USCIB Mourns Passing of John Merow, USCIB Corporate Secretary and Longtime Supporter, and His Wife

John Merow

USCIB members and staff were saddened by the deaths of John Merow, 89, a longtime champion of our work, and his wife Mary Alyce, 85. The couple died on January 12 in a fire at their home in New York City.

Merow, the former chairman of law firm member Sullivan & Cromwell, served as a USCIB board member and corporate secretary for many years. He also served on the board of The USCIB Foundation.

“We are shocked and saddened by the sudden and tragic deaths of John and his beloved Mary Alyce, and we will greatly miss them,” said USCIB President and CEO Peter M. Robinson.

“John was a mentor to me and a guiding spirit to USCIB. In whatever position, he never hesitated to roll up his sleeves and provide solid legal guidance. He was a supporter, champion and friend of the organization and its staff, and was at a meeting in our office the day before he died – showing up, as usual, 15 minutes early.”

Merow led Sullivan & Cromwell through a challenging time of international expansion that included the opening of offices in Australia and Japan. In a statement on his passing, the firm called him “an exemplar of diversity and inclusion, always focused on what truly mattered – an individual’s merits and character. We continue to be inspired by his vision of excellence and inclusiveness.”

Sullivan & Cromwell Senior Chairman Rodgin Cohen, a USCIB trustee, described John as among the “extraordinarily skillful lawyers who thought about the law as a noble calling, and not just as a business or a profession.”

In addition to his volunteer service with USCIB, Merow was a trustee and vice chairman of the New York-Presbyterian Healthcare system. He was a longtime member of the Council on Foreign Relations and a member of the board of the Municipal Art Society of New York. Merow also served for years as senior warden of Saint Thomas Church Fifth Avenue, chairman of the American Australian Association, a director of the Metropolitan Opera Club, the Foreign Policy Association and the Archbishop of Canterbury’s Anglican Communion Fund.

“We will remain forever inspired by John’s positive spirit, generosity, kindness, loyalty, business judgment and sense of humor,” Robinson continued. “He made a mark on our organization and on our lives. Our deep condolences to his family.”

Services for John and Mary Alyce Merow will be held on January 23 at Saint Thomas Episcopal Church, 1 West 53rd Street in New York City. In lieu of flowers, donations may be made to the Council on Foreign Relations and Learning Ally (formerly known as Recording for the Blind).

New Video Highlights USCIB’s Value Add

USCIB has launched a new video highlighting the organization’s policy expertise, close working relationship with decision makers and links to key international business organizations. The video features many of USCIB’s policy experts including USCIB President and CEO Peter Robinson, USCIB Vice President for Product Policy and Innovation Mike Michener, USCIB Senior Director for Trade and Financial Services Eva Hampl, USCIB Vice President for Strategic International Engagement, Energy and Environment Norine Kennedy and USCIB Vice President for Corporate Responsibility and Labor Affairs Gabriella Rigg Herzog. (See video below.)

The video was presented at USCIB’s 2018 International Leadership Award Gala, which honored Unilever CEO Paul Polman.

USCIB Voices China Tariffs Concerns in Coalition Letter

USCIB, as member of the Americans for Free Trade Coalition, signed a letter to Capitol Hill welcoming the 116th Congress and urging congressional members to consider the costs of the trade war on their home districts and states and to exercise their oversight role in trade policy matters. The Coalition is comprised of approximately 150 organizations representing U.S. manufacturers, farmers, retailers and consumers.

“The 116th Congress is beginning during a period of unprecedented economic growth and job creation, yet continued prosperity is not a foregone conclusion. We share the broadly-held concern about the impact to the U.S. economy of the Section 301 tariffs on imports from China, Section 232 tariffs on steel and aluminum imports and corresponding retaliation against U.S. exports,” the Coalition stated in the letter.

The letter emphasized that Americans have built global supply chains that reflect the U.S. economy’s strengths and those of its trading partners. These supply chains have made the U.S. economy even more dependent upon relationships with key economic and strategic allies than ever before.

“The strength of the U.S. is economy relies on these very complex supply chains, which cannot simply be shifted overnight,” said Eva Hampl, who leads USCIB’s work on China. “These sweeping tariffs are purposefully causing a disruption, negatively impacting the U.S. economy.”

 

US Tax Reform One Year Later

Carol Doran Klein, USCIB vice president and international tax counsel, was featured in a new report by Freshfields Bruckhaus Deringer LLP “Four Big Questions on U.S. Tax Reforms,” which assesses the implications of the Tax Cuts and Jobs Act.

Doran Klein weighed in by providing her perspective on the future of BEAT (Base-Erosion and Anti-Abuse Tax), an anti-avoidance measure that targets multinational groups with a significant U.S. presence, effectively applying a 10 percent minimum tax for taxable income adjusted for certain types of payments made by U.S. corporations to related non-U.S. corporations.

In her interview for the report, Doran Klein noted that the BEAT does not respect the arm’s length standard for transfer pricing, which is the internationally accepted principle in the OECD Model Tax Convention (the guidance underpinning the bilateral tax treaties of OECD members), or advance pricing agreements (APAs).

“One might argue that BEAT would violate existing principles because it doesn’t matter whether you have an APA or whether the payment is otherwise considered to be arm’s length, BEAT would effectively disallow a share of the deduction,” said Doran Klein. “However, the U.S. government could argue that it’s no longer clear whether the international accepted standard should take into account the arm’s length nature of the payments because Action 4 of the BEPS Action Plan concerning limitations on the deductibility of interest payments doesn’t actually rely on the arm’s length principle.”

 

USCIB Issues Recommendations for WTO Modernization

As World Trade Organization (WTO) member governments move forward this year with efforts to reform the WTO, USCIB issued recommendations on how business can support the WTO and its efforts to improve the organization.  USCIB’s recommendations also noted the importance of the WTO as a cornerstone of the global rules-based trading system that has helped spread growth and development for decades.

USCIB recommendations focused on addressing subsidies and other market-distorting support provided to state-owned enterprises (SOEs), the establishment of new rules for current issues such as digital trade and customs processes on electronic transmissions, and ensuring a properly functioning appellate body, among others.

“Our recommendations for modernizing the WTO should not in any way be read as questioning the business support for WTO,” said USCIB Senior Vice President Rob Mulligan. “Instead, they are intended to highlight areas for action that would strengthen the ability of the organization to more effectively meet the demands of a changing world as it deals with the rapid evolution of technology that can quickly reshape the way companies do business and operate globally. USCIB believes that effective WTO dispute settlement is a critical part of the global rules-based trading system.”

USCIB’s recommendations also urged Member States, as they continue to discuss modernization and improvements of the WTO and its underlying agreements, to be mindful that among the WTO Member States, private entities conduct the transactions that constitute trade and investment.

“The private sector has a direct stake in the rules that will be the outcome of the government-to-government discussions and, accordingly, private sector comments and recommendations should be actively solicited and given careful consideration by the Member States,” added Mulligan.

Donnelly Stresses Need for US Commercial Diplomacy

The January-February edition of The Foreign Service Journal, which examines economic diplomacy from many angles—and from all over the world, included a piece from USCIB Vice President Shaun Donnelly, who is a former U.S. Ambassador. Donnelly’s piece “Secretary of State Mike Pompeo has made commercial diplomacy a foreign policy priority. Here’s how to get it right,” was co-authored with Daniel Crocker, a foreign commercial service vice president on the governing board of the American Foreign Service Association.

Donnelly and Crocker outline six critical elements in an effective U.S. economic/commercial diplomacy program, including that top leaders must be personally involved and that American business has a broad agenda in today’s and tomorrow’s global economy.

“As American companies compete to grow, prosper and win, they will need support from the government across a much wider agenda: services, regulatory coherence, license arrangements, international joint ventures, supply chain relationships, inward investment to the United States and outward investment by U.S companies to foreign markets,” Donnelly and Crocker note in the article. “A truly supportive, comprehensive “Team USG” approach to support our companies will have to be able to address that full range of issues.”

Three fundamental realities underline the importance for our country of an effective economic/commercial diplomacy program. First, more than 80 percent of global purchasing power now lies outside the United States, including several large emerging markets with annual gross domestic product (GDP) growth rates that are double our own, or more. Second, it’s an ultra-competitive world; in all key sectors, American companies face broader, deeper and more aggressive foreign competitors, some of whom promote their standards, military platforms and state-subsidized or state-owned companies for both commercial and political gain.

US-China Trade: Hampl Speaks With BBC Radio

USCIB’s Eva Hampl

As talks between the United States and China aimed at de-escalating their tariff war ended their first day, USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl spoke with BBC World News on what American business wants out of the negotiations.

Hampl said the business community wants to see progress on fundamental market-access concerns they face in China, and would be disappointed with more cosmetic takeaways from the talks. But she warned that the Trump administration’s strategy of applying tariff pressure across the entirety of U.S.-China trade could prove counter-productive.

“We see this as a very heavy-handed approach” said Hampl. “We would prefer a more targeted approach to address the underlying issues of IP and forced tech transfer.”

Click here to listen to the full report on the BBC website.

USCIB Outlines Priorities for Trade Agreement With Japan

USCIB submitted comments to USTR outlining negotiating objectives for a U.S.-Japan Trade Agreement
Japan is currently the fourth largest goods trading partner of the U.S.

 

USCIB submitted comments in late 2018 to the United States Trade Representative (USTR) outlining negotiating objectives for a U.S.-Japan Trade Agreement. USCIB supports negotiation of a comprehensive trade agreement with Japan as part of a broader strategy to open international markets for U.S. companies and remove barriers and unfair trade practices in support of U.S. jobs. USCIB outlined its priority issues, which include digital trade, intellectual property, media and entertainment services, investment, customs and trade facilitation, express delivery services, electronic payment services, regulatory coherence, government procurement and financial services.

Japan is currently the fourth largest goods trading partner of the U.S. and in 2017, Japan was the United States’ fourth largest export market as well. U.S. goods and services trade with Japan totaled an estimated $283.6 billion in 2017, with exports totaling $114 billion. The U.S. also has a surplus in services trade with Japan, totaling $13.4 billion.

“A successful trade agreement with Japan should cover not just market access for goods, but also address important services issues, as well as issues like digital trade and intellectual property,” said USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl. “We look forward to working with the Administration toward a favorable outcome for U.S. business in a U.S.-Japan FTA.”

USCIB welcomed the conclusion of the Trans-Pacific Partnership Agreement (TPP) back in October 2015, noting at the time that a comprehensive, market-opening agreement would provide a significant boost to the United States.  The Administration has released negotiating objectives for a U.S.-Japan FTA, negotiations for which may begin as soon as late January.

UN Climate Talks Agree on Paris Pact Implementation

Norine Kennedy (center, at laptop) speaks at a business dialogue in Katowice, Poland.
Talks went down to the wire to address who pays for losses due to climate change, and how to balance responsibilities of industrialized vs. developing countries.
USCIB has urged the Trump administration to remain at the table in the UN climate process.

This year’s UN Climate Conference (COP 24) concluded late on Saturday night in Katowice, Poland, having made major progress in several key areas for American business, including on implementation of the landmark 2015 Paris Climate Agreement.

Over 31,000 representatives of governments, UN bodies, NGOs, business and the media were on hand in the capital of Poland’s coal-dependent Silesia province for the 24th conference of parties to the UN Framework Convention on Climate Change.

Norine Kennedy, USCIB’s vice president of strategic international engagement, energy and environment, attended the entire two-week conference. She noted that, despite rough patches that delayed reaching a resolution, the resulting “Paris Rulebook” now offers clarity and predictability for companies planning long term investment and operations relating to energy.

“Crunch issues, which weren’t resolved until the last minutes of intense negotiations, included compensation for climate change-related loss and damage, how to reference scientific findings on potential impacts of a 1.5 degree (Celsius) change in global temperatures, and how to balance reporting requirements for developed and developing countries to ensure comparability and fairness.” Kennedy said.

On the Paris Rulebook, an implementation guide for the Paris Agreement, governments reached compromises to advance accounting and reporting of national climate pledges, as well as information on support provided to developing countries by developed countries. Kennedy said the price of the compromises reached seems to be a decision to defer an outcome on a section of the Paris Rulebook relating to voluntary carbon markets until next year’s conference of the parties, when governments will gather again in Chile.

“The UN Climate Agreement is a dynamic enterprise that has evolved to reflect new science and include new issues, such as just transition,” she said. “But a constant in the UN deliberations is the imperative for business innovation, engagement and action.” USCIB has advocated for enhanced involvement of representative business and employers’ organizations in the policy and implementation discussions.

The International Chamber of Commerce once again provided support for private-sector representation at the COP. USCIB members attending the two-week session took part in the ICC Business Day, the Major Economies Business Forum Business Dialogue and in presentations of the Global Action Agenda showcasing voluntary initiatives by business and other non-governmental interests.

On December 9, USCIB presented its report, “Business Engagement in Implementing National Climate Pledges and the Paris Agreement.” This report gathers business and government experiences in framing and acting on national pledges, and identifies best practices as national governments strengthen their national climate programs, working with business and other societal partners.

“USCIB has encouraged the Trump administration to advance U.S. business interests in the UN climate talks, including the Paris Agreement,” Kennedy noted. “We support having the U.S. remain at the table to defend American economic interests that may arise there.”

The UN process will now move ahead towards a UN Climate Summit to be convened by UN Secretary General Antonio Gutierres in September 2019 in New York, then on to Chile next December.

Digital Partnerships Crucial to Achieve Sustainable Health

The Forum explored the role digital technologies and strategic partnerships play towards the success and well-being of economies and societies.
The Forum featured business contributions on the potential of data for better health, planning for new technologies, and connecting people and patients with healthier choices and lifestyles through digital opportunities.

 

Business at OECD (BIAC) convened senior representatives from business, the OECD, and governments on December 14 in Paris at its 3rd Annual Forum on Health. The Forum explored the role digital technologies and strategic partnerships play towards the success and well-being of economies and societies. The Forum also featured business contributions on the potential of data for better health, planning for new technologies, and connecting people and patients with healthier choices and lifestyles through digital opportunities.

“Improving health in the 21st century can only take place with patient and consumer engagement by optimizing prevention and disease management approaches” said Nicole Denjoy, chair of the Business at OECD Health Committee. “Digital and health technologies are critical to achieve this goal, but we still need policies that support this transformation.”

Experts also examined how partnerships can help achieve balanced dietary choices and active lifestyles. “Well-structured Public-Private initiatives show how even challenging issues can be tackled through joint actions when implementation is effective, positive changes bring mutual benefits and the targeted groups are supported with measures appropriate to their needs,” said Russel Mills, Business at OECD Secretary General.

“This exemplifies the extent to which digital transformation has affected all aspects of our lives,” said USCIB Vice President for ICT Policy Barbara Wanner. “Digital transformation creates some challenges, to be sure, but also offers promising health-related benefits that have the potential to improve everyone’s quality of life, provided there are appropriate enabling conditions for business investment in continued innovation.”

Commenting on the role of international cooperation, OECD Secretary General Angel Gurria stated, “Greater co-operation between the private and public sectors on health issues will be critical to unlock the full power of digital innovation in this area. Partnerships, including at the international level, are essential to connect the brightest minds and to promote research on complex health issues, especially where upfront R&D expenditures are vast and payoffs uncertain.”