America is ready for a comprehensive industrial policy. Can Washington deliver?
This Congress had done more for American industry than any other that I can remember. Despite all the rhetoric about its stalemate and dysfunction, the tightly divided legislature managed to pass three major pieces of legislation in less than a calendar year: The CHIPS Act gave a major boost to the semiconductor industry to invite capital investment; the Inflation Reduction Act provided a clean energy agenda to incentivize consumer behavior; and last fall’s $1.2 trillion infrastructure program, the Bipartisan Infrastructure Act, created huge demand for manufactured goods ranging from steel and iron to fiber optic cables.
All three are governed by national procurement rules and policies such as the Build America, Buy America Act (BABAA), which requires all federal agencies embarking on infrastructure projects to ensure that “all iron , steel, manufactured goods and construction materials used in the project are produced in the United States.” This will effectively ensure that these investments stimulate the creation of new jobs in America, and not abroad.
What’s more, the three pieces of legislation are part of a broader industrial policy — an idea that’s suddenly no longer taboo in Washington after a few years of pandemic-induced supply chain shortages.
Yet, despite all these victories for the domestic industry, there is still much to be done. These three milestones do not represent all the elements necessary for a complete industrial policy; they simply laid the foundation for one. What we need to complete this vision is a commitment from political decision-makers as well as regular maintenance so that it is indeed the national industry that benefits from the programs that this new industrial policy establishes and from the markets that ‘she creates.
So how do you get there? We need more programs that encourage domestic investment. Semiconductors aren’t the only industry we should be concerned about. The Biden administration’s supply chain review for chips also included examinations of electric vehicle batteries, mineral production, and pharmaceuticals, and identified other sectors in which U.S. manufacturing is failing. has only a small global market share. Simply put, we can’t stop after CHIPS, because semiconductors aren’t the end of the critical manufacturing economy.
But just as important is maintenance, which means applying business rules. We must ensure that all these investments are not diverted from their recipients.
Our economy is deeply integrated into the global economy, and the goal here is not to move away from it. But while our industrial policy should invite foreign investment, state-owned enterprises from economic rivals like China should not be allowed, nor should our industrial policy allow subsidized or dumped imports.
We should redouble our efforts to tackle unfair trade practices at all levels, by adopting common-sense reforms like streamlining trade remedy investigations, as the Equal Opportunity Act 2.0 would do. Congress should close loopholes such as the de minimis threshold that allows multibillion-dollar companies to bypass import fees, as proposed by the Import Security and Fairness Act. Both of these were removed from the blockbuster semiconductor bill in the 11th hour; this Congress should review them before the end of its mandate.
Maintenance also extends to the improvement and care of domestic labor. Workers adversely affected by trade should not be denied appropriate assistance simply because the Biden administration is not currently negotiating a new market access deal. Congress should immediately restore funding to the Trade Adjustment Assistance program, which for 50 years helped thousands of workers displaced by import competition learn new skills — until partisan politics put an end to it. its funding will end this summer.
This, in short, is what a comprehensive industrial policy would look like: it is dynamic. We should protect it as it grows and push it forward simultaneously, which means the next Congress should expect to work for more public investment, more tax incentives, and more purchasing preferences for companies that choose to locate their production here and hire American workers. .
In the recent past, deindustrialization was the consequence of trade and tax policies that encouraged capital flight and outsourcing. Congress is now writing laws that favor the opposite outcome, and they have much more desirable results. Our federal lawmakers are turning to a long overdue industrial policy, and we should continue to press them for more.
Scott Paul is president of the Alliance for American Manufacturing.
The opinions expressed in this article are those of the author.