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.”

Time to De-Escalate U.S.-China Trade Conflict, Says USCIB

President Trump and Chinese President Xi Jinping at last year’s G20 Summit in Germany (White House photo)

Washington, D.C., April 6, 2018 – The United States Council for International Business (USCIB), which represents America’s top global companies, is urging the U.S. and China to take steps to de-escalate their trade conflict. Responding to statements by President Trump and China’s commerce ministry over the past 24 hours, USCIB said both parties should seek to resolve their differences via established bilateral and multilateral mechanisms.

“China’s unfair trade practices and its mistreatment of U.S. and other foreign companies are serious problems,” said USCIB President and CEO Peter M. Robinson. “But an escalating, tit-for-tat trade war is not the way to solve them, and risks doing serious harm to the American and global economies.”

Robinson said both sides should seek to work constructively, tone down their rhetoric, and step back from threats to impose new trade barriers, which he said could rattle international markets, imperil future growth prospects and damage the global trading system. He urged the U.S. to use the multilateral mechanisms it has helped build over the years to defuse a looming crisis.

“We should be working with our allies, with other major trading nations, and via the World Trade Organization to apply pressure on China in a way that does not boomerang back to hurt U.S. farmers, workers, consumers and companies.”

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 several leading international business organizations, USCIB provides 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.

Contact:
Jonathan Huneke, USCIB
jhuneke@uscib.org, +1 212.703.5043

Hampl Advocates on SOE Issues at OECD Meetings

USCIB Director for Investment, Trade and Financial Services Eva Hampl was in Paris the week of March 26 participating in various meetings surrounding the work of the OECD Working Party on State Ownership and Privatization Practices. The consultation with the SOE working party took place on March 27. Business at OECD (BIAC) used this platform to present comments on global reporting standards for internationally active SOEs, integrity and anti-corruption in state-owned enterprises, as well as the OECD working party’s program of work for 2019-2020.

“Addressing stakeholder and, particularly, business involvement is crucial,” said Hampl in her remarks. “The importance of the adherence to the OECD Anti-Bribery Convention to ensure government backing, the benefits of privatization, as well as the importance of a horizontal OECD work program cannot be overstated,” she said.

The SOE issue has been addressed in turn by various Committees of the OECD. During the consultation, BIAC learned that such horizontal activity is being pursued by the OECD. On March 28, BIAC participated in a discussion with members of the Working Party on the follow up to the special roundtable on SOEs and Integrity in October, and on the “building blocks” of future OECD Anti-Corruption and Integrity Guidelines for the state as owner of SOEs. Hampl reiterated the point about the importance of stakeholder input, highlighting that business is at the frontlines of these issues and should be regarded as a specifically relevant stakeholder. Following the discussion, Hampl attended a joint session with the Integrity Forum entitled Towards Anti-Corruption and Integrity Guidelines for State-Owned Enterprises.

Hampl Moderates Panel on Trade and Corruption in Paris

USCIB Director for Investment, Trade and Financial Services Eva Hampl was in Paris the week of March 26, participating in the Organization for Economic Cooperation and Development’s (OECD) Global Anti-Corruption and Integrity Forum, during which she moderated a panel on “Integrity & Trade: No Need to Grease the Wheels,” which focused on the relationship between trade facilitation and opportunities for corruption at the border.

Other speakers included Senior Trade Policy Analyst at the OECD Evdokia Moise, Policy Director of Trade Negotiations at the Ministry of Foreign Affairs of Norway Benedicte Fleischer, Capacity Building Director at the World Customs Organization (WCO) Ernani Checcucci, and Director, ABAC Governance and External Engagement at GlaxoSmithKline Gonzalo Guzman. Hampl noted the importance of trade running smoothly for USCIB member companies.

“Corruption is a cost to business and companies invest in compliance systems, however there are limitations to what business can effect internally,” said Hampl. “The customs border presents many opportunities for corruption. One vehicle to address these issues, of course, is the WTO Trade Facilitation Agreement. USCIB has been very active in promoting the ratification of the agreement with U.S. FTA partners, as well as within the Asia Pacific Economic Cooperation (APEC). As always, implementation is the key, and robust implementation is required to achieve the full benefits of the agreement.”

Moise presented preliminary work by the OECD that is being conducted in this space, addressing issues like automation and the relationship to corruption. Following the presentation, panelists and audience participated in a debate to address the various issues surrounding the topic, including transparency, the TFA and other global efforts.

“The general consensus after the panel was that while much is already being done, still more must be achieved, particularly when it comes to collaboration between governments, business, and civil society,” noted Hampl.

USCIB Urges US and China to Avoid Trade War

Washington, D.C., March 22, 2018 – The United States Council for International Business (USCIB), which represents America’s most successful global companies, responded to the Trump administration’s plans to impose tariffs on billions of dollars of Chinese exports along with restrictions on Chinese investment in the United States. USCIB expressed continued concern over Beijing’s trade abuses while also urging the administration to tread carefully to avoid a trade war.

“We support the goal of getting China to stop its unfair trade practices and treatment of U.S. intellectual property,” said USCIB President and CEO Peter M. Robinson. “We are encouraged to see that the administration is considering a range of tools in addressing these concerns, including WTO dispute settlement. However, we remain concerned that potential new U.S. measures and Chinese retaliation will hurt American companies, workers, farmers and consumers.“

President Trump today announced his intention to impose tariffs on some $50 billion of exports from China under Section 301 of the 1974 trade act, in response to intellectual property violations and other trade abuses. Specifically, he instructed the office of the U.S. Trade Representative to publish, within 15 days, a list of proposed Chinese goods that could be subject to tariffs, while the Treasury Department will have 60 days to recommend steps to restrict Chinese investment in the United States.

“It’s been said that nobody wins a trade war,” Robinson added. “That would be especially true of a trade conflict between the world’s two largest economies. Escalation of the current dispute would severely impact our members, who rely on sales in both markets and who maintain complex global supply chains encompassing both countries as well as many others. These overseas sales and supply chains support millions of jobs in the United States.”

Robinson concluded: “We therefore urge the Trump administration to carefully consider the actions it takes pursuant to this Section 301 report, and we encourage both governments to work together to resolve these unfair trade practices before taking steps that will damage both economies.”

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 several leading international business organizations, USCIB provides 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.

Contact:
Jonathan Huneke, USCIB
jhuneke@uscib.org, +1 212.703.5043

Donnelly and Claman Play Key Roles at OECD and BIAC Investment Meetings

Shaun Donnelly speaks at OECD, joined by (on the left) BIAC investment Committee Chair Winand Quaedvlieg of VNO (Netherlands)

Citi Director of International Government Affairs Kimberley Claman joined USCIB Vice President Shaun Donnelly at the recent March 12-13 meetings of the Organization for Economic Cooperation and Development (OECD) and Business at OECD (BIAC) Investment Committee meetings in Paris.

Claman, a last-minute addition to the wrap-up panel for the OECD’s day-long annual Investment Treaties conference, offered business perspectives on the day’s debates on investment treaties and investment chapters as tools to protect and promote much-needed Foreign Direct Investment (FDI) flows around the world.

After BIAC’s in-house Investment Committee discussions and strategizing on March 13, Donnelly and Claman joined the BIAC delegation, as well as invited labor and civil society “stakeholders,” to participate in the OECD Investment Committee’s discussion of “National Security” provisions and exceptions in Investment agreements.

“This was a very timely topic in light of the Trump Administration’s invocation of ‘national security’ justification for steel and aluminum tariffs,” said Donnelly. “Business took a strong position that national security provisions and especially their ‘self-judging’ nature could be serious threats to the quality of investment treaty disciplines.”

Donnelly joined the Dutch BIAC Investment Committee Chair at the table for formal stakeholder consultations with the OECD Committee, where they outlined BIAC policy priorities and positions, presenting BIAC’s “Proactive Investment Agenda for 2018.”  The day concluded with Claman, Donnelly and the rest of the BIAC Investment leadership hosting an informal working dinner for the OECD’s Investment Committee leadership, a useful off-the-record forum for explanations, probing questions, and candid debate.

“It was a long and challenging couple of days but with challenges growing to investment agreements and especially Investor-State Dispute Settlement (ISDS), it’s critical that USCIB be there standing up for strong investment protections, including effective enforcement/dispute settlement provisions,” noted Donnelly. “We offer special thanks to Kimberley for bringing her unique company and former USG negotiator expertise to the discussions.”

“Illicit Trade” Work Heating up at OECD

The Organization for Economic Cooperation and Development (OECD) Governance Committee’s Task Force on Illicit Trade is raising its profile and tempo of work and increasing its effort to include the private sector in that workstream.

USCIB Vice President Shaun Donnelly led Business at OECD’s (BIAC) participation in the first of two days of Task Force meetings in Paris on March 15-16 with strong participation from USCIB member companies and other private sector representatives.  Deputy Assistant Secretary at the U.S. Department of Homeland Security Christa Brzozowski is one of the two new co-chairs for this OECD Task Force, driving this important OECD work and providing strong senior-level U.S. government leadership.

“Illicit trade is a broad and elastic concept, including but not limited to pirated, counterfeit, “gray market”, and smuggled goods but also illicit movement of arms, drugs, antiquities and endangered species as well as and human trafficking,” commented Donnelly.  “As the OECD steps up its policy and coordination efforts to combat illicit trade, strong, broad and proactive private sector involvement will be essential.  BIAC and its national committees, including USCIB, will play the key role in making this process work.”

Colombians in Washington Lobby on OECD Accession

Last week, USCIB was actively involved in various meetings with the Colombian government, business community and civil society on the issue of Colombia’s accession process to the Organization for Economic Cooperation and Development (OECD). USCIB Director for Investment, Trade and Financial Services Eva Hampl, who coordinates U.S. business input on OECD accession issues attended a number of these meetings, along with USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan.

“With only two outstanding OECD Committees left to approve the accession, Colombia has ramped up lobbying efforts to the U.S. business community and government,” said Hampl. The outstanding committees are the Committee for Employment, Labor and Social Affairs (ELSA) and the Trade Committee. These committees are scheduled to deliberate in March and April, respectively.

In anticipation of the upcoming meeting of the Trade Committee, Colombia’s Minister of Trade Maria Lorena Gutierrez met with USCIB to discuss outstanding issues on pharmaceuticals, distilled spirits and truck scrapping, as outlined in the Business at OECD (BIAC) Pre-Accession Recommendations. Also part of the delegation was Colombia’s Minister of Finance and Public Credit Mauricio Cardenas Santamaria, who advocated strongly for Colombia to accede prior to the end of Colombia’s President Juan Manuel Santos term this summer.

USCIB also had a meeting with ANDI, the National Business Association of Colombia, to discuss outstanding issues for business. Bruce Mac Master, president of ANDI led a delegation of Colombian CEOs in this meeting with the U.S. business community, in an effort to make progress on issues like trucking and pharmaceuticals.

Hampl also addressed these critical issues to U.S. business with Colombian civil society in an interview on Colombian radio last week. The main concerns raised during that conversation were on the timing of the accession process given the expiring term of President Santos, and substantive issues on pharmaceuticals, including patents.

“The U.S. business community remains firm on the outstanding issues,” said Hampl. “The OECD is a group of like-minded countries when it comes to believing in open trade and investment and innovation. It is important for any new members to share those views. The Colombian market is important to U.S. industry and we value the U.S. relationship with Colombia, so we look forward to Colombia making the necessary regulatory changes to allow the accession process move forward.”

Post-Brexit Trade: An Opportunity to Set New Standards

By Chris Southworth

As the United Kingdom prepares to leave the European Union, the country is at a crossroads. To deliver success means delivering trade deals fast, and the only way to do that is to be more innovative, explains Chris Southworth, the secretary general of ICC UK, USCIB’s partner in the global International Chamber of Commerce network. This was also the topic of a recent ICC UK podcast featuring USCIB’s Rob Mulligan. The views presented here are the author’s own and do not necessarily reflect USCIB policy positions.

ICC UK Secretary General Chris Southworth

The UK government has committed itself to renegotiate its entire stock of trade relationships and bring home the largest number of trade deals ever delivered in a short space of time – the task has no precedent.

The first round of post Brexit deals will be with 88 countries and nine trade blocs, covering non-EU countries with EU deals – almost half the world. The scale and pace at which this task must be delivered presents a unique opportunity to be innovative – it’s the only way the government will deliver on its promises of a “free trade model that works for everyone.”

The government has begun the process of passing legislation to set up a new Trade Remedies Authority, share customs data and maintain an open procurement market, but there is currently no proposal for how the government will deliver so many deals in such a short space of time. The government says that the 60-plus countries with EU deals will roll over on the same trade terms, so no extra consultation is required, but that is highly unlikely according to the experts.

In a rare display of unity, business groups, NGOs, unions and consumer groups all agree that to move forward on trade, the UK needs a more transparent, inclusive and democratic framework to handle trade policy if there is any chance of ensuring trade benefits everyone.

The UK has become one of the most centralized G7 countries, with wide disparities across its regions, a stubborn trade deficit and a history of under-performance on productivity and competitiveness. London now dominates the UK economy, with every other region a long way behind. Brexit presents a golden opportunity for trade to play a central role in boosting regional economies as well as address the frustration and disparity that is all too clear to spot, but only if the mode of engagement changes.

If the government wants to deliver new trade deals at the pace and scale required, fresh thinking and reinvented processes are required – those who generate trade will need to be consulted on what works, not only because it is necessary, but because it is democratic. To deliver a trade model that works for everyone means giving stakeholders a say in the decisions.

The Trade Bill

The Trade Bill – currently under review in Parliament – sets out an initial framework for an independent trade policy: a Trade Remedies Authority, an open procurement market, rolling over terms with countries with third party EU agreements sharing customs data. Controversially, the bill also proposes “Henry VIII” powers giving the government the ability to overrule Parliament.

Being a member of the EU means that the UK has no formal structures or procedures for reviewing treaties, and Parliament does not have to debate, vote on or approve deals. Trade agreements are scrutinized via the usual Parliamentary means such as written questions and answers, internal debates and select committee inquiries.

If government negotiators have any chance of delivering trade deals on the scale and pace required, there needs to be a more structured approach that provides organised forums for the international community, business, unions, NGOs and civil society organisations to engage on the issues and make consensus based decisions.

There is a myth that consultation and transparency slows the decision-making process. But without dialogue there is scope for mistrust to grow, which if unchecked, has more than enough weight to derail trade negotiations – as we saw with the lack of public support for the Transatlantic Trade and Investment Partnership (TTIP). As hard is may be to hear, public services and food standards trumped trade and that is exactly how people expressed their views.

The TTIP negotiations collapsed, losing five to seven years of negotiation with no sign of an opportunity to restart discussions. It was a colossal waste of resources that could have been easily avoided if the engagement process had been better organised and more inclusive from the start.

The Canada-EU trade agreement (CETA) very nearly went the same way. The issues surrounding Wallonia’s role in Belgium that almost derailed CETA could very well apply in a host of UK regions. Good-quality engagement throughout the decision-making process would prevent such scenarios happening in the future and most importantly give people a stake in making trade a success.

Trade policy now influences all walks of life – it’s not possible to separate trade from public policy and it’s imperative to have the public on board if deals need to be done.

International Models

The US trade model is often cited as an option for the UK but it’s not the only country that has a better system of engagement. New Zealand has successfully integrated private sector groups, civil society and the Maori – its indigenous population – into its model for developing trade positions.

Beyond regular public meetings regarding trade policy, the government established a ministerial advisory group to oversee high-level consultations. The group consists of representatives from key export sectors, NGOs, business and minority groups to reflect the overall priorities of New Zealand’s trade agenda, and to provide feedback to the nation’s minister of trade. In short, it’s a more inclusive system.

The scale of the UK challenge provides an opportunity to set a new international benchmark – no country has it completely right. A deal with 27 EU countries, followed by 60-plus countries with EU agreements, and then the rest of the world is a lot of ground to cover in a short space of time – if the UK government is going to return the benefits of Brexit as promised.

In fact, the success or failure of Brexit will hinge on the government’s ability to deliver trade deals – this is central pillar of the Brexit strategy to offset costs incurred from leaving the EU, especially for SMEs. To do that, it means breaking from the past, opening up and building a model of engagement that is more transparent, consensual and democratic in approach – and doing it fast!

Published March 12, 2018

Controversial Proposals Remain Following Recent NAFTA Round

Eva Hampl, USCIB director for trade and financial services was in Mexico City last week for the 7th Round of negotiations of the North American Free Trade Agreement (NAFTA). The negotiations for this round started on February 25 and concluded with a Ministerial on March 5. U.S. Ambassador Robert E. Lighthizer, Canadian Minister of Foreign Affairs Chrystia Freeland, and Mexico’s Economy Minister Ildefonso Guajardo made statements at a press conference in Mexico on the final day relating to the relative progress of the negotiations, where three new chapters and two sectoral annexes were closed out.

In Mexico, Hampl participated in an event entitled NAFTA Negotiations Status – Current Situation & Impact Analysis hosted by the Canadian Chamber of Commerce in Mexico (CanCham) and organized by Galicia Abogados, a law firm in Mexico City with expertise in arbitration and ISDS issues. Hampl’s remarks at this event addressed the business perspective and priorities, covering the current status of the negotiations, highlighting the substantive and political difficulties, and outlining what these various developments mean for U.S. business. Hampl was joined by Salvador Behar, director for North America in the Secretariat of Economy, part of Mexico’s negotiating team and Jean-Dominique Ieraci, minister-counsellor for trade for the Embassy of Canada, and part of Canada’s negotiating team. The off-the-record remarks were followed by a discussion with the three speakers, joined by Jennifer Haworth McCandless, partner at Sidley Austin and international arbitration and trade expert. The discussion was moderated by Armando Ortega, president of the CanCham Mexico. Following the event, Galicia hosted a lunch for industry, which provided another opportunity to amplify the message about the importance of NAFTA negotiations, particularly investment protection / ISDS and the general enforceability of the agreement. The casual discussion included many questions on the U.S. political process, and the differences between the U.S. government position and business on several of the proposals.

The remainder of the week in Mexico City consisted of briefings from U.S., Mexico and Canada officials. Based on various briefings business had with negotiators from Mexico and Canada, as well as Congressional staff and others last week in Mexico, there continues to be very little progress in the poison pill or rebalancing proposals the United States has put on the table. There continues to be little progress on the sunset provision and automotive rules of origin, particularly as the U.S. negotiator on rules of origin was called back to Washington before negotiations could commence. On investment protection, Canada and Mexico have begun negotiating among themselves, and have similarly begun to do so on government procurement, which was a new development during this Mexico round.

“While valuable progress continues to be made on modernization chapters such as digital trade and customs, concerns remain that the progress on the controversial proposals is too incremental to bridge the dramatic divide between negotiating positions on a reasonable timeline,” said Hampl. “While Mexican officials emphasized prioritizing a good trade deal over a quick one, there are potential political complications on the horizon with the upcoming elections in Mexico. In addition, U.S. midterm elections are coming up later this year, something Ambassador Lighthizer raised in his press conference following the conclusion of the last round of negotiations.”

It does not appear likely that the negotiations will wrap up during the next round, which will take place in Washington DC, likely the week of April 9.

Additional challenges remain following last week’s announcement on steel and aluminum tariffs by the Trump administration. Trade proponents are hoping that, the more they learn about the possible impact of the new tariffs and likely retaliatory measures, the less voters will like them.  A new study from Trade Partnership Worldwide estimated the proposed tariffs would increase employment by some 33,000 jobs in the steel, aluminum and related industries, but cost some 179,000 jobs throughout the rest of the American economy.

Meanwhile, a new survey of likely voters in four key swing states by Firehouse Strategies and Optimus revealed that most voters underestimate the importance of trade on U.S. employment. Only 13.6 percent said their jobs depend on trade, while 69.3 percent said they do not. Most economists put the percentage at more than 20 percent when both exports and imports are factored in.