USCIB Urges Ongoing US-China Negotiations

Washington, D.C., August 13, 2019 – In response to President Trump’s announcement earlier today to delay implementation of a ten percent tariff on imports from China, the United States Council for International Business (USCIB), which represents America’s most successful global companies, urged the U.S. and China to continue negotiations toward a comprehensive agreement.

“Simply delaying harmful tariffs on a select number of particularly impacted products from September 1 to December 15 is not a solution,” said USCIB President and CEO Peter Robinson. “It is crucial for the United States and China to engage in continuous discussions in order to reach a negotiated outcome with the goal of removing these tariffs and eliminating market barriers and discrimination.”

Robinson noted that American business continues to have major problems with China’s commercial policies and urged the Trump administration to work more closely with key U.S. trading partners and with the business community to address serious Chinese trade abuses, including referring U.S. complaints to the World Trade Organization.

About USCIB:
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world, generating $5 trillion in annual revenues and employing over 11 million people worldwide. As the U.S. affiliate of several leading international business organizations, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

Contact:
Jonathan Huneke, USCIB
+1 212.703.5043, jhuneke@uscib.org

USCIB in the News: Taxes, Trade and Tariffs

USCIB’s voice and views were reflected in many of the top stories of the past several months, which saw a heavy focus on taxes, trade and tariffs. USCIB and its global network were featured prominently in numerous stories covering NAFTA modernization, China tariffs and the OECD’s work on global tax policy.

In October, USCIB CEO and President Peter Robinson contributed a letter to the Financial Times in response to an editorial urging action on the digital divide. In his letter, Robinson noted that “public-private partnerships are indeed needed to broaden access to the internet, and companies are already moving ahead in this regard, in addition to taking action on their own.”

In discussing G20 trade tensions, USCIB Senior Vice President Rob Mulligan sat down with BBC World News to do a live television interview. Mulligan said that Trump is right to address the balance of trade between the U.S. and China, but that tariffs aren’t the answer and will ultimately cause higher prices and job losses.

To read more of USCIB activity in the media, please visit this link.

USCIB Expresses Concern Over China 301 Tariffs

In light of last week’s release of two lists of China 301 tariffs by the Trump administration, USCIB Senior Director for Trade, Financial Services and Investment Eva Hampl expressed concern about the impact the China 301 tariffs will have on the U.S. economy and jobs. “In our submission to the U.S. government we highlighted a number of products of particular concern to our members, for which tariffs would have a significant effect on U.S. production and revenue. Unfortunately it appears that only a handful of consumer products were taken off the list. We are also reviewing the new list of products, and welcome the opportunity to provide input as appropriate. We are, however, troubled by the planned investment restrictions to be imposed on Chinese investments in technology later this month, where stakeholder input is not taken into account. Given the significant impact investment restrictions could have on U.S. companies and jobs, this move by the Administration is problematic.”

The first list of China 301 tariffs was a reduced version of the 1,300 tariff lines USCIB commented on in May. This list of tariffs on about $34 billion of Chinese products is set to go into effect on July 6. The second list, covering about $16 billion of Chinese goods, are products that were suggested to be added. That list will be up for a comment period, with a public hearing to be held in late July. The Federal Register Notice is not yet officially out.

“China is ready to retaliate,” warned Hampl. China has apparently reduced their initial $50 billion list to $34 billion to match what is currently the U.S. tariff list – the Ministry of Finance has apparently posted the list.

Hampl was also quoted earlier today in Politico. Full article is available here, subscription required.

Hampl Testifies Regarding Proposed China Tariffs

 Following the Trump administration’s proposed Section 301 tariffs on Chinese goods, USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl testified before the Section 301 Committee, chaired by USTR on May 16 regarding the proposal. Hampl’s testimony reflected USCIB member concerns about potential consequences the proposed tariffs will have on sectors vital to the U.S. economy. Her testimony was drawn from comments USCIB sent earlier this month to the U.S. Trade Representative Robert Lighthizer. Hampl was joined by over 100 other business representatives to share specific concerns regarding the proposed tariffs.

“We believe that the imposition of tariffs will not achieve the important goal of changing China’s behavior in the space of emerging technologies and intellectual property rights,” said Hampl in her testimony. “China’s threat of retaliation further exacerbates uncertainties caused by this proposed action. Rather than create more opportunities for U.S. business, sweeping tariffs will stifle U.S. agriculture, goods, and services exports and raise costs for businesses and consumers.

Hampl emphasized the need for a “holistic structure” to address the aforementioned issues. Speaking on behalf of USCIB, Hampl applauded the Trump administration for looking at alternative approaches, such as initiating a WTO dispute by requesting consultations with China.

“It is important for the administration to address these issues with a broad view, working collectively with U.S. industry, Congress, and our trading partners, to adequately address China’s unfair trade practices and get China to be WTO compliant,” noted Hampl.

The proposed tariffs pose a unique challenge to industrial inputs, which represent over 80 percent of the proposed list. Tariffs on industrial goods are especially problematic because they represent not just a tax on U.S. consumers but a tax on U.S. manufacturers and workers, and on the products they export. Tariffs on aerospace, machinery and IT parts and other advanced technologies can undermine the most competitive sectors of American manufacturing, driving up production costs in the U.S., impacting U.S. manufacturing employment, and making U.S. manufacturers less competitive against global rivals.

“Tariffs on industrial parts imported into the U.S. could have the unintended consequence of prompting manufacturers to move final production outside of the U.S.,” warned Hampl. “To see how U.S. companies will be affected by the tariffs, it is important to look to how the supply chain functions. China is the second largest economy and the largest manufacturing economy in the world. We cannot ignore that China may have some unique capabilities, at the product level, that U.S. businesses need to tap into in order to remain globally competitive. For many products or inputs, there is no feasible alternative to procuring from China. We urge the Administration to use this process to ensure that its actions do not inadvertently harm some of the most competitive sectors of the U.S. economy, and the hundreds of thousands of American jobs that depend on them.”

In addition to the testimony, USCIB also co-sponsored a reception last week for Hill staff centered around the China 301 hearing, as well as NAFTA, celebrating Great American Jobs Supported by Trade. Representatives from U.S. government, companies, and associations, spent the evening discussing various important developments in the trade space.

Industry Appeals to China on Cybersecurity Law

With China’s broad cybersecurity law set to take effect next month, USCIB has joined with a range of industry groups from the United States and other countries in appealing for the country to delay its entry into force. Among other things, the new law would give law enforcement enhanced authority to access private data and require data to be stored servers located in China.

In a joint letter, the business groups said they are “deeply concerned that current and pending security-related rules will effectively erect trade barriers along national boundaries that effectively bar participation in your market and affect companies across industry sectors that rely on information technology goods and services to conduct business.”

The letter called on China to ensure that cybersecurity regulations comply with China’s World Trade Organization (WTO) commitments and encourage the adoption of international models that support China’s development as a global hub for technology and services.

USCIB Statement on China’s WTO Commitments

china_flag_largeThe economic relationship between the United States and China is both vital and complex, and U.S. business holds an important stake in this relationship’s success. Since China joined the World Trade Organization in 2001, the United States Trade Representative has submitted a yearly report to Congress on China’s compliance and commitments to its WTO accession. As part of this submission, USCIB is invited to provide a statement to USTR on behalf of its members, providing feedback, comments and recommendations on China’s compliance with its WTO commitments.

USCIB appreciates the significant efforts China has made since joining the WTO to meet its obligations under the terms of its accession agreement. However, there still remain general WTO obligation compliance concerns. Broad business concerns are listed below, excerpted from USCIB’s statement:

China’s Antimonopoly Law (AML): Chinese antitrust enforcement authorities continue to use the AML as a tool to advance industrial policies goals and limit competition by U.S. and other foreign companies. While we support China’s efforts to address anti-competitive practices, Chinese regulators have repeatedly used AML enforcement against U.S. companies absent any proof of market power or anti-competitive harm, and often in disregard of basic norms of fairness, due process, and transparency. USCIB members urge the U.S. government to continue to focus on this issue and its effects on U.S. companies.

National Treatment and Non-Discrimination: Chinese authorities continue to use a variety of policy tools and regulatory measures—including AML enforcement (described above), technology standards policies, IPR enforcement practices, and licensing and investment reviews—to compel transfer of U.S. IP or technologies to Chinese entities at below-market rates and to exclude U.S. companies from full and equal participation in the Chinese market. USCIB members continue to call on China to abide by their WTO commitments of national treatment and non-discrimination and ensure a competitive market that allows for foreign business participation on a level playing field with domestic Chinese firms.

IT Security Measures: Chinese policymakers and regulators have recently proposed or enacted a variety of trade-restrictive and discriminatory requirements on information technology (IT) under the guise of protecting security. These measures, many of which require the use of IT products that are “secure and controllable,” disadvantage U.S. firms by requiring Chinese IT users to purchase Chinese products or suppliers, imposing domestic R&D or content requirements, requiring the transfer or disclosure of source code or other IP, restricting cross-border data transfers, and in other ways. USCIB members urge the U.S. government to continue to press for full suspension of all existing and proposed measures involving trade-restrictive requirements in this area.

Read USCIB’s full statement on China’s WTO commitments.

 

USCIB Issues Statement on China’s WTO Commitments

4847_image002The economic relationship between the United States and China is both vital and complex, and U.S. business holds an important stake in this relationship’s success. China’s emergence as one of the world’s largest economies means that its policies have a direct impact on its trading partners.

American engagement and exchange of best practices with the Chinese government and business community have proven to be a productive approach to addressing both countries’ common challenges and responsibilities.

Since China joined the World Trade Organization in 2001, the United States Trade Representative is required to submit a yearly report to Congress on China’s compliance and commitments to its WTO accession. USCIB submitted a statement to USTR providing member feedback, comments and recommendations on Chinese compliance with WTO commitments.

USCIB commends the U.S. and Chinese governments for positive and consistent work in ongoing bilateral dialogues, as well as the significant efforts China has made since joining the WTO to meet its obligations under the terms of its accession agreement. However, there still remain general WTO obligation compliance concerns. Broad concerns are listed below, excerpted from USCIB’s statement.

China’s Antimonopoly Law

Chinese authorities are using a variety of policy tools, which include technology standards, antitrust rules and intellectual property policies to protect and promote Chinese companies. USCIB members urge the U.S. government focus more on this issue and its effects on U.S. companies.

Intellectual Property Rights

While USCIB members acknowledge improved IPR laws and combating of IPR violations in China, there continue to be major concerns across industry sectors such as in audiovisual, software, agricultural biotechnology and chemicals. USCIB members urge the U.S. to continue to press for increased protection of IPR through better coordination and enforcement by Chinese authorities.

National Treatment

USCIB members continue to call on China to abide by their WTO commitments of national treatment and non-discrimination and ensure a competitive market that allows for foreign business participation.

Regulatory Environment

USCIB members expect Chinese authorities to fairly and transparently develop, promulgate and enforce regulations and other legal norms. However, USCIB members continue to experience business obstacles related to institutions, frameworks and regulatory enforcement. Improved coordination among regulators in China would benefit USCIB member companies by creating a more transparent and predictable framework.

State-Owned Enterprises

As they increasingly compete with Chinese SOEs, both in China, third markets and in the United States, companies believe that it is critical that the U.S. government use all available tools in dialogues with China and in other forums to press for level playing fields as they compete with these entities globally.

Staff contact: Justine Badimon

More on USCIB’s China Committee

USCIB Paper on Chinas WTO Compliance

USCIB worked with members to submit a statement last month on China’s compliance with its WTO commitments, in response to a federal register notice from the office of the U.S. Trade Representative.

The statement discusses the following cross-sectoral and sectoral issues:

Cross-sectoral: Certification, Licensing and Testing Barriers, Government Procurement, Intellectual Property Rights, Market Access, National Treatment and Non-Discrimination, Regulatory Environment, Standards, State-Owned Enterprises, Taxation

Sectoral: Agricultural Biotechnology, Audiovisual, Chemicals, Customs, Express Delivery Services (EDS), Software and Telecommunications (Services and Equipment).

USCIB’s China Committee will continue working on a more detailed response to USTR’s request and will be in contact with members to develop further sections, including an Annex which will address China transparency and regulatory notice and comment issues, as well as sections on chemicals, electronic payments and pharmaceuticals.

Staff contact: Justine Badimon

More on USCIB’s China Committee

Global Industry Letter to China Urges for ITA Expansion

USCIB, along with numerous business associations and companies from around the world, signed a letter to Chinese Vice Premier Wang Yang urging for expanded product coverage of the Information Technology Agreement (ITA).

What would have been the final round of ITA expansion talks were suspended in Geneva the week before due to China’s “disproportionately large product sensitivities list” that was “more than twice as long as any other country’s sensitivities list and included a request for the removal of roughly 100 product lines from the negotiating table,” the letter remarked. This has become the main obstacle in obtaining an ambitious ITA expansion outcome this year, which would, by one estimate, add $190 billion to global GDP annually.

The letter states that “China stands to be one of the largest beneficiaries of an expanded ITA” because of its considerable presence in the global tech industry, boosting its economy and innovation capacity. The letter thus urges China to significantly reduce the size of its sensitivities list so that ITA talks can reach a conclusion and further increase economic growth, competitiveness, and innovation around the world.

Click here to read the global industry statement supporting ITA expansion, signed by 81 associations from 31 economies and regions around the world.

Staff contacts: Rob Mulligan and Justine Badimon

More on USCIB’s Trade and Investment Committee

More on USCIB’s China Committee

USCIB Releases 2012 Report on Chinas Compliance With its WTO Commitments

4397_image002On October 16, USCIB submitted its 2012 statement to USTR on China’s compliance with its WTO commitments following an earlier Federal Register Notice. USCIB’s Justine Badimon, manager of the China Committee, worked with members from across industry sectors to compile the latest issues and update areas of last year’s report to reflect the current state of affairs.

As in previous reports, USCIB commended the work over the last year of both the U.S. and Chinese governments at maintaining the momentum of important bilateral dialogues such as the U.S.-China Joint Commission on Commerce and Trade (JCCT) and the Strategic & Economic Dialogue (S&ED) as well as several working relationships between U.S. and Chinese agencies, such as the Environmental Protection Agency (EPA) and China’s Ministry of Environmental Protection (MEP). Engagement and exchange of best practices with the Chinese government and business community is a productive approach to addressing our current challenges.

While the positive influence of these dialogues and resulting commitments and outcomes is clearly noted, throughout the report USCIB members detail the on-going concerns with China’s compliance with its WTO commitments in horizontal areas (anti-dumping, certification, licensing, IPR, government procurement, market access, regulatory environment, standards, SOEs and taxation) sector specific concerns (ag bio, audiovisual, chemicals, customs, electronic payments,  express delivery, pharma, software, telecommunications) and finally in a third section which gives examples of certification licensing and testing requirements. Across all sectors, members call for more transparency and better efforts at consistency with regard to China’s regulatory agencies as well as increased efforts at meeting their WTO obligations. If you would like to receive a copy of the 2012 report, please contact USCIB’s Alexandra Garcia at agarcia@uscib.org

Following the submission of the Report to USTR on October 18 in Washington, DC the USCIB China Committee and Trade & Investment Committee met for a briefing with Audrey Winter, deputy assistant USTR for China Affairs. The meeting was held at the offices of Holland & Knight and chaired by Tad Ferris, partner of Holland & Knight and current co-chair of the USCIB China Committee.   This was a timely meeting considering the political climate in both economies, the U.S. presidential election and China’s 18th Party Congress where Xi Jinpeng will be officially announced as new party leader replacing President Hu. Winter briefed the group on the current environment of bi-lateral economic relations between the U.S. and China and gave a snapshot of what is currently on the agenda for USTR with regard to China. Winter reported that at this time there is no public date for the next JCCT meetings but there is hope that there may be a meeting before the end of the year.

The China Committee looks forward to meeting with Winter again for future meetings to follow-up on concerns listed in the WTO report as well as other issues. The meeting also included a reporting out on recent U.S. Government restrictions on Chinese investment by Ron Oleynik, partner of Holland & Knight, and concluded with next steps for the Committee.  A summary of the discussion will be circulated to Committee members.

We thank all USCIB members who took the time to participate in the drafting of our 2012 WTO report and thank those who attended the October 18 meeting.

2012 Report on China’s Compliance with its WTO Commitments

More on USCIB’s China Committee