White House Director of Trade and Manufacturing Policy Peter Navarro will sit down next week with Rep. Jenniffer Gonzalez-Colon, a Republican from Puerto Rico, to discuss legislation she crafted to bring companies back from China to distressed areas in the United States.
The measure would offer tax incentives for businesses to move pharmaceutical drug or device manufacturing to “distressed zones” in the U.S. and Puerto Rico. It would also provide tax breaks for goods and services purchased by a manufacturer from a provider located within one of these zones. Incentives would be greater for supply lines that move from overseas and for purchases made from minority-owned businesses.
The bill calls on the Department of Health and Human Services to study whether extending the intellectual property of some drugs and devices is effective in driving innovation, and if so, recommends an expedited approval process and lengthens a product or drug’s period of market exclusivity.
“Through not only the tax incentives, and the BARDA collaboration, but also the IP goodies, we’re not going to give you money, but we’re going to let you get your money back over a longer period,” said one senior House aide familiar with the legislation. The aide said the White House is “looking to do something.”
While the Joint Committee on Taxation “will probably have a heart attack,” the White House knows “it will cost money to bring manufacturing out of China or India,” this source said. “It’s not going to be a cheap thing. The White House knows this.”
The bill is an amended version of the Securing the National Supply Chain Act of 2020, introduced by Gonzalez-Colon in April.
In an interview with the Washington Examiner, Gonzalez-Colon said she first shared the bill with Navarro’s Office of Trade and Manufacturing in March but has been talking to the White House about manufacturing as a safety issue since last year.
“It’s not just going to be giving the manufacturer or the company the incentive,” Gonzalez-Colon said, explaining that there would be an important jobs creation aspect to her plan.
Navarro said this month that Congress could help spur the return of manufacturing from China to the U.S. and Puerto Rico in a future coronavirus relief package.
The U.S. ran a nearly $34 billion trade deficit in biotechnology and life science products last year and sources many crucial ingredients for drug manufacturing from China.
A senior House aide said that efforts are underway to include the new legislation in the next coronavirus package but cited the “narrow frame of discussions between the House and Senate” as a limiting factor. “The things that are being negotiated are very, very specific. It’s a little bit difficult … although we are trying to do that. That’s our goal.”
Reaching a solution that would benefit Puerto Rico is a “priority area for the administration,” said one person with knowledge of internal discussions.
Working closely with Navarro’s office is Trump’s former Homeland Security and Counterterrorism Adviser Rear Adm. Peter Brown, who now serves as the Special Representative for Puerto Rico’s Disaster Recovery and holds weekly interactions on the issue. “This has become a top issue for him,” this person said.
“In the end, it’s not going to be whatever Congress wants, it has to be something that’s being worked out together with the White House,” a senior House aide said. “And as of right now, the White House has taken a very active role in looking at the different things that people are proposing.”
