What’s the Big Deal About Trade?

AIADA_TradeThe 2016 presidential race has brought trade under heavy fire, with both candidates opposing the the Trans-Pacific Partnership. Jonathan Huneke, USCIB vice president of communications and public affairs was quoted in an article by the American International Automobile Dealers Association about current misconceptions about trade.

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Jonathan Huneke, the vice president of Communications at the U.S. Council for International Business, echoes that belief, noting that many Americans believe the economic climate is working against them. “Despite steady growth in jobs since 2010, wage stagnation in the United States has led many in the United States to believe that the odds in the current economy are stacked against them,” he notes.

According to Huneke, “American dealers have a lot at stake in keeping our trade policy fundamentally open and forward-leaning. There is huge demand and growth potential for innovative automobiles that meet the needs of U.S. consumers. Many of the most innovative automakers rely heavily on the American market, and on skilled American workers, to compete globally.”

Huneke agrees. “Trade agreements serve important diplomatic and geopolitical purposes in addition to their economic benefits, something that most Americans probably understand,” he says. “For example, the TPP and TTIP agreements can play an important role at a time when we are seeking to strengthen our Asian and European alliances in the face of threats like North Korea and ISIS.”

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The Business of Achieving the Sustainable Development Goals

Business for 2030 logo

The Sustainable Development Goals (SDGs) bring the global community together in a bid to end poverty and hunger, fight climate change, and achieve sustainable economic growth. How can businesses play their part in this universal effort, and what’s in it for them?

USCIB Vice President for Labor Affairs, Corporate Responsibility and Governance Ariel Meyerstein was quoted in an article by Eco-Business about how the private sector is participating in the global development agenda.

One major initiative is Business for 2030, launched last September by the New York-based United States Council for International Business (USCIB). The programme showcases efforts by companies worldwide to contribute to the SDGs, and aims to foster partnerships between the public and private sectors to meet the goals.

Ariel Meyerstein, USCIB’s vice-president of labour affairs, corporate responsibility and governance, recalls that in 2014, the organisation recognised that the SDGs offered an unprecedented space for the private sector to participate in the global development agenda.

“This meant that businesses needed to quickly get up to speed on this vast, ambitious, and dizzying new framework,” he says. “Business for 2030 provides a public resource that helps translate existing and ongoing corporate activities into the new SDG language.”

This collection of concrete examples not only offers other businesses case studies on how to get involved, but also allows governments to identify good corporate initiatives in their own countries, which they can then collaborate with, explains Meyerstein.

The site today hosts more than 140 initiatives from 35 firms which are implemented across 150 countries.

Read the full article at Eco-Business

Finance Disrupted – Collaborate or Die?

Finance Disrupted BannerUSCIB is proud to partner with The Economist for the October 13 event “Finance Disrupted: Collaborate or Die?” in New York City. The wave of fintech disruption that is sweeping through the financial services industry is approaching a critical phase. The rise of startups targeting every corner of financial services – from currency transactions to trading and wealth management – has won the attention of the industry’s incumbent giants.

USCIB members save 15% on The Economist’s “Finance Disrupted” conference

Building on 2015’s acclaimed Buttonwood Gathering, “The Valley Meets the Street”, we are pleased to announce that our Finance Disrupted conference will take place this October 13th 2016 at 10 on the Park at the Time Warner Center in New York. Join editors of The Economist, industry leaders, entrepreneurs, investors, academics and policymakers to explore the role of collaboration in surviving the fintech revolution.

Visit The Economist’s website for program and registration information.

Businesses Say Proposed Tax Rule Is Too Complicated

USCIB Vice President and International Tax Counsel Carol Doran Klein and Chair of USCIB’s Taxation Committee William Sample (Microsoft) were quoted in a July 6 Wall Street Journal article about the U.S. Treasury’s controversial new proposed rules to curb tax avoidance. USCIB and other groups have argued the new rules would harm common business structures.

“If it were a targeted rule, the companies wouldn’t be going nuts the way they are,” said Carol Doran Klein, USCIB’s vice president and international tax counsel. “It hits virtually everything they do.”

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The Unexpected Regulatory Threat to Global Trade

The International Chamber of Commerce was quoted in an article in the Wall Street Journal, “The Unexpected Regulatory Threat to Global Trade,” about a European Union regulation on the short-term financial instruments that connect buyers and sellers of goods across countries.

The EU included trade-finance instruments, such as letters of credit, in the list of bank liabilities that could be written down if a bank goes under: “This decision, the banks say, creates an enormous compliance headache and a competitive disadvantage, and could leave unsuspecting parties holding the bag if foreign buyers fail to pay their bills.”

“It’s a poorly thought-out regulation that will hurt EU businesses,” said Emily O’Connor, senior policy manager at the Paris-based International Chamber of Commerce.

Read the full article at the Wall Street Journal’s website.

Business Can Help Shape the Future of Global Trade

The following op-ed was published in the Wall Street Journal on May 26.

The World Trade Organization is seeking input from the private sector on the next steps for trade liberalization.

In the span of two short years, the World Trade Organization has given businesspeople around the world a number of reasons to sit up and take notice. Through a series of negotiated trade agreements, it has demonstrated that its efforts can bring massive, widespread benefits. Now the WTO is looking to work in closer partnership with the private sector to bring further gains to the international trade regime.

In 2013, WTO members delivered the Trade Facilitation Agreement. This was the first global trade deal in 18 years. Once ratified, it promises to slash red tape and reduce border delays. Trade costs will be lowered by an average of nearly 15%. Global trade could be lifted by as much as $1 trillion.

This impact is bigger than if every remaining tariff in the world were reduced to zero. Full implementation could create more than 20 million jobs and lift global gross-domestic-product growth by up to 0.5 percentage points. Businesses around the world will get a significant boost.

Then in 2015, a group of WTO members came together to free up trade on a range of information-technology products, including the latest-generation semiconductors, telecommunications satellites, medical devices and video games.

This deal, expanding the existing Information Technology Agreement, eliminates tariffs on approximately $1.3 trillion in annual exports. That’s more than the value of the global trade in automobiles.

That same year, WTO members agreed on a world-wide ban on export subsidies on agricultural products, the biggest agriculture-trade reform in 20 years. Governments had been spending up to $13 billion on these economically distorting subsidies each year. The private sector supported these deals, and their engagement made a huge difference in the outcome.

Before this recent flurry of breakthroughs at the WTO, businesses had very little interest in trade negotiations. Prolonged lack of progress in global trade negotiations had led many countries to focus elsewhere and pursue bilateral and regional trade initiatives. Such initiatives can deliver significant economic gains, but there’s no question that global agreements can deliver even more benefits to more people.

The private sector recognizes this. A complicated patchwork of overlapping trade regulations and standards is less efficient than global rules. That’s why business leaders want and need a strong WTO.

Shared rules and enhanced market access in 162 countries is something no regional trade agreement can offer. Now that the WTO has showed that it can deliver these results, private-sector interest is rising fast and businesses are asking: What’s next?

The precise shape of the WTO’s future negotiating work remains an open question. All members agree that long-standing differences in agriculture, industrial goods and trade in services must be tackled, and that development should remain a central priority.

But at present there’s no agreement on precisely how to proceed with these negotiations, or what specifically should be on the agenda. Areas for discussion include supporting trade by micro-, small- and medium-size enterprises; promoting and facilitating investments; supporting e-commerce; tackling fisheries subsidies; and lowering nontariff barriers.

In this context, the private sector has asked that its voice to be heard, not to dictate the agenda, but to provide perspective. Two major business organizations, the International Chamber of Commerce and the B-20 (the private-sector arm of the G-20) approached the WTO requesting a platform to discuss current trade issues and present their thoughts to WTO members.

That meeting, the first of its kind, will take place on Monday in Geneva. Business leaders from small and large enterprises, from developed and developing countries, along with other stakeholders, will brainstorm with WTO members. We hope that this interaction will help their governments as they shape the WTO’s future agenda.

In recent years the WTO has shown that, with the support of the private sector and others, it can achieve major, economically significant trade agreements. Strengthening this partnership will ensure that the WTO’s record is maintained and that it keeps delivering for growth, development and job creation around the world.

Mr. Azevêdo is the director-general of the World Trade Organization. Mr. Mittal is the first vice chairman of the International Chamber of Commerce.

Trans-Pacific Partnership’s Vital Role in U.S.-Japan relations

The following op-ed by USCIB President and CEO Peter Robinson and Kunio Ishihara, vice chairman of the Japanese business federation Keidanren, appeared in The Seattle Times yesterday on the economic and geopolitical benefits of the Trans-Pacific Partnership (TPP) for the United States, Japan and the Asia-Pacific region. Ishihara led a Japanese business delegation to Seattle and other U.S. cities this week.

You can view the op-ed on The Seattle Times’ website at http://www.seattletimes.com/opinion/trans-pacific-partnerships-vital-role-in-us-japan-relations/

Broadening the Oversight of a Free and Open Internet

Via the Wall Street Journal

USCIB and the International Chamber of Commerce were cited in a Wall Street Op-Ed about the transition of the stewardship of the Internet from the United States to the broader multistakeholder community. Author Stephen Crocker, chairman of the Internet Corporation for Assigned Names and Numbers (ICANN) Board notes that business has a keen understanding of the importance of the Internet in strengthening the global economy and creating jobs and economic growth.

On March 17, representatives from the Intel Corporation, the Internet Society and others told Congress they supported the transition. The U.S. Chamber of Commerce, the U.S. Council for International Business, the Information Technology Industry Council, the Software & Information Industry Association and others also approve of the plan.

Business leaders from companies like Google, Verizon, AT&T, Cisco and Yahoo participated in the development of the proposal. Academics from Harvard, George Mason University and other institutions also weighed in. From the International Chamber of Commerce to the Center for Democracy and Technology, diverse organizations have voiced support.

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Waiting a BIT for China

Via Politico Pro Trade

Shaun Donnelly, USCIB vice president for investment and financial services, spoke to Politico about the prospects of a U.S.-China Bilateral Investment Treaty as President Barack Obama and Chinese President Xi Jingping are scheduled to meet this afternoon.

Against the backdrop of President Barack Obama and Chinese President Xi Jinping’s meeting this afternoon, the window is closing on China’s pledge that it would submit an updated market access offer in its investment talks with the U.S. in March. While an offer might have come overnight, Beijing had still not put forward an updated “negative list” offer for the bilateral investment treaty by late Wednesday.

“I understand that a comprehensive, high-standard U.S.-style negative list is a new and daunting proposition for a country like China, which has a long tradition of controlling investment, both domestic and foreign, quite tightly,” said Shaun Donnelly, vice president for investment and financial services at the U.S. Council for International Business.

But it would be disappointing if the two sides missed the opportunity of Xi’s visit to make progress on the talks, he said, even though the Nuclear Security Summit is largely focused on defense and security issues.

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ICC: Trade Policymakers — Here are Your Priorities

newspapers_lo-resInternational Chamber of Commerce (ICC) Secretary General John Danilovich urged policymakers to revitalize cross-border trade in a letter to the editor of the Financial Times on March 9.

The letter is available on the Financial Times’s website, and has been reproduced below:

Sir, Your editorial on the regulation of cross-border services (“New global trade under old national rules”, March 7) rightly highlights the imperative for trade policymaking to keep pace with changing patterns of global commerce. But the growing importance of data, services and investment does not obviate the need for policymakers to take urgent action to revitalize cross-border merchandise trade.

The tendency to explain sluggish trade growth by reference to structural shifts in the global economy obscures some of the key factors underlying the recent fall in global merchandise trade — and, in doing so, underplays the potential for simple policy levers to be deployed to boost global growth. Three areas, in particular, warrant further attention.

First, urgent action is needed to address the growing shortage of bank finance to support trade. According to the Asian Development Bank, there is currently a $1.4tn financing gap for trade globally — with small businesses often facing severe difficulties accessing the credit they need to trade internationally. Second, it is time for the international community to get serious when it comes to tackling protectionism. Recent research shows that the sectors in which world trade has fallen the most are those which have been hit hardest by trade barriers over the past two years. This is a worrying trend and one which should be a first-order priority for the G20 in the year ahead.

Finally, governments should ratify and implement the World Trade Organisation’s landmark Trade Facilitation Agreement without delay. This deal — forged in 2013 but ratified by only 70 governments to date — would have a transformational effect on the ability of small business to access global markets by reducing unnecessary red tape at borders. Official estimates suggest that the deal could add more than $1tn to global trade flows, creating 20m jobs in the process. A push to realise the real-world benefits of this agreement would bring a somewhat more optimistic outlook for the future of trade-led growth and development.

John Danilovich
International Chamber of Commerce,
Paris, France