USCIB Meets With OECD to Offer Business Perspectives for OECD’s US Economic Survey

Representatives from the U.S. desk of the OECD’s Economics Department met with USCIB members and staff on January 8 to solicit business input into the next OECD United States Economic Survey. The OECD typically conducts these economic reviews every two years to assess the macroeconomic and structural policy challenges facing economies and offer recommendations.

A robust group of USCIB members participated in the meeting including Rick Johnston (Citi), Jerry Cook (Hanesbrands), Carolina Costa (RELX), Elizabeth Tate (Albright Stonebridge Group) and Cristian Rodriguez-Chiffelle (Boston Consulting Group). They discussed early findings from the OECD analysts that the United States will be experiencing a soft landing with weak economic growth expected in 2024, with GDP project at 1.5 percent, unemployment over 4 percent and abatement of inflationary pressures and wage growth. This led to a conversation about business outlooks on U.S. industrial policies (e.g. CHIPS Act), China trade policy and the impact of tariffs, U.S. retreat from economic globalization, economic security and reduced business voice in economic policy debates.

“As always, USCIB greatly appreciates the opportunity to meet with representatives from the OECD,” said Senior VP for Policy and Global Strategy Norine Kennedy. “As the sole U.S. representative to Business at OECD (BIAC), USCIB is in a unique position to offer invaluable U.S. business perspectives. We are committed to this important analysis and work of the OECD in providing well-informed recommendations to the U.S. government.”

OECD Surveys aim to promote a better understanding of a given country’s economic situation, identify the key challenges facing that country’s authorities and provide recommendations to improve the country’s overall economic performance.

 

USCIB Provides Comments on China’s WTO Compliance, Urges Customs Reform, IP Protection and Open Market Access

USCIB submitted comments on September 20 to the U.S. Trade Representative (USTR) regarding China’s WTO compliance with its World Trade Organization commitments. The submission raised a variety of concerns, including shortcomings with respect to intellectual property (IP) protection, trade facilitation, and market access.

The report notes that although China has improved many of its key IP laws since acceding to the WTO, there is a continued need to pressure China to comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) standards. According to USCIB, China provides inadequate criminal liability for copyright offenses and establishes inadequate thresholds for making a copyright case.

The submission also focuses on sectoral issues, such as agriculture and grain exports, high levels of piracy in the audiovisual sector and a lack of openness in the Chinese telecommunications market. For example, China’s Telecom Services Catalog incorrectly classifies a wide range of ICT technologies and services as telecom services, and there is increased scrutiny over China’s Cybersecurity Law. The comments put pressure on the U.S. government to address these key areas for global commerce, trade facilitation and security.

Echoing USCIB’s 2022 submission regarding China’s WTO compliance to USTR, the comments continue to voice concern over the Section 301 tariffs imposed against Chinese imports.

“USCIB condemns the unfair Chinese practices identified under the Section 301 investigations, including forced technology transfer requirements, intellectual property infringements, state interventions, and other unfair trade practices that harm U.S. companies, workers, consumers, and competitiveness. While we remain wholly committed to U.S. efforts to confront unfair trade practices, we are concerned that the Section 301 tariffs imposed against Chinese imports have done more harm than good, raising the cost of doing business in the United States and increased prices for U.S. families and workers,” said USCIB Vice President for International Investment and Trade Policy Alice Slayton Clark.

“China remains an important player on the world stage, and although cooperation can be challenging, we must continue to push for transparency and open market access,” she added. “Ensuring that China remains compliant with WTO regulations by bilaterally addressing challenges must remain a priority for the United States.”

USCIB Fosters Relationship With Chinese Counterpart CCPIT/CCOIC 

Left to right: Declan Daly, Zhao Jianying, Peter Robinson

The head of the U.S. Representative Office of the China Council for the Promotion of International Trade (CCPIT), Mme. Zhao Jianying, visited USCIB’s New York offices on March 8 to discuss areas of mutual interest and to foster the close working relationship between CCPIT and USCIB, which now spans over three decades.  

 Zhao Jianying, who became head of the CCPIT Representative Office last year, met with USCIB President and CEO Peter Robinson and COO Declan Daly. CCPIT is the China Council for the Promotion of International Trade and its affiliate, the China Council of International Commerce (CCOIC) is USCIB’s counterpart National Committee in the International Chamber of Commerce (ICC) 

Additionally, CCPIT/CCOIC is USCIB’s Chinese counterpart in the ATA Carnet system. ATA Carnet is a custom document for temporary imports and is honored in over 80 customs countries and territories worldwide and can be used for multiple trips during a one-year period.   

According to Robinson, USCIB helped ICC bring CCPIT/CCOIC into the ATA Carnet system in the 1990’s and the two organizations have been working together since. 

Although the economic relationship between the United States and China has been tense for the past several years, USCIB’s working relationship with our Chinese counterpart CCPIT/CCOIC remains robust,” said Robinson. “We appreciated meeting Mme. Zhao and we look forward to fostering our relationship with her and the rest of her team.” 

USCIB Comments on China’s WTO Commitments: Urges Protection of IP, Voices Concern Over 301 Tariffs

USCIB submitted comments to the U.S. Trade Representative regarding China’s WTO compliance with its World Trade Organization commitments, raising a broad array of concerns including in the areas of digital, intellectual property rights (IPR), regulatory policies, competition, transparency and standards.

The comments urge the U.S. government to continue to press for a complete suspension of all existing and proposed measures involving trade-restrictive requirements in the digital sector, where China has enacted and enforced a variety of trade-restrictive and overly prescriptive requirements on information technology (IT). In the area of intellectual property, USCIB urges the U.S. government to continue to press for increased protections, as well as enhanced and efficient enforcement options, better coordination and enforcement by Chinese authorities, and more severe penalties for infringement of IPR. The comments add that concerns about Chinese behavior even extend beyond WTO compliance issues to areas such as government procurement.

USCIB also raises concerns over the Section 301 tariffs imposed against Chinese imports, noting that these tariffs have caused harm to domestic industry and done little to date to change Chinese behavior. The tariffs cover over $370 billion in goods, raising the cost of doing business in the United States and increasing prices for U.S. families and workers, a hardship exacerbated by today’s inflationary environment. According to USCIB Director for Investment, Trade and China Alice Slayton Clark, “as these tariffs continue, they create uncertainty for businesses and negatively impact U.S. companies’ ability to invest in their companies to innovate new products, hire more American workers, and remain competitive globally.” It is essential that the United States adopt a robust strategy that does not only rely on the use of punitive tariffs to achieve its objectives with China.

“Engagement with China can be challenging but China’s importance in the global economy provides a strong incentive for the United States to engage on all fronts to find solutions and foster stability and growth in the relationship,” according to Clark. The United States must not only continue to promote U.S. interests in the WTO rules-based international trading order, but also work with allies to address common concerns with respect to China, and work bilaterally with China to resolve challenges.

USCIB Submits Comments to USTR on Indo-Pacific Economic Framework

USCIB submitted comments this week on the trade aspects of the Indo-Pacific Economic Framework (IPEF), a new Biden Administration initiative to engage regional partners on economic and trade priorities. U.S. officials do not envision the IPEF to produce a traditional trade agreement, but to instead achieve better harmonization and liberalization in the areas of trade, supply chain resilience, infrastructure, decarbonization, tax and anticorruption.

USCIB members welcome the initiative and seek ambitious results. With a population of 1.5 billion people, 62 percent of world-GDP and 46 percent of the world’s merchandise trade, the Indo-Pacific region offers significant market potential for American companies and the millions of workers they employ.

“We urge the Administration to pursue a substantive agreement with concrete outcomes, common standards, and strong rules that are enforceable and binding,” said USCIB Director for Investment, Trade and China Alice Slayton Clark.  “An affirmative economic strategy in the Indo-Pacific is critical to advancing U.S. economic and strategic interests.”

USCIB’s comments emphasized the importance of free market principles, particularly in the wake of COVID-19: “As the world rebounds from COVID-19, the United States can contribute to an inclusive, even and robust recovery with stronger trade engagement in the region, a goal made more urgent today as democracy, rule of law and free market principles come under challenge. The IPEF must strengthen U.S. relationships in the region, create more resilient supply chains and ultimately make U.S. allies less vulnerable to China’s economic coercion.”

USCIB Commences 2022 With Robust Engagement With Biden Trade Officials

USCIB is off to a vigorous start in 2022 in the area of business advocacy. In January, USCIB Director for Investment, Trade and China Alice Slayton Clark held three major committee meetings to bring USCIB members together with Biden Administration officials to discuss China, India and Indo-Pacific trade policy.

Launching this effort, the USCIB China Committee met January 11 for an off-the-record virtual discussion with Deputy Assistant USTR for China Affairs Tim Wineland regarding the key issues confronting the U.S.-China trade relationship. The meeting provided an opportunity for USCIB members to discuss the latest policy developments impacting relations with one of our largest trading partners; topics addressed included the Biden-Xi virtual leaders’ summit, the Administration’s new China trade policy and negotiating agenda for 2022, an assessment of the China Phase 1 trade agreement, and the U.S. plan to address industrial subsidies with China, among other concerns.

The following week, USCIB members met January 19 with Assistant USTR for South and Central Asia Chris Wilson and Deputy Assistant USTR Brendan Lynch for an update on the US-India Trade Policy Forum (TPF) process and the chance to share trade concerns to help inform U.S. priorities as TPF working groups in the areas of agriculture (regulatory alignment), non-agriculture, intellectual property, and services (including digital) are formed for 2022.  A dialogue established by India and the United States in 2005, the TPF was on pause for several years until the Biden Administration relaunched it with an inaugural meeting November 23, 2021.

According to Clark, “the TPF is important to the elimination of trade barriers between the United States and India, and we are grateful to the Biden Administration for resetting the bilateral relationship by reviving this process.  It was important for USCIB members to talk with the negotiators and share their company concerns so the discussions can yield the best results for U.S. industry and its workers.”

Finally, Deputy Assistant Secretary for Asia at the Department of Commerce Pamela Phan joined the USCIB Trade and Investment Committee quarterly meeting January 27 to discuss the Biden Administration’s recently announced Indo-Pacific Economic Framework (IPEF). The IPEF is a Biden Administration initiative intended to reassert U.S. leadership and influence, particularly vis-à-vis China’s economic linkages in the region.  While IPEF is in its early stages, USCIB felt it important to engage with Administration officials now to help shape workstreams and expectations for the discussions ahead.

USCIB Launches Competition Webinar Series; First One Focuses on China

The USCIB Competition Committee launched a new webinar series for 2022 titled “Updates in International Competition Law and Enforcement,” spotlighting antitrust developments in key jurisdictions around the globe.

The first event was held last week, focusing on China antitrust regulation and enforcement and featuring experts from the International Chamber of Commerce (ICC) China National Commission: Dr. Hao Zhan, managing partner at Anjie Law Firm Beijing and ICC Competition Commission regional ambassador to China, Susan Ning, senior partner and head of compliance department of King & Wood Mallesons in Beijing, and Song Ying, antitrust partner at Anjie Law Firm Beijing.

“We hope these webinars will benefit USCIB members, giving them the opportunity to learn from competition experts from around the globe on issues critical to their business,” said USCIB Director Investment, Trade and China Alice Slayton Clark.

Zhan discussed recent fundamental changes in China’s antitrust system, with consolidation in 2018 of three authorities into the State Administration for Market Regulation (SAMR), a centralized, vice ministry level authority with more power to promulgate and enforce competition rules and laws. According to Zhan, this has ushered in a new era of antitrust enforcement in China with the establishment of the State Anti-Monopoly Bureau and more cases and higher penalties targeting mostly the media, finance, technology internet platform and pharmaceutical sectors.

Ning outlined the Anti-Monopoly Law, draft amendments released in October 2021 and the anti-monopoly guidelines on the platform economy enacted in February 2021. She discussed how the trend in China is to focus antitrust efforts on the platform economy, focusing on the role of algorithms and platform technologies being misused to exclude or coordinate with others in the marketplace.  Vertical, horizontal and hub and spoke relationships are all targeted. She also discussed the behavior patterns for big data killing, when platforms discriminate in pricing practices using algorithms to differentiate consumers and customary spending costs and described a few high-profile penalty decisions imposed on platform operators who hindered the flow of consumers between platforms – “picking one from the two” problem.

Finally Song described the recent history of anti-monopoly law development in China, highlighting a few of the key changes sought through AML amendments, most of which fall under merger control, addressing no safe harbor, aiding and abetting (liability of third parties), stop the clock, and higher penalties for gun jumping, for example.

Clark plans to host the next webinar in the spring, spotlighting European or Latin American antitrust enforcement practices.

USCIB Presses USTR for Section 301 Tariff Relief

USCIB sent a letter to the United States Trade Representative (USTR) Katherine Tai urging for full reinstatement of the Section 301 product exclusion process and calling for a negotiated solution to put an end to the tariffs.

According to USCIB Director for Investment, Trade and China Alice Slayton Clark, the letter was dispatched December 1 as USCIB’s response to the recent USTR request for comment on the possible reinstatement of certain product exclusions subject to the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property and innovation (86 FR 56345).

“While reinstatement of the product exclusion process is an important first step, we urge USTR to grant exclusions to all 549 products currently under review, to broaden the Section 301 product exclusion process, and to intensify high level engagement with the Chinese government and U.S. allies on a negotiated solution that ends these harmful tariffs,” said Clark. The letter advocates for retroactive recuperation of duties, long term extensions and a full and transparent Section 301 product exclusion process. It also urges caution when considering any future unilateral actions or remedies, as Ambassador Tai has indicated an interest in launching a new Section 301 investigation into Chinese industrial subsidy policies.

The letter further emphasizes that, while USCIB remains wholly committed to U.S. efforts to confront unfair trade practices, “we are concerned that the Section 301 tariffs imposed against Chinese imports have done more harm than good. Today, the tariffs cover over $370 billion in goods, levying tariffs of up to twenty-five percent on almost every Chinese import into the United States, including USCIB member products across the entire scope of the Harmonized Tariff Schedule of the United States (HTS). The tariffs have raised the cost of doing business in the United States and increased prices for U.S. families without addressing or improving the practices identified by the Section 301.” This outcome runs counter to the Biden Administration’s Build Back Better agenda and goals for U.S. economic recovery.

USCIB Comments on China’s Compliance With Its WTO Commitments

USCIB submitted comments September 15 in response to the U.S. Trade Representatives request for input into China’s compliance with its World Trade Organization (WTO) commitments. The comments covered a wide variety of topics with a focus on intellectual property enforcement, regulation, transparency and standards.

According to USCIB Director for Investment, Trade and China Alice Slayton Clark, USCIB members have significant concerns regarding China’s fulfillment of its WTO obligations in a variety of sectors but also regarding unilateral restrictions and bilateral commitments, like the Phase One trade agreement, that remain unfulfilled.

USCIB members also remain concerned about U.S. tariffs and retaliatory measures imposed as a result of the U.S. Section 301 investigation into China’s forced technology transfer, intellectual property, and innovation policies. The submission stated: While the Phase One deal partially addresses some of these tariffs, much more must be done to restore the ability of U.S. business to compete effectively in the global marketplace. It is essential that the United States develop a robust strategy that does not only rely on the use of punitive tariffs to achieve its objectives with China. Tariffs alone have not changed China’s economic policies to date and, ultimately, tariffs also increase costs for U.S. consumers and businesses.

USCIB urges both countries to utilize, in addition to the WTO, the full range of formal multilateral fora, including Asia-Pacific Economic Cooperation (APEC) Forum and the Organization for Economic Cooperation and Development (OECD), to work toward improved commercial relations. Plurilateral dialogues that include U.S.-friendly jurisdictions such as the European Union, Canada or Australia should also be considered.

“China’s importance in the global economy creates a strong incentive to find ways to promote U.S. interests in a rules-based international trading order; to work with allies to address common challenges with respect to China; and to work together with China to address our common challenges and responsibilities,” said Clark.

Donnelly, Hampl Help Lead Business Input on OECD China Work

USCIB Senior Advisor Shaun Donnelly and member company Dell staffer Eva Hampl led a significant “kick-off” session for Business at OECD (BIAC) and its China Experts Group to elevate and deepen a dialogue with the OECD’s Ambassadorial-level Informal Reflection Group on China on May 3.

The BIAC China team presented concerns and recommendations on four China-related items: state-owned enterprises (SOEs) and government support; inward and outward foreign direct investment (FDI) policies; innovation and digitalization policies; and a “climate neutrality” agenda. Other key topics will be addressed in future OECD and BIAC China discussions. Over 100 participants were on session, including OECD country Ambassadors and senior delegates, OECD staff, and BIAC participants, including USCIB members.

Representing BIAC, Donnelly led on FDI issues, focusing on both sides of the China investment coin – foreign investment into China and Chinese investment in our home countries and in third country markets.  With regards to investing in China, Donnelly highlighted business concerns over lack of a level-playing field, formal and informal discrimination against foreign investors, and a lack of effective rule of law in China. On the side of Chinese FDI in our countries, he highlighted two priority concerns, including establishing strong, targeted, and enforceable national security rules on foreign investors while avoiding investment protectionism. Donnelly also noted potential problems in competing against Chinese companies , often state-owned enterprises, which have invested in our markets can be heavily subsidized back home. Donnelly’s comments sparked a good discussion on the substantive issues and on priorities for OECD Investment Committee work going forward.

Hampl, a former USCIB policy director now with Dell’s Washington office, is Vice Chair of the BIAC China Experts group. Hampl was one of three BIAC presenters on innovation and digitalization issues, highlighting that supply chain resiliency, especially in the semiconductor sector, is at the top of global concerns with China and praising the OECD for its ability to decouple economics from politics on such vital issues. Hampl also noted the importance of engaging China constructively on a range of issues related to standards, privacy, intellectual property protections, as well as the broader issues of leveling the playing field and competition against Chinese SOEs.

According to Donnelly, other BIAC colleagues made assertive presentations on the unique challenges of competing with Chinese SOEs, especially in China, but also in the U.S. and around the world.  Several participants urged that disciplines on SOEs be added to the World Trade Organization (WTO) agenda and included in bilateral trade and investment agreements.  Finally, the climate neutrality agenda item provoked broad agreement that the OECD must play a leading role in the broader effort to enlist China constructively in the global climate effort; while much remains to be done, participants agreed that engaging China on climate should be somewhat easier now that the U.S. has rejoined the Paris Climate Accord.

BIAC Executive Secretary Hanni Rosenbaum, who led BIAC in this novel, in-depth BIAC/OECD session on China, was delighted with participation and the quality of debate. Rosenbaum sees potential for deepening and expanding the BIAC/OECD dialogue on China with new leadership coming to the OECD and a growing consensus among OECD member countries that China poses unique challenges.

“I thought it was an excellent session,” said Donnelly. “The discussion was substantive, candid and forward-looking. The four agenda items are crucial, but there are plenty of other important China-related issues where BIAC can make useful contributions to OECD’s work. These high-level, cross-cutting China discussions, hopefully to be held regularly, can complement in-depth work in specific OECD committees. There is a lot of challenging work with China and the OECD can play a valuable role in this effort.”

Alice Slayton Clark, USCIB’s new director for investment, trade and China will be leading USCIB’s work on China, both specific to the OECD and more generally, going forward. If you have issues, questions, or suggestions related to China, please get in touch with Clark.