US petchems, others urge govt tax, rules cuts to spur R&D

17 March 2010 18:40  [Source: ICIS news]

WASHINGTON (ICIS news)--US petrochemical and consumer product leaders on Wednesday joined policy analysts in urging Congress to reduce corporate taxes and ease energy development and other regulations in order to boost manufacturing innovation.

In testimony to the House Committee on Science and Technology, witnesses suggested that less, rather than more, government involvement in research and development (R&D) funding would help spur breakthroughs that could restore US leadership in manufacturing.

The committee held a hearing to consider the future of the US manufacturing sector and what the federal government can do to support manufacturing innovation.

The National Petrochemical & Refiners Association (NPRA) said that US manufacturing leadership is in part challenged by increasing global competition, but more so by “an increasingly hostile domestic business environment”.

“Taxes, an increasing number of overly burdensome regulations and a flawed domestic energy policy are adversely impacting our industry and allowing other countries to forge ahead of us in research and development, production and international trade,” the association said.

The petrochemicals and refining trade group said that “a hostile business environment prevents the private sector R&D funding necessary for long-term development of new technologies”.

“With increasing regulations, many companies have been forced to decrease their R&D budgets and shift their resources to regulatory compliance,” the association charged.

“Overall US manufacturing, no matter what the industry, will continue to move overseas and lag behind international manufacturing until Congress addresses four critical issues relating to the US business environment: education, taxes, over-regulation and energy costs,” NPRA said.

The group also cited volatile natural gas prices and uncertainty about reliable gas supplies as hindering US petrochemical production and innovation.

“While recent prospects of potential new shale gas resources provide hope for more reliable and hopefully more stable supplies of natural gas, domestic policy still limits development of natural gas resources.”

US chemical makers and a broad range of other manufacturers have been critical of the energy policies of President Barack Obama’s administration, charging that the White House has moved to maintain drilling bans and increase other restrictions and permitting.

Len Sauers, vice president for global sustainability at pharmaceutical and consumer products giant Procter & Gamble, told the panel that “the best way to preserve and create US manufacturing jobs and innovation is through sound and predictable policies”.

“The cumulative effect of new legislation and regulation will result in added cost, regulatory burden and less rather than more flexibility for business,” Sauers said.

Wayne Crews, vice president for policy and technology studies at the Competitive Enterprise Institute (CEI), cautioned that federal R&D funding can misdirect scientific research with politically motivated policy direction.

For example, he said, the US is at risk of creating “a green technology bubble” with Congress focusing federal funding on favoured technologies.

“We don’t want a scientific world of researchers chasing politically favoured fads and steering their grant requests according to politics, whether biofuels, alleged energy conservation, materials conservation, smart grids, politically favoured medical research or whatever,” he said.

“Viable technology doesn’t need a subsidy, and non-viable technologies can’t be helped by one,” Crews argued.

“Government’s legitimate role is to improve the track on which all the technological horses run, rather than picking the winning horses,” he added. “That means liberalising the tax and regulatory environment within which entrepreneurs operate, for starters.”

The committee will consider legislation that would shape federal funding for private sector research and development in manufacturing fields.

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