USCIB Leads Business in UN Discussions on Investor-State Dispute Settlement Reform

USCIB Senior Advisor Shaun Donnelly and investment treaty expert Lauren Mandell from USCIB member firm WilmerHale represented USCIB at a virtual Working Group III (WG III) sessions of the UN Commission on International Trade Law (UNCITRAL).  For over three years, WG III has been discussing possible “reforms” of the Investor-State Dispute Settlement (ISDS) arbitration system.  The sessions had delegates and observers participating from around the world and every time zone. 

According to Donnelly, the European Union’s effort to establish a multilateral investment court continued to be the focus of discussions as it has been in the past three years.  Under the EU’s vision, the court would replace traditional ISDS – under which the investor appoints one arbitrator, the state appoints one arbitrator, and the parties jointly appoint the chair of the tribunal – with a “court” consisting of a pool of judges appointed solely by states, assigned to each case on a random basis. 

“The discussion last week focused on technical questions regarding how judges would be selected and appointed, including qualifications, nominations and screening procedures, and terms of office,” said Donnelly.  “However, amidst this technical exercise, numerous states, as well as USCIB and other observer groups, raised larger conceptual questions about the merits of a court. In particular, some states objected to losing their ability to appoint adjudicators in individual cases. Other states raised questions about the cost of establishing and maintaining the court.” 

The WG also started debate on the key issue of adding an appellate body which might review investor-state decisions, whether from an ISDS panel or a new investment court. USCIB actively participated in the discussions and posed many questions regarding the desirability of a court. 

As a next step, the working group tasked the UNCITRAL Secretariat with drafting legal text to flesh out the design of the court. According to Donnelly, it will be important for USCIB and USCIB member companies to actively monitor this drafting and negotiation process to ensure that the working group fully takes into account investors’ interests. 

USCIB is one of only a few non-governmental organizations representing business that is accredited to participate in the working group discussions.  

“It’s not clear how much real progress was made but there was real debate on some important issues,” Donnelly said. “My colleague Lauren and other expert observers got chances to point out major questions and problems with the EU’s investment court proposal. Increasing numbers of member states also seem to be focusing on the flaws in the EU’s radical proposal which would eliminate investors’ role in selecting arbiters. The U.S. government delegation did an outstanding job. We will continue to work with interested government delegations as well as legal, arbitration and business groups allies. We encourage more USCIB members to get involved with us in this important negotiation.”     

USCIB Informs EU With Comments on Sustainable Corporate Governance

As part of the European Green Deal and the European Commission’s (EU) Communication on the (COVID-19) Recovery Plan, the EU has invited stakeholder comments during a public consultation to inform consideration of a possible EU Sustainable Corporate Governance Initiative. USCIB has submitted its comments on February 9, drawing on the expertise of its Committees on Corporate Responsibility and Labor Affairs and Environment.

According to USCIB Senior Vice President for Policy and Global Strategy, Norine Kennedy, the consultation took the form of an online questionnaire, seeking feedback on numerous elements of ESG, and exploring what form an EU-wide framework to promote due diligence, board of directors’ duty of care and stakeholder engagement should take. 

USCIB comments highlighted the fundamental importance of the UN Guiding Principles.  USCIB set out U.S. business concerns about any promulgation of rigid approaches, such as the application of tariffs, sanctions or import restrictions that rightly seek to address human rights or labor rights concerns but – due to their rigidity – inadvertently create a disincentive for long-term supply chain engagement, the use in accordance with the UNGPs of leverage in company supply and value chains, and sustainable remediation.  

“We would welcome an EU approach to these issues that would include sustainability risks, impacts and opportunities into corporate strategy and decisions, as many companies already have,” added Kennedy. “However general principles would be preferable over rigid legal requirements. Flexibility afforded to each company to decide how to include such considerations would be crucial for such general principles to be effective.”

USCIB also encouraged the EU to pursue a fuller holistic dialogue with business and other stakeholders on how to advance sustainable corporate governance in environmental and social areas.

“We support the role business can and should play in respecting human rights” said USCIB Vice President for Corporate Responsibility and Labor Affairs Gabriella Rigg Herzog.  “We strongly encourage the EU to gather business and other stakeholder views through actual dialogue and consultation, with due attention to context, such as ongoing impacts and burdens on companies because of the pandemic’s economic disruption and ongoing constraints, as well as existing business initiatives and systems.”

USCIB will continue to follow and stay in close contact with U.S. government and EU authorities as these deliberations go forward.

USCIB Statement on the WTO’s New Director-General

Photo credit: Martial Trezzini/EPA, via Shutterstock

New York, N.Y., February 08, 2021: The United States Council for International Business (USCIB), which represents many of America’s leading global companies, welcomed news ​of the Biden administration’s decision to support Dr. Ngozi Okonjo-Iweala as the new Director-General of the World Trade Organization (WTO). This decision is indicative of a shift in U.S. support for the WTO and its view of the criticality of the multilateral trading system. Further, the decision has been viewed as an affirmation of the U.S. commitment to constructively address substantive and procedural reforms.

Dr. Okonjo-Iweala, who will be the first woman to lead the organization, has shared that she intends to take a more active role as Director-General and to act as a sounding board to try to find common ground among the trade body’s disparate membership. Since the departure of former Director-General Roberto Azevedo in August of 2020 and the prior refusal of the U.S. to support Dr. Okonjo-Iweala, the ​future leadership of the WTO has been uncertain.

“Open trade and global value chains are fundamental drivers for recovery from the current global crisis,” said USCIB Senior Vice President for Innovation, Regulation, and Trade Brian Lowry. “Once formally approved by the WTO General Council, Dr. Okonjo-Iweala will have the opportunity to lead the organization into a new era of increased action and inclusive multilateralism.”

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, the International Organization of Employers 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.

Donnelly Co-Authors Op-Ed in The Hill on Commercial Diplomacy

USCIB Senior Advisor Shaun Donnelly and his longtime State Department colleague Ambassador (ret.) Tony Wayne recently co-wrote an op-ed in The Hill titled, “Biden’s Trade Policy Needs Effective Commercial Diplomacy.”

Wayne and Donnelly, both retired U.S. ambassadors, ran the State Department’s Economic and Business Bureau in the early 2000s; Wayne served as assistant secretary and Donnelly was his principal deputy assistant secretary.  Their recent op-ed recommends that the new Administration focus on strengthening a government-wide effort to support U.S. companies (and thereby, U.S. workers and localities) to win more business opportunities overseas in order to bolster American revenues, jobs, and global competitiveness across the United States.

According to both, the international competition is fierce, and getting increasingly more fierce every day. “Frankly other governments have upped their games in recent years, so we have some catching up to do,” they argue in the op-ed.

“High-level political support, interagency teamwork, strong Ambassadorial leadership in the field, and in-depth partnership with the U.S. private sector will be essential.”

“Both in our days together at the State Department and now as colleagues in the American Academy of Diplomacy, Ambassador Wayne and I have been working on these important issues of how the U.S. Government can best support U.S. companies and workers, to help them win more deals, contracts and partnerships around the world,” said Donnelly.  “We’ve worked with the Obama and Trump Administrations on these issues and we anticipate engaging actively with the incoming Biden team at key agencies, as well as key players at the White House, on the Hill and beyond.  The U.S. needs to up its game, play stronger offense on international commercial battlefields. I see this work as a natural extension of my earlier work at State and USTR on international economic and trade policy and also of the important work we at USCIB have been doing to support U.S. business.”

Global Business Statement on Safeguarding International Data Flows

USCIB joined dozens of global associations in a letter to the EU expressing concern to ongoing developments in the European Union on international data flows. The letter notes that international data flows are an integral pillar of global trade, and any disruption to their free flow constitutes a major challenge to every economic sector.

“The recent developments in the European Union are creating deep uncertainty throughout the world, as the wide geographic variety of co-signatories to this statement demonstrates,” emphasized USCIB Vice President for ICT Policy Barbara Wanner.

In addition, the repercussions of an unduly restrictive approach to data flows, the letter notes it will also hit hard more traditional European industries, as the recent BusinessEurope-led coalition statement underlines.

“We underline the importance of providing certainty for all businesses and their data transfers to third countries,” the letter notes. “Any disruption must be avoided in order to minimise negative economic consequences, particularly in the wake of the global COVID-19 crisis and the economic recovery phase that we will enter in 2021. Crucially, our organizations believe that this can be achieved while respecting European data protection law, if a pragmatic and flexible approach prevails.”

USCIB Warns Against Tariffs on Vietnam at USTR Public Hearing

As the U.S. Trade Representative (USTR) conducts its Section 301 investigation on Vietnam’s currency valuation, USCIB Senior Director for Trade, Investment and Financial Services Eva Hampl testified before USTR at a public hearing on December 29, warning USTR that tariffs on Vietnamese goods would be detrimental to both American companies and consumers.

“Putting in place trade penalties, such as additional tariffs against Vietnam, would further work against the supply chain and national security interests of the United States,” said Hampl. “At a time when policymakers, companies, and non-government stakeholders have coalesced around the need for trustworthy and resilient supply chains, Vietnam is strongly positioned to play a leading role in that ecosystem. It is an increasingly important security partner of the United States and possesses strong capabilities in technology manufacturing. Vietnam’s presence in supply chains can serve as a complement to manufacturing in other trustworthy locations in Asia and other regions, including the United States.”

Other agencies represented on the panel included the U.S. Departments of Commerce/International Trade Administration, State, Treasury, Agriculture, and the Small Business Administration (SBA). Hampl received several follow-up questions to her testimony from State Department Foreign Service Officer Carter Wilbur.

According to Hampl, the majority of the witnesses pushed back against the use of tariffs in their comments to address any issues related to currency valuation. In a report released just a week before the hearing, Treasury labeled Vietnam as a currency manipulator. Most of the witnesses during the hearing indicated that whether or not this may be true, tariffs are not the appropriate vehicle to address this issue. Moreover, there should be deference to the Treasury process in resolving any currency related concerns.

USCIB Announces 2021 Priority Issues for Asia-Pacific Economic Cooperation (APEC)

Washington D.C., January 5, 2020 — The United States Council for International Business (USCIB), which represents many of America’s leading global companies, appreciates and welcomes the committed partnerships that the Asia-Pacific Economic Cooperation (APEC) has established with the private sector to address the many economic, trade and regulatory opportunities available to foster greater integration between APEC’s twenty-one member economies. Each year, USCIB issues a statement outlining priorities and recommendations that USCIB and its members would like to see advanced in that particular APEC year; we are pleased to announce and make available our 2021 APEC Priority Issues and Recommendations paper:

USCIB commends the leadership of Malaysia in 2020, particularly under the challenging circumstances of adjusting to virtual meetings in the face of an unprecedented global pandemic. Our members see the New Zealand host year as an important opportunity to continue essential work in APEC working groups and to set topics for major outcomes and deliverables. USCIB members are eager to learn more about key initiatives for New Zealand during its host year and how business can help achieve these initiatives. Further, USCIB members are looking forward to Thailand’s host year in 2022. We stand ready to provide relevant inputs into the establishment of goals and objectives. The policy priorities of USCIB reflect our longstanding and overarching objectives of promoting open markets, competitiveness and innovation, sustainable development, and corporate responsibility. The priorities and recommendations detailed in this document are practical recommendations that can be taken to address some of the challenges for governments and businesses in the APEC region.

There remain ongoing global business concerns that the U.S. government and APEC Business Advisory Council (ABAC) members should consider as they identify priorities for the upcoming year. USCIB members have identified key issues that are detailed in this paper. We view this APEC Priority Issues and Recommendations policy paper as a “living document”, which is updated on an annual basis at the time of the CEO Summit, and as necessary following Senior Official Meetings throughout the year. The priorities in this statement are not exhaustive, in many cases they are “living issues”, and we will continue to work with our members on emerging and developing issues. We would be pleased to address any questions and discuss any of these recommendations in greater detail.

About USCIB:

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world, generating $5 trillion in annual revenues and employing over 11 million people worldwide. As the U.S. affiliate of the International Chamber of Commerce (ICC), the International Organization of Employers, and Business at OECD (known as BIAC), USCIB helps to provide business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More information is available at www.uscib.org.

USCIB Hosts Briefing with USG Negotiating Team on Investor-State Dispute Settlement

USCIB hosted a briefing with the U.S. negotiating team on Investor-State Dispute Settlement (ISDS) Reform at the UN Commission on International Trade Law (UNCITRAL) on December 16. UNCITRAL’s Working Group III focuses on the issue at UNCITRAL and held its thirty-ninth session in early October. Members had the opportunity to discuss current developments with Karin Kizer, attorney-advisor in the Office of Private International Law in the Office of the Legal Adviser of the Department of State, and lead negotiator on ISDS Reform at UNCITRAL. She was also joined by Khalil Gharbieh, director for Investment at the Office of the U.S. Trade Representative (USTR), as well as colleagues from the State Department.

“Investment protections are more important than ever, with global Foreign Direct Investment (FDI) having dropped dramatically due to the current crisis,” said USCIB Senior Director for Trade, Investment and Financial Servcies Eva Hampl. “Increasing investment flows should be a priority for countries as they look to recover from the pandemic. Mechanisms like ISDS are critical in ensuring that investors have adequate recourse as they invest in foreign markets, and are a factor as decisions are made where to invest.”

According to Hampl, the discussions at UNCITRAL are driven by the European Union’s proposal for a multilateral investment court, a proposal that reared its head during the negotiations of a Transatlantic Trade and Investment Partnership (TTIP). USCIB, having official observer status at UNCITRAL, has been an active participant in the meetings of the working group, most recently at the meetings in October.

Subsequent to the meetings, USCIB together with the Corporate Counsel International Arbitration Group (CCIAG) submitted comments on Appointment of Arbitrators, Appellate Mechanism, and Enforcement.

The next session is scheduled to take place February 8-12, 2021 in Vienna.

USCIB Discusses USMCA Labor Provision With USTR’s Lewis Karesh

USCIB members met for a briefing with Lewis Karesh, who serves as Assistant U.S. Trade Representative for Labor, to discuss the status of the latest developments regarding the implementation of the labor provisions of the US-Mexico-Canada Agreement (USMCA). The December 10 briefing with Karesh, who was the lead negotiator of the USMCA labor chapter, provided members a detailed overview of the new provisions in the agreement, including the newest feature, the Rapid Response Mechanism, discussing issues related to implementation and next steps to be expected. The meeting was co-organized by the USCIB Corporate Affairs and Labor Committee, as well as the Trade and Investment Committee, and included introductions from the respective Chairs: Laura Rubbo, Disney and Rick Johnston, Citi.

USMCA entered into force July 1 of this year and is currently being implemented. The Labor Chapter is a new provision, establishing a number of new labor requirements for signatory States. Among the enhancements, USMCA prioritizes labor obligations by including them in the core of the agreement and making them fully enforceable, whereas NAFTA labor obligations were contained in a side agreement on labor.

“We appreciated learning more about the USMCA labor chapter elements and their implementation status. Promulgation and effective enforcement of national labor laws that align with international standards should be the norm everywhere, and that certainly should be the case with U.S. trading partners if we are to achieve our shared goal of advancing worker rights globally,” said Gabriella Rigg Herzog, USCIB vice president for corporate responsibility and labor affairs.

The USMCA implementing legislation established an Interagency Labor Committee for Monitoring and Enforcement, co-chaired by USTR and the Department of Labor, to coordinate U.S. implementation of its labor obligations, monitor Mexico’s labor law reforms and enforce USMCA labor provisions where necessary. “Implementation and enforcement of trade agreements is key to how effective their negotiated provisions will be for companies” commented Eva Hampl, USCIB senior director of investment, trade and financial services. “The North American market covered by USMCA is extremely important to our members and their ability to continue to be able to compete in the global market place. Effective implementation of all provisions, including the Labor Chapter, is a top priority.”

Donnelly Advocates for Investment, Investor-State Dispute Settlement

USCIB Senior Advisor Shaun Donnelly was a panelist in a two half-day virtual Forum on Investor-State Mediation December 8-9 organized by the British Institute of International and Comparative Law (BIICL). The conference brought together international arbitrators, mediators, academics and investment experts. Donnelly’s panel, wrapping up the conference, was focused on “Future of ISDS Mediation: Climate Change, COVID-19 and the Potential Surge of Investor State Disputes.” ISDS (Investor-State Dispute Settlement) is the arbitration enforcement provisions commonly found in international investment agreements. 

Donnelly, the lone business voice on a panel with ISDS skeptics from NGOs and academia, emphasized the importance of private sector investment, including Foreign Direct Investment (FDI), to drive global economic recovery, growth, trade and jobs. 

“Investment agreements with strong investor-state dispute  settlement provisions can be key to incentivizing investment flows,” said Donnelly.  Donnelly also challenged critics to show any recent surge of ISDS cases, noting investors are generally acting responsibly and assisting host governments in dealing with the daunting health and economic crises. He endorsed serious mediation efforts as an additional tool, but not as a substitute for, to support strong investment agreements in resolving disputes. 

“If early, time-limited, voluntary mediation can solve problems, resolve disputes, cut costs, and speed decisions, great!” he added.  “I enjoyed the opportunity to participate in a very interesting, very international conference focused on mediation as potential tool to help resolve investment disputes,” Donnelly said. “It was important for business voices to be there with lawyers, arbitrators and mediators, as well as NGO activist and academics. We had a good exchange. I think effective mediation could be a useful tool in some cases but it has to be voluntary for the parties and should not be seen as an excuse for radical revisions to international investment agreements and established dispute settlement mechanisms.”