Focus Turns to Global Food Security as Commodity Supplies Destabilize by War in Ukraine

According to USCIB Senior Vice President for Regulation, Innovation and Trade Brian Lowry, the focus in the United States last week shifted from sanctioning Russia toward urgently addressing global food insecurity caused by the war in Ukraine.

U.S. Secretary of State Antony Blinken convened a high-level UN Global Food Security Ministerial Meeting on May 18, bringing together approximately thirty-five countries to discuss ways to stave off global food shortages linked to the conflict in Ukraine, which is potentially impacting forty million people, according to the World Bank. The U.S. issued a fact sheet calling for Days of Action on Global Food Security and Blinken provided a statement outlining objectives for the ministerial meeting. Ministers ultimately produced a Roadmap for Global Food Security-Call to Action, a commitment to act urgently to address global food security and nutritional needs as well as strengthen resilient and “inclusive” food systems in line the objectives of the UN 2030 Agenda for Sustainable Development and its Sustainable Development Goals and the 2021 UN Food Systems Summit.

That same day, multiple International Financial Institutions (IFI) released the IFI Action Plan to Address Food Insecurity, a program of financing, policy engagement, technical assistance, and know-how developed by the by the Asian Development Bank (ADB), the African Development Bank (AfDB), the European Bank for Reconstruction and Development (EBRD), the International Fund for Agricultural Development (IFAD), the Inter-American Development Bank (IDB), the International Monetary Fund (IMF) and the World Bank Group to address food insecurity. Treasury Secretary Janet Yellen commended the release May 18 as the Action Plan was conceptualized at a meeting she convened with the international financial institutions in April.

The G7 joined the World Bank Group to announce on May 19 the launch of the Global Alliance for Food Security to support work on food security at the UN and other international institutions.  The Alliance will leverage existing institutions and programs to develop a short-term response to shortages in food, fertilizer, and fuel and work together to remove trade barriers and provide the support needed to alleviate the negative impacts of the war.

The International Chamber of Commerce (ICC) of which USCIB is unique affiliate, called on G7 governments on May 19 to spearhead efforts to provide logistical supports – humanitarian sea corridors, rail and road land routes – sanctions carve-outs, and risk guarantees to restore trade in Ukrainian grains and vegetable oils and Russian fertilizers. Ukraine and Russia had been major exporters of wheat, sunflower oil and fertilizers, creating a trade a gap today that cannot be readily filled. This is consistent with recent messaging from UN Secretary General António Guterres to reopen the Black Sea to agricultural shipments from Ukraine.

Similarly, the G7 Finance Ministers and Central Bank Governor’s released a communique May 20 expressing support for Ukraine and a commitment to help close short-term financing gaps and ensure its macro-economic stability. They pledged continued coordinated action to isolate Russia and Belarus from the global economy through economic and financial sanctions, to prevent sanctions evasion and backfilling and to support the ongoing work of the Russian Elites, Proxies and Oligarchs Task Force.

According to USCIB, there is no doubt that additional sanctions are in the offing, as the G7 Foreign Ministers released a statement May 14 affirming continued coordinated actions against Russia and in support of Ukraine. They pledged to continue working together to pressure Russia with future economic and financial restrictions on sectors that Russia depends on, and by imposing penalties on Russian elites, institutions and military. In fact, the United States has already resumed punitive actions this week.

USCIB Members General Motors and Uber Receive Accolades from the Coalition for Integrity

The Coalition for Integrity (“C4I”), a top Washington-based group promoting integrity and combatting bribery and corruption, handed out its two major awards for 2022 at its annual session late May 19. Both awards went to USCIB members. General Motors won the prestigious Corporate Leadership Award, the eighth time in ten years that a USCIB member company has been selected, according to USCIB Senior Advisor Shaun Donnelly, a former U.S. Ambassador. GM and its CEO Mary Barra were singled out by C4I for its broad corporate culture of integrity, exemplified by its strong Code of Conduct and a mantra “Winning with Integrity.” GM Assistant General Counsel and Chief Compliance Officer Michael Ortwein accepted the award on behalf of the company and gave brief remarks, thanking the coalition and reaffirming GM’s commitment to integrity in all aspects of its business and at all levels. GM joins other USCIB members, including Bechtel, Raytheon, Procter & Gamble, Coca-Cola, PepsiCo, and General Electric in winning the coveted C4I award.

The Coalition’s other major annual award is its Integrity Award to a prominent individual for her/his leadership efforts in combatting corruption and illicit practices. Previous winners have included former President Jimmy Carter, the late Senators John McCain and Richard Lugar, former World Bank President Jim Wolfensohn, and Dr. Anthony Fauci.  For 2022, C4I is honoring, Tony West for his career achievements promoting integrity and combatting corruption.  West is currently Chief Legal Officer for USCIB member Uber. He has previously served as an Assistant U.S. Attorney, Assistant Attorney General for the Civil Division, Associate Attorney General, which is the third highest position in the Department of Justice, and in the private sector as General Counsel at PepsiCo and in his current role at Uber. The Coalition cited West’s “leadership and efforts to promote accountability in the public and private sectors” in selecting him for this year’s Integrity Award. In 2015, when PepsiCo was honored with the Corporate Leadership Award, Tony West accepted the award on behalf of the company at the Coalition’s annual dinner in Washington. He thus becomes the first person to receive both the Coalition for Integrity’s Corporate Leadership Award and the individual Integrity Award.

Donnelly is a longtime member of the Coalition for Integrity’s Policy Advisory Board. Donnelly, who attended the C4I virtual awards ceremony, commended the Coalition for Integrity and the award winners for their leadership in combatting bribery and corruption and in promoting accountability, strong corporate governance and ethical behavior.

“It was great, again this year, to see outstanding USCIB member companies recognized for their leadership in this important area,” said Donnelly. “We as USCIB are proud of the high ethical standards our member companies set, implement and enforce, year in and year out.”

USCIB Joins Global Trade and Industry in Statement to Urge WTO to Renew Moratorium on Customs Duties on Electronic Transmissions

May 17, 2022, New York, NY — The United States Council for International Business (USCIB) joined today nearly 100 other global trade and industry associations to urge WTO members to renew the Moratorium on Customs Duties on Electronic Transmissions at the 12th WTO Ministerial Conference in June.

According to the statement, allowing the Moratorium to expire would be a historic setback for the WTO, representing an unprecedented termination of a multilateral agreement in place nearly since the WTO’s inception – an agreement that has allowed the digital economy to take root and grow. All WTO members have a stake in the organization’s continued institutional credibility and resilience, as well as its relevance at a time of unprecedented digital transformation.

Continuation of the Moratorium is critical to the COVID-19 recovery. As detailed by the United Nations, the World Bank, the OECD, and many other organizations, the cross-border exchange of knowledge, technical know-how, and scientific and commercial information across transnational IT networks, as well as access to digital tools and global market opportunities have helped sustain economies, expand education, and raise global living standards.

Continuation of the Moratorium is also important to supply chain resilience for manufacturing and services industries in the COVID-19 era. Manufacturers – both large and small, and across a range of industrial sectors – rely on the constant flow of research, design, and process data and software to enable their production flows and supply chains for critical products.

The Moratorium is particularly beneficial to Micro, Small and Medium-Sized Enterprises (MSMEs), whose ability to access and leverage digital tools has allowed them to stay in business amidst physical restrictions and lockdowns.

Failure to renew the Moratorium will jeopardize these benefits, as customs restrictions that interrupt cross-border access to knowledge and digital tools will harm MSMEs, the global supply chain, and COVID-19 recovery – increasing digital fragmentation. As UNCTAD has explained, such fragmentation “reduces market opportunities for domestic MSMEs to reach worldwide markets, [and] … reduces opportunities for digital innovation, including various missed opportunities for inclusive development that can be facilitated by engaging in data-sharing through strong international cooperation…. [M]ost small, developing economies will lose opportunities for raising their digital competitiveness.”

The rest of the statement can be found here.

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. As the U.S. affiliate of the International Chamber of Commerce (ICC), the International Organization of Employers (IOE) and Business at OECD (BIAC), USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade and investment. More at www.uscib.org.

OECD Event Attempts to Help Governments Develop Agile Governance

Rick Johnston at the Agile Governance Symposium

The OECD, Business at OECD (BIAC) and the George Washington University Regulatory Studies Center co-hosted an event on April 26 on the need for agile and adaptable regulatory practices. The event, titled “Agile Governance for our Future: Reimagining Regulation to Support Innovation” was held in person in Washington, DC, at the REACH at the Kennedy Center and received programming support from both USCIB and USCIB member Google.

The program included a keynote by Cass Sunstein of Harvard Law School, a fireside chat with Google President of Global Affairs Kent Walker as well as remarks by BIAC Chair and USCIB Trade and Investment Committee Chair, Rick Johnston of Citi.

Additional panels featured the perspectives of policymakers, regulators and civil society, including Director General of the Danish Business Authority Katrine Winding, Assistant Secretary, Regulatory Affairs Sector of the Treasury Board of Canada Secretariat Tina Green and Susana Cordeiro Guerra, manager for institutions for development at the Inter-American Development Bank.

According to USCIB Policy Manager for Regulation and Trade Chris Olsen, who attended the Symposium, this event builds on the Fall 2021 release of the OECD’s Agile Governance Recommendation, which aims to help governments develop and implement agile and resilient regulatory approaches, and facilitate institutional co-operation both in response to, and to further stimulate, international innovation. This Recommendation received input and support from the Business at OECD (BIAC) Governance and Regulatory Policy Committee.

A full recording of the symposium will soon be available on both the OECD website and through George Washington University’s program page.

Lowry Testifies at Forced Labor Enforcement Task Force Hearing on the Uyghur Forced Labor Prevention Act

The Forced Labor Enforcement Task Force (FLETF), as required by the Uyghur Forced labor Prevention Act (UFLPA), held a public hearing on the Use of Forced Labor in the People’s Republic of China and Measures to Prevent the Importation of Goods Produced, Mined, or Manufactured, Wholly or in Part, with Forced Labor in the People’s Republic of China into the United States. On behalf of the FLETF, the hearing was led by the Department of Homeland Security, which also issued the Federal Register Notice requesting comments on UFLPA, and coordinated and moderated by U.S. Customs and Border Protection (CBP).

Over 400 participants and sixty speakers joined from a wide array of groups, including, but not limited to U.S. trade associations (including USCIB), foreign trade associations, labor organizations, other governments, victims, private citizens and even faith-based groups.

USCIB Senior Vice President, Innovation, Regulation, and Trade Brian Lowry was among those speakers and provided testimony on behalf of USCIB members to highlight that, “Business is a committed, willing, and necessary partner in the global fight to eradicate forced labor from their supply chains.”

“We believe that application of the rebuttable presumption should be coordinated under a singular approach consistent with Section 307 enforcement,” added Lowry. “CBP’s current process for the detention or release of goods believed to be linked to forced labor is opaque and undermines the very concept of partnership that CBP has historically maintained with the Trade. It fails to effectively leverage businesses’ capacity to deter the offending behavior, as well as, long held and internationally accepted principles related to transparency, stakeholder engagement and remedy.”

Lowry encouraged the FLETF to adopt USCIB’s Withhold Release Order process proposal which would improve CBP’s enforcement process; enhance compliance consistent with the requirements of Section 307; increase transparency; encourage greater collaboration with the trade community; and expedite shipment clearance.

While there will be a transcript of the event made available, Lowry’s full testimony is available here.

USCIB continues to welcome the opportunity to work with the FLETF and CBP to effectively implement the UFLPA.

USCIB Tax Committee Work Featured in Bloomberg, Tax Notes International

USCIB and the USCIB Taxation Committee appeared prominently in the tax press this week—Tax Notes International and Bloomberg Tax—with coverage of a USCIB letter filed with the U.S. Treasury Department on April 25.  According to USCIB Vice President and International Tax Counsel Rick Minor, this was a unilateral consultation and not a letter related to a public consultation that USCIB’s Tax Committee is currently working on.

Bloomberg Tax quoted Minor and excerpts of USCIB’s letter in its article, Amount B Could Involve Routine Function List, Treasury Told. “Our members consider Amount B to be, as it has been described in the 2020 Pillar One blueprint, one of the key benefits of a Pillar One solution,” he said. “The concept is directly related to one of the fundamental goals of Pillar One, improved tax certainty.”

Click here for the Tax Notes International story. Below is the Bloomberg Tax coverage with quotes from Minor and excerpts from the USCIB letter to the Treasury Department.

Bloomberg Tax: Amount B Could Involve Routine Function List, Treasury Told

By Natalie Olivo · Apr 26, 2022, 8:01 PM EDT ·  Listen to article

An approach for determining Amount B — the routine portion of profits subject to allocation under a global corporate tax plan — could include an agreed list of functions related to these earnings, a U.S. business association told the U.S. Treasury Department.

The U.S. Council for International Business sent Treasury a letter Monday that listed marketing and distribution functions that relate to normal, or routine, returns that fall under Amount B of a tax agreement reached in October by an inclusive framework of nearly 140 jurisdictions. Amount B would simplify and streamline the application of the arm’s-length principle to in-country baseline marketing and distribution activities, according to the Paris-based Organization for Economic Cooperation and Development, which led negotiations on the tax rewrite.

Amount B falls under the overhaul’s first pillar alongside Amount A — a separate provision that involves a narrow departure from traditional arm’s-length transfer pricing rules, which divide intercompany profits based on how unrelated parties would behave. Under Amount A, large companies would reallocate a portion of their above-normal returns to market jurisdictions where they have customers but not a physical presence.

The USCIB told Treasury in its letter that Amount B must be anchored in the arm’s-length principle. The group included a list of entrepreneurial functions — which commonly generate residual returns that would fall under Amount A — and a list of routine marketing and distribution functions that would relate to normal returns under Amount B.

“These two categories cover a significant volume of the transfer pricing controversies of our members which we understand Pillar One is intended to largely eliminate,” the USCIB wrote.

The group’s list of entrepreneurial functions included final decision-making on large discounts and nonstandard contracts and setting global or regional branding, marketing, pricing and promotional strategies. As for routine marketing and distribution functions, the group’s list included bearing limited market and business risks, as the profits of routine distributors are fixed, in addition to not owning any high-value intangible property.

These lists were compiled by the USCIB’s members from company transfer pricing files, meaning they represent “functions that are audit tested and generally represent clear distinctions between entrepreneurial and routine functions,” according to the group’s letter.

Rick Minor, vice president and international tax counsel at the USCIB, told Law360 on Tuesday that his group wanted to be helpful in the absence of a formal consultation to offer timely guidance on Amount B to delegates of the inclusive framework.

“Our members consider Amount B to be, as it has been described in the 2020 Pillar One blueprint, one of the key benefits of a Pillar One solution,” he said. “The concept is directly related to one of the fundamental goals of Pillar One, improved tax certainty.”

So far, the OECD has only released draft rules aimed at helping countries implement Amount A in addition to the overhaul’s second pillar, which involves minimum tax rules. The organization has also released public feedback on its Amount A draft rules, including calls for guidance that would let multinational corporations seek advance certainty on how tax administrations would apply the new rules, including a proposed anti-abuse provision.

Meanwhile, KPMG issued a proposal for Amount A that was released Tuesday by Treasury’s Office of Tax Policy. According to the firm, the proposal involves identifying entities to fund Amount A and determining the share of Amount A that would be allocated to each payer entity.

This proposal would use a formulaic approach that approximates a “market-connection” test without the need to look at transfer pricing documentation or make factual judgment calls, according to KPMG.

Treasury didn’t immediately respond to a request for comment.

USCIB Members Meet With USCTOC Director of the Strategic Division James (JC) Collins

James (JC) Collins in USCIB’s Washington DC office

USCIB hosted James (JC) Collins, director of the strategic division of the United States Council on Transnational Organized Crime (USCTOC) for a hybrid discussion with USCIB members to introduce Collins to the work that USCIB does in the areas of illicit-trade, customs, trade and investment, as well as intellectual property.

 

On December 15, 2021, the White House issued the Executive Order on Establishing the USCTOC.  The USCTOC is comprised of the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the Attorney General, the Secretary of Homeland Security and the Director of National Intelligence Strategic Division. The Strategic Division produces coordinated strategic plans for whole-of government Counter-Transnational Organized Crime efforts in support of and in alignment with policy priorities established by the President of the United States through the National Security Council.

 

“USCIB, through its relevant committees, looks forward to collaboration with USCTOC and to advance innovative public-private partnerships to counter illicit trade and organized crime that impact the integrity of American businesses, markets and global supply chains”, said David M. Luna, USCIB Anti-Illicit Trade Committee (AITC) chair.  “We commend President Biden and his administration for their commitment to elevate these pernicious threats to U.S. national security, and applaud USCTOC’s leadership to partner with businesses to join forces across sectors to build capacities, resiliency, and cross-border cooperation to reduce the harmful effects of transnational crime and kleptocracy to our homeland and economy.”

USCIB Competition Committee Holds Joint Meeting With ICC

The USCIB Competition Committee held a joint meeting April 13 with the International Chamber of Commerce (ICC) Competition Commission to discuss developments in international competition enforcement.

The meeting featured a keynote presentation on a history of cases brought before the International Trade Commission (ITC) relating to unfair competition under Section 337, according to USCIB Director for Investment, Trade and China Alice Slayton Clark. While Section 337 protects U.S. companies from “unfair methods of competition and unfair acts” related to the importation of articles made by foreign companies, it was considered for years as inappropriate for antitrust litigation. Since the law was amended in 1974 to give the ITC authority to issue cease and desist orders, however, it is now being used more for antitrust filings. Deanna Tanner Okun, former ITC chair and managing partner at AMS Trade LLP, and Lauren Peterson, partner AMS Trade LLP, described how the law developed into the antitrust tool it is today, including details on key cases filed and their outcomes.

Of significance, USCIB member Taylor Owings of Baker Botts reviewed USCIB comments filed last week with the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division on modernizing enforcement guidelines for mergers. USCIB Competition Committee Vice Chair Jennifer Patterson provided updates on details of antitrust legislation moving through the U.S. Congress. USCIB plans to facilitate a member briefing with congressional staff on antitrust legislation as it advances in the months ahead. Finally, USCIB member John Taladay of Baker Botts proposed the creation of a new ICC task force to develop principles for RFIs (requests for information) for non-targeted stakeholders because they have become overly burdensome.

Regarding the ICC Competition Commission workstreams, Compliance and Advocacy Chair Anne Riley reported that ICC is working to expand credit for compliance programs in other jurisdictions across the globe. Riley also reported that late last year, the ICC filed comments regarding the French Competition Authority’s (FCA) new guidance on antitrust compliance programs, highlighting the importance of compliance and providing benchmarks on the objectives, the definition, and the implementation of these programs. In addition, Member of the ICC Merger Control Regimes Task Force (TF) Alex Nourry reported that the TF is currently working on comments to the European Commission on a proposed revision of competition rules regarding horizontal cooperation agreements. USCIB members were solicited and provided inputs. The ICC hopes the revision will ultimately yield better clarity and legal certainty for these agreements.

ICC Competition Commission Chair Francois Brunet encouraged USCIB companies to get more involved in ICC task forces.

USCIB Promotes World IP Day; Encourages Members to Vote in Youth Video Competition

Photo credit: WIPO

The World Intellectual Property Organization (WIPO) is hosting their annual World Intellectual Property Day on April 26 with a focus on youth. The official theme, “IP and Youth Innovating for a Better Future,” recognizes the incredible and untapped potential of young people’s ingenuity and creativity which can drive the change the world needs to move to a more sustainable footing.

According to WIPO, IP Day 2022 is an opportunity for young people to find out how IP rights can support their goals, help transform their ideas into reality, generate income, create jobs and make a positive impact on the world around them. WIPO has been working with its member states and partners to create a legal and policy environment for young inventors, creators and entrepreneurs to thrive.

WIPO has also invited the public to vote on a youth video competition. The videos will demonstrate how young people perceive innovation and IP for a better future. Youth from sixty-three countries have submitted videos. Online public voting closes on April 22.

“Young people are the future and we must support them,” said USCIB Senior Vice President for Innovation, Regulation and Trade Brian Lowry. “We look forward to IP Day where we can better explore and understand how young people have been driving change.”

USCIB Supports “ITU International Girls in ICT Day” and Candidacy of Doreen Bogdan-Martin

The International Telecommunications Union (ITU) has developed an initiative aimed at realizing greater inclusion in the digital economy, bridging the gender digital divide and encouraging young women throughout the world to study and pursue careers based on STEM skills.

This year, the ITU’s International Girls in ICT Day will be celebrated on April 28.

According to Barbara Wanner, USCIB vice president for ICT Policy, this year’s theme will be “Access and Safety,” a selection based on consultations with girls and young women, who indicated that they need safe and reliable access to the Internet and digital tools to pursue their STEM career ambitions.

“It is USCIB’s hope that events such as this will help to broaden global support for the candidacy of Doreen Bogdan-Martin, currently Director of the ITU Development Bureau, for ITU Secretary General when elections are held at the ITU Plenipotentiary, September 26-October 14, 2022, in Bucharest, Romania,” said Wanner.

USCIB featured a discussion about the ITU’s efforts to bridge the gender digital divide and encourage more young women to pursue STEM careers as part of our workshop at the 2016 Internet Governance Forum (IGF) – “An Internet of Women by 2020: From WSIS Vision to Reality.  “Our expert speaker, in fact, was Ms. Bogdan-Martin,” added Wanner.