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The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) expanded for the first time since August. The composite index rose surprisingly well in this report, up from 49.5 in February to 51.8 in March. More importantly, new orders (up from 51.5 to 58.3) and production (up from 52.8 to 55.3) were both up sharply in March, with the demand figure at its highest level since November 2014. Exports (up from 46.5 to 52.0) also improved, shifting into positive territory in March for the first time this year. That was encouraging news, and it helps to illustrate the stabilization that we have seen in the manufacturing sector in recent data. To be fair, growth for manufacturers remains weaker-than-desired, with businesses continuing to cite a number of challenges for their firms. Yet, the sample comments tend to highlight the positive, noting activity picking up and sales improving.

Employment (down from 48.5 to 48.1) remained a hurdle, with hiring not recovering just yet from the improvements in new orders and production. Indeed, hiring has contracted in five of the past six months. With continued progress, however, we would expect for firms to begin to add to their workforces moving forward. Meanwhile, inventories (up from 45.0 to 47.0) contracted for the ninth straight month, albeit at a slower pace of decline in March. This also could provide a stimulative effect for growth in the coming months, as manufacturers will need to increase production to meet additional demand, with stockpiles quite low.

President Barack Obama’s meetings last month with Canadian Prime Minister Justin Trudeau emphasized the value of open trade and investment between the two countries — some $2 billion per day between the two countries – as a linchpin of the relationship. Possible regulatory changes related to wood packaging, however, would impede that commercial relationship, adding unnecessary costs that would harm business and consumers in both the United States and Canada.

The NAM on Friday joined 37 other organizations on both sides of the U.S.-Canada border in a letter urging the United States Department of Agriculture (USDA) and the White House Office of Information and Regulatory Affairs (OIRA) to halt efforts to impose these new rules. Our collective organizations represent companies that supporting millions of jobs and hundreds of millions of dollars in economic activity – working for industries in nearly every area of bilateral trade, from aerospace to retail, from autos to food and beverages, and from heavy equipment to cosmetics.

This is not a new battle, but it has taken on new urgency in recent months. USDA’s Animal and Plant Health Information Service (APHIS) first proposed removing this exemption as far back as 2010, but met with widespread industry concern. In 2015, APHIS, ignoring that concern, pushed to include another proposal on the regulatory agenda for this year’s U.S.-Canada Regulatory Cooperation Council (RCC), which is now scheduled to meet on May 4-5 in Washington.

Wooden pallets are used to transport a substantial portion of consumer and industrial products crossing the U.S.-Canadian border each and every day. APHIS’s proposal would affect all of that trade by effectively requiring all wood pallets to undergo costly and unnecessary heat-treatment requirements to prevent invasive pests that come not from North America, but from Europe and Asia.  This proposal not only would have highly negative commercial impacts on industries and consumers in both markets, but would also actually divert enforcement resources away from areas where they would do the most good: entry points from Europe and Asia that are the source for the targeted pests.

Further, APHIS’s push is based on an outdated cost-benefit analysis that significantly underestimates the cost of these regulations to businesses, consumers – and the overall economy.

As urged by both manufacturing and service industries across the United States and Canada, USDA and APHIS must halt their current efforts to impose these new regulations on wood packaging and instead seek to engage actively with industry on both sides of the border to address invasive species problems in ways that do not cripple bilateral trade. Only a common, sustainable, inclusive approach by U.S. and Canadian officials can address these types of challenges while also strengthening our critical economic relationship.

Tonight the U.S. Senate took a huge step toward protecting manufacturing products and processes from the current onslaught of intellectual property (IP) theft by passing the Defend Trade Secrets Act.  NAM President and CEO Jay Timmons released the following statement after the bill’s passage, citing the important role IP has for manufacturers of all sizes –

“Manufacturers in America are the world leaders in innovation. The know-how to perfect their products can take years, even decades. These days, a competitor can steal that knowledge with the click of a mouse, costing a company good-paying jobs or even its entire business. This is a critical issue facing manufacturers, one that will define competition and success in the 21st century. That’s why we need all the tools possible to protect the superior knowledge and products that set our industry apart.

“IP can comprise up to 80 percent of the value of a company’s knowledge portfolio, and theft of these resources costs U.S. businesses roughly $250 billion a year. Manufacturers need a strong, unified federal policy that will enforce strict laws to protect what many businesses consider their most valued corporate assets. Today’s vote is a step toward updating our laws and helping manufacturers prevent IP theft aggressively and efficiently.

“We support Senate passage of the Defend Trade Secrets Act and urge the House to take swift action to get this legislation to the president’s desk for his signature.”

IP is truly a manufacturer’s “secret sauce.”  It can include everything from the special recipe for a food or beverage to research, marketing data, and customer lists. This proprietary information powers manufacturing innovation, in turn driving productivity and job creation for companies of all sizes.

The Defend Trade Secrets Act is a must-pass bill this Congress and we look forward to continuing our work on both sides of the aisle to advance it.

Learn more about manufacturing priorities for IP protection by clicking here.