NEMA/MITA Highlights: President Obama’s 2016 State of the Union Address

NEMA/MITA Highlights: President Obama’s 2016 State of the Union Address

By Kyle Pitsor, Vice President of Government Relations, NEMA

President Obama’s final State of the Union address set the tone for his last year in office and set forth his vision for policies in America. The full transcript of the address can be found here.

NEMA’s summary of key points in the address that affect electrical equipment and medical imaging technology manufacturers is provided below.

"President Obama delivers the State of the Union address Jan. 20, 2015" by Pete Souza - Official White House Photo by Pete Souza ( Licensed under Public Domain via Commons
“President Obama delivers the State of the Union address Jan. 20, 2015” by Pete Souza – Official White House Photo by Pete Souza ( Licensed under Public Domain via Commons.

International Trade

Trans-Pacific Partnership

President Obama touted the completion of the Trans-Pacific Partnership (TPP) in 2015 to open markets, eliminate tariffs, protect workers and the environment, and advance American leadership in Asia. In one of few legislative mentions in his address, the president called on Congress to approve the TPP this year.

Passage of TPP would be the most significant such initiative since the 1994 North American Free Trade Agreement, ratified during the Clinton administration. Congressional action on TPP this year promises to be an uphill fight and uncertain at best.

Business Implications

The TPP is an important agreement for the electrical equipment and medical imaging industry due to the elimination of customs tariffs in 11 countries and the breaking down of non-tariff barriers as well. The 11 countries involved in the TPP represent about 40 percent of global GDP and some 800 million people.

Trade Agreements and Practices

The president called on Congress to give the administration the “tools” to enforce trade agreements and trade practices.

This refers to action pending in the Senate to pass the Trade Facilitation and Trade Enforcement Act, which includes new tools for U.S. Customs and Border Protection to use to combat imported counterfeit products and other forms of unfair trade. The House passed the compromise bill in late 2015.

Business Implications

Passage of this legislation is important to NEMA and MITA members to combat unfair trade, protect intellectual property, and prevent counterfeit products from entering the U.S.

Trade Embargo on Cuba

The president called for Congress to lift the trade embargo against Cuba.

Business Implications

If lifted, manufacturers would be able to export directly to Cuba and have access to projects to upgrade Cuban electrical, building, and transportation infrastructures, although the initial opportunity for U.S. firms may be limited due to existing commercial supply-chain and customer relationships. It is doubtful that Congress will lift the embargo in 2016.

Energy Policy

Energy did not take center stage in President Obama’s address, but the president did highlight many of the changes that occurred during his administration and areas on which he intends to focus going forward.

iStock_000071484915_LargeClean Energy

The president touted the policies and investments made in clean energy as the “biggest in our history.” He called for continued policies to accelerate the transition away from “dirty energy”:

“Rather than subsidize the past, we should invest in the future—especially in communities that rely on fossil fuels….That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet. And that way, we put money back into those communities and put tens of thousands of Americans to work building a 21st-century transportation system.”

Business Implications

Companies that extract oil and coal on federal land face increased fees for exploration and extraction. The Department of the Interior is in the process of completing a rulemaking on how to modernize its coal and oil leasing programs to “ensure that taxpayers are getting a fair return.”

The White House also recognizes the need for the modernization of our transportation systems, which is important not only to NEMA industries that sell into that market (such as intelligent traffic systems, electric vehicle charging stations, and roadway lighting) but to all companies that move products and inputs from A to B and are constrained by today’s freight transportation bottlenecks. Money raised from the oil and gas leases will be targeted for transportation projects.

Homeowners and Energy

The president spoke about efforts to help homeowners upgrade their energy efficiency by doing things like installing solar panels.

“We’re taking steps to give homeowners the freedom to generate and store their own energy—something, by the way, that environmentalists and Tea Partiers have teamed up to support,” President Obama said.

Part of the effort to assist homeowners has been through the Property Assessed Clean Energy (PACE) program. Many states are authorizing local governments to make these loans more available. However, mortgage lenders have been wary of the loans and hesitant to offer their own financing because in some cases a PACE loan enjoyed a higher lien status than the mortgage. This resulted in a protracted lobbying battle that kept the program from growing.

Finally, in 2015, the Federal Housing Administration offered clearer guidelines to settle the issue when insuring home loans for borrowers who made payments on PACE loans.

Business Implications

Through the use of PACE loans, homeowners can undertake energy-efficiency upgrades that include NEMA member products and technologies including lighting, HVAC controls and systems, and other electrical systems improvements. At the end of 2015, over $1.4 billion in PACE projects were financed.

NEMA members make products that are connecting solar arrays around the country, including the inverters, switches, wires and cables, and conduits needed to install solar on homes and buildings, as well as the modern transmission and distribution equipment needed to safely integrate renewable energy into the grid. Energy storage systems are making renewable energy integration and a host of other grid services easier and more cost effective.

There are now over 22,700 megawatts of cumulative solar electric capacity operating in the U.S., enough to power more than 4.6 million average American homes. Over 135,000 installations were completed in the first half of 2015, representing nearly 784,000 U.S. homes and businesses that have gone solar. A new solar project was installed every two minutes, according to the Solar Energy Industries Association.

Medical Imaging

Cancer Treatment

President Obama called for a “moonshot” to develop a cure for cancer, led by Vice President Joe Biden. This initiative would entail leveraging the National Institutes of Health and private partnerships to advance the understanding of cancer and develop novel treatments. Better sharing of data and scientific research would be encouraged. Reports released following the address have highlighted what Biden identifies as the three main opportunities in cancer care: 1) cancer control, 2) early detection, and 3) immunotherapy treatments.

Business Implications

Medical imaging devices are used in the diagnosis, staging, and therapy monitoring of numerous cancers. This initiative has the potential to create new opportunities for advancements in the field of medical imaging, crucial for the treatment of cancer.

Molecular and genetic in vitro testing are more likely candidates given the great advances made in these fields in recent years. The introduction of novel therapies, however, could push innovation in the diagnostic space as well as incrementally drive up demand for imaging products. Further, while in vitro testing can help to determine whether a person has cancer, it cannot offer the anatomical information needed for treatment. Medical imaging provides this information and could be an increasingly important adjunct to these tests. MITA stands ready to help in this endeavor.

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