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ICC Urges G8 to Press for Global Trade Accord

Published on May 23, 2007
Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany June 6-8.
Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany June 6-8.

Halting investment protectionism, encouraging energy efficiency and stopping counterfeiting and piracy also business priorities for G8 summit

Paris and New York, May 23, 2007 – Even at this desperately late hour, a good deal can be struck in the Doha round of multilateral trade talks if G8 leaders intensify their diplomatic efforts, the International Chamber of Commerce said today in its annual statement on behalf of the world business community to the heads of state and government who will attend the G8 summit.

Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany on 6-8 June to find ways of addressing the most pressing issues affecting the world economic order.

With more than 8,000 member companies in over 130 countries, the Paris-based ICC is the largest, most representative private sector association in the world.  The United States Council for International Business (USCIB), based in New York, serves as ICC’s American national committee.

Last month, USCIB Chairman William G. Parrett, CEO of Deloitte and a member of the ICC Executive Board, took part in the first-ever G8 business summit in Berlin, where the heads of major business federations from each of the G8 nations met with German Chancellor Angela Merkel to urge action on the key issues reflected in the ICC statement.

The Doha trade round represents a historic opportunity to generate economic growth, raise living standards and create potential for development across the world that should not be squandered. World leaders need to urgently devote their personal attention to reaching an agreement so that rapid progress can be made on the contours of a balanced package of measures to substantially improve market access in agriculture, industrial products and services, facilitate trade and update WTO rules.

It seems that a final and very narrow window of opportunity has opened up to forge an agreement in the weeks ahead, even though the U.S. Congress will have to be called upon to extend the president’s trade negotiating authority, ICC said.

ICC has a close working relationship with the G8 and many other intergovernmental organizations, including the World Trade Organization and the United Nations. The core mission of ICC is to promote trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization.

Reverse the trend toward investment protectionism
G8 governments must set an example for the rest of the world and roll back the tide of investment protectionism showing renewed vigor – including within some G8 countries, ICC urged. Cross-border investment is crucial to spread the benefits of globalization more widely, since foreign direct investment plays an important role in transferring technology, know-how and management skills to developing countries, the statement said.

Encourage energy efficiency
ICC welcomed the focus at this year’s summit on energy efficiency, but asked G8 leaders to keep in mind that investments on the massive scale needed to stimulate innovation will require a more favorable policy and regulatory framework. Strict adherence to a number of conditions is also a prerequisite, such as upholding laws against corruption, ensuring fair competition, and guaranteeing contracts.

But lack of global consensus and stable policies is discouraging innovation and investment in future sources of clean energy, ICC said. The UN Framework Convention on Climate Change provides a useful forum for international cooperation to help reduce greenhouse gas emissions over the longer term.

Uphold commitments to curb counterfeiting and piracy
While counterfeiting and piracy remain a topic at this year’s G8, deeds continue to fall short of words in addressing a global epidemic that leaves virtually no sector untouched, ICC said.

ICC called on the G8 to make counterfeiting and piracy a higher priority by gathering more accurate data, launching public awareness campaigns of the damage done, and improving training and cooperation of national enforcement agencies. ICC’s initiative, Business Action to Stop Counterfeiting and Piracy, addresses these issues in a comprehensive anti-counterfeiting plan that fosters world business collaboration with government.

USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment.  Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion.  As American affiliate of the leading international business and employers organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contacts:

Jonathan Huneke, VP of Communications, USCIB
+1 212 703 5043 or jhuneke@uscib.org

Mary Kelly, Director of Communications, ICC
+33 1 4953 2987 or mary.kelly@iccwbo.org

ICC statement to G8 leaders

Press release: At G-8 Business Summit, USCIB Chairman Urges Governments to Avoid Investment Protectionism (April 24, 2007)

ICC Urges G8 to Press for Global Trade Accord

Published on May 23, 2007

Halting investment protectionism, encouraging energy efficiency and stopping counterfeiting and piracy also business priorities for G8 summit

Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany June 6-8.
Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany June 6-8.

Paris and New York, May 23, 2007 – Even at this desperately late hour, a good deal can be struck in the Doha round of multilateral trade talks if G8 leaders intensify their diplomatic efforts, the International Chamber of Commerce said today in its annual statement on behalf of the world business community to the heads of state and government who will attend the G8 summit.

Leaders of the world’s richest countries will gather at the annual G8 summit in Heiligendamm, Germany on 6-8 June to find ways of addressing the most pressing issues affecting the world economic order.

With more than 8,000 member companies in over 130 countries, the Paris-based ICC is the largest, most representative private sector association in the world.  The United States Council for International Business (USCIB), based in New York, serves as ICC’s American national committee.

Last month, USCIB Chairman William G. Parrett, CEO of Deloitte and a member of the ICC Executive Board, took part in the first-ever G8 business summit in Berlin, where the heads of major business federations from each of the G8 nations met with German Chancellor Angela Merkel to urge action on the key issues reflected in the ICC statement.

The Doha trade round represents a historic opportunity to generate economic growth, raise living standards and create potential for development across the world that should not be squandered. World leaders need to urgently devote their personal attention to reaching an agreement so that rapid progress can be made on the contours of a balanced package of measures to substantially improve market access in agriculture, industrial products and services, facilitate trade and update WTO rules.

It seems that a final and very narrow window of opportunity has opened up to forge an agreement in the weeks ahead, even though the U.S. Congress will have to be called upon to extend the president’s trade negotiating authority, ICC said.

ICC has a close working relationship with the G8 and many other intergovernmental organizations, including the World Trade Organization and the United Nations. The core mission of ICC is to promote trade and investment across frontiers and help business corporations meet the challenges and opportunities of globalization.

Reverse the trend toward investment protectionism

G8 governments must set an example for the rest of the world and roll back the tide of investment protectionism showing renewed vigor – including within some G8 countries, ICC urged. Cross-border investment is crucial to spread the benefits of globalization more widely, since foreign direct investment plays an important role in transferring technology, know-how and management skills to developing countries, the statement said.

Encourage energy efficiency

ICC welcomed the focus at this year’s summit on energy efficiency, but asked G8 leaders to keep in mind that investments on the massive scale needed to stimulate innovation will require a more favorable policy and regulatory framework. Strict adherence to a number of conditions is also a prerequisite, such as upholding laws against corruption, ensuring fair competition, and guaranteeing contracts.

But lack of global consensus and stable policies is discouraging innovation and investment in future sources of clean energy, ICC said. The UN Framework Convention on Climate Change provides a useful forum for international cooperation to help reduce greenhouse gas emissions over the longer term.

Uphold commitments to curb counterfeiting and piracy

While counterfeiting and piracy remain a topic at this year’s G8, deeds continue to fall short of words in addressing a global epidemic that leaves virtually no sector untouched, ICC said.

ICC called on the G8 to make counterfeiting and piracy a higher priority by gathering more accurate data, launching public awareness campaigns of the damage done, and improving training and cooperation of national enforcement agencies. ICC’s initiative, Business Action to Stop Counterfeiting and Piracy, addresses these issues in a comprehensive anti-counterfeiting plan that fosters world business collaboration with government.

USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment.  Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion.  As American affiliate of the leading international business and employers organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contacts:

Jonathan Huneke, VP of Communications, USCIB

+1 212 703 5043 or jhuneke@uscib.org

Mary Kelly, Director of Communications, ICC

+33 1 4953 2987 or mary.kelly@iccwbo.org

ICC statement to G8 leaders

Press release: At G-8 Business Summit, USCIB Chairman Urges Governments to Avoid Investment Protectionism (April 24, 2007)

International Chamber of Commerce Appoints New Representative to the United Nations

Published on May 10, 2007
Louise Kantrow, the world business organization’s new permanent representative to the UN.
Louise Kantrow, the world business organization’s new permanent representative to the UN.

Paris and New York, May 10, 2007 – The International Chamber of Commerce (ICC) has appointed Louise Kantrow, a former United Nations official with extensive experience in the government and nonprofit arenas, as its new permanent representative to the UN.

In April, Ms. Kantrow succeeded William J. Stibravy, ICC’s longstanding UN representative, who has retired following over a quarter-century representing business in the world body.  Like him, she will be based in the Manhattan offices of ICC’s American national committee, the United States Council for International Business (USCIB).

“ICC’s links to the UN span over 60 years,” noted ICC Secretary General Guy Sebban. “Thanks to her skills and experience, Ms. Kantrow will efficiently take on the vital role of ICC ‘s UN representative.”

With more than 8,000 member companies in over 140 countries, the Paris-based ICC is the largest, most representative private-sector association in the world.  It has served as the voice of business at the UN since 1945, frequently taking part in UN and related multilateral deliberations in the economic, social and environmental arenas.

Ms. Kantrow’s career has included posts within the United Nations and senior positions at nonprofit, governmental and intergovernmental organizations closely associated with UN activities.  Most recently, she served as executive director of the International League for Human Rights, one of the oldest human rights organizations in the world.  Prior to that, as executive vice president and chief operating officer with the UN Association of the USA (UNA-USA), she supervised a major expansion of programs at the Business Council to the United Nations.

The new ICC representative has also served as senior advisor to the United Nations Population Fund and as director of operations at the Population Council.  She worked for fourteen years as economic affairs officer in the UN Department of Economic and Social Development, following service as a senior economist with the U.S. Agency for International Development and as a population affairs officer with the UN.  Ms. Kantrow holds doctoral and master’s degrees in demography and economics from the University of Pennsylvania, and a bachelor’s degree from the University of Michigan.

Ms. Kantrow said she wished to utilize her background in economic development to focus business activity in the UN on promoting international trade and sustainable development, and in ensuring business can contribute to the success of joint initiatives like the UN Global Compact.

“The private sector is a critical partner in solving intractable problems and in helping countries develop,” she stated.  “This is a very exciting time to be helping lend the business community’s experience and know-how to the important work of the United Nations.”

Peter M. Robinson, president of USCIB, welcomed Ms. Kantrow and praised her predecessor.  “A lot of the credit for the UN’s more positive attitude toward business in recent years can go to Bill Stibravy,” he said.  “We in ICC’s American national committee have come to rely on the presence of ICC’s permanent representative, and I am sure Louise will provide able representation for global business at this critical time.”

USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment.  Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion.  As American affiliate of the leading international business and employers organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contacts:

Jonathan Huneke, USCIB

+1 212 703-5043 or jhuneke@uscib.org

Mary Kelly, ICC

+33 1 4953 2987 or mary.Kelly@iccwbo.org

Ms. Kantrow’s bio

ICC Booklet: Working With the United Nations

ICC website

More on USCIB’s Global Network

Global Survey More Enforcement Needed to Curb Counterfeiting

Published on January 29, 2007

New BASCAP study ranks top – and bottom – ten countries for I.P. rights protection

The first annual BASCAP Global Survey on Counterfeiting and Piracy provides a snapshot of country and business efforts to stop the theft of intellectual property.
The first annual BASCAP Global Survey on Counterfeiting and Piracy provides a snapshot of country and business efforts to stop the theft of intellectual property.

Geneva and New York, January 29, 2007 – Global companies say more government enforcement is what is needed most to win the fight against counterfeiting and piracy, according to a new survey unveiled today by the International Chamber of Commerce (ICC).

The first annual BASCAP Global Survey on Counterfeiting and Piracy was conducted by ICC’s Business Action to Stop Counterfeiting and Piracy (BASCAP) initiative, in cooperation with the Cass Business School, part of City University, London.  The survey polled 48 companies, many of which operate globally, spanning 27 product categories.

The findings provide a snapshot of country and business efforts to stop the theft of intellectual property, which has become a substantial drain on business, and has led to the widespread loss of jobs and a massive reduction in tax revenues.

“Not only does unfair competition from counterfeiting and piracy worldwide drain billions annually from the ‘virtuous circle’ of economic growth that intellectual properly generates, but we are particularly concerned about the risks for consumers from unsafe counterfeit products,” said Peter Brabeck-Letmathe, chairman & CEO of Nestlé.  “We urge the assistance of governments to curb the proliferation of counterfeit products.”

ICC is the world business organization, the only representative body bringing the views of companies from every region and every sector to bear upon global policy matters.  The United States Council for International Business (USCIB), based in New York, serves as ICC’s American national committee.

Meeting today in Geneva under the umbrella of BASCAP, CEOs and senior corporate officials from four continents, including those from some of the world’s largest companies, discussed the survey results and announced a new plan to step up the fight against counterfeiting and piracy.

When asked which area would yield the best results in curbing counterfeiting and piracy – legislation, public education or increased enforcement – survey respondents rated enforcement much higher than the other options.

“The survey shows a lot more work needs to be done on enforcement, said ICC Secretary General Guy Sebban.  “We need to educate policymakers that greater investments in IP enforcement will translate into more jobs and tax revenues, and also help them in the fight against organized crime.”

The survey ranked the best- and worst-performing countries in addressing counterfeiting and piracy. Companies rated the U.S., U.K., Germany and France, respectively, as exemplary.  Also among the best performers, in descending order, were Japan, Switzerland, the Netherlands, Singapore and Australia.

On the other end of the spectrum, respondents named China and Russia, respectively, as the two worst-performing countries, followed by India, Brazil, Indonesia, Vietnam, Taiwan, Pakistan, Turkey and Ukraine.

“The mention of these bottom-performing countries shows the problem is indeed worldwide and requires a global solution, said Mr. Sebban.  “Focusing on one or two problem areas is simply not enough.”

American executives at the BASCAP meeting echoed this sentiment.  “This issue needs to be moved up on the agenda of every business leader, every trade organization and every policymaker,” according to Bob Wright, CEO of NBC Universal.  “At risk is every sector of our economy where creativity, innovation and invention drive the creation of economic value and of high-wage jobs.”

Regarding business strategies to rein in fake products, respondents said they spent over half their investment on anti-piracy technologies and product differentiation. “The investment of around 50 percent of R&D in technologies to thwart copying indicates that companies are working hard to stay a step ahead of the pirates,” Mr. Sebban said.

Future surveys will examine the I.P. regimes of top-performing countries to identify best practices, flag problem areas and track progress.  An index will rank country performance.

About BASCAP

Business Action to Stop Counterfeiting and Piracy (BASCAP) was established by ICC in 2005 to connect all business sectors and cut across all national borders in the fight against counterfeiting and piracy.  This global approach is designed to leverage individual company and organizational efforts and amplify business messages with national governments and intergovernmental organizations.  Through BASCAP, more than 150 companies and associations are now actively engaged in a set of projects designed to defeat the pirates and increase public and political awareness of the economic and social harm caused by this illegal activity.  More information is available at http://www.iccwbo.org/bascap/id1127/index.html.

About USCIB

USCIB promotes an open system of global commerce in which business can flourish and contribute to economic growth, human welfare and protection of the environment.  Its membership includes some 300 U.S. companies, professional service firms and associations whose combined annual revenues exceed $3 trillion.  As American affiliate of the leading international business and employers organizations, including ICC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contacts:

Dawn Chardonnal, communications manager, ICC

+33 1 49 53 29 07, dcl@iccwbo.org

Amy Lehr, media relations coordinator, USCIB

+1 212 703 5063, alehr@uscib.org

 

BASCAP Global Survey on Counterfeiting and Piracy

BASCAP website

More on USCIB’s Intellectual Property Committee

Meetings in New York Spotlight International Competition Network

Published on October 6, 2006
L-R: Paul Lugard (Philips), vice chair of the ICC Competition Commission; Daphne Yong-d'Hervé (ICC); Charlene Flick (USCIB); David Lewis, chair of South Africa’s competition tribunal; Michael Blechman (Kaye Scholer), chair of USCIB’s Competition Committee; and Ferdinand Hermanns (Hermanns & Brück), chair of the ICC Competition Commission.
L-R: Paul Lugard (Philips), vice chair of the ICC Competition Commission; Daphne Yong-d’Hervé (ICC); Charlene Flick (USCIB); David Lewis, chair of South Africa’s competition tribunal; Michael Blechman (Kaye Scholer), chair of USCIB’s Competition Committee; and Ferdinand Hermanns (Hermanns & Brück), chair of the ICC Competition Commission.

Last month in New York, the USCIB Competition Committee and the International Chamber of Commerce‘s Competition Commission held meetings that highlighted the emerging role played by the International Competition Network (ICN), which links antitrust enforcement authorities from both developed and developing countries.

David Lewis, chair of South Africa’s competition tribunal and vice chair of the ICN Steering Group, spoke at the ICC meeting, which was well attended by companies and law firms from around the world and across a variety of industries. His remarks underscored the global movement towards convergence in the area of competition law and how the work of the ICN has contributed to the harmonization of competition laws across borders.

Through ICN, government institutions come together to enhance convergence and cooperation so as to promote effective and efficient antitrust enforcement worldwide. The work of ICC’s Competition Commission, as well as USCIB’s Competition Committee, regularly informs the dialogue at the ICN. In the past, ICC has offered comments on the ICN Merger Remedies Review Project as well as input regarding global harmonization efforts in antitrust enforcement generally. ICC as well as individual member companies continue to work closely with ICN and the Competition Commission is currently considering proposals to further engage in upcoming ICN activities in the months to come.

Other agenda items discussed at the USCIB and ICC meetings included the U.S. Department of Justice/Federal Trade Commission ongoing hearings on single-firm conduct, a discussion of the European Commission’s application of Article 82 of the Treaty of Rome to exclusionary abuses, and a briefing concerning China’s pending antimonopoly law.

Staff contact: Justine Badimon

More on USCIB’s Competition Committee

ICC Books USA: Under New Management

Published on October 7, 2005

USCIB to market and distribute publications from the International Chamber of Commerce

ICC Books titles include many popular works based on ICC rule-making and policy activities
ICC Books titles include many popular works based on ICC rule-making and policy activities

New York, N.Y., October 7, 2005 – American readers of the International Chamber of Commerce’s popular publications may not notice the difference when they log on to www.iccbooksusa.com.  But the marketing and distribution of the trade, law, finance and reference materials based on the world business body’s longtime rule-making and policy work is in new hands.

As part of the restructuring of ICC’s publishing and book-selling operations in the United States, ICC’s U.S. national committee, the United States Council for International Business (USCIB), has assumed responsibility for the U.S. operations of ICC Publishing, S.A., the publishing arm of ICC based in Paris.  The change in management took effect on October 1, 2005.

ICC is the world business organization, with more than 8,000 member companies in over 140 countries.  In addition to serving as the voice of world business in the UN and with national governments, ICC develops widely used rules for various aspects of international trade, finance, contracts, marketing and advertising, and many other areas.

“We are delighted to be able to serve ICC’s existing readers, and we look forward to extending ICC’s many fine business publications to a broader readership, with the goal of promoting global trade” said USCIB President Peter M. Robinson.  “We foresee growing interest in many ICC titles among existing customers, USCIB members and users of our various trade services, such as the ATA Carnet.  And we intend to bring the interests of U.S. readers to the forefront in the development of even more exciting ICC publications.”

The operations of ICC Books USA are now located at USCIB’s headquarters in New York (1212 Avenue of the Americas, 18th floor, New York, NY 10036, tel: 212-703-5066, fax: 212-944-0012, e-mail: iccbooks@uscib.org).  Online purchases can still be made at www.iccbooksusa.com.

ICC Books USA will continue to market and distribute a wide range of ICC titles, including the Incoterms series, ICC model contracts, numerous banking and trade finance titles, and ICC arbitration guides, as well as general interest titles like A to Z of International Trade, Guide to Export-Import Basics, Fighting Corruption and Corporate Governance Worldwide.  In addition, upcoming titles of interest include Uniform Customs and Practice for Documentary Credits, UCP 600, the latest revision to the standard reference for trade finance professionals.

Incoterms, the current edition of UCP (UCP 500) and ICC model contracts are just three of the trade tools published by ICC which are used by millions of traders around the world on a daily basis.

USCIB promotes an open system of global commerce.  As American affiliate of the leading international business and employers organizations, including ICC, it provides unparalleled access to policy makers and regulatory authorities worldwide.  USCIB also works to facilitate international trade by issuing and guaranteeing ATA Carnets (for temporary, duty-free imports of various types of goods), promoting use of the ICC International Court of Arbitration and related services for the settlement of commercial disputes, and promoting other ICC services such as ICC Books USA.

 

ICC Books USA website

New editor takes over ICC corporate governance website

Published on June 11, 2003

Paris, June 11, 2003 – ICC’s Corporate Governance website moved into top gear today with up-to-the-minute coverage of developments of vital interest to companies across the world.

Stories include moves by the European Commission to set new rules billed as “a model for the rest of the world” as well as a report from New Delhi about controversial new government proposals to strengthen the role of independent directors.

Also on the site is an account of the implications for Australian companies of new disclosure rules introduced by the Australian stock exchange and a report under a London dateline about heightened public interest in boardroom pay – and the repercussions for companies.

With more than 8,000 member companies in over 140 countries, ICC is the largest, most representative private sector association in the world. It is represented in the U.S. by the United States Council for International Business (USCIB), its American national committee based in New York.

From Manila comes a story on efforts by the Asian Development Bank and the OECD to bring about swift improvements in corporate governance across Asia. An OECD White Paper just issued maintains that the most serious corporate governance challenge facing the Asian region is the “exploitation of non-controlling shareholders”.

The ICC Corporate Governance website was introduced a year ago with a mission to assist companies, and especially small and medium-sized enterprises, in achieving the highest standards of corporate governance. At the same time, it seeks to keep abreast of relevant government and private sector initiatives.

Taking over as the site’s editor is Australian writer and broadcaster Colin Chapman, a former Director of Television for the Financial Times. In the last 18 months, Mr Chapman has been course director on financial and political reporting for the Commonwealth Press Union, the British Council, and USIS. He has also acted as a visiting lecturer at the University of Beijing, where among other subjects he lectured on corporate governance.

Julian Kassum, site manager, said: “The site takes a strong ‘how to’ approach and will be especially useful to companies that are overhauling their corporate governance provisions.”

One of the big issues that will shortly be analysed in a full-length feature is whistle-blowing, and safeguards for employees who draw attention to irregularities.

USCIB promotes an open system of global commerce. Its membership includes some 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3 trillion. As American affiliate of the leading international business and employers organizations, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contacts:
Bryce Corbett, ICC Communications
(011-33-6) 20-47-32-52 or bryce.corbett@iccwbo.org

Jonathan Huneke, USCIB Communications
(212) 703-5043 or jhuneke@uscib.org

The ICC Corporate Governance Website

More on USCIB’s Financial Services Committee 

ICC statement on Tobin tax

Published on December 14, 2001

ICCWBO logo

Department of Policy and Business Practices

Commentary by the ICC Presidency

The “Tobin tax” – a business viewpoint

Introduction

Since originally raised in 1974 by Professor James Tobin, Nobel Memorial Pricze winner in economics, the question of taxing international transactions in different currencies has over the years been proposed in various versions and for a number of different reasons.  While ICC considers that greater stability of financial markets is desirable, it also believes that a “Tobin tax” would be harmful to international trade, economic growth and welfare, and businesses throughout the world. The smallest nations would be most hurt. The tax would not prove feasible in practice since it would require uniform implementation throughout the world, and would need to encompass not only spot transactions but also substitutes and supplements such as currency swaps, forwards and futures in order to limit evasion.

Tobin’s original idea

Tobin’s original idea was to introduce an internationally uniform tax on all spot conversions of one currency into another, proportional to the size of the transaction. The impact of such a tax would obviously punish short-term trading more seriously than longer-term trading. A major concern was to make currency exchange rates reflect to a larger degree long-run fundamentals relative to short-range expectations and risks, and thus reduce volatility. A second objective was to preserve and promote the autonomy of national macroeconomic and monetary policies. To raise revenues for international purposes was never a main motivation of Professor Tobin, but is a major purpose of many of the present supporters of such a tax.

Transactions are necessary to cover currency risks

An estimated 1,500 billion US dollars are traded each day on the world’s foreign exchange markets. Most transactions are for less than one week – most within a day – and the interbank share is approximately 70-80 per cent of the total. To a large extent, the high volume of the transactions reflects genuine needs to cover currency risks and spread the risks among different participants in the exchange market, in much the same ways that insurance risks are distributed on the international reinsurance market. Certainly, a single trade transaction may easily result in ten currency transactions because the currency risk is passed around among currency dealers like a hot potato. In most countries there are strict regulations regarding how much uncovered currency exposure banks may accept.

Harmful effects

A consequence of a Tobin tax would be to reduce short-term trading.  But there would be no guarantee that exchange rate volatility would diminish because liquidity would also diminish.  Indeed, minor currencies might become more volatile and vulnerable to manipulative speculative attacks. Reduced liquidity would also make stabilizing long-term arbitrage more risky. Thus, customers’ transaction costs would increase more than the tax levied. As with stock and security markets, some degree of short term trading – or speculation – is desirable on most currency markets to increase liquidity.

Transactions between minor currencies would be particularly hurt because there are no cross rates between many of them. Hence, it is necessary to use a major currency – for instance the US dollar (which is part of 80 to 90 per cent of all currency transactions) – as an intermediary currency. This implies two transactions or more (if an additional intermediary currency is required). Consequently, the tax might be doubled or tripled for conversions between many minor currencies. Because of the costs involved, pension funds and other portfolio managers would increase their home bias. Less capital would be available for international capital markets in general, and for investments in minor currencies in particular.

At a reasonable rate, say 0.05 per cent, the increased domestic autonomy the tax would provide in setting interest rates would be negligible.  And to the extent it did work, there might be a loss of discipline on economic policy stemming from abroad.

A Tobin tax would not prevent speculative attacks on a currency where the expected gain might be high — not unusually 10 per cent or more over a week. Furthermore, a tax could neither rectify nor repair unsustainable economic policy, which more often than not is the main reason why a currency comes under attack.

An impracticable tax

A Tobin tax would prove impracticable since it would require worldwide coverage, or at least coverage encompassing the G 10 countries, supplemented by a penalty on transactions to tax havens. Unilateral implementation would move currency trading offshore. Not only spot transactions, but also derivatives like currency swaps, forwards and futures would need to be taxed, since they are substitutes for and supplements to spot transactions.

ICC notes that Professor Tobin today is no longer a proponent of the tax that bears his name — inter alia, because the currency regime is now very different from the time when he originally proposed the tax and because he supports free trade as an instrument for raising welfare throughout the world.

Conclusion

In conclusion, ICC is firmly of the view that it would not be feasible to implement a Tobin tax.  And even if it were feasible, such a tax would neither significantly prevent speculative attacks on currencies nor increase national economic autonomy. The tax would throw sand in the wheels of international trade and investment and would harm the prospects for raising global economic growth and the welfare of all peoples.

About ICC

ICC is the world business organization, the only representative body that speaks with authority on behalf of enterprises from all sectors in every part of the world.  ICC promotes an open international trade and investment system and the market economy.  Business leaders and experts drawn from the ICC membership establish the business stance on broad issues of trade and investment policy as well as on vital technical and sectoral subjects.  ICC was founded in 1919 and today it groups thousands of member companies and associations from over 130 countries.

ICC-Ifo World Economic Survey

3766_image001Each quarter, the International Chamber of Commerce joins with the Munich-based Ifo Institute for Economic Research to survey more than a thousand economists and business executives around the world.

Download the latest survey (USCIB members only)

Information on the results of the most recent ICC-Ifo World Economic Survey

The results provide a highly regarded assessment of the economic climate worldwide and in major regions, as well as the outlook for growth in the coming months.  Each quarterly survey also addresses one hot-button topic of importance to global business.

USCIB members are encouraged to lend their insight to this important and respected survey.  Participation is voluntary and anonymous.  Completed surveys should be returned by fax to the Ifo Institute at the number indicated on the survey form.

We are seeking to build the American distribution list for the ICC-Ifo World Economic Survey.  If you would like to have future surveys sent directly to you, please contact:

Jonathan Huneke
Vice President, Communications
United States Council for International Business (USCIB)
1212 Avenue of the Americas, New York, NY 10036
Tel: +1 212 703-5043  E-mail: jhuneke@uscib.org

Thank you for your participation!

USCIB Spring 2008 Seminar Series

Modified on December 7, 2018

Letters of Credit: Are the New Rules Working?

3778_image002Nearly one year after UCP 600 went into effect on July 1, 2007, problems and challenges have emerged in the practical application of these rules that impact current trade practice and can increase your payment risk.

It’s time to ask – how are the new rules really working in practice?

Join USCIB for a full day seminar in any one of five locations, where you will have the opportunity to examine the issues, clarify the major changes in the rules and assess your risks – from the standpoint of new insights gained from current trade practice.   Whether you have already attended a seminar on the topic or this is your first in-depth look at the new rules, this seminar brings fresh and important perspectives to your understanding of the impact and risks to your business.

Our instructor, Don Smith, is a well-known speaker and writer on trade finance and brings a wealth of real world experience to the topic.   In his role as an expert member of the International Chamber of Commerce’s Banking Commission, Mr. Smith represented the United States in the ICC’s updating of its longstanding benchmark rules that resulted in the revised UCP 600.  He is uniquely qualified to address the rule and its impact on trade practice.

Registration fee is $395 and includes all materials, continental breakfast and buffet lunch.  USCIB members are entitled to a 10 percent discount.

Seminar Locations: (click on event date to register online)

May 5 – New York, NY
Hosted by:  Bank of New York Mellon

May 15 – Chicago, IL
Holiday Inn Chicago Mart Plaza (Riverview)

May 19 – Burlington, MA
Hosted by:  TD Banknorth

May 20 – Lyndhurst, NJ
Hosted by: TD Banknorth and Commerce Bank

For a copy of the seminar brochure, including registration form, please click HERE.

For more information, please contact Debbie Siu at dsiu@uscib.org or 212-703-5062.

Order your copy of UCP 600 from ICC Books USA

More on USCIB’s Banking Committee

ICC website