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The Office of the U.S. Trade Representative must revise its digital trade policy now to reassert American leadership, the 51�Թ��� and more than 40 industry partners the Biden administration ahead of U.S. Trade Representative Katherine Tai’s testimony this morning before the House Committee on Ways and Means.

What’s going on: In the past few years, the USTR has “retreat[ed] from digital trade protections,” the groups told National Security Adviser Jake Sullivan and National Economic Council Director Lael Brainard. Problematic actions/items by the USTR include:

• The October 2023 withdrawal of longstanding U.S. World Trade Organization positions that support the protection of cross-border data flows, stop data localization requirements, end discrimination against U.S. firms and their goods and services and protect sensitive data from bad actors;
• Abandonment of core U.S. policy priorities in the Indo-Pacific Economic Framework for Prosperity; and
• The omission in the USTR’s 2024 National Trade Estimate Report on Foreign Trade Barriers of numerous digital trade barriers, despite the statutory obligation under the Trade Act of 1974 to detail such barriers.

Why it’s important: These moves raise “deep economic and national security concerns,” the groups continued. They are in direct opposition to the interest of U.S. companies and their employees, and they give greater power to foreign nations, including China, “to write the rules that will govern the global digital economy for years to come.”

What must be done: The USTR its stance on digital trade to “stand up for U.S. businesses and workers who face damaging digital trade barriers in foreign countries.”

Construction of a manufacturing plant that promises to be vital to the world’s move toward electrification is now underway, according to .

What’s going on: “Orion S.A., a specialty chemicals company, broke ground on a plant in Texas that will be the only facility in the U.S. producing acetylene-based conductive additives for lithium-ion batteries and other applications vital for the global shift to electrification.”

• Batteries require conductive additives, and those produced at the Texas facility southeast of Houston will be made using acetylene, a colorless gas.
• Equistar Chemicals LP, a subsidiary of polymer and polyolefin technologies manufacturer LyondellBasell, will manufacture acetylene at a nearby location.
• The new plant will be similar to an Orion facility already in operation in southern France that also uses acetylene from LyondellBasell.

“A crucial part”: “[W]e see electrification as a crucial part of our plan to reduce carbon emissions across our industries,” said LyondellBasell Executive Vice President of Global Olefins and Polyolefins, Refining and Supply Chain Kim Foley. “By supporting the production of key battery components, we’re contributing to solutions for a better tomorrow.” The company recently released its annual sustainability report.

• The battery additives produced at the Texas facility will have “one-tenth of the carbon footprint of other commonly used materials,” according to the article.
• And the plant “will bring new technology and high-skilled jobs including laborers, millwrights, welders, equipment operators, among others jobs in Texas, and [will] positively impact long-term job creation for the local community,” reports.

U.S. industrial production increased modestly in March, in keeping with economist forecasts, according to .

What’s going on: “Industrial production in the United States rose by 0.4% in March after increasing 0.1% in the previous month, the Federal Reserve’s Board of Governors stated in its report published on Tuesday.”

The details: Manufacturing output increased 0.5% on a monthly basis and 0.8% on an annual basis. It rose 1.2% in February.

• Mining declined 1.4% in March and 2.0% year on year.
• The utilities index grew 2.0% for the month but declined 3.1% year on year.

Capacity utilization: Capacity utilization—a measure of potential output—for the industrial sector as a whole increased to 78.4%, up from 78.2% in February but “1.2 percentage points below its long-run average.”

What it means: These data are among “signs that manufacturing is starting to pick up,” (subscription) reports.

• “The S&P Global U.S. Manufacturing PMI has been in expansion territory for the past three months, and the ISM factory index was 50.3 in March, the first reading above the break-even level of 50 since September 2022.”

The number of renewable energy projects awaiting entry onto the power grid rose significantly in 2023, according to (subscription).

What’s going on: There were “2,600 gigawatts of energy and storage capacity trying to connect [last year], according to a report released Wednesday by the Energy Department’s Lawrence Berkeley National Laboratory.”

• The waiting projects—most of which are wind, solar and storage capacity initiatives kickstarted with incentives from the Inflation Reduction Act of 2022—could more than double current grid capacity, the report says.
• Solar accounts for most of the generation.

The problem: Despite an order passed by the Federal Energy Regulatory Commission last year intended to speed up the process of getting new resources connected, “most regions have not yet implemented the new rule, leaving power systems across the country jammed.”

• The need to link in new energy sources quickly will only grow in the coming years, as the U.S. moves more toward electrification.

Our view: “Energy security is more important than ever,” 51�Թ��� Director of Domestic Policy Michael Davin said. “Manufacturers need affordable, reliable energy to power economic growth. This is why we greatly need comprehensive permitting reform to expedite these projects and many more.”

The Senate this week approved a resolution to repeal the National Labor Relations Board joint employer rule, (subscription) reports.

What’s going on: In a 50–48 vote Wednesday, the Democrat-controlled Senate passed a Congressional Review Act resolution to block an NLRB “rule that would treat companies as the employers of many of their contract and franchise workers and require them to bargain with those workers’ unions.”

• President Biden pledged to veto the resolution, which the House approved in January. A veto would send the measure back to Congress, where it appears to lack the necessary votes for an override.
• The CRA “allows Congress to repeal agency rules through a majority vote in both houses.” The president must sign the resolution for it to take effect.
• The rule was scheduled to go into effect in February but was blocked by a federal judge in Texas. The NLRB is considering options in response to the decision.

What it would do: “The rule would treat companies as ‘joint employers’ of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.”

Why it would be problematic: The NLRB requirement would lead to confusion about which businesses should be considered employers, “disrupting franchising and routine contracting arrangements,” according to another article.

The 51�Թ��� says: The joint employer rule would “harm manufacturers at a time when they need the flexibility and contingency offered through temporary and contract workers to best manage supply chain impacts, demand for manufactured products and other inflationary challenges,” the 51�Թ��� the NLRB in December.

Prices paid by businesses to goods and services producers in the U.S. rose by slightly less than anticipated in March, according to .

What’s going on: “The producer price index for final demand rose 0.2% last month, after rising by 0.6% in February, the Labor Department’s Bureau of Labor Statistics said. Economists had expected the PPI to gain 0.3%. In the 12 months through January, the PPI increased 2.1%, below the 2.2% expected, after climbing 1.6% in February.”

• “Core” PPI, which excludes food and energy prices, rose 0.2% on the month, for an annual increase of 2.4%.
• The data comes just a day after the release of a higher-than-anticipated consumer price index for last month.

The details: Services inflation stayed elevated, with a gain of 0.3% in prices in March, reports.

• Goods prices, however, edged down 0.1%.
• A 1.6% decline in energy prices made up much of March’s overall decrease and outweighed a 0.8% increase in food prices.

Why it’s important: The news may mean an interest-rate cut from the Federal Reserve will come later than previously thought.

Prices paid by consumers for goods and services rose last month, according to .

What’s going on: The consumer price index, “a broad measure of goods and services costs across the economy, rose 0.4% for the month, putting the 12-month inflation rate at 3.5%. Economists surveyed by Dow Jones had been looking for a 0.3% gain and a 3.4% year-over-year level.”

• March’s seasonally adjusted CPI increase was the same as February’s.

Core CPI: Core CPI, which excludes often volatile food and energy costs, also increased 0.4% on a monthly basis.

• Core CPI for March was 3.8% higher than it was in March 2023.

Why it’s important: CPI is the most widely used measure of inflation, and these data “indicat[e] that inflation is staying stubbornly higher and likely keeping the Federal Reserve on hold with interest rates.”

The EPA late last week awarded $20 billion to community development banks and nonprofit organizations to combat climate change in disadvantaged communities in the U.S., the reports.

What’s going on: Money from the “green bank” initiative “could fund tens of thousands of eligible projects ranging from residential heat pumps and other energy-efficient home improvements to larger-scale projects such as electric vehicle charging stations and community cooling centers.”

• Previously called the Greenhouse Gas Reduction Fund, the $27 billion “green bank” overseeing the grants was created by the 2022 Inflation Reduction Act. Its aim is “to reduce climate and air pollution and mobilize public and private capital in the communities that need it most.”

Where the money went: At least $14 billion of the funding is reserved for low-income and rural areas, neighborhoods of color and communities with shuttered coal mines, among other locations.

• One of the bank’s funds is the National Clean Investment Fund. Grants from that pot include nearly $7 billion to help consumers, schools and small businesses and farms, $5 billion to “leverage the existing and growing national network of green banks” and $2 billion for decarbonized, affordable housing, according to .
• Another fund, the $6 billion Clean Communities Investment Accelerator, is for centers that offer technical help and lending to clean-technology projects.

How it works: “Recipients committed to spending $7 in private sector funding for each $1 from the federal investment money, to ‘reduce or avoid’ 40 million metric tons of carbon dioxide each year and earmark 70% of the money for disadvantaged and low-income communities. These groups are often passed over by commercial banks and investors yet are�� disproportionately impacted by climate change.”

A newly finalized rule from the EPA will require chemical and plastics plants to slash emissions of two widely used compounds, according to (subscription).

What’s going on: The EPA’s final rule, released Tuesday, requires manufacturing facilities to curb emissions of chemicals including ethylene oxide and chloroprene. These two chemicals have broad applications, from sterilizing medical equipment to producing synthetic rubber.

• The rule would affect about 200 plants across the U.S. and include a requirement for “fenceline monitoring,” the use of technology to measure the ambient air concentration for certain chemicals.
• Once in effect, the regulation could reduce emissions of both compounds by almost 80% annually, the EPA said.

The background: The news comes less than a month after the EPA finalized a to regulate the use of ethylene oxide as a sterilizing agent, a decision that will affect the way most medical devices—including complex, lifesaving ones, such as artificial heart valves—are sterilized.

Regulatory onslaught continues: “While the EPA listened to some of manufacturers’ concerns, such as allowing more time for companies throughout the supply chain to assess the impact on their operations, the rulemaking adds to the ongoing regulatory onslaught our industry has been facing,” 51�Թ��� Managing Vice President of Policy Chris Netram.

Effect on supply chains: The fenceline monitoring schedule will be a “significant burden” to manufacturers, as will the EPA’s requirement that operations be fully shut down for small plant repairs, Netram continued.

• “The potential disruption to supply chains could make it more difficult to create jobs in communities across the country.”

The House passed a health care package on Monday that includes measures to curb some practices by pharmacy benefit managers, according to .

What’s going on: The Lower Costs, More Transparency Leadership Act, which passed on a bipartisan vote, “would equalize payment between hospital outpatient departments and doctors’ offices for administering medicines in Medicare, rein in some practices by pharmacy benefit managers and codify health care price transparency rules.”��

• The vote on the measure was scheduled for September originally but was pushed back amid a larger funding dispute.

What it means: The package would prohibit PBMs from “spread pricing”—or charging Medicaid more than they pay pharmacies for medications.

• It would also require PBMs, “clinical lab test providers, imaging providers [and] ambulatory surgical centers … to be more transparent about their pricing.”

What’s next: “Some community health advocates hope Monday’s vote will jump-start negotiations with the Senate, where leaders have signaled they’re looking for more than what’s in the House bill,” reports.

Our view: “House passage of the Lower Costs, More Transparency Act is a step forward for PBM transparency, but Congress must continue to advance reforms that ensure PBMs pass on prescription drug discounts directly to plan sponsors and patients as well as delink their compensation from the list price of drugs,” the 51�Թ��� on Tuesday.
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