Washington Update, April – May 2018

Highlighting Key Activities, April – May 2018

During the months of April and May 2018, USCIB Staff met with EU Finance Ministries on draft digital tax directives, participated in a roundtable with OECD Trade staff on digital trade, testified before USTR’s Section 301 Committee, advocated for business as Colombia acceded to the OECD, spoke on NAFTA at the NGA North American Summit, filed comments to the ITC on foreign measures affecting B2B and B2C products and services, met with Kenneth J F Kennedy, DHS, on Forced Labor issues, briefed Tim Skud, Treasury, and Mark McKenzie, DHS, on E-Commerce at the WCO, met with Hill staff Hill on CFIUS reform, and much more. Below are summaries of these and other highlights from the activities of USCIB in Washington, D.C. over the last two months. If you have any questions or comments, or want more information on a specific topic, please contact any of the staff members listed at the end of this brief.

Table of Contents:

  1. Trade and Investment – Opening Global Markets for Trade and Investment
  2. ICT Policy – Promoting Sound Policies for New Technologies
  3. Tax – Advancing Tax Policies that Promote U.S. Competitiveness
  4. Customs and Trade Facilitation – Reducing Barriers and Costs from Customs and Border Control Practices
  5. China – Supporting Policies and Relationships that Enhance U.S.-China Business
  6. Corporate Responsibility and Labor Affairs – Shaping the Development of CR Principles and Increasing Awareness of Business’s Positive Social Contributions
  7. Creating Global Legal Practices for an Open and Competitive Business Environment
  8. Membership
  9. Upcoming Events
  10. Staff List

Trade and Investment – Opening Global Markets for Trade and Investment

Mulligan Shares USCIB Views at B20/BIAC/OECD/ICC Meetings:  Several meetings took place in Paris the week of May 28 at which Rob Mulligan, USCIB Senior Vice President Policy and Government Affairs, presented member views, starting with the B20 Trade and Investment Taskforce.  He made the point that the trade paper language related to digital trade, especially on IP, should be consistent with language developed by the Digital taskforce.  Since several companies working in the Digital taskforce had developed compromise language on IP, he urged the Trade taskforce to also use that language.  The BIAC General Assembly followed the B20 meeting where Rick Johnston, Citi, was approved for another term on the BIAC Board and they announced the new Secretary General, Russell Mills.  In a meeting with Ken Ash, Director of the OECD Trade Directorate, Rob discussed upcoming OECD work on tariffs, market opening, trade facilitation, non-tariff barriers and services reform.  At the meeting of the ICC Trade and Investment Commission on May 30, Rob provided input on proposed ICC work on unilateral protection measures, the impact of extraterritorial application of national laws, and the intersection of trade and climate change.

USCIB Kicks Off BIAC Roundtable with OECD Trade Staff on Digital Trade:  As part of the BIAC Trade Committee meeting on April 23, 2018, a roundtable discussion was organized with Ken Ash, Director of the OECD Trade Directorate, and his staff on digital trade.  Rob Mulligan started the discussion by highlighting the importance of cross border data flows to business and the negative impact of data localization requirements. He stressed the need for regulators to take approaches that do not end up restricting trade, stifling innovation, and undercutting economic growth.  The OECD staff noted some of the issues they are trying to resolve in their work on digital trade including: the challenges for business in distinguishing personal data from non-personal data; the costs of technological solutions such as encryption; differences of views based on cultural beliefs; and, is there a role for multilateral approaches.  BIAC will continue this dialogue as the OECD trade staff develops its digital trade papers.

USCIB/BIAC Urge OECD Trade Committee to Include Business Priorities in Future Workplan:  Rob Mulligan represented USCIB at the BIAC and OECD Trade Committees in Paris from April 23-25.  The BIAC meeting focused on providing input into the discussions the OECD Trade Committee was having on it Program of Work and Budget (PWB) for 2019-2020.  BIAC supported plans to work on digital trade, customs facilitation, international regulatory cooperation, trade in services and trade and environment.  We noted that the PWB should continue to include work on localization requirements and state-owned enterprises that are still key areas of concern for our members. BIAC also arranged for a lunch meeting with Deputy Secretary General Kiviniemi, which provided a chance for members to hear her thinking on the current global trade environment.  They also organized a dinner with Ana Novik, Head of the OECD Investment Division, John Drummond, Head of the OECD Services Trade Division, and Dermot Nolan, Permanent Representative of Ireland to the OECD.  This provided an opportunity to discuss how they will structure the planned joint committee meeting in October between the trade and investment committees and for us to share suggestions.

USCIB Pushes for Open Investment Climate in CFIUS process: USCIB has been an active advocate on investment issues in the context of the CFIUS legislation on the Hill. On April 19, 2018, Shaun Donnelly, Vice President, Investment and Financial Services, and Eva Hampl, Senior Director, Investment, Trade and Financial Services, met with Hill staff to discuss the Cornyn bill. On April 30, 2018, Donnelly and Hampl joined a group of associations in a meeting with Treasury and Commerce officials for an update on what at the time was the most recent draft of the legislation. USCIB hosted a member meeting on May 8, 2018, to discuss ongoing developments and next steps. Finally, on May 21, 2018, USCIB signed on to a multi-association letter to the House and Senate in support of the most recent updates of the legislation, which importantly no longer included provisions to expand CFIUS jurisdiction to cover outbound investment.

USCIB Pens Multi-Association Letter to Treasury on Investment 301: On April 26, 2018, USCIB, together with the Coalition of Services Industries (CSI) and the National Foreign Trade Council (NFTC) hosted a strategy meeting to share intelligence and discuss potential action items on investment issues related to the Administration’s Special 301 investigation. On May 18, 2018, USCIB, together with five other associations, sent a letter to Secretary Mnuchin asking for a more open and consultative process regarding the Administration’s investment restrictions contemplated under Section 301, pursuant to the March 22 presidential memorandum. The letter was sent in anticipation of a report coming out from Treasury no later than May 21, 2018, on the progress in developing measures to address concerns about investment in the U.S directed or facilitated by China in industries or technologies deemed important to the U.S.

Hampl Discusses NAFTA in Politico Roundtable: On April 18, 2018, Eva Hampl, participated in a roundtable conversation hosted by Politico, to discuss NAFTA. The off-the-record discussion addressed what the renegotiated chapters looked like at that time, the major sticking points that remain, and what potential solutions may be. USCIB has been actively advocating for members on NAFTA, traveling to rounds in Canada and Mexico earlier this year, and participating in the Coalition here in D.C., including advocating on the Hill. In support of an open conversation on trade, USCIB co-sponsored a reception on May 17 for Hill staff centered around the China 301 hearing that took place that week, as well as the ongoing NAFTA negotiations, 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.

USCIB Advocates for Business as Colombia Concludes OECD Accession Process in May: Following the conclusion of an accession process that started in 2013, Colombia joined the OECD this month. On May 30, Colombian President Juan Manuel Santos and OECD Secretary General Angel Gurria signed an accession agreement at the annual ministerial-level council meeting. USCIB, which serves as the U.S. affiliate of Business at OECD, the representative private-sector voice in the OECD, has advocated on behalf of U.S. business throughout this process. Leading up to this conclusion, USCIB joined a meeting with other associations and companies at the White House to discuss Colombia, as well as with USTR, following the most recent meeting of the OECD Trade Committee in April. USCIB welcomes the progress Colombia has made over the past several years in the context of the accession process to the OECD, and we look forward to continued progress and concrete actions being taken on outstanding issues, including on pharmaceuticals and trucking, where the current status does not yet rise to the level of like-mindedness with other OECD countries on open trade and investment. As the OECD considers inviting additional countries to join, USCIB will continue to advocate on behalf of U.S. business to ensure that all OECD countries continue to meet high standards.

Donnelly Defends Business Positions at UNCITRAL Review of ISDS Procedures: USCIB Vice President Shaun Donnelly was the leading advocate for business positions and priorities at a weeklong review of Investor-State Dispute Settlement (ISDS) provisions to enforce international investment agreements held at the UN in New York April 23-27 under the auspices of “Working Group 3” of the UN Commission on International Trade Law (UNCITRAL). ISDS and investment arbitration are under assault from a coalition of developing countries, NGOs, some international organizations and the European Union. The EU is aggressively pushing its “Multilateral Investment Court” proposal as the solution to alleged problems in the long-established ISDS system to afford an independent body to address serious breaches of investment and rule or law commitments by host government. We and many other business groups find the EU proposal deeply flawed and biased against business. Shaun and a handful of invited business and arbitrator representatives spoke up forcefully to provide much-needed real world perspectives of investors. But the UNCITRAL group is a government-dominated process with limited scope for business and other stakeholders. The next week-long semi-annual session of the WG will be in

USCIB at the National Governors Association North American Summit:  Shaun Donnelly represented USCIB at the special North American Summit of the National Governors Association (NGA) in Scottsdale, Arizona May 4-6. U.S. state Governors met with their North American counterparts – Mexican governors and Canadian provincial Premiers – to review common North American challenges and opportunities. Not surprisingly, NAFTA was a primary focus for discussion among the governors and with USCIB and other business stakeholders participating in the session. Several USCIB member companies also participated. Governors from the three nations had remarkably similar pro-business views on NAFTA – keep it strong, do no harm, and update/strengthen it on new issues based on global best practices. Governors seem to “get” NAFTA more than some Washington politicians.

ICT Policy – Promoting Sound Policies for New Technologies

USCIB Files Comments to the U.S. International Trade Commission on Foreign Measures Affecting B2B and B2C Products & Services: Members of USCIB’s Digital Trade Working Group contributed their expertise to USCIB’s April 5, 2018, submission in response to the ITC Federal Register Notice calling for comments on Global Digital Trade 2: The Business-to-Business Market, Key Foreign Trade Restrictions and U.S. Competitiveness (#332-562) and Global Digital Trade 3: The Business-to-Consumer Market, Key Foreign Trade Restrictions and U.S. Competitiveness (#332-563). Evidence of trade barriers that members have been collecting for USCIB’s annual National Trade Estimate/Section 1377 submission to the U.S. Trade Representative’s office (USTR) served as the foundation for the ITC comments, which profiled practices in Brazil, China, European Union, India, Indonesia, and Russia.

USCIB Joins Forces with USITUA to Host Roundtable Discussion Featuring ITU Director Candidate: USCIB and the U.S. International Telecommunication Union Association (USITUA) jointly organized a special roundtable discussion on April 5, 2018, in Washington, D.C. to hear a brief of Doreen Bogdan-Martin’s candidacy for director of the International Telecommunication Union (ITU) Telecommunication Development Bureau (BDT). The Roundtable attracted nearly 40 participants from both trade associations, as well as from the U.S. Government and the Washington, DC diplomatic community. The U.S. Government will formally deposit Bogdan-Martin’s candidature prior to the ITU Plenipotentiary (PP-18), which will take place in Dubai in October 29-November 16. Senior U.S. Government officials indicated that one of Washington’s leading goals at the PP-18 is to secure Bogdan-Martin’s election to this post, highlighting her impressive track record with the ITU.

UNCTAD E-Commerce Week Provides Opportunity for USCIB Members to Highlight the Importance of Digital Technologies for Sustainable Development: UNCTAD’s E-Commerce Week, April 16-20, in Geneva, Switzerland highlighted progress by emerging economies in developing digital ecosystems to support electronic commerce and digital trade and, in turn, drive sustainable economic development. More than 1,000 participants from government, business, civil society, and international organizations convened for the fourth edition of this conference under the theme “Development Dimensions for Digital Platforms.” USCIB Vice President for ICT Policy Barbara Wanner was on the ground for the first half of the week and observed enthusiasm for the potential of digital platforms to create commercial and economic benefits. USCIB members from Mastercard, Facebook, and King & Spalding elaborated on effective ways of leveraging digital technologies to address various developmental needs as both workshop and plenary speakers.

USCIB Members Help Develop 2018 Policy Priorities for ICC Digital Economy Commission: The ICC Digital Economy Commission (ICC-DEC) held its first meeting of 2018 on April 19-20 at the ICC’s Paris headquarters. USCIB Vice President for ICT Policy Barbara Wanner contributed to discussions about existing and new policy work as did members from Apple, CenturyLink, Computer & Communications Industry Association, Facebook, Google, Intel, KPMG International, and Microsoft. Existing work that will be taken forward include draft policy papers on Artificial Intelligence (AI) and Cybersecurity as well as advocacy efforts, supported by the ICC policy paper, “ICT, Policy and Sustainable Economic Development,” at the UN High Level Policy Forum in July 2018. New work includes: (1) an ICC response to the European Union e-privacy regulation, which was created to complement the EU General Data Protection Regulation (GDPR); (2) the European Commission’s proposal for cross-border data flows in trade and investment agreements; and (3) a paper that will explore the ICC’s potential role in promoting and preparing self-regulation in the digital economy. The ICC’s ITU Working Group met on the sidelines of the Commission meeting and decided key areas of priority for ICC advocacy in anticipation of the ITU PP-18.

USCIB Members Help to Advance OECD’s Going Digital Project: Barbara Wanner and representatives from AT&T, CCIA, eBay, 21st Century Fox, Mastercard, Microsoft, and Verizon participated in the May 14-18 meetings of the OECD’s Committee on Digital Economy Policy (CDEP) and its Working Parties. The week-long meetings focused on advancing the ambitious horizontal Going Digital project and rolling out plans for a Global Forum on Digital Security for Prosperity. The meeting also featured a special Roundtable discussion on privacy interoperability. USCIB members, participating under the auspices of Business at OECD (BIAC), made numerous interventions focused on elements of the Going Digital Project, such as projects on Artificial Intelligence, Online Platforms, and E-Commerce. The OECD will present an Interim report at the Ministerial Council Meeting, May 28-June 1. The final Going Digital Report will be unveiled at a special Gala event, March 11-12, 2019, in Paris.

Tax – Advancing Tax Policies that Promote U.S. Competitiveness

USCIB Meets with EU Finance Ministries on the EU Draft Directives on Digital Services Tax and Significant Digital Presence: Bill Sample, Chair of the USCIB Taxation Committee and Carol Doran Klein, USCIB VP and International Tax Counsel, along with USCIB member companies participated in a series of meetings with Finance Ministries in European countries concerning the draft directives. The meetings were intended to provide information concerning the potential impact of the draft directives on businesses – both the companies that are targeted by the directives and others that might be “collateral damage” — and discern the countries positions on the proposed directives. USCIB pointed out that the draft directives are deeply flawed and evidence a misunderstanding of the nature of digital economy business models. For example, companies are paid for clicks, rather than displays of advertisements, intermediaries may have very low margins such that a 3% tax would exceed the total profit on the transaction, and companies do not sell data. While many countries expressed concerns with the draft directives and the EU requires unanimity to proceed, it is important that USCIB continue to make its case about the potential damage from these directives. Many countries expressed a willingness to work within the OECD to achieve a long-term solution.

USCIB Joins BIAC Tax Committee Meeting Discussing Digital Taxation: USCIB members attended the BIAC Tax Committee meeting on May 4, 2018 in Paris. The Committee meeting included presentations on the taxation of the digital economy (which is likely to be the main tax topic at the OECD, the EU and the UN this year (and perhaps beyond)); the multilateral instrument, which will enter into force on July 1, 2018 and add new countries and agreements as more countries ratify; MAP and dispute resolution; transfer pricing topics; and U.S. tax reform.

Customs and Trade Facilitation – Reducing Barriers and Costs from Customs and Border Control Practices

USCIB Customs Committee Members Meet with ICE on Forced Labor: On Thursday, May 31, 2018, USCIB Director of Customs and Trade Facilitation, Megan Giblin, along with Jerry Cook, Hanesbrands and USCIB Customs Committee Chair, and several other Committee members met with Kenneth J F Kennedy, Senior Policy Advisor Forced Labor Programs, Homeland Security Investigations, U.S. Immigration and Customs Enforcement, U.S. Department of Homeland Security to discuss ICE updates on Forced Labor.

USCIB Discusses E-commerce with DHS Trade Policy Staff: The USCIB Customs and Trade Facilitation Committee met on May 22, 2018, where Mark McKenzie of DHS Trade Policy joined the Committee to discuss the HSI ICE E-Commerce strategy, provide views on WCO E-Commerce work given DHS’ leadership role in leading the interagency process, and discuss the joint USCIB – U.S. Chamber Industry day on June 14, 2018. The event will give members the opportunity to provide inputs directly into the U.S. interagency group on the issue of the WCO E-Commerce Cross-Border Framework of Standards (FoS).

USCIB Hosts Discussion with U.S. Government Partners on Waste: Since the early 2000s there has been at the WCO, at the request of the Basel Convention, an effort to create “waste” breakouts for a variety of product categories. Under the process to update the legal text of the 2022 Harmonized System Nomenclature, the WCO has been discussing breakouts related to mechanical and electronic or electrical waste.  On May 17, 2018, the USCIB Customs Committee hosted Ms. Beth Elkins of USITC and lead U.S. delegate to the WCO HS Review Subcommittee to discuss current Basel Convention efforts in preparation for June RSC meetings.

Giblin Supports USCIB Member Companies and the USG at WCO E-Commerce Working Group Meetings: From April 9-12, 2018, Megan Giblin, participated in the WCO E-Commerce Working Group meetings held at World Customs Organization Headquarters in Brussels.  During the meetings, Giblin supported both USG interagency partners (i.e., DHS Trade Policy, CBP, and USTR) and USCIB member companies. In preparation for the meeting, the USCIB Customs Committee submitted formal comments on the Draft Framework of Standards. Following the meeting, the USCIB Customs Committee submitted formal comments on 1) the agreed Standards; 2) Related introductions; 3) additional text that was rapidly reviewed and included in the go-forward draft; 4) Resolution; and 5) Draft Workplan tied to the request to extend the tenure of the Working Group past June 2018.

Giblin Meets with Colombian Trade and Customs Attaches: On March 23, 2018, while in Brussels attending international classification meetings at the World Customs Organization, Megan Giblin, met with the Trade and Customs attaches at the Colombian Embassy to discuss key member issues including, but not limited to: Customs Valuation, Consultation with Industry, WTO TFA, and more. The USCIB Customs Committee is working on a Customs and Trade Facilitation Barriers paper, which will be used to continue to address member concerns in the Customs space.

USCIB Customs Committee Meets with Department of Treasury to Discuss E-Commerce at WCO: On March 27, 2018, Megan Giblin, Jerry Cook, and several members of the Customs Committee met with Tim Skud, Deputy Assistant Secretary (Tax, Trade and Tariff Policy) and others of Department of Treasury representatives to discuss USCIB submissions on WCO E-Commerce Draft FoS, specific concerns related to Draft FoS section on Revenue collection, and expressed views in preparation for April in-person meetings on the Framework.

China – Supporting Policies and Relationships that Enhance U.S.-China Business

USCIB Submits Comments and Testifies on 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 submitted to the U.S. Trade Representative Robert Lighthizer. USCIB also signed on to a multi-association letter on April 11 to the Hill, expressing concern about the tariffs to Chairman Brady and Ranking Member Neal. In addition, USCIB also signed on to a multi-association letter to Amb. Lighthizer in response to the request for comments.

Corporate Responsibility and Labor Affairs – Shaping the Development of CR Principles and Increasing Awareness of Business’s Positive Social Contributions

USCIB Compares Views/Priorities with State on Responsible Business Conduct in Leadup to OECD Forum in June: USCIB VP for Labor Affairs and Corporate Responsibility Gabriella Rigg Herzog, accompanied by USCIB Investment staffers Shaun Donnelly and Eva Hampl, met with the State Department senior staffers who lead U.S. Government work on Responsible Business Conduct (RBC) at the OECD on May 1, 2018. The OECD’s annual Global Forum on RBC will be held in Paris June 20 and 21 and will include a focus on RBC in the agricultural sector. The OECD’s work on RBC is centered in the Working Party on Responsible Business Conduct, under the general auspices of the OECD Investment Committee. Gabriella will again be attending the June Forum meeting. Unfortunately, some NGO groups and even a few OECD member country delegations seem to view OECD RBC work as simply an open season to criticize business. But our ongoing cooperation with the U.S. Government team continues to yield areas for serious, fact-based work.

Competition – Creating Global Legal Practices for an Open and Competitive Business Environment

USCIB Competition Committee Discusses Recent Supreme Court Case at Spring Meeting: The USCIB Competition Committee held its spring meeting on April 9, 2018. Following welcoming remarks from new Chair Dina Kallay, Ericsson, and Vice-Chair Jennifer Patterson, Arnold & Porter, members received updates on OECD Competition Meetings and BIAC Developments from John Taladay, Baker Botts and Chair of the BIAC Competition Committee, as well as updates on ICC Competition Commission Developments from Jennifer Patterson and Cal Goldman. Brinkley Tappan and William Rinner, Counsels to the Assistant Attorney General at the U.S. Department of Justice, provided an update on the activities in their office. The remarks included an extensive discussion of the Vitamin C antitrust legislation that was heard by the Supreme Court on April 24, 2018. The remainder of the agenda included an update on Brazil Antitrust Developments from Ademir Pereira Jr., focusing on the Volkswagen case, and an update on the International Competition Network (ICN) from Paul O’Brien, Counsel for International Antitrust, U.S. Federal Trade Commission (FTC).

Membership

  • Membership Meetings: The USCIB membership department and policy staff met with representatives from member companies Biotechnology Innovation Organization and Intel to develop our understanding of their policy priorities for the next year and beyond, and to see how USCIB can better serve their policy needs.
  • New Members: USCIB has recently welcomed Winston & Strawn LLP as a new member.

 

Upcoming Events:

  • 2018 OECD International Tax Conference, Washington, D.C. – June 4-5
  • USCIB Digital Trade Working Group Meeting, Washington, D.C. – June 12
  • WCO E-Commerce Framework Industry Day Meeting, Washington, D.C. – June 14
  • OECD Responsible Business Conduct Annual Forum – Paris, June 18-22
  • USCIB Trade and Investment Committee Meeting, Washington, D.C. – June 19
  • USCIB ICT Policy Committee Meeting, Washington, D.C. – June 20
  • ICANN 62, Panama City, Panama – June 25-28
  • Economic and Social Council (ECOSOC) High-Level Policy Forum & Ministerial, UN-HQ, New York – July 16-19
  • APEC Senior Officials Meeting (SOM 3), Port Moresby, Papua New Guinea – August 4-20
  • Engaging Business Forum on Business and Human Rights, Atlanta, Georgia – September 13-14

USCIB Policy and Program Staff

Rob Mulligan
Senior Vice President, Policy and Government Affairs
202-682-7375 or rmulligan@uscib.org

Erin Breitenbucher
Senior Policy and Program Associate and Office Manager, Washington
202-682-7465 or ebreitenbucher@uscib.org

Norine Kennedy
Vice President, Strategic International Engagement, Energy and Environment
212-703-5052 or nkennedy@uscib.org

Shaun Donnelly
Vice President, Investment and Financial Services
202-682-1221 or sdonnelly@uscib.org

Elizabeth Kim
Policy and Program Assistant, New York
212-703-5095 or ekim@uscib.org

Megan Giblin
Director, Customs and Trade Facilitation
202-371-9235 or mgiblin@uscib.org

Carol Doran Klein
Vice President and International Tax Counsel
202-682-7376 or cdklein@uscib.org

Ronnie Goldberg
Senior Counsel
212-703-5057 or rgoldberg@uscib.org

Mia Lauter
Policy and Program Assistant, New York
212-703-5082 or mlauter@uscib.org

Eva Hampl
Director, Investment, Trade and Financial Services
202-682-0051 or ehampl@uscib.org

Mike Michener
Vice President, Product Policy and Innovation
202-617-3159 or mmichener

Alison Hoiem
Senior Director, Member Services
202-682-1291 or ahoiem@uscib.org

Chris Olsen
Policy and Program Assistant, Washington
202-617-3156 or colsen@uscib.org

Gabriella Rigg Herzog
Vice President, Corporate Responsibility and Labor Affairs
212-703-5056 or gherzog@uscib.org

Barbara Wanner
Vice President, ICT Policy
202-617-3155 or bwanner@uscib.org

Jonathan Huneke
Vice President, Communications and Public Affairs
212-703-5043 or jhuneke@uscib.org

Kira Yevtukhova
Communications Manager
202-617-3160 or kyevtukhova@uscib.org

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Education and Re-skilling in the Age of AI

By Andreas Schleicher, Shea Gopaul and Peter Robinson

Faced with major economic and social disruption, business and policy leaders are joining together to devise strategies and models to adapt the skills of the existing and future workforce to the opportunities offered by AI, automation, robotics and digitalization. McKinsey reports that 42% in the United States, 24% in Europe, and 31% in the rest of the world admit they currently lack a “good understanding of how automation and/or digitization will affect […] future skill needs.”

To prepare for looming technological upheavals, we need to understand the current educational and training landscape, its limitations, examine the latest research on the future skills needed and highlight some of the most effective employment and human resources strategies and educational models that can better position all stakeholders for the imminent change. We argue that by working together, especially through public-private partnerships, business and policy leaders can develop effective work-readiness and skill matching solutions, lifelong learning and re-skilling approaches to prepare both employers and employees for the changing world of work.

Teaching People to Learn

For some, AI and globalization can be liberating and exciting; but for those who are insufficiently prepared, they can mean uncertainty in employment, and a life without prospects. Our economies are shifting towards regional hubs of production, linked together by global chains of information and goods, but concentrated where comparative advantage can be built and renewed. This makes the distribution of knowledge and wealth crucial, and that is intimately tied to the distribution of educational opportunities.

The dilemma for education is that the kinds of things that are easy to teach have now become easy to digitize and automate (e.g. memorization vs. critical thinking). The modern world does not reward us just for what we know – Google knows everything – but for what we can do with what we know. So, the focus must shift to enabling people to become lifelong learners, which encourages constant learning, unlearning and relearning when the contexts change, and integrates both the practical world of work, with the theoretical world of learning. The future is about pairing computers with the cognitive, social and emotional skills of human beings.

These days, AI algorithms sort us into groups of like-minded individuals. They create virtual bubbles that amplify our views and leave us insulated from divergent perspectives. Tomorrow’s educational institutions will need to help students to think for themselves and join others, with empathy, in work and citizenship, and build character qualities such as perseverance, empathy or perspective taking, mindfulness, ethics, courage and leadership.

But to transform schooling at scale, we need not just a radical, alternative vision of what’s possible, but also smart strategies and effective institutions. Our current educational institutions were invented in the industrial age, when the prevailing norms were standardization and compliance, and when it was both effective and efficient to educate students in batches and to train teachers once for their entire working lives. The curricula that spelled out what students should learn were designed at the top of the pyramid, then translated into instructional material, teacher education and learning environments, often through multiple layers of government, until they reached, and were implemented by, individual teachers in the classroom.

This structure, in a fast-moving world, reacts to current needs, far too slowly. Today, we need to embrace AI also in ways that elevate the role of educators from imparting received knowledge towards working as co-creators of knowledge, as coaches, as mentors and as evaluators. AI can support new ways of teaching that focus on learners as active participants (e.g. chat bot, gaming applications).

Public/Private Coming-Together Around Skills

With 40% of employers reporting that they lack the talent required, it is surprising that at the same time global youth unemployment as stated by the International Labor Organization (ILO) is at 66 million. There is clearly a mismatch and the private sector has a critical role to play in resolving this skills-education deficit. Employer-driven education (i.e. apprenticeships, traineeships, internships, learnerships) are key in equipping the workforce with the soft and technical skills that employers require.

In countries such as Switzerland and Germany with robust apprenticeship programs and strong employer engagement, the rate of youth unemployment is very low. So, why aren’t there more apprenticeships and employer driven education? In many countries, the policies, regulations, registration process for setting up work-based learning programs are cumbersome and time-consuming for employers. The return on investment (ROI) is often unknown, e.g. in the U.S. for every $1 spent there is a return of $1.47. Lastly, educational institutions are not always linking to employers on curriculum design to reflect the world of work’s latest needs.

We have learnt at the Global Apprenticeship Network (GAN), a public-private partnership (PPP), that the convening of key stakeholders at the local city and country level ensures that education and legislation is better attuned to the world of work. Although private and public stakeholders do not always speak the same language, bringing them together increases their mutual understanding of the needs and changes that will assist in getting skills for business and jobs for youth.

Employers are uniquely positioned to define the skills required in the world of AI, robotics and automation as they are developing these technologies. Sadly, their importance as not only job creators, but also curricula designers, are often overlooked and they are often left out of the conversation and decision-making process. Work-based learning and notably apprenticeships connect education to work and we are seeing more and more employers creating innovative apprenticeships – part-time apprenticeships, pre-apprenticeships and a vast range of online tools. e.g. e-apprenticeships. In the last five years since GAN’s inception, it has become increasingly apparent that these models must be leveraged to ensure that not only youth, but also middle-aged and senior population groups adapt their skills and competencies to the fast evolving economic and technological context. In short, with the need for re-skilling and lifelong learning on an unprecedented scale, innovative apprenticeships can help get skills for business and jobs for all.

Below are two business-led initiatives that further illustrate the power of public-private partnership in skilling and reskilling. With the uncertainties linked to fast-paced technological change, these models show us how all actors – public and private- can join forces to ensure that skill development is continuously connected to present and future socioeconomic needs.

The first is IBM’s P-TECH school, a public-private partnership educational model that addresses postsecondary degree completion and career readiness by smoothing the transitions between high-school, college, and the professional world in science, technology, engineering, and mathematics (STEM). It recognizes that students need early and engaging experiences with the world of work, to make the academic work in high school and college meaningful and to fully prepare them with the workplace skills required by employers. The model pairs educational institutions with “employer partners” to act as mentors, develop curriculum, organize site visits, internships and other workplace learning opportunities.

The sustainability of the model depends on public authorities’ active involvement to develop appropriate frameworks, regulations, licensing, etc. Starting with one school in 2011 and engaging over 400 business partners, P-TECH expects to have 100 schools in 2018. IBM also ensures that its own workforce has continuous access to lifelong learning. Through the Think40 program IBM staff is asked to pursue at least 40 hours of personal and technical skills development through formal classes, self-paced learning, and online resources. The Think Academy platform allows IBM staff to access customized training which is constantly updated to IBM’s clients’ most current and pressing needs.

The second example is based on Randstad’s approach to “put humans first” in the age of digital transformation. Randstad supports clients to integrate versatility in their organizational culture, through a wide variety of re-skilling mechanisms, ranging from external & internal training, mentorship to job rotations and adult apprenticeships. Moreover, Randstad operating companies facilitate the integration and reintegration of vulnerable segments of society (e.g. youth, women, senior staff) with more than 100 social innovation programs mostly through public-private partnerships across the world. For example, in Spain, the Randstad Foundation works with more than 600 companies to ensure the reintegration of those at risk of exclusion from the labor market. In Italy and in the Netherlands, Randstad focuses on employees over 50 years of age, by organizing training in the latest technologies, advocacy, and networking opportunities (12 events to date) with employers.

This overview of initiatives, models and partnerships demonstrates that, through collaboration involving public and private entities, excellent strategies can be developed, not only to adapt to the upcoming technological change, but also to capitalize on the opportunities technology has to offer for the creation of better jobs and better lives.

Employers Are Optimistic in the Age of AI

We’re all being told that our jobs are doomed by robots and automation. But the OECD estimates that only nine percent of jobs across the 35 OECD nations are at high risk of being automated, although of course even nine percent can generate plenty of social difficulties. But there is an established track record throughout history of new technologies creating at least as many new jobs as they displace. Usually these new jobs demand higher skills and provide higher pay. The biggest threat is that our educational institutions won’t be able to keep pace with the new skills demands including the important skills that AI will not be able to replace.

For global employers, there is a steadily growing mismatch between what companies need in terms of skills and what the workforce is coming equipped to do. In an economy with a significant on-demand labor force, two main types of competencies will be needed: “technical” – or in other words, related to deep knowledge of a specific domain, whether welding or engineering, and “transversal,” which applies to all occupations. Those are described by the Center for Curriculum Redesign as creativity, critical thinking, communication and collaboration.

The Skills Employers Will Seek

So what skills will managers need as a result of likely structural changes, driven by AI and growth of the on-demand economy? A recent survey by Business at OECD (BIAC) surveyed 50 employers’ organizations worldwide. It showed that employers value not just the skills and character traits described above, but also character qualities as well, such as mindfulness, curiosity, courage, resilience, ethics, leadership and meta-learning (e.g. growth mindset and metacognition).

Furthermore, it is becoming increasingly clear that, in a constantly changing world, an individual’s versatility matters; so, the model developed by Jim Spohrer of IBM, of a “T-shaped” person, holds true: broad and deep individuals capable of adapting and going where the demand lies.

Employers’ organizations at the national and global levels are already developing innovative programs to help governments and educators anticipate the needs of the future workforce. Through robust action at the global level, including through the G-20 and the OECD, policy makers can also make sure that they are helping their populations succeed and thrive in a world of AI and other technological advances.

This overview highlights the strength of partnerships between the public and the private sector in preparing for the unpredictable. For such alliances to reach their full potential, on the one hand governments and policy makers must be open to the private sector’s input and on the other hand employers need to take a long term view of the ROI and accordingly commit resources in skilling and educating their current and future staff, notably through apprenticeship and work-readiness programs.

Andreas Schleicher heads the Directorate of Education and Skills at the Organization for Economic Cooperation and Development (OECD). Shea Gopaul is executive director and founder of the Global Apprenticeship Network (GAN). Peter Robinson is president and CEO of the United States Council for International Business (USCIB).

For more information, please contact:

OECD: news.contact@oecd.org
GAN: gueco@gan-global.org
USCIB: jhuneke@uscib.org

USCIB Warns of Potential Harms to the US Following China Tariffs

In light of the Trump administration’s proposed Section 301 tariffs on Chinese goods, USCIB sent comments last week to the U.S. Trade Representative Robert Lighthizer expressing concern about the potential unintended negative consequences the proposed tariffs will have on sectors vital to the U.S. economy and jobs. With $587.6 billion in total goods trade in 2016, China has become the United States’ largest goods trading partner. China was also the third-largest export goods market in 2016 for the U.S., while U.S. foreign direct investment in China was $13.8 billion in 2016, with the ICT sector alone encompassing $4.34 billion.

“China can be a challenging market for U.S. companies to navigate. The ongoing intellectual property rights violations, forced technology transfer requirements, and state interventions harm U.S. companies, workers, consumers, and competitiveness,” stated Eva Hampl, who leads USCIB work on China-related issues.

Made in China 2025 is considered by many an indication that China plans on further advancing in developing their high-tech industries, such as robotics, advanced information technology, aviation, and new energy vehicles, with the eventual goal of global dominance in those industries through uncompetitive means such as subsidies.

“While this unfair advantage to Chinese companies in the high-tech industry space is a legitimate threat to U.S. leadership in innovation, continued engagement in the Chinese market is also very important for U.S. companies in terms of their ability to be globally competitive,” emphasized Hampl. “USCIB members are very concerned that these proposed tariffs will stifle the U.S. economy, and not achieve the important goal of changing China’s behavior in the space of emerging technologies and intellectual property rights. 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.”

The comments urge the administration to use this public comment period to listen to USCIB members and other U.S. stakeholders who explain how they will be directly affected by the proposed tariffs.

“It is critical that the administration exclude from its tariffs particularly those products that cannot feasibly be replaced by non-Chinese sources, where the harm of potential tariffs would fall more on U.S. businesses, workers, and exporters than on Chinese entities,” said Hampl. “Hurting American exporters cannot be the outcome of a process designed to level the playing field in China.”

USCIB has also signed on to a broader coalition of trade associations to echo these and other business concerns. Additionally, USCIB is co-sponsoring a reception later this week for Hill staff centered around the China 301 hearing, as well as NAFTA, celebrating Great American Jobs Supported by Trade. Finally, USCIB will also testify this week as part of the China 301 hearing.

USCIB’s Geneva Delegation Supports Innovation at World IP Day

As part of USCIB’s Geneva Week, USCIB staff and members had the opportunity to participate in the annual World Intellectual Property Day on April 26 in Geneva to celebrate the role that intellectual property rights play in encouraging innovation and creativity. This year’s campaign celebrated women who are driving societal change and shaping “our common future” through innovation and creativity.

The USCIB delegation attended a reception sponsored by Mexico, Indonesia, South Korea, Turkey and Australia (MIKTA), an informal partnership created in 2013 on the sidelines of the United Nations General Assembly to support effective global governance.

“USCIB appreciated the opportunity to attend World IP Day and to support the importance causes of promoting intellectual property rights and bridging the gender divide in innovation,” noted Mike Michener, who leads USCIB’s Committee on Innovation and Intellectual Property. “USCIB’s goal within our recently revamped Intellectual Property and Innovation Committee is to improve our members’ global competitiveness as well as identify international initiatives to secure IP rights and promote innovation. World IP Day is an exemplary forum to help endorse our long-standing beliefs that intellectual property protection and innovation go hand-in-hand.”

 

Goldberg Presents New Report on Global Compact on Migration

USCIB Senior Counsel Ronnie Goldberg

The Federation of Uganda Employers (FUE) welcomed representatives of national and sub-regional employers’ organizations (EOs), including USCIB’s Senior Counsel Ronnie Goldberg from 16 countries in the East, Central and Southern Africa region to Kampala last week for their annual two-day conference.

Panel discussions explored themes of youth employment, regional integration and labor migration, with Goldberg, who attended on behalf of the International Organization of Employers (IOE), outlining the business perspective on the Global Compact for Safe, Orderly and Regular Migration, which will be adopted by the UN later this year.

Goldberg described ways in which the IOE and newly formed Business Mechanism to the GFMD were presenting business perspectives to the government negotiators. “Migration policy is not simply a political issue,” she noted. “Labor mobility is an economic necessity and skills mobility is central to the ability of companies to thrive and compete in global markets.”

The theme of this year’s conference, which was co-funded by the European Union, built on the Declaration from the 2017 event in Walvis Bay, Namibia.  Last week, the assembled EO leaders were joined by experts from the IOE, ILO and IOM to explore: “From Declaration to Action – Accelerating an enabling environment for youth employability and entrepreneurship”.

The keynote address was delivered by Chairperson of the FUE Nicholas Okwir, who was joined in the opening session by Jacqueline Mugo, secretary-general of Business Africa, Matthias Thorns, director of stakeholder engagement from the IOE and Jealous Chirove, employment specialist from ILO Dar es Salaam.

The second part of the two-day program considered best practices to address youth unemployment, as well as ways to foster youth and women’s entrepreneurship. Group sessions worked on a Road Map to identify and implement key areas for action, in line with the objective of the event.

IOE Vice-President for the ILO Mthunzi Mdwaba looked ahead to the 2018 International Labor Conference, with a comprehensive overview of the key matters of relevance to the Employers. He also updated the EOs on other ILO developments requiring concerted Employer engagement.

USCIB Mission to Geneva Targets UN Agencies

In an effort to ensure inclusivity and transparency of international policy deliberations for business at the United Nations, USCIB organized a Geneva “door knock” meeting to UN and multilateral institutions last week, bringing together a USCIB delegation of members and staff to meet with UN agencies, officials in the U.S. Mission to the United Nations and other important government representatives in order to highlight American policy priorities and concerns. The topical areas and issues of concern included food and agriculture, healthcare, intellectual property and innovation, sustainability, environment and chemicals, and trade.

USCIB presented itself as a unique business organization, affiliated with ICC, IOE and Business at OECD (BIAC), and constructively involved in an array of UN institutions, with positive examples of the benefits of such engagement. USCIB members spoke to how U.S. business innovation, investment, and partnership deliver global progress advancing economic benefits in the U.S. and globally, with examples found on USCIB’s Businessfor2030 web platform, and argued for enabling frameworks of policy, markets and governance.

The USCIB member delegation met with the World Health Organization (WHO), World Intellectual Property Organization (WIPO), the Office of the UN High Commissioner for Human Rights (OHCHR), the World Trade Organization, and UN Environment, as well as country missions, including the U.S., UK, Japan and Brazil.

The delegation was led by USCIB Vice President for Strategic International Engagement, Environment and Energy Norine Kennedy, Vice President for Product Policy and Innovation Mike Michener, Senior Director for Membership Alison Hoiem, and Policy Assistant Mia Lauter. USCIB members include representatives from Cargill, AbINBev, CropLife, Ferrero, Sidley and GMA.

Watch Michener’s report from the field below!

Over 100 Business Representatives Lobby Senate on NAFTA

Following previous successful NAFTA Senate Lobby Days, USCIB once again participated last week, joining more than 100 representatives from the agriculture and business community to talk about private sector concerns and perspectives regarding the ongoing negotiations to modernize NAFTA. The Senate Lobby Day, as in the past, was coordinated as a larger Coalition effort by the U.S. Chamber of Commerce.

“The purpose of this day was to increase support in light of the high-level talks among the NAFTA countries currently taking place in DC,” noted Eva Hampl, USCIB director for investment, trade and financial services. “There is concern in the business community about the Administration’s alleged push to conclude an agreement on an accelerated timeline.”

Hampl led one of the groups that went up to the Hill last week, where she met with several Republican and Democratic Senate offices throughout the day.

“While the various offices are certainly focused on NAFTA, they do not appear to have a definite action plan on what to do in the event of the potential negative scenarios that may take place, such as withdrawal from NAFTA 1.0 or an inadequate NAFTA 2.0.,” said Hampl.  “Also, while the Committee appears to get briefings from the Administration when they request it, the remainder of the Senators are not being briefed in a way that should be expected under TPA, given that the agreement is allegedly near conclusion.”

USCIB Supports US Candidate for Leadership Position at ITU

Eric Loeb (AT&T), chair of USCIB’s ICT Policy Committee and Doreen Bogdan-Martin

USCIB and the U.S. International Telecommunication Union Association (USITUA) jointly organized a special roundtable discussion on April 5 in Washington, DC to hear a brief of Doreen Bogdan-Martin’s candidacy for director of the International Telecommunication Union (ITU) Telecommunication Development Bureau (BDT).

The Roundtable attracted nearly 40 participants from both trade associations, as well as from the U.S. Government and the Washington, DC diplomatic community.

The U.S. Government will formally deposit Bogdan-Martin’s candidature prior to the ITU Plenipotentiary (PP-18), which will take place in Dubai in October. Senior U.S. Government officials have already indicated that one of Washington’s leading goals at the PP-18 is to secure Bogdan-Martin’s election to this post, highlighting her track record with the ITU, including being the chief architect of the Global Symposium of Regulators, coordinating the UN Broadband Commission, and recently launching ITU’s new gender empowerment initiative, EQUALS.

“Doreen’s candidacy is significant because she is the only female candidate for this position,” said Barbara Wanner who leads USCIB’s work on ICT policy. “Importantly, she brings 20 years of experience at the ITU, include 14 years in the Telecommunication Development Bureau, most recently as the Chief of ITU Strategic Planning and Membership. USCIB members strongly support Doreen’s candidacy, knowing that she will pursue the development agenda in a manner that thoughtfully considers all stakeholders’ views.”

During the course of the roundtable last week, Bogdan-Martin noted that the two most significant obstacles to connecting the remaining 3.9 billion people in the world who are still offline are the still-high costs for services and devices, as well as the lack of relevant content to stimulate demand for access and online services. “I envisage the BDT redoubling its efforts on digital inclusion, which is at the core of the 2030 Agenda,” noted Bodgan-Martin. “Together we will make the ITU-D a thriving, forward-looking community of Members served by a BDT known for quality, relevance, and practical solutions.”

Election of the director of the ITU Telecommunication Development Bureau (BDT) will take place at the ITU Plenipotentiary in Dubai later this year (October 29-November 16, 2018).

ILO Launches Inquiry Into Rights Violations in Venezuela

For only the 13th time in its history, the International Labor Organization’s (ILO) Governing Body agreed to appoint a Commission of Inquiry for Venezuela to examine allegations of the Venezuelan government’s non-compliance with a number of legally-binding ILO Conventions. Specifically, allegations were made of attacks, harassment, aggression and a campaign to discredit the employers’ organization – FEDECAMARAS – its leaders and affiliates.

“This action is especially notable because it is a rare instance of ILO action supporting an employer organization’s right to freedom of association,” said Ed Potter who serves as the USCIB’s ILO Governing Body member. It is the only other time, again after a decade old fight, that an Employer freedom of association case was approved for a Commission of Inquiry by the GB.

At its 332nd meeting earlier this month, the ILO Governing Body agreed, by consensus, to approve the appointment of a Commission of Inquiry for Venezuela. The allegations against the Government of Venezuela state a lack of consultation with FEDECAMARAS on laws that affect the labor and economic interests of the employers, and the adoption of numerous increases to the minimum wage without consultation with employer and worker representatives. The Governing Body has discussed this complaint six times since it was presented by 33 employer delegates at the International Labor Conference in June 2015.

“In taking the decision to set up the Commission of Inquiry, the Governing Body expressed deep concern about the lack of any progress with respect to its previous decisions and recommendations regarding the complaint,” noted Potter. “In particular, it referred to the failure to establish a tripartite roundtable, bringing together government, employer, worker as well as ILO representatives to resolve all pending issues. The Governing Body also expressed its regret that it had not been able to carry out the high-level mission it had recommended at its November 2017 Session, due to objections raised by the Government about the agenda of the mission.”

The Commission of Inquiry is made up of three independent members and is tasked with carrying out a full investigation of the complaint, ascertaining all the facts of the case, and making recommendations to address the problems raised in the complaint. A Commission of Inquiry is the ILO’s highest-level investigative procedure. It is generally set up when a member State is alleged to have committed persistent and serious violations of ratified International Labor Conventions, which are binding international treaties, and has repeatedly refused to address them.

 

Robinson: Governments Must Join With Companies to Foster Skilled Migration

USCIB CEO Peter Robinson at the March 26 international dialogue on migration at UN headquarters

Global skills mobility is integral to business and economic growth, with labor migration having contributed an estimated four percent to global economic output in recent years. That was one of the key messages delivered by USCIB President and CEO Peter Robinson at a March 26 international dialogue on migration held at UN headquarters in New York.

Robinson represented both USCIB members and the International Organization of Employers, which alongside the World Economic Forum spearheads private-sector input to the inter-governmental Global Forum on Migration and Development via a recognized “Business Mechanism.” He said companies know the value of skills mobility in their workplaces: fully 74 percent of corporate respondents in a recent survey by the Council for Global Migration reported that access to global skills is critical to attaining their business objectives.

By 2020, there is expected to be a worldwide shortfall of 38-40 million skilled workers, Robinson observed, and national migration systems need to adjust to address this need. Benefits of skilled migration accrue to both the countries receiving and sending migrants, he said. Many advanced economies are facing the labor impact of aging populations and falling birth rates, and must look abroad to fill worker shortages at all skill levels. And many countries rely on remittances from their citizens working abroad as well as the skills of returning migrants.

Companies operating at the global level are increasingly sensitive to potential abuses of migrant workers in their supply chains and are taking steps to address these, according to Robinson, who currently co-chairs the B20 Employment and Education Task Force. They are participating in an array of initiatives aimed at fostering fair and ethical recruitment, and are lending their expertise to helping national authorities better process immigrants and match employment opportunities with available workers.

Robinson underlined the commitment of business to this subject area and to the UN’s Global Compact on Migration. He urged governments and other stakeholders to partner with employers at the global and national levels to address the need for expanded skilled migration.