USCIB, U.S. Take Lead on Alternatives to Forced Localization at APEC

L-R: Trudy Witbreuk (OECD); Ken Schagrin (USTR) and Ed Brzytwa (ITIC)

Demonstrating thought leadership on trade facilitation and global value chains (GVCs) in the Asia-Pacific, USCIB participated in a half-day trade policy dialogue during the third Asia Pacific Economic Cooperation (APEC) Senior Officials Meeting (SOM III) in Cebu, the Philippines on August 28. The event titled, “APEC Best Practices to Create Jobs and Increase Competitiveness,” was organized by the APEC Committee on Trade and Investment and convened private sector representatives and officials from the United States and the OECD for a discussion of the impacts of forced localization policies and how best trade practices can serve as sound alternatives to these policies.

Helen Medina, USCIB’s vice president for product policy and innovation attended SOM III and led the session on best practices as alternatives to localization policies in the APEC region during the dialogue. USCIB members participating at the event included Jeffrey Hardee (Caterpillar), Jennifer Mulveny (Intel) and Ed Brzytwa (Information Technology Industry Council).

The event reviewed the APEC Best Practices to Create Jobs and Increase Competitiveness, which were endorsed by the APEC economies in 2013, and highlighted how those practices can be alternatives to local content requirements (LCR). Often LCRs are put in place to deal with one aspect of the economy at the expense of hurting the wider economy. Trudy Witbreuk (OECD) discussed the detrimental impacts that LCRs have had and offered other approaches for policymakers. Namely, the OECD recommends that economies to identify the domestic problem and work on a horizontal approach to resolves the issues. For example, skill shortages are best resolved through targeted training and education policies instead of local labor requirement. The OECD recommended that policies targeted at the regulatory environment, trade and investment barriers, innovation policy and infrastructure development will lead to trade outcomes that are more sustainable over the long run.

“It is not surprising that the private sector panelists echoed the OECD’s recommendation,” Medina said. The private sector participants shared their own stories about why their investments in certain APEC Economies have  flourished.  They highlighted reasons such as good investment environment, highly skilled local labor, and efficient infrastructure. The private sector also unanimously stated that the free flow of data is key to all industries.

The discussion also highlighted possible next steps that APEC can take, such as new guidance on internal coordination of regulatory work.  A summary of the meeting will be circulated to the APEC Committee on Trade and Investment so that further action items can be taken to address LCRs.  It was agreed that APEC economies have economic challenges and that what are needed are sustainable long term solutions.

USCIB and APEC economies have endeavored to make global value chains top-of-mind at APEC dialogues. At last year’s APEC CEO Summit in November, USCIB organized an event on global value chains that gave members an opportunity to discuss obstacles that APEC economies must overcome in order to leverage the benefits of GVCs as well as corresponding policy recommendations to promote economic integration within the region. You may read the outcome document of the November event online.

You may read the outcome document of the November event online.

USCIB has been advocating an APEC work stream on promoting global value chain coordination in the region, including the development of the APEC Strategic Blueprint on GVCs from the 2014 Leaders’ Declaration, which highlights how understanding global value chains is crucial for realizing a more effective policy and regulatory infrastructure for global trade. Following the blueprint, USCIB has been working with the U.S. government to address trade and investment issues that impact GVCs within APEC.

Additionally, USCIB has circulated an ICC Policy Statement on localization barriers to trade.

Staff Contact:   Michael Michener

VP, Product Policy and Innovation
Tel: 202.617.3159

Michael Michener is USCIB’s vice president of product policy and innovation, joining USCIB in early 2017. Michener is a former administrator of the U.S. Foreign Agricultural Service who has also served as a U.S. trade diplomat and association executive. Michener most recently served in Brussels as director of multilateral relations for CropLife International, representing the association before a range of international organizations – including the UN Food and Agricultural Organization, the UN Environment Program and the UN Framework Convention on Climate Change – on issues related to crop protection products and agriculture biotechnology.
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