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Speaker
Richard PaddockMedical Devices
Office of Health & Information Technologies
Cary IngramCNTE Lead
Office of Health & Information Technologies
Linda AstorActing Information Tech Lead
Office of Health & Information Technologies
Sam TsomingDeputy Team Leader
Global Information and Comm. Technologies Sector TeamU.S. Commercial Service
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Industry and Analysis’Spotlight on
Medical DevicesMarch 18, 2014
March 18, 2014
Prepared by
Office of Health and Information Technologies
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Medical DevicesSection 201(h) of the Food, Drug and Cosmetic Act defines a medical device as any
healthcare product that does not achieve its principal intended purposes by chemical action or by being metabolized.
– As simple as a tongue depressor or a thermometer
– As complex as robotic surgery devices
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Medical Device Classification
• 500,000 medical technologies registered with the Global Medical Devices Nomenclature (GMDN) Agency (Source: Medtech Europe)
• USFDA: Medical devices are classified by finding the matching description of the device in Title 21 of the Code of Federal Regulations (CFR), Parts 862-892. The CFR gives a general description including the intended use, the class to which the device belongs (i.e., Class I, II, or III), and information about marketing requirements.
862 = Chemistry/Toxicology 878 = General Plastic Surgery
864 = Hematology/Pathology 880 = General Hospital
866 = Immunology/Microbiology 882 = Neurological
868 = Anesthesiology 884 = Obstetrical/Gynecological
870 = Cardiovascular 886 = Ophthalmic
872 = Dental 888 = Orthopedic
874 = Ear, Nose and Throat 890 = Physical Medicine
876 = Gastro/Urology 892 = Radiology
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Risk Classification Western Europe Regulatory Process Timeline
Source: http://www.emergogroup.com/Source: http://medtecheurope.org/newsletternews/473/86#
D ivers ity and class ification of m edica l technology
Medical devices1 In Vitro Diagnostics 2
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Top Twenty Medical Device Companies Worldwide(Source: Medical Device and Diagnostic Industry Report as of October 2013)
*Proposed Rank In 2018: http://www.mddionline.com/article/top-20-medtech-companies-2018#node-10566
Company Total Revenue Company Total Revenue
Johnson & Johnson *(1) $28.6 Stryker Corp *(9) $8.8
Siemens AG $18.7 Becton Dickinson & Co *(15) $7.9
General Electric Co *(4) $18.3 Boston Scientific Corp *(14) $7.1
Medtronic Inc. *(2) $16.7 Essilor International $6.5
Baxter International Inc. *(16) $14.3 Allergan Inc . $6.1
Fresenius Medical Care AG $14.2 St Jude Medical Inc. *(17) $5.5
Koninklijke Philips Elec. NV $13.5 3M *(19) $5.3
Covidien plc $12.1 Zimmer Holding Inc. $4.5
Novartis AG $10.4 Terumo Corp $4.2
Cardinal Health Inc. $10.1
Smith & Nephew $4.2
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Healthcare in Transition
• “Governments, providers, [payers] and consumers in 2014 [face issues associated with] aging populations; increases in chronic disease; cost and quality; access to care; and technology. Deloitte, 2014 Global Healthcare Outlook
• “The [healthcare] situation is particularly acute in the United States, where…we have access to quality care but face steeply rising costs. A significant cause of the cost escalation in the U.S. is the way we have historically financed and incentivized health care delivery.” Omar Ishrak, Chairman and CEO, Medtronic, Inc.
• “The medical technology sector is weathering a perfect storm caused by three concurrent trends: the move toward value-based health care, growing regulatory pressures, and resource constraints within the industry itself. [To solve current] challenges in a highly regulated industry with numerous parties and conflicting interests…companies must find new ways to create, deliver and capture value. Ernst & Young, Pulse of the Industry 2013
• Every [med tech] company is faced with a choice: stick to the status quo, or transform and lead.” Michel Orsinger, Worldwide Chairman, DePuy Synthes.
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Trends in Healthcare Impacting Med TechResource constraints
1. Global Macro economic developments and the end of “easy money”.
2. Public and private funding systems are economically stressed by inceasing demand.
3. Venture capital: VC’s have moved away from early stage investment – only about 25% of med tech venture investment went to first or second rounds in 2012-13.
4. The total value of IPOs declined from the previous year.
5. Corporate capital is filling the gap. Debt continues to constitute the vast majority of the industry’s total funding in recent years, driven largely by a handful of commercial leaders who have taken advantage of historically low interest rates.
6. Industry Consolidation/(M&A). The case for an M&A exit has become more compelling for smaller companies.
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Trends in Healthcare Impacting Med TechValue-based Healthcare
1. Volume to Value: Medical devices will need to demonstrate improved health outcomes in cost-efficient ways. o “The shift from fee-for-service to fee-for value is upon us.” Omar Ishrak, Chairman and CEO, Medtronic,
Inc.
o “In as few as three to five years half of healthcare payments will be based on value. At present, only 20% are”. Shahid Shah, CEO Netspective.
2. “Big Data”, Health IT and Interoperability: Medical devices will need to produce and share data to prove their value and enables predictive analytics.
3. This is leading to changing approaches for:o Governments: Increase access to care; focus on disease education and prevention.o Providers: Contend with growing consumer power, managing expectations. Seek
new device technologies that streamline/complement data collection efforts and help automate manually performed tasks.
o Med Tech Companies: Need to consider the whole product environment and look for existing consumer technologies that can drive device functionality.
o Payers: Bundled payments, coverage limitations, imposing penalties.
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Trends in Healthcare Impacting Med TechRegulatory Pressures
1. Changing regulatory landscapes – increasing complexity increased levels of scrutiny. Changes are underway to existing regulatory regimes (U.S. and EU) and increasing regulatory requirements in developing countries (China, India, Brazil).
2. New reporting requirements: e.g. the Sunshine Act requires companies to report transfers of value to medical practitioners.
3. Regulations and the Environment: e.g. RoHS and REACH.
4. Regulatory pressures and Cost Containment: To cope with cost containment pressures, device makers are outsourcing more and more of their critical operations and materials, trying to wring out costs and improve their profitability. The unintended consequence? A much, much greater risk of supplier control violations.
5. Regulatory vs Reimbursement Reviews: The FDA and the CMS have extended for two years a pilot project that lets some medical devices undergo simultaneous review by the agencies. The program is meant to streamline the agencies' review processes, shrink the interval between FDA approval and determination of Medicare coverage and foster innovation.
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A few words on domestic issues…
• Affordable Care Act (ACA)
• Medical device excise tax
• Unique Device Identification (UDI) (2014)
• Physician Payment Sunshine Act- tracking of payments
and other “transfers of value” (2014)
• Upcoming legislation on FDA budget and sustainable
growth rate formula.
• USFDA - Requires electronic submission of adverse
event reports by August 2015
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Key Characteristics of the Medical Device Sector
• Recognized for its growth potential and relationship with economic development. Certain market drivers are inevitable.
• Industry Structure Predominantly SMEs, however large companies have a significant share of the industry’s total revenue.
• Highly Regulated: Regulatory landscapes are changing, with increased levels of scrutiny.
• Reimbursement is Key: Adequate reimbursement is necessary for products to succeed in the market.
• Rapid Pace of Advancement/Relatively Short Life Cycle: Average life cycle of about 18 months before an improved product becomes available.
• Ebb and Flow to Market Demand: Intense competition demands faster times-to-market. Products can be overtaken by new products, or by events.
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Major Issues and Strategic Objectives in Medical Devices Trade
Issues
• Medical devices vs. Pharmaceuticals• Medical Device Regulation Transparency• Medical Device Registration/Re-
registration• Product Classification• Product Testing and Use of Standards• Quality systems vs. type testing• Acceptance of test data• Combination Products & IVDs• Clinical Trials• Tendering Procedures• Pricing• Unique Device Identifier (UDI)• Policies and Practices to Protect Data
Strategic Priorities
• Improve Market Access • Promote transparency and fairness and
regulatory structures based on international best practices
• Provide a reasonable comment, consulation with industry and transition periods on new regulations
• Ensure requirements are written and enforced evenly for domestic and imported products
• Ensure consideration of/access to advanced technologies
• Contend with issues arising from pressures on the healthcare sector (e.g. cost containment)
• Access to capital
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Emergo Poll: What are the biggest challenges you face? (Sorted by respondent location )
(Source: Emergo 2013)
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U.S. Med Tech at a Glance Public Company Data
(Source: Medical Technology Report 2013 Ernst & Young and TPIS*)
Public Company Data 2012 2011 Percent Change
Revenues $210 $206.6 2%
R&D Expense $10.2 $10.0 2%
SG&A $41.4 $41.6 0%
Net Income $8.7 $13.7 -37%*
Market Capitalization $309.4 $296.5 4%
Number of Employees 431,400 438,000 -2%
Number of Public Co 227 232 -2%
* 2010 2011 2012 2013
EXPORTS IMPORTS
$37.413 B $30.814 B
$39.487 B$33.417 B
$41.560 B$34.366 B
$42.384 B$36.076 B
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U.S. Exports to Key Trading Partners2011-2012
$Million
Country 2011 2012Total Market Size (2012) U.S. % of Market
Republic of Korea 706.3 686.3 5,425.2 12%Brazil 867.6 920.3 4,192.8 21%France 1257.6 1185 8,736.7 13%Mexico 1703.1 1,805.6 3,738.5 48%China 1892.3 2,361.9 10,199.6 23%Germany 2746.9 2,784.3 19,392.4 14%India 461.7 503.3 3,000.2 16%
ASEAN 955.1 1,084.7 4,456.0 24%Saudi 232.9 257.3 1,521.0 16%
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Global Demand for Healthcare/Medical Devices
The United States, Japan, Germany, France, and Italy account for 13.1% of the global population and 76% of global medical device use.
Conversely, the five most populous countries (China, India, Indonesia, Brazil and Pakistan) account for nearly half of the global population but only about 5-6% of global medical device use.
Huge populations around the world at all income levels –[more than 1 billion worldwide] -, lack access to basic standards of health care. “The emerging markets’ share of global demand is steadily climbing, from roughly 40 percent in 2008 to an expected 66 percent by 2025 …” Ernst & Young’s Pulse of the Industry 2013/Deloitte Global Healthcare Outlook 2014
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World Market Growth for Med DevicesSource: BMI Espicom Worldwide Medical Market Forecasts to 2018
($Billion)
Market0
50
100
150
200
250
300
350
400
450
500
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
19
Market Size United StatesW Europe (16)JapanChinaRussiaCanadaS KoreaAustraliaBrazilMexicoIndiaROW
Global MarketTotal Market Size $284.47 (2012)
(Source: Espicom)
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Global Markets by RegionSource: BMI Espicom Worldwide Medical Market Forecasts to 2018
($Billion)
2009 2010 2011 2012 2013 2014 2015 2016 2017 20180
50
100
150
200
250
300
350
400
450
500Americas W Europe Asia Pac CE Europe ME/Africa
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China
US and European med tech companies view China as a major source of growth.
• Spending on healthcare more than doubled from 2008-2012 reaching $436 billion
in 2012 (Sources: GBI, RnR Market Research). Expected to near $890 billion – 5.9% of GDP - in 2017. (Deloitte)
• Demand has increased dramatically, and is forecast to achieve a compound annual growth rate (CAGR) of 11% through 2018 (Sources: USITC and Global Business Intel).
• China’s medical device market was valued at $20 billion in 2012 and will exceed $50 billion by 2020 (Source: Global Business Intel).
• All the market drivers are there: aging population, increased urbanization, healthcare awareness, emergence of life style-related illness. By 2050 nearly one third of China’s population will be over 60. Annual orthopedic procedures are forecast to increase by 18% through 2015. China has 92 million diabetics.
22
India
• Spending on healthcare is estimated to be 5% of GDP in 2013. and double from 2012-17, an average annual growth rate of 15.8% (Deloitte).
• Promising but difficult market with a myriad of issues including regulatory uncertainties, pricing and payments, clinical trials, “systems organization”, need for targeted expansion of healthcare.
• India’s approach to healthcare development is an interesting one. On the one hand it has among the lowest public health expenditures per capita in the world and a compelling need for development. On the other, its private sector and research base includes some of the world’s leaders.
• There is still a compelling need for a more robust regulatory regime.
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Brazil
• Healthcare spending has increased in recent years to 8.9% of GDP. Forecast to exceed $250 billion by 2017.
• Largest medical device market in South America. Annual rate of growth 15–19 % from 2008-11. Valued at about $7.9 billion in 2012, expected to exceed $13 billion by 2020. Double digits growth should resume in 2014 and continue through 2015. (Source: Medistat)
• Medical products in Brazil are highly regulated by ANVISA, the Brazilian counterpart of FDA.
• Webinar: Selling Medical Equipment in Brazil will take place on March 19, 2014, from 1pm to 2:15pm https://emenuapps.ita.doc.gov/ePublic/event/editWebReg.do?SmartCode=4Q4T.
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Western Europe
• The European Union remains the top export market for U.S. medical device suppliers and has been for decades. The EU represents roughly a third of the world’s market, surpassed only by the United States for production and consumption of med devices.
• Three EU Member States -- France, Germany, and the United Kingdom – are NEI priority markets for the medical technology sector. U.S. exports to the top twelve countries in the EU that represent the bulk of the market approached $8 billion in 2012.
• “Greater regulatory compatibility can be achieved through a range of regulatory cooperation tools as well as other steps aimed at eliminating unnecessary regulatory differences.”
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Other Key Markets(Source: Medistat Forecast to 2016)
• Japano 33.3 $B (2012) / 33.5 $B (2016)o Percent imported: 35.1%
• South Koreao 5.4 $B (2012) / 7.86 $B (2016)o Percent imported: 57.9%
• Mexicoo 3.7 $B (2012) / 4.3 $B (2016)o Percent imported: 95%
26
ASEAN Economies
• Singapore, Malaysia, Philippines, Indonesia, Thailand, Viet Nam, Brunei, Cambodia, Laos and Myanmar.
• Combined population of 600 million; combined GDP exceeding $2.5 Trillion. Combined med device market of about $6 Billion.
• In 2012, the MDPWG supported a Commerce and USAID proposal for a multi-year series of training programs, consisting of both ASEAN-wide and country-specific workshops focused on MD regulatory harmonization. The workshops emphasized a globally harmonized approach to medical device regulation based upon GHTF guidance documents.
27
U.S. Industry Outlook for Med Tech• “2014 is not looking like a banner year for the medical device market – but it won’t
be a loser, either. We believe the outlook for 2014 is not much improved over 2013 – we expect low, single-digit growth overall. Global companies have balanced out weak demand in developed markets for mature products with double-digit growth in emerging markets, and new product introductions that address new patient populations…” Cheryl Richer, Director, Corporate Healthcare for Standard & Poor’s.
• Market performance will vary across product segments. certain segments remain weak while certain non-communicable disease segments - atrial fibrillation and neuro-modulation - are exhibiting stronger growth. Kalorama forecasts respiratory devices market will grow 4.6% annually through 2017
• While demand is slowing in the U.S. and in Europe it’s growing in Asia. Firms based in the Asia-Pacific region expressed the most optimism for the 2014 business climate.
• General sustained optimism past 2014: Positive expectations for the industry as a whole have increased slightly from January 2013. Nearly 75% of respondents reported "somewhat positive" or "very positive" outlooks for 2014 compared to 71% in our 2013 survey.
• http://www.healthcarefinancenews.com/news/2014-medical-device-market-lukewarm• http://www.emergogroup.com/research/download-annual-medical-device-industry-survey
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THANK YOU!CONTACT INFORMATION
Office of Health and Information Technologies (OHIT)International Trade Administration
Staff Telephone Email
Jane Earley (TL) 202 482-6241 [email protected]
Richard Paddock 202 482-3360 [email protected]
Matthew Hein 202 482-5014 [email protected]
Gerry Zapiain 202 482-2410 [email protected]
Lisa Huot 202 482-2976 [email protected]
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Industry and Analysis’Spotlight on
Communications Network& Transmission Equipment
March 27, 2014
Prepared by Office of Health & Information Technologies
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Communications Network and Transmission Equipment includes: Telephone Apparatus Manufacturing (NAICS 334210) Radio and Television Broadcasting and Wireless Communications
Equipment Manufacturing (NAICS 334220) Fiber Optics Cable Manufacturing (NAICS 335921*) Copper Rolling, Drawing, Extruding, and Alloying (NAICS 331420*) Other Communication and Energy Wire Manufacturing (NAICS 335929*)
What is Communications Network and Transmission Equipment (CNTE)?
*Only part of this NAICS category
31
Impact on the U.S. Economy(2013)
Domestic Exports: $16.3 billionTotal Exports: $35.3 billion
Total Manufacturer Employment: 201,000CAGR Exports 2007-2013: Domestic 2.1 %
Total 9.2 %
As a % of U.S. ICT Exports: 43 %
Balance of Trade: $-53.2 billion
% of U.S. Production Exported: 42 % (2011)
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Major Demand Drivers• Wireless:
Mobile subscribers will surpass 7 billion in 2014. The U.S. has invested a cumulative total of $378 billion in wireless networks, more
than any other geographic region by a significant margin. Although North America has been the most aggressive in launching 4G services, by
2018, the focus will shift to Asia. Smartphones will account for over 60% of all handsets sold worldwide in 2014.
Emerging markets represent a tremendous growth opportunity for high capacity mobile broadband networks.
• Broadband: Only 35-40% of households worldwide have a broadband connection, with 1.1 billion
households – or 4.4 billion people – remaining unconnected in 2014 (ITU). While broadband penetration hovers around 65-70% of households in developed
regions like North America and Western Europe, it is 25% in emerging markets in Asia Pacific and merely 13% in Africa and the Middle East.
Mobile broadband is now more affordable than fixed broadband, and is the fastest growing segment of the global ICT market, by a 3:1 margin.
33
Comparing Technology Platform Access
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013*0
10
20
30
40
50
60
70
80
90
10096.2
38.8
16.5
29.5043327264554
9.8
Global ICT developments, 2001-2013
Mobile-cellular telephone subscrip-tions
Individuals using the Internet
Fixed-telephone subscriptions
Active mobile-broadband subscrip-tions
Fixed (wired)-broadband subscrip-tions
Per 1
00 in
habi
tant
s
Note: * EstimateSource: ITU World Telecommunication /ICT Indicators database
34
Fixed-Line Telephony Global Access
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013*0
5
10
15
20
25
30
35
40
45
50
41.6
16.5
11.1
Fixed-telephone subscriptions per 100 inhabitants, 2001-2013
DevelopedWorldDeveloping
Per
100
inha
bita
nts
The developed/developing country classifications are based on the UN M49, see: http://www.itu.int/ITU-D/ict/definitions/regions/index.htmlNote: * EstimateSource: ITU World Telecommunication /ICT Indicators database
35
Fixed-Broadband Global Access
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012* 2013*0
5
10
15
20
25
30
27.2
9.8
6.1
Fixed (wired)-broadband subscriptions per 100 inhabitants, 2001-2013
DevelopedWorldDeveloping
Per 1
00 in
habi
tant
s
The developed/developing country classifications are based on the UN M49, see: http://www.itu.int/ITU-D/ict/definitions/regions/index.htmlNote: * EstimateSource: ITU World Telecommunication /ICT Indicators database
36
Mobile Economy to Triple in Size by 2017
Source: Pyramid Research
37
Mobile Broadband Traffic Forecast
38
Global LTE Network Growth & Forecast
Global LTE Network Growth & Forecast
39
Wireless Subscriber Distribution by World Region
Subscription Distribution by World Region
40
Global Share of Wireless Infrastructure CapEx
41
Top International MarketsGlobal Telecom Market Value $2.1 Trillion
China Japan Brazil U.K. Germany France India Korea -
50,000,000,000
100,000,000,000
150,000,000,000
200,000,000,000
250,000,000,000
300,000,000,000
$105,400,000,000
$35,700,000,000
$16,700,000,000 $21,100,000,000 $16,600,000,000 $14,200,000,000 $16,800,000,000 $21,200,000,000
$177,900,000,000
$123,800,000,000
$100,700,000,000
$49,100,000,000 $53,100,000,000 $48,500,000,000$38,900,000,000
$28,900,000,000
$283,300,000,000
$159,500,000,000
$117,400,000,000
$70,200,000,000 $69,700,000,000$62,700,000,000
$55,700,000,000 $50,100,000,000
Top International Markets(Est. 2013)
Equipment Services Total
Source: IDC Blackbook
42
Global Telecom MarketShare of Global Telecom Market
(Based on 2013 Revenue)
Top Foreign Markets Valued Around $869 Billion; 41% of Global Telecom Market
Source: IDC Blackbook
33%
18%13%
8%
8%
7% 6%6%
Percentage Share of Top International Markets
ChinaJapanBrazilU.K.GermanyFranceIndiaKorea
43
U.S. Exports of Communications Network and Transmission Equipment
2007 2008 2009 2010 2011 2012 20130
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
35,000,000,000
40,000,000,000
$14,438,015,023.0 $15,241,348,960.0
$12,358,594,377.0$13,368,597,154.0
$14,371,618,112.0$15,395,916,374.0 $16,300,263,616.0
$20,839,382,570.0
$24,374,581,684.0
$21,666,242,106.0
$26,292,321,477.0
$30,455,965,866.0$32,652,246,553.0
$35,343,803,560.0
(In Billions USD)
CNTE Domestic Exports CNTE Total Exports
44
Top CNTE Exports Markets: (Figures based on Year-End 2013)
29%
23%13%
9%
6%
6%5%
5%3%
Share of U.S. CNTE Exports
European UnionMexicoCanada Hong KongJapanChinaBrazilAustraliaColombia
45
CAGR for Top CNTE Export Markets: (Figures based on Year-End 2013)
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
4.8%
-0.5%
12.8%
6.9%
-1.9%-3.9%
9.2%10.4%
-7.4%
Top International Market Export CAGR 2007-2013
Mexico Canada Hong Kong Brazil Japan China Australia Colombia European Union
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Strategic Priorities Expansion of the WTO Information Technology Agreement to provide duty-free
treatment to additional products.
Elimination or reduction of forced localization requirements in key priority markets (China, India, Brazil).
Opening China market for telecommunications products—ongoing effort in the context of the JCCT.
Historically #1 for product reliability, quality and safety
U.S. communications products are recognized globally as being world leaders.
Monitor Government Activities in Emerging Markets
Countries seeking to develop competing products frequently rely on policies which are discriminatory and/or run afoul of WTO rules.
Competitive U.S-Based SMEs
While the largest U.S. firms are successful internationally, many SMEs need assistance in accessing and navigating participation in foreign markets.
Pillars of Export Competitiveness
47
Opportunities• U.S. communications network and transmission equipment manufacturers
should see continued global demand for their products.
• Global population is expected to reach 9 billion by 2050.
• Middle class populations in many emerging economies are expanding rapidly, as well.
• U.S. manufacturers are leading global producers of new technologies to meet expanding global demand for communications.
• Expansion of the WTO Information Technology Agreement to cover new technologies.
48
Risks and Issues• Foreign governments seek to create/bolster their domestic
industries create programs to subsidize their manufacturers.
• Import substitution and localization efforts in key emerging markets are important roadblocks.
• Slower economic recovery in Europe and many emerging economies has been a drag on exports.
• Efforts to expand the WTO Information Technology Agreement have been stalled since last fall due to China’s prohibitively long list of products to be excluded from duty-free treatment.
49
Competitive Environment:BRIC Market Access
• Brazil: Local content, tariffs, NTBs, industrial policy
• Russia: Tariffs, financial restrictions, local content
• China: Intellectual property, industrial policy
• India: Forced localization and burdensome testing
50
Inward Investment
CommunicationsEquipment:Samsung (Korea)
Electronics Assembly:Foxconn (Taiwan)
51
Examples of ITA and Interagency Activities
• Industry expertise and outreach to support expansion of the WTO Information Technology Agreement.
• Coordinate with USTR on WTO Information Technology Agreement, JCCT, Section 1377 Review, TTIP.
– I&A participates in development of USG positions on regulatory and standards issues, along with other USG agencies.
– Ongoing research on relevant U.S.-EU trade issues for use by DOC and other USG decision makers.
• OHIT collaborates with the CS Global Mobile Sub-Team.
• Promote U.S. exports at communications trade shows, including:– NAB (IBP)– InfoComm (IBP)– Mobile World Congress– TIA
Mobile World Congress 2014 –Barcelona, Spain
Presenting and Export Achievement Award.
52
Opportunity: Expansion of covered products under the Information Technology Agreement is estimated to increase annual exports of U.S. ICT products (including CNTE) by $2.8 billion, boost revenues of U.S. ICT firms by $10 billion, and support the creation of 60,000 new jobs. (Source: ITIF)
Issue: Government of India (GOI) approved Preferential Market Access (PMA) policies that give advantage to domestically manufactured electronic goods purchased by government ministries that are deemed to have national security implications.
Issue: On November 1, 2013, China began to implement guidelines on Mobile Smart Terminals (e.g., smart phones and tablets) that establish an onerous regulatory framework for mobile devices sold in China.
Opportunity: The GOI has suspended the implementation of the PMA mandate for private sector procurement. There is currently an open review and consultation period to work with the GOI on developing security best practices that would not harm trade.
Risk: WTO ITA Expansion negotiations have been suspended due to China’s intractable negotiation position maintaining a prohibitively high list of products exculuded from duty- free treatment.
Inward Investment: Opportunities, Challenges & Trends Opportunity: The U.S. offers a vibrant ecosystem, including excellent educational,
workforce, and physical infrastructure, as well as a dynamic market for foreign investors. Challenge: Foreign firms have lower production costs, aggressive pricing and access to
low cost financing, which encourages continued offshore manufacturing by U.S. firms. Opportunity: Foxconn, a Taiwanese contract electronics assembly company, announced
plans to invest in the development of a $30 million assembly facility in Harrisburg, Pennsylvania. Production will include telecom equipment products.
Strategic Priorities Expand telecommunications products eligible for zero-tariff trade under the WTO Information Technology Agreement (WTO ITA).
Discourage the governments of priority markets (India and China) from implementing new country-specific technical standards and burdensome testing requirements for CNTE products.
Discourage the governments of priority markets (India and China) from implementing new domestic procurement and local content requirement (LCR) mandates for CNTE products.
Priority Markets 2013 exports in billions (bn) and 2012-2013 YOY export growth rate: EU ($2.2 bn; 4.8%); China ($0.61 bn; -14.9%); India ($0.25 bn; -3.7%)
Accomplishments & Actions Taken in Last 3 Months Policy Led telecom product analysis and advised U.S. team on negotiating positions for the
expanded product list for goods covered under the WTO ITA. Successfully engaged GOI to gain implementation postponement of India’s Compulsory
Registration Order on imported Electronics and Information Technology Goods. Provided critical expertise on ICT products during meetings of the customs experts group.
Gained agreement on customs administrable product descriptions for all of the proposed products to ensure successful implementation of an expanded WTO ITA.
Outreach/Promotion Outreach: Formulated strategies with private sector on engaging GOI to reform or delay
implementation of the Compulsory Registration Order. Outreach/Promotion: Consulted with industry on market opportunities and market
access concerns at 2014 Mobile World Congress.
Market Access Case Initiated and/or Advocacy and/or Commercial Diplomacy Advocacy: Advised on advocacy projects for U.S. telecom equipment firms bidding for
communications infrastructure projects in China, Brazil, and Peru.
Opportunities, Risks & Issues Where We’re Going In the Next 3 Months Policy Conduct US-China JCCT IIWG meeting focusing on mobile device standards and
regulation, cloud security standards, conformity assessment, and services-related issues that impact the overall market.
Raise telecommunications market access issues to be included on the agenda for the U.S.-EU Information Society Dialogue (ISD) talks planned for May 2014.
Coordinate telecommunications market access issues on the agenda for U.S.-India ICT WG meetings, to address localization, trade, and market access issues.
Identify opportunities to apply high-level pressure on China and implement coordinated interagency campaign to drive Chinese WTO-ITA negotiators to reach agreement on the expanision of covered products.
Outreach/Promotion Outreach: Conduct stakeholder meeting to develop IIWG priorities for 2014 meetings
and market access discussions. Outreach: Devlop strategies and actions that will press China toward a more tenable
negotiation position that is conducive to successfully concluding expansion of covered products.
Market Access Case Initiated and/or Advocacy and/or Commercial Diplomacy Advocacy: Support U.S. bids for projects in China, India, Brazil, and Gulf States.
Communications Network and Transmission Equipment – Status as of March 16, 2014
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Sources and Useful ResourcesSources/Resources
4G Americas425-372-8922http://www.4gamericas.org/index.cfm?fuseaction=page§ionid=117
iGR512 263-5682https://igr-inc.com
International Telecommunication Union (ITU)+41-22-730-511http://www.itu.int/en/ITU-D/Statistics/Pages/default.aspx
Pyramid Research617-747-4100http://www.pyramidresearch.com/
http://itacentral/teams/gt/teams/ict/Shared%20Documents/Forms/AllItems.aspx?RootFolder=%2Fteams%2Fgt%2Fteams%2Fict%2FShared%20Documents%2FTeam%20Training%202013&FolderCTID=0x01200052375538CC73974E99710B791339F4FD&View={6D7D156B-2390-43BB-AADA-D83B9894C884}
Industry News
Light Reading http://www.lightreading.com/
Fierce Wireless (industry’s daily monitor)http://www.fiercewireless.com/
RCR http://www.rcrwireless.com/Trade Associations
CTIA – The Wireless Association202-736-3200http://www.ctia.org/
Information Technology Industry Council (ITI)202-626-5736http://www.itic.org
Telecommunications Industry Association (TIA)703-907-7700http://www.tiaonline.org
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Contact InformationOffice of Health & Information Technologies
(OHIT)Linda Astor; Acting Team [email protected]; 202-482-4523
Cary Ingram; Communications Network and Transmission [email protected]; 202-482-2872
Indrek Grabbi; [email protected]; 202-482-2846
Dorothea Blouin; Semiconductor manufacturing equipment, WTO [email protected]; (202) 482-1333
http://trade.gov/td/OHIT
Robin Gaines; Computer equipment [email protected]; (202) 482-3013
Sergio Delgado; Computer [email protected]; (202) 482-3548
