US Chamber of Commerce Blog
Editor's note: This op-ed was first published last week, before Hannover Messe, in the Handelsblatt Global Edition.
Next week, several hundred American companies will display their wares at the Hannover Messe, the world’s largest industrial fair. President Obama will be the first sitting American president to attend the fair in its nearly seven-decade history, as the U.S. holds the premier spot as the 2016 “Partner Country” at Hannover.
The Hannover Messe is a prime opportunity to showcase the best America has to offer in advanced manufacturing, innovative services, cutting-edge research and development, and a robust and welcoming investment environment here at home. Dozens of the U.S. Chamber’s members — companies of all sizes, sectors and regions — will shine at Hannover.
At Hannover, our leaders will also double down on their commitment to strengthen economic growth and put people back to work. A dizzying array of challenges looms: the migration crisis, the threat of terrorism, Russian aggression, questions about Britain’s future in Europe, and more.
On both sides of the Atlantic, populists and activists decry international commerce and deny its benefits for workers, consumers and businesses.
To address these challenges, Europe and the United States must strengthen our trade and investment ties, foster the digital economy, and encourage a climate of innovation.
We also have a unique opportunity to leverage our rapidly evolving energy markets to improve security and competitiveness.
Obama’s visit to Germany coincides with the next round of negotiations on the Transatlantic Trade and Investment Partnership. TTIP provides a once-in-a-generation opportunity to deepen our ties and enhance our position as world leaders in an increasingly diverse and competitive global economy.
TTIP’s goals and incentives remain as important today as when the talks began three years ago. We need to eliminate tariffs; open up services, investment and procurement; and promote regulatory cooperation that will cut unnecessary costs without undermining the high levels of health, safety and environmental protection that all of our citizens seek.
A strengthened partnership will build on our common values as strong democracies with an enduring commitment to civil liberties and the rule of law. We must build upon these shared strengths and ensure that the U.S. and Europe continue to be the world’s standard bearers in such areas as intellectual property rights protection.
But we are a long way from the comprehensive accord our members seek, and we ought not lower our ambition just to conclude a deal against an artificial deadline.
There are other opportunities we must seize beyond the negotiating table. A central component of the Hannover Messe is industrial automation and IT.
While the fair focuses on industrial technologies, it is critical to appreciate that moving data and information across borders is critical to companies of every size and sector. In other words, the digital economy isn’t just for so-called Internet companies: All firms are Internet companies now.
Indeed, imagine trying to do business today without being able to use a credit card, or shutting down the burgeoning world of e-commerce that has allowed thousands of small and medium-sized companies to find new markets for their products. It is crucial that the seamless flow of data and information be maintained.
In particular, the new Privacy Shield agreement between the U.S. and Europe must be implemented quickly to give businesses the certainty they need to invest and hire.
Failure to move this agreement forward not only threatens the ability of European and U.S. firms to conduct business and reach customers across the Atlantic, but also puts Europe on a path towards restricting data flows to other key trading partners, and even within Europe itself.
Another central focus of the Hannover Messe is on energy and environmental technologies. A robust energy strategy is essential in promoting industrial competitiveness and addressing potential national security challenges.
America’s energy revolution has rocked global markets and presents Europe with new options as well. As Europe seeks to expand the types of energy it uses and diversify the sources of those supplies, it will surely seek to leverage innovative technologies that will generate ample energy at lower cost for consumers and businesses alike.
In each of these areas — trade, the digital economy, and energy — transatlantic cooperation is needed now more than ever. So much more unites our economies than divides us.
We are each other’s largest markets, staunchest allies, and firmest friends. Together we can tackle many of the challenges the world faces. The U.S. business community stands ready to assist in that effort, and Hannover Messe will be an important step forward.
Our country’s small businesses aren’t wanting for challenges. Capital and talented workers are hard to come by, technology is advancing more and more quickly, our nation’s tax code and health care system are a mess, and the economy can’t seem to sustain any sort of real momentum. It’s hard enough for entrepreneurs to simply stay in business, let alone expand and create jobs.
So why on earth do environmental regulators seem on hell-bent on making their jobs even harder?
The Environmental Protection Agency has in recent years proposed and in some cases finalized a flurry of onerous new regulations that aren’t merely sticking a thorn in the sides of small companies, they’re downright driving them out of business. It’s not merely one or two sectors that have been clobbered by the new rules, either. It’s everyone from farmers to manufacturers to energy producers to construction companies. Nor are the ripple effects limited to certain areas of the country; the federal agency’s wrath is being felt by small businesses from coast to coast.
The agency’s Waters of the United States (WOTUS) rule, for instance, is threatening agricultural business owners like Jack Field, a cattle rancher in Yakima, Washington. A second-generation rancher, Field currently leases pastures from local landowners to run his 120 cattle, but under WOTUS – which vastly expands the definition of federally protected water and gives federal regulators unprecedented authority over local land use – that leasing model may not be sustainable. From our earlier story:
Under the rule… the agency can claim jurisdiction over any “waters” that are deemed to be adjacent to streams, wetlands and creeks, essentially stripping away broad regulatory power from states and local jurisdictions. In the process, the EPA has opened landowners and ranchers up to a host of new permitting requirements, as well as potentially devastating fines and lawsuits.
“For the price of a postage stamp, someone who disagrees with eating red meat could now throw me into court, where I will have to spend time and money proving that I am not violating the Clean Water Act,” Field told the House Small Business Committee at a hearing last year. “I don't think this is what anyone had in mind when Congress passed the Clean Water Act.”
With the added liability, it’s not surprising that landowners who have leased Field their property in the past have expressed concerns about his operations moving forward.
“It may very well end up that landlords decide that my cattle grazing activity now has too high a risk profile under this new rule, and they may no longer want to rent the land to me,” Field said in an interview. “If that’s the case, and I can’t find somewhere to run my cattle, I’ll have to get rid of them – that’s just the way it works. I’m not sure what we would do then.”
Read the rest of Field’s story here.
On the other side of the country, Drew Greenblatt had been planning an expansion of his small manufacturing company, Marlin Steel, based in Baltimore, Md. However, EPA’s new ozone rules threaten to throw a wrench in those plans, under which Greenblatt was expecting to expand his manufacturing space by 53 percent and hire 15 new workers, as our earlier story explained:
[Under new ozone rules], many of the manufacturing and industrial firms that Marlin Steel counts as customers will see their regulatory compliance costs skyrocket as communities are forced to lower pollution levels even further than they already have (ozone levels have already dropped by a third since 1980). Every dollar spent complying with the new rules is one less dollar those manufacturers have to invest back into their firms and purchase new machinery.
Only when those manufacturers are expanding and investing in new machines do they need more steel containers (like the ones Greenblatt sells) to move goods from machine to machine within their factories. Thus, only when they're expanding does Marlin Steel have customers.
Several longtime clients have already told Greenblatt that the EPA’s new ozone rules will put a freeze on any expansion or investment plans they had in the works.
“My clients are going to clamp down, and my phone is going to stop ringing” Greenblatt said. “When they hit pause, we have to hit pause, too, and as a result, we’re simply not going to be able to expand and hire as much as we had planned.”
Read the rest of Greenblatt’s story here.
Moving to the Midwest, John Cooper, a former mechanic in the Marine Corps, has spent the past fifteen years working for Ameren, an energy utility company in the Midwest, moving up the ladder from a laborer back in 2000 to the plant’s supervisor today. However, another cumbersome EPA regulation has put his and the rest of the plant’s workers’ jobs in serious jeopardy:
Last year, Ameren announced plans to close the Meramec site, the smallest of the company’s remaining coal-powered plants, by 2022. While the company has cited a number of factors that played into the decision, executives acknowledged that the Environmental Protection Agency’s new, much more strict carbon emission limits for power plants -- which had been proposed one month before Ameren’s announcement -- made it “clearer” the facility would have to close. In fact, the site may be shuttered even sooner depending on how the rules are implemented.
Cooper took notice.
“I have a real concern about the speed at which the changes being implemented by the Clean Power Plan will affect my work location and my life,” Cooper wrote in a comment submitted to the EPA after the agency first proposed the standards last year. “I understand environmental change is coming and I wholeheartedly accept that it is our generation’s responsibility to turn the corner on our lasting effects on the environment. However, you also need to understand that not only is our environment at stake but also the livelihoods of thousands of utility workers and the tax revenues these facilities provide.”We're simply not going to be able to expand and hire as much as we had planned."
Drew Greenblatt, President of Marlin Steel
His lone request to the EPA? “For myself and my family, I only ask that you be patient and understanding of our plight and please try to work with my company and the many others like us to help make this transition as painless possible,” Cooper wrote.
Instead, the agency has done precisely the opposite. Officials moved with reckless abandon to implement the new emissions standards, recently issuing a final rule without even taking into account sufficient input from the small business community, as is required by federal law.
Read the rest of Cooper’s story here.
Staying in America’s heartland, new EPA rules finalized late last year have clobbered small brick manufacturers across the country, pouring salt in the wounds of an industry that has already been struggling in recent years. The regulations will require brick makers to purchase and install expensive new equipment that regulators hope will slightly reduce their plants’ mercury output and emissions of so-called particulate matter – basically, a mix of dust, dirt, and smoke particles. The rules have pushed Davis Henry’s 60-person brick company in Selma, Ala. to the brink of closure:
“Our regulators are targeting an industry that has been absolutely crippled by the recession,” said Henry, noting that his company has already had to shut down one of its two brick kilns (a reflection of the downward trend across the brick industry, which is currently operating at less than 50 percent capacity). He pointed out that “a bank is not going to invest millions into a business for something that isn’t going to increase sales one bit and will instead drag down its profits."
Once the rules are finalized, Henry and other brickmakers will have three years to come up with a plan to comply. Henry, his brother and the rest of his management team are mulling their options. But as it stands now, the outlook appears bleak.
“The worst case scenario is that we can’t find a way to avoid these new requirements, a bank won’t give us a loan, and in three years’ time, if we haven’t sold the company, we would just have to cease operations,” he said. “I mean, that’s the worst case scenario: We would have to close the business.”
Read the rest of Henry’s story here.
Some 800 miles to the north, Janet Kaboth’s small brick business is facing a similar fate. Her 100-year-old company based in Alliance, Ohio, which has always made a concerted effort to hire workers who would likely have a difficult time finding employment elsewhere, could be on the hook for $5 million in upfront technology investments and as much as $1.5 million in additional operating costs every year moving forward. Kaboth elaborated:
“I would like to think that after almost 100 years of providing good employment, paying taxes, and being a responsible corporate entity that someone in our government could look at the cumulative effect of regulation compliance and help us,” she [told] Congress.
In Kaboth’s case, for EPA's rules alone, her 80-employee company would be required to purchase and install new equipment that would scrub some of the mercury and particulate matter emissions out of Whitacre Greer’s smokestacks. All told, the new systems will amount to a more than $4 million investment (equal to approximately a quarter of the company’s net worth) to scrub out only a few additional pounds of mercury – or for those counting, less than 1 percent of 1 percent of the amount of mercury currently embedded in American mouths.
“It’s not just that it’s a high cost,” she said. “It’s that it comes with so little benefit.” [...]
“It would be a shame, when you think about all the things we have gone through and all our company has survived over the past hundred years – recessions, wars, housing market crashes – to be brought down by one regulation,” Kaboth said. “It just seems wrong. I don’t make the rules, though, so we’ll just have to do our best to keep surviving.”
Read the rest of Kaboth’s story here.
Unfortunately, these small business owners aren’t alone. The EPA’s regulatory machine has been steamrolling small companies in these and many other industries, and there’s no sign of it slowing down anytime soon. We have to pump the brakes on this overregulation and fundamentally reform the way federal rules are enacted, so that we help these small businesses grow and create jobs, rather than running them into the ground.
All eyes are focused on the business world this week at the 69th annual Hannover Messe in Germany – the world’s largest industrial fair and the perfect setting for American companies to show the world what they’ve got in terms of innovation and technology.
But amidst the gadgets and buzz of the moment, it is important to not lose sight of the path forward. The next big thing – whether it is in the United States or Europe – depends on opportunity.
The U.S. Chamber of Commerce and the Federation of German Industries (BDI) hosted a business summit on Monday at Hannover Messe to look at “The Future of the Transatlantic Relationship.”
In his remarks, Chamber President and CEO Thomas J. Donohue said the relationship rests on three pillars: the Transatlantic Trade and Investment Partnership (TTIP), digital data flows and cooperation, and energy.
“No other partnership in the last seventy years has done more to advance global economic growth, establish a robust and fair trading system, and foster democracy, opportunity, and security around the world. Today, our partnership is more important than ever — and so is our global leadership.”
On TTIP, Donohue said “we’re a long way from the comprehensive accord we seek, but that does not mean we should lower our ambition just to conclude a deal against an artificial deadline.”
“On trade, the U.S. Chamber and BDI have agreed to a joint declaration that calls on the European Commission, the United States government, and the governments of all EU member states to secure an ambitious, comprehensive, and high-standard Transatlantic Trade and Investment Partnership. A standard-setting agreement will ensure the free flow of capital, talent, goods, and data. It will spur jobs, growth, and investment on both sides of the pond.”
In regards to digital, Donohue noted that “moving data and information across borders is critical to companies of every size and sector.”
“Soaring flows of data and information now generate more economic value than the global trade in goods. That’s why the American business community is urging the United States and the EU to quickly approve the new Privacy Shield agreement to give businesses the certainty they need to invest and hire. In doing so, we will acknowledge that we can facilitate data flows while protecting privacy at the same time. Our member companies are committed to fulfilling their obligations under both European and U.S. law. Through the Center for Advanced Technology and Innovation (CATI), the Chamber is devoting more resources to ensuring the right policies are established to harness the power of data while keeping it safe. For the digital economy to thrive, rules must be consistent, reasonable, and adaptable to new technologies and processes."
And when it comes to energy, Donohue pointed to the United States as an example.
"As Europe begins charting a new course on energy, the U.S. experience is instructive. America has grown its economy while reducing its carbon emissions. Our energy revolution—including a surge in hydraulic fracturing—has lowered U.S. energy prices, given us a significant competitive edge, and is driving a U.S. manufacturing revival. The Chamber has launched a European Energy Initiative to advance a pro-growth European energy strategy that will promote responsible development of Europe’s own resources, increase its access to external energy supplies, and enhance transatlantic cooperation on efficiency. A robust energy strategy is essential in promoting industrial competitiveness and addressing potential national security challenges.”
In closing, Donohue said we can’t lose sight of the things that led to our economic success in the first place – a commitment to free enterprise.
“None of this will be possible unless we boldly reaffirm the free enterprise principles that built our great economies in the first place. This is not the time to retreat from them, but to embrace and advance them for our collective prosperity—and as a model for the rest of the world. America and Europe have a bright future ahead, if we continue to work together."