A Test for Tech

Being in the top 10 most definitely carries its rewards. However, there are no promises that such rankings are permanent. There is always something, somewhere that could take that away.

That best describes the situation where it comes to Arizona’s technology industry and its role as a key exporter in the United States. Arizona ranks No. 8, with approximately $5.6 billion in manufactured technology goods exported in 2016, according to the latest CompTIA Tech Trade Snapshot. That’s an increase of 0.9 percent from the previous year. For the Phoenix-Mesa-Scottsdale area, $4.1 billion in technology product exports were reported in 2015 — a jump of 9.2 percent from 2014.

With more than 800 member companies now in the Arizona Technology Council, they have a lot at stake in the trade situation. Their workforces were among the 34,742 estimated by CompTIA to be involved in technology manufacturing in 2014, with 32 percent of those jobs supported by exports.

But exporting can be risky business. This became readily apparent close to home when President Trump first talked about upending the North American Free Trade Agreement (NAFTA), causing a shudder to ripple among members of Arizona’s technology community as they thought of what would happen to the state without this historic deal that has changed three nations. After all, the leading trading partners for technology products for the entire nation and Arizona last year were Mexico and Canada. This also includes IT, telecommunications and information services.

Admittedly, NAFTA is overdue for change. When the agreement was signed by the United States, Mexico and Canada in 1994, the world was a different place. Take the technology sector. What is taken for granted today was but a dream more than two decades ago. For example, rapid technological advancement has changed how goods and services move around the Earth. NAFTA does not address data transfer and storage. Renegotiations could adopt regulations that help protect the storage and privacy of company data. An updated agreement could incorporate other important benefits and protections if handled properly.

U.S. Trade Representative Robert Lighthizer has said the administration hopes to complete the NAFTA talks by the end of the year. That means productive dialogue must begin now. That also means Arizona companies need to reach beyond the state’s borders for input. As a first step, Melissa Sanderson, chair of the Arizona District Export Council, was joined by the Arizona Technology Council and other groups in recently sending a letter to Michael Crow, president of Arizona State University, asking the university to convene national thought leaders for a summit to begin the process of analyzing and developing fact-based options for a new trade paradigm.

The focus shouldn’t just be on Arizona exports. Imports also are essential in a global marketplace. In technology, companies rely on imported parts from processors to computer screens that can fuel advancements in products and solutions. Unfortunately, U.S. House of Representatives members are not helping as they have proposed a Border Adjustment Tax (BAT) of 20 percent on goods imported into our country. That means all imported goods, including food, drugs and clothing. It’s estimated each family will pay $1,700 per year more for these necessities, totaling $1 trillion over the next decade. The BAT would be a major step backward with serious consequences for innovation.

Speaking of the border, there is a major push to tackle the related issue of reforming a broken immigration system. To help, the Council is a member of the new FWD.us Arizona Coalition comprised of business and community leaders to communicate the need for immigration reform. FWD.us is a national bipartisan organization started by Facebook founder Mark Zuckerberg and Microsoft founder Bill Gates among other key technology leaders to promote policies that keep the United States competitive. By modernizing a legal immigration system, the group envisions unlocking immigrants’ economic potential to help create millions of jobs and reduce the deficit.

FWD.us is working to mobilize the tech community and other leaders in business and civic engagement to promote immigration and economic policies that keep the U.S. competitive in an increasingly globalized world. Since Arizona is on the front lines of the immigration debate, it also is well positioned to have a significant and positive impact on the vital issue of immigration reform.

The FWD.us Arizona Coalition is championing the cause of Deferred Action for Childhood Arrivals (DACA) recipients. The DACA program was put in place in 2012 to allow young undocumented immigrants who were brought to the United States as children to get temporary relief from potential deportation and be able to live, work and study openly in the United States. In order to receive a two-year renewable work permit, all DACA participants must undergo a thorough background check (including fingerprinting), pay fees, and be subject to strict residency and other requirements.

Hundreds of thousands of DACA recipients across the country face significant insecurity about their legal status in the face of aggressive immigration policies being pursued at the federal level. The Council through the FWD.us Arizona Coalition will fight for DACA recipients in the state, advocating for the government to find a legislative solution like the Recognizing America’s Children Act for these individuals who came to the U.S. as children and desperately want to continue contributing to our economy.

So far, there has been no morally defensible reason to deport the young people. The vast majority of the 750,000 participants in the DACA program are gainfully employed or students. They are major contributors to the U.S. economy, both as workers and consumers. Forcibly removing hundreds of thousands of these “Dreamers” would have a significantly negative impact on our national economy, with the potential to push gross domestic product down by as much as $400 billion over the next decade.

The effort by FWD.us is coupled with the technology community’s ongoing push to double the number of available H-1B visas for high-tech jobs in response to the shortage of workers with the necessary science, technology, engineering and math skills and education needed to fill critical positions. There is concern that the Trump administration will reduce the number of H-1B visas, which the Arizona technology community fears would negatively affect the economy, as many companies could be forced to move key projects outside the United States.

There is a proposal for a “startup visa” that has gained some support. The International Entrepreneur Rule would allow some startup founders to remain in the United States while they build their companies and maintain at least 10 percent ownership, among other requirements. They would be allowed to stay up to 30 months with the possibility of extending their stay for an additional 30 months. The rule was scheduled to go into effect July 17 — six months after it was approved by the Department of Homeland Security under the Obama administration. It was revealed in recent news reports, however, that the rule was sent to the Office of Management and Budget for further review, which some observers say means it could be amended, postponed or withdrawn.

Time will tell whether the shifting trade and immigration climate will bring sunnier days or dark clouds for technology in Arizona and the rest of the nation.