Focus on Sustainability, New Technologies at 2019 World Trade Symposium

USCIB once again sponsored the World Trade Symposium this year November 6-7 in New York. The Symposium, hosted by Finastra and programmed by The Economist Events, brought together researchers, government officials and private sector leaders to discuss “Trade in an Uncertain World.” According to USCIB Assistant Policy and Program Manager Daniella Goncalves, several themes emerged throughout the Symposium, including the impact of new technologies on trade and investment, the need for greater interoperability of new technologies, the importance of sustainability to trade and investment and the continued importance of free trade.

Political uncertainty took center stage during the event’s discussions. The rise of populism and protectionist policies, as well as perceived lack of efficiency and productivity in multilateral fora, were identified as threats to be addressed. Many participants expressed the need to reform multilateral institutions and reaffirmed their support for trade liberalization. The need for U.S. leadership in such reform and trade liberalization activities was highlighted as a priority. Participants were in agreement that the restoration of predictability, reciprocity and fairness is required to bolster global trade and investment.

Digitization has the ability to drive down costs and speed of getting goods to market, but standardization of data protection and date flow regulation are priorities. The importance of regulating data flows and the need for standardized data protection laws, new technologies and the issue of illicit trade were highlighted by several panelists, including the World Trade Organization (WTO) Deputy Director-General Ambassador Alan Wm. Wolff, Research Professor of International Affairs & Director of Digital Trade & Data Governance hub Susan Ariel Aaronson and President of the Mediterranean Shipping Company Fabio Santucci.

The use of blockchain was characterized as a means to more efficiently engage in trade and investment, as well as increase sustainability through decreased paper usage. However, interoperability of blockchains and standardization of regulatory frameworks remain hurdles to wide-spread deployment of this technology.

It was noted that the International Chamber of Commerce (ICC) is working with an Asia-based partner to develop a blockchain technology to enable traceability and tracking of goods. The goal ultimately is to promote interoperability among various blockchain networks and technology platforms.

Recognizing the rise of consumer interest in sustainability, the issue of sustainable trade and investment was discussed. According to the panelists, millennial consumers are driving interest in and profitability of sustainable goods and services. Trade has lifted hundreds of millions out of poverty; to continue to see the benefits of trade, growth needs to be inclusive. USCIB is actively advocating on these important issues in various multilateral fora, including at the Organization for Economic Cooperation and Development (OECD) in Paris.

OECD Report Weighs In On WTO Moratorium Debate

The much-anticipated Organization for Economic Cooperation and Development (OECD) report on the World Trade Organization (WTO) moratorium on customs duties on electronic transmissions was de-classified on November 4.

According to USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan, the report, “Electronic transmissions and international trade – Shedding new light on the moratorium debate,” concludes that revenue implications of lifting the Moratorium are likely to be relatively small and would come at the expense of more significant gains in consumer welfare (estimated at 940 million USD) and export competitiveness.

The Moratorium, which has been in place since 1998 and has been continuously extended every couple of years since then, is once again due to expire at the end of 2019. Keeping the Moratorium is crucial for business, and USCIB has been actively engaged in pushing back against the opponents of extending the Moratorium with the ultimate goal of making it permanent.

The OECD report also notes that the highest estimated share of opportunity cost in terms of foregone revenue is in digitizable goods, which is low, at 1.2% of total trade. This will likely remain low even with the advent of technologies such as 3D printing, which are unlikely to have far-reaching implications on trade in the near term.

The report noted that tariffs also come with costs. Tariffs are associated with lower output and lower productivity and their burden falls mainly on domestic consumers, not foreign firms. Tariffs are also an unstable source of revenue. Alternatives exist in the form of non-discriminatory value added taxes or goods and services taxes.

The WTO General Council meeting, set for December 9-11, will provide a final opportunity to extend the Moratorium.

New OECD Deputy Secretary General Meets With USCIB

L-R: OECD Deputy Secretary General Ulrik Vestergaard Knudsen; Head of the OECD’s Washington office Will Davis

USCIB members and staff had the opportunity to meet with the new Organization for Economic Cooperation and Development (OECD) Deputy Secretary-General Ulrik Vestergaard Knudsen on November 5 at the USCIB Washington DC office. Knudsen’s diverse policy portfolio at the OECD includes science, technology and innovation, trade and agriculture, the OECD Center for Entrepreneurship, SMEs, as well as regions and cities.

The dialogue between Knudsen and USCIB members focused on areas of mutual interest such as taxation policy, including the pressing issue of digital taxation, as well as cross-border data flows, healthcare, trade and investment, digital trade, and the Going Digital Project. Knudsen also mentioned Artificial Intelligence (AI) as an increasingly important issue for the OECD and the establishment of the OECD AI Policy Observatory, which will help countries nurture and monitor the responsible development of trustworthy AI systems for the benefit of society.

L-R: Norine Kennedy (USCIB), Will Davis (OECD Washington), Ambassador Ulrik Vestergaard Knudsen (OECD), Peter Robinson (USCIB), Eva Hampl (USCIB), Rob Mulligan (USCIB)

USCIB members from Microsoft, IBM, General Electric, CropLife America, Walmart and others, benefited from the opportunity to hear directly from OECD leadership regarding the OECD’s priorities as well as an update on the OECD accession process. USCIB participants underlined the importance of maximizing access for business and other responsible stakeholders in all OECD committee meetings.

“We are grateful that DSG Knudsen took the time to meet with U.S. business,” said USCIB Senior Vice President for Policy and Government Relations Rob Mulligan. “USCIB staff and members always appreciate an opportunity to provide perspectives to the OECD staff and secretariat to help inform the OECD’s science-based policy recommendations.”

USCIB is the U.S. national committee of Business at OECD (BIAC).

USCIB Member Reports on Recent UN International Trade Law Meetings

Lauren Mandell, an international investment expert from the Washington DC office of USCIB member WilmerHale and a former deputy assistant U.S. Trade Representative for investment policy, represented USCIB at the October 14-18 meeting of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III in Vienna. Mandell was one of a small handful of business and arbitration community observers at this semiannual meeting.

UNCITRAL’s Working Group III is focused on “reforming” the Investor-State Dispute Settlement (ISDS) arbitration system, which is widely used to resolve investment disputes between host governments and foreign investors. Some governments and civil society activists have long criticized the ISDS system. In recent years the European Union has jumped on board, aggressively pushing its proposal for a government-dominated multilateral investment court and appellate mechanism to replace traditional ISDS. According to Mandell, even long-standing U.S. government policy supporting a high-standard ISDS system has wavered.

Photo source: UNCITRAL.org

“It was very valuable to have an experienced, eloquent investment policy expert like Lauren participating in this important investment policy body,” said USCIB Vice President for Investment Policy Shaun Donnelly. “Although UNCITRAL may be, to some, an obscure UN agency, it’s where the action is these days on international investment policy and, specifically, on ISDS. We at USCIB and many of our member companies see ISDS as a key pillar for global Foreign Direct Investment (FDI) decisions. We will continue to work with Lauren, the U.S. government and our members in UNCITRAL and beyond to defend strong investment protections.”

The next meeting of UNCITRAL Working Group III, scheduled January 20-24, 2020, will be critically important for the business community because the meeting will focus on the EU’s proposed multilateral investment court. For more information, contact Shaun Donnelly or Lauren Mandell (lauren.mandell@wilmerhale.com) for further information.

Promoting U.S. Business Access: USCIB Submits NTE Comments

USCIB filed comments on October 25 for the annual National Trade Estimate (NTE) report to highlight significant barriers that American companies continue to face with regards to exports of goods, services and U.S. foreign direct investment. The comprehensive comments included barriers faced by U.S. companies in over twenty countries, including in Brazil, China and India.

According to USCIB Vice President for ICT Policy Barbara Wanner, the comments urged the U.S. Trade Representative to encourage Brazil to promote an international, interoperable policy framework for the Internet of Things (IoT) and machine-to-machine (M2M) solutions that includes M2M permanent roaming, among other things.

“Many IOT and M2M solutions will only reach their optimal scale if they can operate around the globe,” said Wanner. Monitors on airline cargo or shipping containers must be able to operate wherever their freight travels. Automakers sell vehicles across many different countries and operators drive vehicles across national borders for commercial and personal purposes; automakers and customers alike need a single communications platform to support their connected vehicles.

“The Brazilian government should modify the regulatory framework to support providers of IoT and M2M services and devices and allow them to choose between various available options for numbering and device management (including permanent M2M roaming), rather than imposing a single, one-size alternative for all cases,” added Wanner.

With regards to China, USCIB’s submission focused on China’s WTO compliance record in services, particularly China’s indiscriminate filtering and blocking of online services. China’s expansive definition of value-added services, high capitalization requirements for basic telecommunications services, lack of an independent regulator, and restrictions that specifically apply to the non-Chinese companies for provision of value-added services remain key outstanding issues for U.S. business.

Finally, while India has accelerated broadband deployment, USCIB’s comments stressed that it must also implement policies that foster an innovative environment through predictable, progressive and technology-neutral policies that are compatible with global standards.

“It is important to keep encouraging the Indian government to support further market liberalization and to remove remaining market access barriers,” said Wanner. “India should be urged to continue its efforts to provide legal and regulatory policy certainty both in the development of a body of clear and consistent laws and regulations, and in the transparent and equitable application and enforcement of those laws and regulations. Unfortunately, in recent years the government of India has implemented a number of policies that constitute significant market access barriers to U.S. companies, including in data localization, remote access policy and cloud computing.”

Mulligan Represents Business at OECD Trade Meetings

USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan

Rob Mulligan, USCIB senior vice president for policy and government affairs, was in Paris the week of October 21 attending OECD and Business at OECD (BIAC) trade committee meetings. Over the last few months, USCIB members have contributed to the development of BIAC’s trade priorities paper which was released last week. Mulligan, as a vice-chair of the BIAC trade committee, represented BIAC at the OECD Trade Committee Meeting and shared the eleven-priorities for consideration as the OECD develops their program of work for 2021-2022.

“During the OECD meeting, I highlighted the need for continued OECD work on market distorting subsidies and other government support for state-owned enterprises, digital trade and new work on trade and the environment that would underpin the need to balance climate change with ensuring open markets for trade,” said Mulligan.

The OECD Trade meeting also discussed ongoing G7, G20 and Asia Pacific Economic Cooperation (APEC) activities, including outcomes of the G7 and G20 Summits, as well as expectations for the APEC Economic Leader’s meeting in November, which will be hosted by Chile.

USCIB Welcomes Ratification of UN Convention That Helps SMEs

After years of effort by USCIB and a coalition of other trade associations, USCIB welcomed an announcement that the United States has formally ratified the United Nations Convention on the Assignment of Receivables in International Trade, having deposited the instrument on October 17 at the UN Treaty Office in New York.

Enactment of the Convention makes it easier for U.S. small and medium-sized businesses to access additional financing from lenders based on their sales of goods and services to customers located in other countries that ratify the Convention.

USCIB has been urging the U.S. to ratify this convention since 2016 and worked through a coalition to send letters to high-ranking Senators at the Committee on Foreign Relations and the Committee on Banking, Housing and Urban Affairs.

“We need three more countries to ratify the Convention for it to enter into force, and we have an active list of those countries most likely to ratify,” noted USCIB Senior Director for Trade, Investment and Financial Services Eva Hampl.

Hampl Contributes Expertise at OECD Workshop on Investment

USCIB Senior Director Eva Hampl speaks at OECD

USCIB Senior Director for Trade, Finance and Investment Eva Hampl contributed her expertise on a panel hosted by the OECD during its workshop on investment promotion and facilitation in Paris on October 22. The day-long event focused on investment facilitation and retention, foreign direct investment (FDI) impact on the host economy, as well as organized break-out sessions focusing on specific regions such as the European Union, Eurasia and select Latin America and Caribbean countries.

Hampl’s panel also featured Ambassador of Chile to the WTO and Coordinator of the WTO Structured Discussions on Investment Facilitation for Development Eduardo Gálvez, Director, Services and Industry Promotion Department, Ministry of Foreign Relations of Brazil Min. Luiz Cesar Gasser, Executive Director, Invest in Finland, Business Finland Antti Aumo and Head of Investment Policy Unit, DG Trade, European Commission Carlo Pettinato. Panelists addressed key roles of investment promotion agencies (IPAs) and policymakers in facilitating business establishment, securing investment retention and encouraging re-investments.

As the sole business representative on the panel, Hampl discussed common challenges that companies face on the ground at the establishment phase or for expansions and re-investments in both OECD and non-OECD economies. She suggested measures that governments can make in order to facilitate the establishment of companies to encourage them to stay in the home country. Hampl also touched upon the U.S. business perspective of the WTO discussions on investment facilitation.

“Investment is vital to economic growth and development,” said Hampl during the panel. “However businesses face many challenges when investing, including regulatory issues, lack of IP protections, lack of appropriate redress, inefficiencies and costs generated by forced localization policies and duplicative testing requirements, skills disparity, inability to find suitable business partners, etc. There is unfortunately no one size fits all approach — every country needs to work out what works best within the economy. But any measures should improve the rule of law and strengthen the institutions — more carrot than stick.”

The purpose of the workshop was to build on the IPA mappings to deepen OECD research in certain areas of investment promotion and facilitation, strengthen the knowledge of the OECD IPA Network and exchange on topics of common interest.

Hampl is attending a slew of investment-related meetings taking place at the OECD this week, including an OECD Roundtable on Investment and Sustainable Development, a Business at OECD (BIAC) dinner with the OECD Investment Committee leadership, a Business at OECD Investment Committee meeting and a stakeholder consultation with the OECD Investment Committee.

USCIB Holds High-Level Meetings During WTO Public Forum

USCIB and several members were on the ground in Geneva the week of October 7 for the World Trade Organization (WTO) Public Forum. The Forum included a plethora of panels on critical issues of concern to business including digital trade, services, the moratorium in customs duties on electric transmissions (Moratorium), the ongoing e-commerce negotiations, and WTO reform, including issues surrounding the Appellate Body (AB).

In addition to participating in the active forum agenda, USCIB’s Senior Vice President Rob Mulligan and Senior Director Eva Hampl held side-meetings with WTO leadership, such as Deputy Director-General Alan Wolff, Director, Council and TNC Division Victor do Prado, Director, Information and External Relations Division Keith Rockwell and Counselor, Telecom, ICT & E-commerce, Trade in Services and Investment Division Lee Tuthill. Mulligan and Hampl also met with Ambassadors Dennis SheaStephen deBoer, and Junichi Ihara from the United States, Canada, and Japan, respectively. Finally, USCIB engaged with international business groups, including Confederation of British Industry (CBI), Ibec (Irish Business), Canadian Chamber of Commerce, ICC UK, and Confederation of Danish Industry (DI).

“Across the board, everybody is closely paying attention to the E-Commerce negotiations,” said Mulligan. “There is a general positive attitude regarding the negotiations, but also a recognition that the tough issues like data flows and localization policies are still to come. Accordingly, it is not likely that an agreement will be ready by the Ministerial Council meeting in June 2020 (MC12).”

According to Mulligan, on the issue of the Moratorium, there continue to be opponents to extending the agreement, but most WTO members support at a minimum extending it to MC12 once it runs out in December of this year. To push back against the opposing forces, several studies are being developed. Among these, the OECD is also developing a paper on the Moratorium, which is likely to be released very soon.

WTO reform domin ated the discussion, often targeted at the U.S. pushing for meaningful updates on issues like subsidies, transparency, and notifications. The U.S. position on the Appellate Body, however, continues to be controversial and there is some nervousness about what will happen to the dispute resolution arm of the WTO once the terms of two of the three remaining AB members run out at the end of the year. On the other hand, there are some who believe pragmatism will take over and the value of the institution and the important work being done on the other reforms will not be impacted.

USCIB also co-hosted a breakfast with the International Chamber of Commerce (ICC). Speakers at the breakfast included The Right Honorable Liz Truss MP, secretary of state for International Trade in the UK, who spoke on the importance of the multilateral trading system; Ambassador Sunanta Kangvalkulkij from Thailand, who provided an update in the General Council discussions; Ambassador David Walker from New Zealand, who provided an update on the AB, and Ambassador Frances Lisson from Australia, who spoke about the JSI on E-Commerce; and WTO Director General Roberto Azevedo, who spoke to the current state of play of WTO Reform.

To wrap up the busy week in Geneva, USCIB co-hosted a business reception with several other business associations, to underline the importance of a business relationship with the WTO. Invitees include member companies and associations, country delegates, and WTO staff.

USCIB Participates in WTO Public Forum in Geneva

With the World Trade Organization (WTO) Public Forum taking place this week in Switzerland, USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan and Senior Director for Trade, Investment, and Financial Services Eva Hampl, along with several USCIB members, are on the ground in Geneva to engage in various side meetings with WTO officials and staff.

According to Mulligan, the main issues of concern are WTO reform, including the Appellate Body, as well as the E-Commerce negotiations, with a particular focus on the Moratorium on customs duties on electronic transmission which is about to run out the end of the year.

On October 9, USCIB co–hosted a breakfast with the International Chamber of Commerce (ICC), several ICC National Committees, including from the UK, Germany, and Switzerland, and the Digital Trade Network. The governments of Benin, Canada and Switzerland also supported the event. Several ambassadors exchanged views with business in the room about various aspects of current WTO activities. The event concluded with remarks by WTO Secretary General Roberto Azevedo, speaking about the importance of international trade and finding solutions.