If you can buy anything online, how can you make sure that what you’re buying is genuine?
That’s a problem facing consumers and manufacturers alike. According to the NAM’s research, fake and counterfeit products cost the United States $131 billion and 325,000 jobs in 2019 alone—and estimates suggest that global trade in counterfeits exceeds $500 billion per year. The explosive rise of counterfeit goods has heavily impacted manufacturers, requiring them to fight back on a range of fronts.
For Clint Todd—the chief legal officer at Nite Ize, Inc., a manufacturer of mobile, pet and key accessories, as well as hardware, lighting and other products—that challenge is very real and only getting worse.
“In 2019, we took down 75,000 counterfeit listings and websites,” said Todd. “And we’re a small business, so you can guess how large the problem is countrywide.”
Why it’s happening: First, the online nature of e-commerce makes it more difficult to ensure accountability. Many counterfeit products are purchased through third-party sellers that may or may not provide real contact information.
- In practice, many platforms have not been held liable for counterfeit products sold on their platforms by these third-party sellers, even as they facilitate their sale. That means there’s often little manufacturers can do beyond asking the platforms to remove the listing.
- Second, a large proportion of the sellers of counterfeit goods are located in China and Hong Kong, making it much more challenging for U.S. companies to bring effective lawsuits, even if they do have accurate seller contact information.
“You have this odd confluence of laws and tech development and the involvement of another country that has driven this exponential increase in counterfeits,” said Todd. “You don’t have to be a rocket scientist to see how the inability to fight the problem has been detrimental to U.S. businesses.”
How manufacturers respond: Manufacturers and others have been forced into a piecemeal strategy that includes using software tracking services to find fraudulent trademarks and images; working with third-party sites to remove listings for knockoff merchandise; bringing lawsuits against counterfeiters where possible; and coordinating with the International Trade Commission. That strategy is challenging for lots of manufacturers but is particularly hard on small and medium-sized companies that may have fewer resources yet can be devastated when their products are ripped off.
What we need: The NAM’s report, “Countering Counterfeits,” details solutions for the federal government and the private sector, including:
- Requiring e-commerce platforms to reduce the availability of counterfeits;
- Modernizing enforcement laws and tactics to keep pace with counterfeiting technology;
- Streamlining government coordination;
- Improving private-sector collaboration; and
- Empowering consumers to avoid counterfeit goods.
As Todd put it, “It’ll take a multi-stakeholder approach. It’s not just the government. It’s not just manufacturers. It’s not just the online platforms. It has to be a coordinated approach with all those stakeholders to get to the heart of the matter.”
What the NAM is doing: The NAM is leading the effort against counterfeiting and has already made significant headway with policymakers. Among its recent highlights:
- After years of NAM advocacy, the Department of Homeland Security has implemented the Synthetics Trafficking and Overdose Prevention (STOP) Act of 2018, which steps up screenings for international mail shipments—one way in which counterfeits get into the U.S.
- In late 2020, Congress also implemented several NAM recommendations, including bolstering federal oversight at U.S. ports; cracking down on scammers and other bad actors exploiting the pandemic by producing fake goods or engaging in price gouging; and allowing the FDA to seize and destroy dangerous counterfeit medical devices.
- Both the Senate and House have seen the introduction of bipartisan bills that incorporate NAM recommendations on addressing the sale of counterfeits through online platforms.
The last word: “People need to understand the scope of the problem and how pervasive it has become,” said Todd. “Everyone needs to know how often counterfeits and knockoffs are affecting U.S. companies and how expensive and difficult it is to combat the problem with the tools we have at our disposal now.”
The NAM is fighting against congressional efforts to increase the minimum tax on U.S. companies’ foreign earnings above the rate recently reached by a global minimum tax deal—thereby putting globally engaged manufacturers at a significant disadvantage.
The context: For a number of years, the Organisation for Economic Co-operation and Development has been leading global tax negotiations that would fundamentally reshape the current international tax system. A centerpiece of the effort is a 15% global minimum tax that more than 130 countries signed off on earlier this month. The deal is intended to be implemented in 2023.
The U.S. angle: The United States already has a global minimum tax, called the global intangible low-taxed income tax, or GILTI, which operates as a minimum tax on the foreign earnings of U.S. multinational corporations. Now, Congress is considering increasing it as part of the reconciliation legislation. In particular, the pending House reconciliation bill would increase the GILTI rate from the current 13.125% tax rate to 17.4%—above the proposed global minimum tax rate.
The problem: The NAM has made clear that the United States shouldn’t move forward with any changes to GILTI before other countries implement a minimum tax, and that the U.S. shouldn’t have a minimum tax regime that results in a higher tax burden than the rest of the world. Such a burden on globally engaged companies would make it more difficult for these companies, including manufacturers, to compete and succeed in the global marketplace.
What we’re saying: “If Congress adopts a harsher tax regime than the rest of the world, it would tilt the scales against manufacturers and manufacturing workers in the U.S.,” said NAM Vice President of Tax and Domestic Economic Policy Chris Netram. “A harsher regime would harm manufacturers, reducing their ability to compete around the world and invest in high-paying jobs here at home.”
Learn more: One NAM study showed that proposed harmful changes to the GILTI regime could cost up to 1 million U.S. jobs.
The NAM is stepping up to protect a hard-won victory on an issue critical to public company governance—oversight of proxy advisory firms.
The background: Proxy firms advise institutional investors (like retirement fund managers) on how to vote on the policies of the companies they invest in. The problem is that the two main proxy firms—ISS and Glass Lewis—have generally operated without any oversight, and as a result, their work has relied on questionable methodologies and ignored conflicts of interest. These issues have often caused problems for manufacturers and their shareholders given the power these firms wield.
- Last year, following years of advocacy by the NAM, the Securities and Exchange Commission finalized a rule that provides targeted oversight of these firms. The rule requires that proxy firms disclose conflicts of interest and create procedures to give companies a chance to respond to their recommendations.
The problem: Following the change in presidential administrations, the SEC announced that it is taking steps to revise or rescind the rule that was finalized last year. On top of that, it has suspended enforcement of the rule during the review process and plans to prevent many provisions from going into effect as planned on Dec. 1.
Our move: The NAM is filing suit against the SEC for refusing to enforce the rule without going through the official process to change or replace it, as required under the Administrative Procedure Act. Agencies cannot set aside regulations they happen to disagree with, and the NAM is contending that the SEC has acted unlawfully by effectively rescinding the rule without inviting public comment on its impact on market participants, including manufacturers. Of course, the NAM also intends to fight any effort to revise or rescind the rule under normal procedures, but that comes later.
The stakes: If the NAM wins the suit, the SEC will have to leave the rule on the books until it comes up with substitute regulations through notice-and-comment rulemaking, and proxy firms will have to comply with the basic safeguards required under the rule.
The last word: “The SEC’s rule on proxy advisory firms was a victory for manufacturers, but also for accountability and transparency,” said NAM Senior Vice President and General Counsel Linda Kelly. “The NAM intends to stand up for this rule, to hold the SEC to its responsibilities and to ensure that manufacturers on the public market and manufacturing workers with retirement savings are protected from proxy firms’ outsized influence.”
INX International, a global manufacturer of high-performance printing inks and coatings, has a strong and growing presence in the U.S. thanks to tax reform.
The company’s success has been made possible in part by tax reform’s lower corporate tax rate and a foreign-derived intangible income (FDII) deduction, which encourages companies to develop and keep intellectual property in the U.S. by providing a lower tax rate for foreign sales based on U.S. IP. These reforms have helped manufacturers like INX invest in their U.S.-based facilities and employees—and INX has done exactly that.
Manufacturers wanted: From 2017 to today, the company has hired 89 people—a 7% increase in personnel. And even with the significant increase in workers, INX has been able to use its tax savings to pay good wages and benefits for all its employees.
- “We have not had one year since 2017 without raises or an increase in benefits,” said INX Vice President of Tax and Finance David Rossi. “That’s because the company has been doing pretty well—reaping the benefits from the economy and tax reform.”
Facilities expanded: INX has also worked to build new production capabilities, financed in part by the 2017 changes to the tax code.
- “The FDII deduction gave us $1.1 million in 2020 alone,” said Rossi. “That’s two-thirds of a solid equipment buildout for a new location. That number is significant to us.”
IP kept local: Provisions like the FDII deduction have made it possible for INX to keep their intellectual property in the United States, rather than moving critical production to facilities in other countries where labor and production costs might be lower.
- “We’re brick-and-mortar manufacturing in the U.S., and we keep our IP here; we keep our R&D here,” said Rossi. “Our ideas are here. Everything is developed here in the United States and kept in the United States.”
Continued benefits: The highly competitive labor market means that INX is also using its tax reform savings to attract and retain workers—making stability and certainty around these tax rules even more important.
- “We have dramatically increased starting wages, due to competition for manufacturing workers,” said INX CEO John Hrdlick. “Employees hired last year are also getting an increase. We’re offering incentives for referrals for new positions and spending a fair amount of money to recruit and keep people and stay ahead of our competition. If we weren’t in a strong position now, we wouldn’t be able to do that.”
The road ahead: The team at INX is concerned about what might happen if tax reform were to be rolled back and their tax burden were to increase. Especially with ongoing shortages of labor and materials—and with delays in shipping and freight transport—higher taxes would make it more difficult to continue the kinds of investments they have made.
- “Right now, any savings get invested into our people and our operations,” said INX Chief Financial Officer Bryce Kristo. “Any loss will negatively affect that.”
- “If there’s change, you’re talking about smaller facilities, less expansion or no expansion at all,” said Rossi.
The last word: “We are in a very competitive industry and an important industry,” said Hrdlick. “We’re almost a $500 million company, but given the high competitiveness, we are in single-digit operating income. All these proposed tax increases will pull some of that away. Everything we get, we invest in our people—and if that number is dramatically impacted, that’s going to be a problem for us.”
As Congress reconvenes this fall, the NAM will continue to make sure manufacturers’ priorities are front and center, driving the legislative conversation and shaping America’s future. We spoke with the NAM’s policy leaders to get a sense of the agenda going forward and discussed two bills in particular that are on manufacturers’ radar.
Bipartisan infrastructure reform: The $1.2 trillion investment would fund roads and bridges, as well as upgrades of the electric power grid and energy infrastructure, passenger and freight rail, public transit, airports, water systems, broadband and other critical priorities. Many of the bill’s investments were also initially highlighted in the NAM’s Building to Win framework—the NAM’s plan to invest in America’s infrastructure. The NAM will continue to work with Congress and President Biden to help move this bill across the finish line and ensure we can build the world-class infrastructure manufacturers deserve.
- “It’s critical that this moves forward,” said NAM Senior Vice President of Policy and Government Relations Aric Newhouse. “The bipartisan infrastructure reform bill would create transformative change—and every day that passes without it is a lost opportunity for manufacturers.”
- “We are using our influence to call on Congress to finalize this bill and move it to the president’s desk,” added NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling. “We also intend to stay engaged after it’s signed into law. This is a significant federal investment, with a lot of new programs and opportunities—and the NAM will be here to help steer our members through the implementation process.”
Reconciliation: Democrats are considering a multitrillion-dollar reconciliation bill that would supplement the bipartisan infrastructure reform bill with additional priorities in areas like health care, climate change and labor rules. As this bill moves ahead, the NAM is focused on preventing changes in corporate taxes, individual taxes, estate taxes and international tax policy that could harm manufacturers; blocking policies that could damage the employer–employee relationship; and standing up against efforts to stifle innovation in the pharmaceutical sector.
- Taxes: The bill proposes more than $2 trillion in tax increases that could hit every segment of the manufacturing economy. Proposed changes could affect big corporations through corporate taxes; globally engaged firms through changes to the Global Intangible Low-Taxed Income (GILTI) provision, the Base Erosion and Anti-Abuse Tax (BEAT) and a more limited incentive to locate intellectual property in the U.S.; family-owned businesses through estate tax reforms and increases to the capital gains rate; and small and medium manufacturers through changes to the tax system for pass-through entities. The bill would also make it harder to finance new equipment purchases through new limitations on the deductibility of interest on business loans.
- “These changes would affect every manufacturer, increasing the burden on corporations and pass-through entities,” said NAM Vice President of Tax and Domestic Economic Policy Chris Netram. “And we intend to stand up for our members, so that big and small manufacturers alike can compete, invest and grow here in the United States and around the world.”
- Pharmaceutical innovation: The reconciliation bill also contains provisions that would introduce price controls on certain medicines and harm the capacity to innovate by making it more difficult for pharmaceutical companies to invest in research and development, potentially hampering the creation of new medications and treatments. The NAM is fighting against these provisions to ensure that pharmaceutical companies are able to robustly invest in lifesaving cures.
- “Congress must take the long view on innovation,” said Newhouse. “If we take steps that harm pharmaceutical companies’ ability to innovate today, fewer lifesaving drugs will be available in the future. We think that’s a mistake.”
- Labor: In addition, the reconciliation bill in its current form seeks to impose some of the provisions of the Protecting the Right to Organize Act, or PRO Act. The bill, which previously passed the House in 2020, has the potential to reshape the relationship between employers and employees. The NAM will work to ensure these changes are not included.
- “The PRO Act is so broad and so sweeping in terms of its changes to the employee–employer environment that it comes at the expense of the manufacturing sector,” said Boerstling.
- “We’re going to do everything we can to keep this out of reconciliation because we believe the existing employee–employer relationship is working,” said Newhouse. “Now is not the time to blow it up with antiquated approaches to labor policy.”
The bottom line: This fall promises to be a busy time for policymakers in Washington, and the NAM intends to keep them focused on the needs and priorities of manufacturers across the country.
Washington, D.C. – Following President Biden’s speech on new measures to combat COVID-19, National Association of Manufacturers President and CEO Jay Timmons released this statement:
“Americans can be grateful to President Trump for ‘Operation Warp Speed’ that enabled the United States to develop the lifesaving vaccines against COVID-19 and to President Biden for his continued focus on getting Americans vaccinated. We share their steadfast focus, and manufacturers have led the way in promoting the lifesaving COVID-19 vaccines. They are safe and effective vaccines made for us, by people like us—manufacturers in America.
“We look forward to working with the administration to ensure any vaccine requirements are structured in a way that does not negatively impact the operations of manufacturers that have been leading through the pandemic to keep Americans safe. It is important that undue compliance costs do not burden manufacturers, large and small alike.
“Getting all eligible Americans vaccinated will, first and foremost, reduce hospitalizations and save lives. But it is also an economic imperative in that our recovery and quality of life depend on our ability to end this pandemic. This is why the NAM and The Manufacturing Institute continue equipping manufacturers of all sizes with resources to promote vaccination through our ‘This Is Our Shot’ project.”
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.3 million men and women, contributes $2.35 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org
With major policy issues coming to a head this fall in Washington, the National Association of Manufacturers this week launched Manufacturers United – a new digital platform to power the industry’s grassroots advocacy.
We spoke with some of the people behind the effort to learn more about what it does, how it works, and why manufacturers across the country should use it to highlight their priorities and make their voices heard.
What it does: Manufacturers United provides a clear platform and a wide range of easy-to-use tools for individual manufacturers to take action to advance the industry’s policy priorities:
- “Manufacturers United is the central resource where manufacturers, those who work in our industry and everyday Americans who care about the future of manufacturing in the United States can come together and take meaningful action, said Assistant Vice President for Advocacy at the NAM Michael O’Brien. “Congress is currently working on urgent priorities ranging from infrastructure investments to revisiting tax reform. Manufacturers United gives you the tools and resources — from posting key messages to social media, sending a message to your representative, all the way to helping you attend a congressional town hall, or host a member at your facility — that help you take action.”
A helping hand: In addition to giving manufacturers the tools to advocate for their causes, Manufacturers United also offers access to members of NAM staff who can help you navigate and make effective use of these advocacy tools and opportunities.
Why it matters: Research shows that persistent, sustained advocacy is incredibly important – and that outreach from individual constituents has the most impact, especially when policymakers are undecided on an issue. MU unleashes the power of manufacturers who have been interested in advocacy, but haven’t known where to start.
“The NAM will always be there to serve up full and comprehensive information on policy matters and other leading issues, but we’re seeing a real hunger from our members to actually join the fight,” said NAM Grassroots Strategist Alex Przybelski. “Manufacturers United helps them scale campaigns themselves and move their issues forward.”
How it works: Manufacturers United is designed to help individuals take a number of actions in support of manufacturing priorities. A few ways to plug in are:
- Get up to speed and take action on current issues like fighting new taxes on manufacturers, advancing historic infrastructure investment, and other major issues
- Sign up by texting MU to 52886 for updates about the major issues MU is working on (or just visit the homepage and sign up)
- Get to know the NAM staff who can help you put these tools to work
The bottom line: “Manufacturers United is about harnessing the power of manufacturing voices,” said O’Brien. “What’s at stake, fast facts and useful statistics, how to take action – it’s all there to help individual manufacturers find information and act on it to create an impact.”
Learn more: Find out more at www.manufacturersunited.org.
Washington, D.C. – Following the U.S. Court of Appeals for the Federal Circuit decision in National Association of Manufacturers v. Department of the Treasury, NAM Senior Vice President and General Counsel Linda Kelly released this statement:
“The NAM is very gratified to see the court agreed in full with the trial court’s decision holding that Congress spoke clearly when it created and expanded the duty drawback program to support U.S. exports. Put simply, this program helps manufacturers in America level the playing field when they sell to overseas markets. We look forward to working with our members as they expand their operations and add jobs in the United States in light of today’s decision.”
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.4 million men and women, contributes $2.44 trillion to the U.S. economy annually, has the largest economic multiplier of any major sector and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.
While Americans have largely focused in recent months on the recovery and renewal of our domestic economy, manufacturers also recognize the critical importance of global markets for their success. That makes trade agreements incredibly important—and underscores the urgency of renewing Trade Promotion Authority, a current focus of the NAM.
We recently spoke to NAM Vice President of International Economic Affairs Ken Monahan about this essential issue.
What it is: Trade Promotion Authority is a legislative framework between Congress and the executive branch that details the priorities and consultative process for U.S. trade negotiations. Essentially, said Monahan, Congress lays out its trade negotiation objectives and oversight obligations in TPA legislation, and in exchange, the president is able to negotiate trade agreements that will ultimately receive an up or down vote in Congress.
Why it matters: TPA can help ensure that new trade deals will reflect the priorities of manufacturers in the United States, said Monahan. With 95% of consumers living outside U.S. borders, and with more than 6 million U.S. manufacturing jobs depending on exports, trade agreements are needed to give manufacturers access to other markets on the right terms.
- “From a business perspective, having a TPA that reflects the priorities of manufacturers on the front end is vitally important,” said Monahan. “We are urging the Biden administration to prioritize a robust trade agenda that will open markets with countries with which we don’t already have agreements.”
- “We’re rightly focused on the domestic market, including through our support for the infrastructure package moving through Congress, but manufacturers also need to be able to compete overseas and access markets around the world.”
Where we are: To date, the Biden administration hasn’t detailed a strategy for the negotiation of new trade agreements. TPA was last passed by Congress in 2015, but that authority expired at the end of June.
What manufacturers want: Last year, the NAM laid out manufacturers’ priorities for trade agreements in comments submitted to the U.S. International Trade Commission. “In broad strokes, manufacturers want four things with respect to trade agreements,” said Monahan.
- “First, reverse unfair trade barriers that impede our ability to export.”
- “Second, protect intellectual property through technology leadership and innovation.”
- “Third, raise global standards to ensure a level playing field and ensure that other countries have standards that are consistent with ours.”
- “And fourth, codify respect for the rule of law and the pivotal role of free markets around the world.”
What the NAM is doing: The NAM has been leading the charge on TPA, ramping up engagements in recent weeks with members of Congress and the Biden administration. Most recently, NAM President and CEO Jay Timmons called on President Biden to work with Congress without delay to renew TPA.
The last word: “The United States needs to be back in the game,” said Monahan. “Our trading partners are negotiating agreements among themselves that are excluding the United States. Manufacturers need to access new markets. We need more exports that support good-paying jobs. And in order to accomplish that, we need to get off the sidelines and negotiate new trade agreements that will support growth here at home by reducing barriers faced by manufacturers around the world.”
The Biden administration released an executive order last week that is intended to enhance competition. While agencies will still have to draft regulations in response to the EO, this plan could have a big and potentially negative impact on manufacturers in several sectors. Here’s what manufacturers need to know, according to the NAM’s policy experts.
Antitrust provisions: The EO directs the Federal Trade Commission and Department of Justice to reexamine previously completed mergers and review the guidelines for both horizontal and vertical mergers.
- Why it matters: Business combinations help manufacturers streamline operations and boost efficiency. This directive could hinder pro-competitive mergers and ultimately harm consumers, says NAM Vice President of Tax and Domestic Economic Policy Chris Netram. The NAM has previously weighed in with the FTC on its vertical merger guidelines and its premerger notification rules, highlighting the importance of predictability in the merger approval process.
Other key points of interest: the EO also tells the agencies to crack down on noncompete agreements that keep workers from changing jobs easily, as well as on employers’ collaborations to reduce wages and benefits.
“Right to repair”: Another key target of the EO was the so-called “right to repair”—the ability of third parties to repair sophisticated equipment, like tractors, without involving the manufacturer.
- Why it matters: The NAM has long argued that such repairs pose a danger to consumers and expose companies’ intellectual property to theft by competitors, Netram points out.
Health Care: The EO also covers certain practices in the health care and pharmaceutical industries. Manufacturers should be aware of the following moves:
- Within 45 days, the Department of Health and Human Services is instructed to come up with a plan to address high drug prices. HHS is also directed to work on the importation of drugs from Canada.
- Meanwhile, the FTC is tasked with banning “pay for delay” agreements—when industry players agree to delay the market entry of generics or biosimilars.
- Why it matters: These moves could endanger America’s global leadership in the development of lifesaving treatments, argues NAM Vice President of Infrastructure, Innovation and Human Resources Policy Robyn Boerstling, by reducing the returns on and protections for innovation. This could potentially lead to fewer treatments being developed overall.
Technology: The EO addresses technology policy in a number of ways, most prominently urging the reinstatement of “net neutrality” rules imposed by the Obama administration.
- Why it matters: The NAM urged the repeal of those rules back in 2017. As Boerstling puts it, “net neutrality” treats the new and dynamic technology of broadband as if it were indistinguishable from the telephone, and treats competition in communications technology as if it hadn’t changed since the mid-20th century.
Other key points: The EO also instructs the Federal Communications Commission to hold spectrum auctions that disallow excessive concentration, and to create new reporting requirements for broadband providers’ prices and subscription rates.
Transportation: Lastly, the EO addresses certain practices by railroads, airlines and other sectors in transportation. For example:
- It urges the Surface Transportation Board to require railroad track owners to let competitors and passenger trains have right of way.
- It asks the Federal Maritime Commission to target certain shipping practices—mainly relating to fees charged while goods wait in containers to be unloaded, or while the company has yet to return an emptied container.
The NAM says: NAM President and CEO Jay Timmons released a statement last week, saying, “Our sector is strong and growing, and our people are benefiting. Unfortunately, there are those who want to erode our competitive advantage with archaic tax policies. And some of the actions announced today are solutions in search of a problem; they threaten to undo our progress by undermining free markets and are premised on the false notion that our workers are not positioned for success.”
Read the NAM policy team’s full overview of the EO here.