their states and districts and gearing up for action in the fall on a range of stalled trade measures—including reauthorization of the Export-Import Bank, Trade Promotion Authority, a miscellaneous tariff bill and the Generalized System of Preferences. A House bill that would provide access to federal civil enforcement for trade secrets theft is fast gaining cosponsors, laying the groundwork for a Judiciary Committee markup and possible passage in September. The planned official visit of India’s new Prime Minister, Narendra Modi, to Washington at the end of next month will provide another opportunity to address outstanding trade and investment barriers in that important market.

Chad Moutray
Chief Economist
National Association of Manufacturers
 
Global Economic and Trade Trends

The global economy has improved somewhat over the past few months; yet, there was little difference overall between June and July
The J.P. Morgan Global Manufacturing PMI edged marginally lower, down from 52.6 in June to 52.5 in July. Yet, the data were largely unchanged from last month, and the pace of growth remains slightly improved from three months ago. Indices for new orders (down from 54.2 to 54.0) and output (down from 54.0 to 53.9) eased a little, but still reflected modest growth overall. Hiring (down from 51.0 to 50.4) also slowed, but export sales (up from 51.1 to 51.5) picked up a little.

Looking at the top 10 markets for U.S.-manufactured goods, all but two of them had expanding levels of activity in July, the same as the month before and continued progress from just five in expansion in May. Brazil (up from 48.7 to 49.1) and South Korea (up from 48.4 to 49.3) continue to experience contractions in their economy, but each made some minor progress last month. Outside of those two nations, the data were largely mixed. Manufacturing activity decelerated in the United States (down from 57.3 to 55.8), Germany (down from 52.4 to 52.0), Mexico (down from 51.8 to 51.5) and the United Kingdom (down from 57.2 to 55.4), but it picked up a bit in Canada (up from 53.5 to 54.3), China (up from 50.7 to 51.7) and the Netherlands (up from 52.3 to 53.5).

In contrast to Markit’s analysis, the Institute for Supply Management (ISM) found that manufacturing activity picked up in July. The ISM Manufacturing PMI rose from 55.3 in June to 57.1 in July, its highest level since November. More importantly, the production index has measured 60 or more for each of the past three months, indicating strong output growth. Demand and hiring also rose sharply, but export sales growth eased and raw material costs remained elevated.

The Chinese economy continues to stabilize, with manufacturers in China expanding for the second straight month
The HSBC China Manufacturing PMI rose from 50.7 to 51.7. This marks the fastest pace since January 2013 and signals that the sector has begun to recover after contracting from January to May of this year. The underlying data were mostly higher across the board, with accelerating levels for new orders (up from 51.8 to 53.3), exports (up from 50.7 to 52.6) and output (up from 51.8 to 52.8). Still, growth remains modest overall, and employment growth (up from 48.7 to 49.4) has been negative in 15 of the past 16 months, albeit with some easing in the rate of decline last month.

Chinese GDP has also shown slight improvement of late, up from a year-over-year pace of 7.4 percent in the first quarter to 7.5 percent in the second. We will get new data for industrial production and fixed-asset investment next week, but the June data reflected a pickup for each. Industrial production has increased 9.2 percent over the past 12 months and has continued to edge higher since bottoming out at 8.6 percent in February. Likewise, fixed-asset investments in manufacturing rose 14.8 percent year-over-year in June, up from 14.2 percent in May. Nonetheless, investment remains decelerated from a more-robust 18.5 percent year-over-year pace observed in December for the sector. Indeed, all of the Chinese data seem to reflect this easing in activity; while growth has stayed strong, it has slowed significantly from what businesses are accustomed to seeing.

There has been slightly improved growth in the emerging markets, led by China, the Czech Republic, India and Taiwan
While the HSBC Emerging Markets Index eased a bit (down from 52.3 to 51.7), its manufacturing component increased (up from 50.8 to 51.5) to its highest level since January 2013. The progress resulted from faster paces across the board in a number of manufacturing measures, including new orders (up from 51.8 to 52.7), output (up from 51.4 to 52.4), exports (up from 51.1 to 51.7) and employment (up from 49.6 to 50.1). It marks the first positive reading on hiring since March. More importantly, survey respondents were more upbeat about future output (up from 63.3 to 64.3); while this was still not as optimistic as in February (68.4), it hopefully suggests the beginning of a rebound from recent softness. 

Looking at Brazil, Russia, India and China (BRIC), three of them noted improving levels of manufacturing activity in July. In addition to the stabilization seen in China (up from 50.7 to 51.7), India’s (up from 51.5 to 53.0) manufacturers reported their fastest pace of growth since December 2012, led by stronger domestic demand and production. Exports eased a bit, and hiring contracted somewhat, however. At the same time, Russia (up from 49.1 to 51.0) expanded for the first time since October on increased new orders and output. With that said, export sales (down from 47.7 to 43.1) have deteriorated to their lowest level in five years as global tensions continue to mount over Ukraine. Nonetheless, Brazil (up from 48.7 to 49.1) had contracting levels of activity across the board, with its PMI staying below 50 for the fourth straight month. Yet, Brazilian sales and output improved, and employment growth turned positive for the first time since March.

Outside of the BRIC nations, the Czech Republic (up from 54.7 to 56.5), Indonesia (unchanged at 52.7) and Taiwan (up from 54.0 to 55.8) saw decent growth in manufacturing output. Activity in the Czech Republic bounced back in July after softening in June, and Taiwanese manufacturers experienced their fastest pace of growth since April 2011. Vietnam (down from 52.3 to 51.7) also experienced modest growth in activity, but with demand and output easing. In contrast, Poland (down from 50.3 to 49.4), South Africa (down from 49.5 to 46.4), South Korea (up from 48.4 to 49.3) and Turkey (down from 48.8 to 48.5) contracted again with new orders, output and exports falling. Ironically, all three of these countries had hiring picking up in July, which is interesting, given the slower activity levels across the board in other data points. This could be an encouraging sign for the future.

Eurozone manufacturers have now expanded for 13 straight months, but activity has decelerated more recently amid lingering deflationary worries
The Markit Eurozone Manufacturing PMI held steady in July (51.8), with growth in activity continuing to ease from January’s 54.0 reading. The news coming out of Europe includes a complicated mix of increased confidence after a steep two-year recession and continuing challenges related to slow economic and labor market growth. Manufacturing data were equally varied. The pace of new orders (up from 51.9 to 52.1) and exports (up from 52.4 to 52.6) increased marginally, but production (down from 52.8 to 52.7) and hiring (down from 50.3 to 49.9) slipped a little. Employment growth fell back into contraction territory—albeit barely—after six consecutive months of positive gains.

This complexity also appears in the country-by-country numbers. French manufacturing activity (down from 48.2 to 47.8) continues to worsen on deteriorating levels of new orders and output. The country’s manufacturing PMI has contracted in all but three months since July 2011, and the latest data are a disappointment after the improvements seen in March and April. Greece (down from 49.4 to 48.7) has been similarly frustrating. Other nations are seeing modest growth in their manufacturing sectors, including Austria (up from 50.4 to 50.9), Germany (up from 52.0 to 52.4), Ireland (up from 55.3 to 55.4) and the Netherlands (up from 52.3 to 53.5). In each of these four markets, however, employment growth remains a challenge. In addition, we are seeing decent growth in Italy (down from 52.6 to 51.9), Spain (down from 54.6 to 53.9) and the United Kingdom (down from 57.2 to 55.4) despite some deceleration in the month of July in many of the key indicators.

Overall growth in the Eurozone remains subpar but potentially improving. Real GDP rose just 0.2 percent in the first quarter and is expected to increase by 1.1 percent in 2014 as a whole. Next week, we will get new data for second quarter GDP and June industrial production, with each expected to show slight growth. For instance, industrial production is anticipated to rebound from May’s 1.1 percent decline. Along those lines, we have already seen better retail sales data for June, up 0.4 percent after remaining flat in May. Moreover, the unemployment rate has fallen to 11.5 percent, its lowest level since September 2012. Yet, it remains quite elevated, with job and income growth worries pervasive. As a result, the ZEW Indicator of Economic Sentiment weakened again in July, and deflationary worries continue to cause concern. As of July, Eurozone inflation had risen just 0.4 percent over the past 12 months, down from 0.5 percent year-over-year in June.

North American manufacturers reported differing trends in July
The RBC Canadian Manufacturing PMI improved for the second straight month, up from 53.5 to 54.3. The underlying data were higher across the board, including new orders (up from 54.1 to 55.2), output (up from 53.8 to 55.2) and exports (up from 51.4 to 52.0). Looking at economic indicators, second quarter real GDP is expected to improve upon the 1.2 percent rate observed in the first quarter, with 2.3 percent growth anticipated for 2014 as a whole. In May, manufacturing output jumped 0.8 percent on the strength of motor vehicles, primary metals and furniture production. Retail sales have also seen decent gains of late, up 1.3 percent and 0.7 percent in April and May, respectively. Total retail spending has increased 4.0 percent year-over-year.

Meanwhile, the HSBC Mexico Manufacturing PMI edged slightly lower, down from 51.8 to 51.5. The pace of growth has not changed much over the past six months, however, averaging 51.8 since January. New orders (unchanged at 53.8) and exports (up from 52.0 to 53.0) were bright spots in the July survey, but production (down from 52.0 to 51.8) eased a bit. Hiring (unchanged at 49.3) was negative for the second straight month. Real GDP is expected to increase 2.5 percent in 2014, with second quarter output improving upon the first quarter rate of 1.8 percent. Manufacturing production has increased 3.6 percent in May, an improvement from softness in April. Mexico’s unemployment rate was 4.8 percent in June, down from 4.9 percent in May but higher than the 4.3 percent rate observed in December.

Reduced goods imports helped to narrow the U.S. trade deficit in June
The U.S. trade deficit narrowed for the second straight month, down from $44.66 billion in May to $41.54 billion in June. This marks the smallest trade deficit since January’s $40.05 billion level. Still notable is that it has been larger in 2014, averaging $43.34 billion over the first six months of the year, than it was in 2013, averaging $39.70 billion for the whole year. The larger year-to-date trade deficit has largely stemmed from growth in goods imports outpacing growth in goods exports.

With that said, in June, goods imports declined (down from $200.05 billion to $197.16 billion); whereas, goods exports increased marginally (up from $136.74 billion to $136.87 billion). This explained the bulk of why the U.S. trade deficit narrowed for the month. The petroleum trade deficit also factored in, narrowing slightly in June (down from $8.89 billion to $8.15 billion).

Looking specifically at goods exports by sector, the data were mostly positive, but not significantly so. Consumer goods (up $411 million), automotive vehicles and parts (up $163 million), industrial supplies and materials (up $51 million) and non-automotive capital goods (up $33 million) experienced growth in exports in June. In contrast, exports of foods, feeds and beverages (down $264 million) were off for the month because of reduced international sales for soybeans and fish and shellfish. The trade deficit’s June decline can be explained by falling goods imports for consumer goods (down $1.28 billion), automotive vehicles (down $1.07 billion), industrial supplies and materials (down $548 million) and non-automotive vehicles (down $259 million).

Manufactured goods exports continue to grow slowly year-to-date
According to the latest trade data from Trade Stats Express, U.S.-manufactured goods exports have increased 1.7 percent in the first six months of 2014 relative to the same time frame in 2013. This represents a deceleration in last year’s 2.6 percent pace. It was higher than the 1.1 percent year-to-date rate seen through March, however.

Looking at the top five markets for U.S.-manufactured goods, the data were mixed. Exports to our largest trading partner Canada have been flat each of the past two years, declining somewhat year-to-date in 2014. China’s exports were strong at 9.4 percent, but slower than last year’s 18.4 percent pace. Meanwhile, there Mexico, Japan and Germany saw pickups in export growth. Here are the breakdowns (using seasonally adjusted data):

  • Canada (down 0.7 percent, from $134.72 billion year-to-date in 2013 to $133.85 billion in 2014)
  • Mexico (up 5.5 percent, from $100.36 billion to $105.86 billion)
  • China (up 9.4 percent, from $40.41 billion to $44.20 billion)
  • Japan (up 0.3 percent, from $26.84 billion to $26.93 billion)
  • Germany (up 7.6 percent, from $20.94 billion to $22.52 billion)

International Trade Policy Trends

U.S. and Europe conclude sixth round of trade negotiations
The EU hosted the sixth round of Transatlantic Trade and Investment Partnership (T-TIP) talks in Brussels last month. Early reports indicate negotiators moved to joint text in some areas, such as market access, dispute settlement, legal issues, textiles and rules of origin. Negotiators also discussed next steps on tariff offers. It appears progress is being made on intellectual property, as well as regulatory issues for autos, pharmaceuticals, chemicals, cosmetics and other sectors. The United States proposed text on regulatory coherence, which will be discussed further at the next round. The Office of the U.S. Trade Representative (USTR) released this statement at the end of the sixth round. The European Commission issued a separate fact sheet on the state of play. U.S. negotiating objectives can be found here, and the EU’s initial negotiating positions in a number of areas can be found here. On July 7, the NAM submitted detailed comments regarding the investment provisions in the T-TIP in response to the EU consultation on this issue. The next round of negotiations will be held in the Washington, D.C., area beginning September 29—just days before a high-level “stocktaking” meeting between U.S. Trade Representative Michael Froman and EU Trade Commissioner Karel DeGucht, slated for October 13. An eighth round is expected in December. For more information, please contact Jessica Lemos.

Pacific trade talks move closer to conclusion; Republicans urge TPA first
Chief negotiators from the 12 Trans-Pacific Partnership (TPP) countries met in Ottawa, Canada, from July 3 – 12. While they narrowed a number of differences, significant outstanding issues remain in market access and other parts of the agreement. Chief negotiators are scheduled to meet next in Hanoi, Vietnam, from September 1 – 10. However, House and Senate Republicans are urging the Administration not to conclude a deal without first securing Trade Promotion Authority (TPA). In a July 17 letter to Ambassador Froman, all 23 House Ways and Means Committee Republicans pledged to oppose TPP if the agreement—or even an agreement in principle—is completed before TPA is enacted. At a Senate Finance Committee hearing last week, Ranking Member Orrin Hatch (R-UT) expressed the same view, saying that “if the Administration chooses to negotiate and conclude a trade agreement such as the Trans-Pacific Partnership, even in principle, without first having TPA, they do so without Congress' authorization.” The NAM continues to push for a comprehensive, ambitious, high-standard TPP agreement with concrete market-opening provisions, strong protections for intellectual property rights and investment, and new disciplines on cross-border data flows and other issues. On July 11, the NAM sent a letter signed by 18 manufacturing associations to Ambassador Froman highlighting the importance of eliminating tariffs on U.S. manufacturing exports. For more information, please contact Jessica Lemos.

The NAM participates in launch of environmental goods talks in Geneva
In July, Lemos participated in the official launch of the Environmental Goods Agreement (EGA) negotiations at the WTO in Geneva. Manufacturers welcomed these efforts to build on progress already achieved in the Asia-Pacific Economic Cooperation (APEC) forum to eliminate and reduce tariffs on green goods. The Coalition for Green Trade, co-chaired by the NAM and others, also launched this month and released a global business letter by a broad range of international industry associations in support of the EGA talks. The NAM submitted these comments to the European Commission last week as part of its public consultation on the EGA negotiations. For more information, or if you would like to join the NAM’s Environmental Goods Negotiations Task Force, please contact Jessica Lemos.

WTO Trade Facilitation Agreement stalled
Resistance by India and a small group of other countries blocked implementation of the WTO Trade Facilitation Agreement (TFA) reached last year in Bali. Late on July 31—the deadline for the WTO General Council to accept notification of certain commitments, adopt the Protocol of Amendment and open the protocol for acceptance—WTO Director-General Roberto Azevêdo announced no solution to the impasse could be found. In a statement issued last week, Ambassador Froman pledged to “consult with our trading partners on potential paths forward.” Some see an opportunity to recoup losses when trade negotiators return to Geneva in September. In the weeks leading up to the July 31 deadline, the NAM and eight other associations sent a letter to trade ministers from India and other G20 countries urging support for the TFA. The NAM remains committed to the objectives outlined in the TFA. We will continue to work with our business community partners to launch a Global Coalition for Trade Facilitation to provide private-sector feedback to the U.S. government on TFA implementation.​ For more information, contact Lauren Airey.

United States and Europe expand sanctions on Russia as Ukraine tensions mount
On July 29, the Treasury Department announced additional sanctions on three entities in Russia's financial services sector and one Russian state-owned defense technology firm. These measures coincide with actions to suspend U.S. export credit and development finance to Russia, and they follow a July 17 round of targeted sanctions to prohibit U.S. persons from providing new financing to two major Russian financial institutions (Gazprombank OAO and VEB) and two Russian energy firms (OAO Novatek and Rosneft). Further information on the newly designated entities is available here. On the same day, the U.S. Commerce Department's Bureau of Industry and Security (BIS) announced a policy to deny export, re-export or foreign transfer of certain items for use in Russia's energy sector that may be used for exploration or production from deep-water, Arctic offshore or shale projects that have the potential to produce oil. The European Union adopted similar restrictions on capital markets and Russian state-owned banks. It also imposed an embargo on new arms sales to Russia and limited sales of dual-use equipment to Russian military buyers. For more information, contact Lauren Airey.

Export-Import Bank reauthorization debate heads into August
The NAM continues to lead business efforts to ensure Export-Import Bank (Ex-Im) reauthorization before its charter expires on September 30. On July 30, Sens. Joe Manchin (D-WV), Mark Kirk (R-IL), Roy Blunt (R-MO), Joe Donnelly (D-IN), Mark Warner (D-VA), Maria Cantwell (D-WA), Tim Johnson (D-SD), and Tim Kaine (D-VA) introduced the Export-Import Bank Reauthorization Act of 2014 (S. 2709). On July 29, the NAM released a new report titled "The Global Export Credit Dimension" that documents the massive size and growth of foreign export credit activity. As explained in a Policy Brief released the same day, tens of thousands of dollars in U.S. exports will be put at risk if the Ex-Im Bank is not reauthorized. You can see the impact of Ex-Im Bank on your state here. There are a number of ways to join the Ex-Im Coalition in advocating for Ex-Im Bank reauthorization over August. For more information, contact Lauren Airey.

NAM urges swift action to strengthen trade secrets protection
Work to strengthen domestic protection and enforcement of trade secrets and establish a strong model for U.S. trade agreements took an important step forward late last month with the introduction of a House bill that would provide access to federal civil courts for trade secrets theft. Sponsored by Reps. George Holding (R-NC), Jerrold Nadler (D-NY), Howard Coble (R-NC), Hakeem Jeffries (D-NY), Steve Chabot (R-OH) and John Conyers (D-MI), the Trade Secrets Protection Act of 2014 would enable manufacturers to enforce their rights more effectively and efficiently. The measure is the House companion to legislation (S.2267) introduced in April by Sens. Chris Coons (D-DE) and Orrin Hatch (R-UT). With a House Judiciary Committee markup of the Trade Secrets Protection Act expected in September, manufacturers are supporting passage of this legislation before the end of the year. The NAM welcomed the bill and joined more than 40 companies and associations on a letter supporting the measure. On July 31, the NAM partnered with the National Alliance for Jobs and Innovation (NAJI) and the Center for Responsible Enterprise and Trade (CREATe) to host a member webinar highlighting the growing challenge of trade secrets theft and opportunities to strengthen protection and enforcement at home and abroad. The NAM will continue working to do this in ways that advance manufacturing in the United States. For further information, contact Chris Moore.

Manufacturers urge action on commercial concerns ahead of Modi visit
The planned official visit of Indian Prime Minister Modi, to Washington at the end of September will provide another critical opportunity to address manufacturing trade and investment barriers in that important market. In part to prepare for that visit, Secretary of State John Kerry and Secretary of Commerce Penny Pritzker traveled to India on July 31 for U.S.–India Strategic Dialogue talks with Modi and his External Affairs Minister Sushma Swaraj. In remarks following those meetings, Kerry called for action to break down barriers and remove obstacles to trade and investment. The NAM closely followed Kerry and Pritzker’s visit and will continue to press for results on trade and investment priorities—including forced localization barriers and intellectual property rights protection. Progress on these and other issues will be critical to reinvigorating a promising bilateral partnership. For further information, contact Chris Moore.

The NAM plays leading role to address country of origin labeling (COOL) concerns
The NAM has been working with others in the business community to lead the COOL Reform Coalition, aimed at addressing U.S. country of origin labeling (COOL) requirements for meat that have prompted a WTO case by Mexico and Canada. The coalition has been working to promote reforms to the COOL requirements, which are widely expected to be found WTO noncompliant in the coming weeks and could potentially result in $2 billion in retaliatory tariffs on a broad range of U.S.-manufactured exports. The NAM and others have met with the U.S. Department of Agriculture and participated in several Capitol Hill meetings to educate key lawmakers and their staff on COOL, its potential implications for manufacturers and possible solutions. Last month, the NAM also signed onto a letter to the chairs and ranking members of the House and Senate Agriculture Committees, urging them to authorize and direct the Secretary of Agriculture to suspend the current COOL rule indefinitely upon adjudication of noncompliance by the WTO. For more information, or if your company is interested in getting involved with the coalition’s efforts, please contact Jessica Lemos.


Exports in Action
Energy Efficiency Business Development Mission to China

Date: Dec. 7 – 13, 2014
Location: Beijing, Tianjin, Qingdao and Changzhou

The China–U.S. Energy Efficiency Alliance, in partnership with the U.S. Department of Commerce, will lead a mission designed to help U.S. companies that provide technology and/or services related to energy efficiency enter into or expand operations in the Chinese market. The trip includes opportunities for companies to meet one on one with potential business partners in the locations that have specific needs for energy-efficiency products and services; network with key decision-makers from government and the private sector; understand and learn how to navigate the market in China; and gain practical insights into doing business in China. For more information click here or contact the ChinaU.S. Energy Efficiency Alliance at trademission@chinauseealliance.org or (415) 951-8975.

Department of Commerce to Host Health Care and Energy Business Development Mission to Asia

Dates: Oct. 19 – 23, 2014
Locations: Japan, South Korea

Secretary of Commerce Penny Pritzker will lead a health care and energy business development mission to Asia with stops in Japan and South Korea. This mission is designed to promote U.S. exports to Asia by helping U.S. companies launch or increase their business in the health care and energy sectors, where both Japan and South Korea are investing heavily. Participating U.S. companies will meet with prescreened potential partners, agents, distributors, representatives and licensees. The agenda will also include meetings with high-level national and local government officials, networking opportunities, and country and industry briefings. For more information, click here or contact the Office of Business Liaison at BusinessLiaison@doc.gov or (202) 482-1360.


Questions or comments?
Contact Chief Economist Chad Moutray at cmoutray@nam.org.