USCIB Trade and Investment Committee Meeting
June 19, 2018
Citigroup offices, 1101 Pennsylvania Ave, NW, Suite 1000
Contact Christopher Olsen (email@example.com) for more information.
USCIB Trade and Investment Committee Meeting
June 19, 2018
Citigroup offices, 1101 Pennsylvania Ave, NW, Suite 1000
Contact Christopher Olsen (firstname.lastname@example.org) for more information.
ICC Secretary General John Denton published a letter in Financial Times last week titled, “The Rules-based Trading System is Worth Preserving.”
The letter comes in light of the Trump administration’s decision to impose steel and aluminum tariffs on its trading partners.
“As the prospect of a ‘trade war’ gradually escalates, we must all bear in mind what is currently at stake in broader systemic terms,” writes Denton. “The rules-based multilateral trading system has fuelled seven decades of unprecedented job creation and poverty alleviation. Communities connected by commerce have a common interest in maintaining peace. The World Trade Organization has proved itself the linchpin of what is — by any objective measure — a more prosperous world order. And with the right reforms it can do more to help families and workers the world over.”
The full letter can be viewed on FT’s website, subscription required.
In light of last week’s release of two lists of China 301 tariffs by the Trump administration, USCIB Senior Director for Trade, Financial Services and Investment Eva Hampl expressed concern about the impact the China 301 tariffs will have on the U.S. economy and jobs. “In our submission to the U.S. government we highlighted a number of products of particular concern to our members, for which tariffs would have a significant effect on U.S. production and revenue. Unfortunately it appears that only a handful of consumer products were taken off the list. We are also reviewing the new list of products, and welcome the opportunity to provide input as appropriate. We are, however, troubled by the planned investment restrictions to be imposed on Chinese investments in technology later this month, where stakeholder input is not taken into account. Given the significant impact investment restrictions could have on U.S. companies and jobs, this move by the Administration is problematic.”
The first list of China 301 tariffs was a reduced version of the 1,300 tariff lines USCIB commented on in May. This list of tariffs on about $34 billion of Chinese products is set to go into effect on July 6. The second list, covering about $16 billion of Chinese goods, are products that were suggested to be added. That list will be up for a comment period, with a public hearing to be held in late July. The Federal Register Notice is not yet officially out.
“China is ready to retaliate,” warned Hampl. China has apparently reduced their initial $50 billion list to $34 billion to match what is currently the U.S. tariff list – the Ministry of Finance has apparently posted the list.
Hampl was also quoted earlier today in Politico. Full article is available here, subscription required.
USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan was in Paris at the end of May participating in various Business at OECD (BIAC), B20, ICC and OECD meetings related to trade and investment. The meetings provided important policy-related updates for USCIB members and U.S. business, as well as recent developments and staff changes in USCIB’s global network.
At BIAC’s General Assembly on May 28, USCIB Trade and Investment Committee Chair Rick Johnston (Citi) was approved for a new term on the BIAC Board. The Assembly also approved the appointment of a new Secretary General, Russell Mills, who will take office on September 1. The current and outgoing Secretary General, Bernhard Welschke, was recognized for his service with BIAC and will retire as of July 31. Finally, BIAC had several representatives participating at the OECD Ministerial meeting and delivered a statement that noted the benefits of multilateralism in terms of economic growth and offered recommendations for improving and making multilateralism more effective.
Mulligan also met with Ken Ash, director of the OECD Trade and Agriculture Directorate. Ash noted that the OECD will be working on a series of analysis over the coming months on tariffs, market opening, trade facilitation, non-tariff barriers, and services reform and will be looking to get input from USCIB and BIAC as the OECD moves forward on this work. On May 30 the G20-OECD-WTO hosted an event on “Trade Facilitation and Future Trade Cooperation” which highlighted the gains from the WTO Trade Facilitation Agreement (TFA) and discussed the TFA as a model for other types of trade agreements that are flexible and accommodate country capacity restraints.
At the conclusion of the OECD Ministerial that week, the United States refused to join a consensus statement with other OECD countries due to differences related to including language supportive of globalization and the multilateral trading system. Mulligan commented on concerns with the U.S. government’s most recent trade actions. “Governments at the OECD were very concerned with the U.S. decision to impose tariffs under the steel and aluminum 232 action,” said Mulligan. “In a misguided effort to re-balance perceived inequities, often based solely on the metric bilateral trade deficits without a view to the larger picture, the administration is effectively alienating the United States from the global order that it once championed and led.”
At the B20 Trade and Investment taskforce meeting, Mulligan raised several issues, including a request for consistency in the taskforce’s policy paper, noting that the trade paper language related to digital trade, especially on IP, be consistent with language developed by the Digital taskforce. Mulligan also sought clarification on some of the language that implied that cybersecurity laws are a barrier to trade which the secretariat agreed to address.
Finally, the ICC Trade and Investment Commission received an update on developments at the WTO. It was noted that there have been several meetings on the e-commerce initiative and 11 papers have been submitted by various countries. In early June, the WTO Director General Roberto Azevedo held a meeting with private sector representatives, including from ICC, in Geneva to get input on the WTO agenda. The commission members had a robust discussion on ICC developing an issue a statement opposing unilateral protectionist measures and how to make it most impactful. Members supported moving forward and ICC staff will draft a statement for review by members and possibly approval by the ICC Board in late June.
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:
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.
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.
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.
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.
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.
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.
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).
USCIB Policy and Program Staff
Senior Vice President, Policy and Government Affairs
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Gabriella Rigg Herzog
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Last week, ministers gathered in Paris for the annual OECD Ministerial Council Meeting. For the second year in a row, the United States refused to join a consensus statement with the other OECD countries.
As happened last year, the U.S. objected to language supportive of globalization and the multilateral trading system. The action came as the Trump administration announced that it would end temporary exemptions from Section 232 tariffs on steel and aluminum granted to Mexico, Canada, and the European Union. The duties went into effect on June 1.
According to USCIB Senior Vice President Rob Mulligan, who attended the OECD ministerial as part of a delegation from Business at OECD, the administration has made clear that it attributes little significance to U.S. leadership in the global trade environment.
“In a misguided effort to re-balance perceived inequities, often based solely on the metric bilateral trade deficits without a view to the larger picture, the administration is effectively alienating the United States from the global order that it once championed and led,” he said following the meetings in Paris.
At the OECD ministerial, U.S. Commerce Secretary Wilbur Ross defended the U.S. action, saying problems arise “when people don’t follow the rules, when the enforcement mechanisms are inadequate and even more so when the rules become obsolete.”
Mulligan elaborated: “Protectionism, while tempting in the short term, has consistently proven to be damaging for the larger economy in the long term. Unilateral, protectionist actions such as these tariffs, enacted under the guise of national security, do not constitute an effective long-term strategy for economic growth. They will also erode the value of the national security exception. For the United States to continue its leadership in innovation, the trade and investment environment must remain open. These recent actions unfortunately do not reflect such a view.”
The business community remains very concerned about the trajectory of the administration’s policies on trade and investment, said Mulligan. While many U.S. actions appear targeted at China and its commercial practices, he said, “it is not clear how stepping away from the global table and alienating our allies is an effective strategy to address the many problems U.S. business encounters in China.”
OECD countries have officially agreed, on May 25, to invite Colombia to become a member of the organization. An Accession Agreement was signed by Colombian President Juan Manuel Santos and OECD Secretary General Angel Gurria on May 30 during the OECD Ministerial meetings in Paris. Colombia is the 37th country and the third member country from the LAC (Latin America and the Caribbean) region to join the OECD.
“Through the OECD accession process Colombia has made impressive strides in, for example, reforming its justice system and reducing informality in the labor market,” said Gurria. “The accession process has been instrumental in the design and implementation of new national policies, such as on water and chemicals management. Colombia took important steps to improve its governance of state-owned enterprises, including removal of ministers from the boards. To comply with the OECD Anti-Bribery Convention Colombia significantly modified its corporate liability regime. The list of reforms goes on.” Gurria’s full remarks at the signing ceremony can be found here.
Colombia was invited to begin the accession process in 2013. Over the past five years, 23 OECD Committees conducted an in-depth review of Colombia’s legislation, politics and practices, to align them with OECD standards. The final two Committees where reforms were required were the Labor Committee and the Trade Committee. The Labor Committee concluded their process during their recent meeting in March. The Trade Committee concluded their April meeting with a draft formal opinion, which was finalized several weeks later, just ahead of the Ministerial. Rob Mulligan, USCIB senior vice President for policy and government affairs, was in Paris last week for the Ministerial.
“USCIB has been actively involved in providing input into Colombia’s accession process via Business at OECD (BIAC), the official business voice at the OECD,” said Mulligan. “The main affected sectors throughout that process were pharmaceuticals, distilled spirits, and trucking. Many issues were resolved before accession, and we look forward to continued progress and concrete actions being taken on outstanding issues.” View USCIB’s official statement here.
“Moving forward, USCIB will play an active role in providing U.S. business input to the OECD on any upcoming accession processes,” added Mulligan. The countries that have expressed interest are Argentina, Brazil, Peru, Romania, Croatia, and Bulgaria. At this time, no new process has commenced.
Colombia will join the Organization for Economic Cooperation and Development following an agreement among the 35-nation forum’s member states ahead of this week’s OECD ministerial.
Colombian President Juan Manuel Santos and OECD Secretary General Angel Gurría are expected to sign an accession agreement at the annual ministerial-level council meeting, which is scheduled for May 30, according to the OECD.
USCIB – which serves as the U.S. affiliate of Business at OECD, the representative private-sector voice in the OECD – issued the following statement:
“USCIB welcomes the progress Colombia has made over the past several years in the context of the accession process to the OECD. As the official voice representing U.S. business in this process, we acknowledge the steps taken by Colombia to meet the high standards of the OECD in various sectors. 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.”
USCIB has been actively involved in providing input into Colombia’s accession process to the Organization for Economic Cooperation and Development (OECD). Most recently, USCIB’s views on Colombia’s progress to meet certain standards have been published in Politico and Inside U.S. Trade.
In Politico, USCIB stated that it welcomed the progress Colombia has made over the past several years in the context of the accession process to the OECD. “As the official voice representing US business in this process, we acknowledge the steps taken by Colombia to meet the high standards of the OECD in various sectors,” the statement reads. “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 US business to ensure that all OECD countries continue to meet high standards.”
Read the full news story in Politico here.
Additionally, Inside U.S. Trade also highlighted this statement, along with those of NAM and PhRMA.
USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl, who coordinates U.S. business input on OECD accession issues, noted, “USCIB has worked over the past several years to represent and address any issues U.S. industry faces in Colombia in the context of the OECD accession process. Colombia is an important market for U.S. business, and it is important to ensure that the high standards of the OECD are met. We look forward to continued progress, as Colombia officially joins the OECD this week.”
USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan is currently in Paris attending the annual OECD Forum, where the Colombia accession process will be finalized. Colombia is expected to sign an Accession Agreement on May 30 during the upcoming meeting of the OECD Council at the ministerial level. Colombia will become the 37th member of the OECD upon signing.
Following the Trump administration’s proposed Section 301 tariffs on Chinese goods, USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl testified before the Section 301 Committee, chaired by USTR on May 16 regarding the proposal. Hampl’s testimony reflected USCIB member concerns about potential consequences the proposed tariffs will have on sectors vital to the U.S. economy. Her testimony was drawn from comments USCIB sent earlier this month to the U.S. Trade Representative Robert Lighthizer. Hampl was joined by over 100 other business representatives to share specific concerns regarding the proposed tariffs.
“We believe that the imposition of tariffs will not achieve the important goal of changing China’s behavior in the space of emerging technologies and intellectual property rights,” said Hampl in her testimony. “China’s threat of retaliation further exacerbates uncertainties caused by this proposed action. Rather than create more opportunities for U.S. business, sweeping tariffs will stifle U.S. agriculture, goods, and services exports and raise costs for businesses and consumers.
Hampl emphasized the need for a “holistic structure” to address the aforementioned issues. Speaking on behalf of USCIB, Hampl applauded the Trump administration for looking at alternative approaches, such as initiating a WTO dispute by requesting consultations with China.
“It is important for the administration to address these issues with a broad view, working collectively with U.S. industry, Congress, and our trading partners, to adequately address China’s unfair trade practices and get China to be WTO compliant,” noted Hampl.
The proposed tariffs pose a unique challenge to industrial inputs, which represent over 80 percent of the proposed list. Tariffs on industrial goods are especially problematic because they represent not just a tax on U.S. consumers but a tax on U.S. manufacturers and workers, and on the products they export. Tariffs on aerospace, machinery and IT parts and other advanced technologies can undermine the most competitive sectors of American manufacturing, driving up production costs in the U.S., impacting U.S. manufacturing employment, and making U.S. manufacturers less competitive against global rivals.
“Tariffs on industrial parts imported into the U.S. could have the unintended consequence of prompting manufacturers to move final production outside of the U.S.,” warned Hampl. “To see how U.S. companies will be affected by the tariffs, it is important to look to how the supply chain functions. China is the second largest economy and the largest manufacturing economy in the world. We cannot ignore that China may have some unique capabilities, at the product level, that U.S. businesses need to tap into in order to remain globally competitive. For many products or inputs, there is no feasible alternative to procuring from China. We urge the Administration to use this process to ensure that its actions do not inadvertently harm some of the most competitive sectors of the U.S. economy, and the hundreds of thousands of American jobs that depend on them.”
In addition to the testimony, USCIB also co-sponsored a reception last week for Hill staff centered around the China 301 hearing, as well as NAFTA, celebrating Great American Jobs Supported by Trade. Representatives from U.S. government, companies, and associations, spent the evening discussing various important developments in the trade space.