Hosting European Media, USCIB Makes Case for Ambitious Transatlantic Trade Pact

Published on July 22, 2015

USCIB’s Washington, D.C. office hosted a diverse group of 10 journalists from around the European Union yesterday for a discussion of the state of transatlantic trade talks. USCIB Vice President Shaun Donnelly provided an in-depth analysis of key issues at stake in the Transatlantic Trade and Investment Partnership (TTIP) negotiations.

Joined by Eva Hampl, USCIB’s director of investment, trade and financial services, Donnelly emphasized American business’s strong support for an ambitious and comprehensive TTIP agreement that sets high standards in areas such as regulatory cooperation and protection of investments. He also stressed that the negotiating dynamics as well as an ultimate agreement would be different from other U.S. and EU trade pacts, owing to the relative size and sophistication of the economies involved.

“Average tariffs between our two economies are now around three percent,” he observed. “So it’s clear that the ‘easy’ issues of reducing traditional trade barriers have already been tackled. What we need to do now is address the ‘hard’ issues: making our regulatory systems work together to expand trade and investment, streamlining government procurement rules and creating a level playing field with regard to state-owned enterprises.”

Since the beginning of the TTIP negotiations in 2013, the treatment of investor-state dispute settlement (ISDS) rules in TTIP has emerged as a lightning rod for many in Europe. Donnelly reminded the journalists that ISDS was in fact a European invention, forming a cornerstone of many bilateral investment treaties and free-trade agreements.

“Investment is now a central issue in trade negotiations,” Donnelly stated. “We need strong investment rules in TTIP, both to safeguard reciprocally beneficial FDI and as a benchmark for further agreements with other countries.”

The media roundtable was facilitated by the U.S. State Department’s Foreign Press Center.

Enable Trade for Development, ICC Secretary General Writes in FT

Published on July 15, 2015

During the Third International Conference on Financing for Development, which took place in Addis Ababa from July 13 to 16, the Financial Times published a letter by ICC Secretary General John Danilovich underscoring the need to reform the global trading system to support the post-2015 sustainable development agenda.

The full text of the letter follows:

Addis declaration must mark the start of a push on three commitments

Sir, Your editorial “Global leaders must back broader growth tactics” (July 13) on this week’s Financing for Development conference in Addis Ababa, rightly centres on the disconnect between diplomatic rhetoric and real world action when it comes to fostering development. Nowhere is this more apparent than on the issue of reforming the global trading system in support of the world’s poorest.

If we are to make 2015 the year of sustainable development, the Addis declaration must mark the start of a concerted push to deliver on three longstanding commitments.

First, governments should ratify and implement the World Trade Organisation’s Trade Facilitation Agreement (TFA) without delay. This deal – forged in 2013 but ratified by only eight governments to date – would have a transformational effect on the ability of entrepreneurs in developing countries to access global markets by reducing unnecessary red tape at borders. Implementing the TFA, which would also support broader efforts to eliminate corruption and reduce rates of food wastage, should be seen a quick win to deliver on the promise of the post-2015 development agenda.

Second, action is needed to address a growing shortage of bank finance to support trade. Trade finance is one of the safest forms of financing and has the advantage of directly promoting development through trade. According to the Asian Development Bank, there is currently a $1.9tn financing gap for trade globally – with as much as $900bn of the shortfall in developing Asian economies alone. The causes of this problem are multi-faceted: from skills shortages in the financial and commercial sectors through to the unintended effects of national financial crime policies. None will be easy to resolve, but that must not be an excuse for inaction.

Finally, it is imperative that world leaders exercise the political will to conclude the long-stalled Doha Round of trade talks after almost 14 years of periodic crises and missed deadlines. Recent reports have once again called into question whether governments will be able to meet their latest goal of striking a grand bargain by the end of the year. G20 leaders, in particular, must definitively commit to an agreement and give their negotiators the necessary latitude to deliver it. Concluding the round would send the clearest of signals that the international community is finally serious about turning words into action when it comes to enabling trade for development. We must all invest the time and effort to get the Doha deal done.

John Danilovich
Secretary General,
International Chamber of Commerce,
Paris, France

Click here to read the original letter published on July 14 by the Financial Times

OECD Updates its Policy Framework for Investment

Published on July 6, 2015

USCIB member Kimberly Claman (Citigroup) speaks at the joint meeting of the World Bank and the OECD.

At last month’s annual Ministerial meeting of the Organization for Economic Cooperation and Development (OECD), the 34-member organization adopted and issued an important update to the OECD’s Policy Framework for Investment (PFI), first adopted nine years ago in 2006. Basic information on this OECD investment policy effort, including the text of PFI, the OECD’s fact sheet and press release, the Ministerial Council’s action on the PFI, and relevant background materials are available here.

The PFI offers a broad-based checklist of policy recommendations for consideration by individual governments, especially developing country governments who want to attract and retain Foreign Direct Investment (FDI). The checklist is voluntary and has been used successfully in connection with OECD advisory services, regional FDI policy dialogues and policy review of individual countries that step forward to use this policy tool.

USCIB, both directly and through the OECD’s Business and Industry Advisory Council (BIAC) has been quite active in this effort to update the PFI. USCIB staff and member company representatives have participated in reviews of draft versions of the update held in Paris, Brussels and Washington as well as playing a leading role in authoring detailed formal BIAC comments into the OECD drafting process. I was honored to lead BIAC teams in the formal stakeholder consultations on PFI held in Paris and Brussels over the past year. USCIB members Kimberley Claman of Citigroup and Nicole Bivens Collinson of Sandler Travis & Rosenberg P.A. were panelists at a joint OECD/World Bank seminar on the PFI held in Washington this spring.

USCIB member Nicole Bivens Collinson (Sandler, Travis & Rosenberg) speaks at the joint meeting of the World Bank and the OECD.

As in so many policy areas, in investment the critical variable is host government commitment to policy reform and implementation. PFI is not a panacea or magic wand to attract investment. It should not be oversold. But in the hands of a government committed to policy reform in the investment area and beyond, the PFI has proven it can be a useful, practical tool to help improve investment climate to promote growth and development through FDI.

I commend the OECD for a job well done in updating the PFI and for the increased priority the organization is according to investment and FDI issues within OECD member countries and beyond.

This post was originally published on the Investment Policy Central website.

S&ED Outcomes: Investing in China

Published on July 6, 2015

Last week, the United States and China concluded their seventh meeting of the Strategic & Economic Dialogue (S&ED) in Washington, D.C. The annual high level dialogue, which launched in 2009 to provide a forum to discuss a wide range of bilateral, regional, and global issues between the two countries, has become an integral part of the economic relationship. The meeting resulted in a number of joint strategic and economic outcomes issued by the Departments of State and Treasury which co-lead the U.S side. The Treasury also published a U.S.-specific fact sheet on the outcomes of the economic track.

At the dialogue, both nations reaffirmed their commitment to negotiate a high-standard Bilateral Investment Treaty (BIT) and intensify negotiations. Even before the meetings began, the BIT was considered one of the top issues on this year’s agenda. The 19^th round of BIT negotiations concluded earlier this month in Beijing, following a period of a year and a half, during which China developed its “negative list,” a compilation of areas it would like exempted from the BIT’s market-opening rules. Despite the apparently slow process of the negotiations, China presented its list, the first the country has ever created, at the June round in Beijing, demonstrating its commitment to the negotiations. The U.S. experts, led by USTR and State, are now reviewing the initial Chinese list in great detail.

A major outcome of last week’s S&ED, described as one of the dialogue’s most significant outcomes by U.S. Treasury Secretary Jack Lew, was China’s commitment to provide an updated negative list reflecting a commitment to open investment environments by September of this year. This could be a key step in the negotiation process, moving discussions forward in a manner that will allow for an appropriately market opening agreement to benefit both negotiating parties. The Treasury Department’s fact sheet explains that U.S. officials have made clear to China that their list of exceptions will have to be ‘very limited and narrow’, as well as ‘represent substantial liberalization’.

Adequate investment protection is indispensible for U.S. investors in China, as anywhere in the world. While a successful BIT presents an opportunity for U.S. investors to gain access to new sectors in the Chinese market, without protections and narrowly tailored exclusions, the benefits remain limited. USCIB’s Shaun Donnelly, Vice President of Investment and Financial Services, discussed the S&ED on a segment on CNBC last week, highlighting the importance of the investment talks.

Despite being the world’s two largest economies, and the destinations for about 30 percent of global foreign direct investment (FDI), the United States and China account for a relatively small share of one another’s FDI. In 2014, Chinese FDI in the United States exceeded American FDI in China for the first time. Given the size and dynamic nature of the Sino-American economic relationship, the importance of finishing these the BIT negotiations with a high-standard outcome cannot be overstated; a sub-standard agreement would do more harm than good. Progress from the most recent round of negotiations and the outcomes of the S&ED provide much needed momentum to the process and hopefully, the United States and China can capitalize on this momentum, leading to a swift conclusion of a strong agreement.

Of course, other developments – be they positive or negative – continue to be relevant to American or other foreign investors looking at China, which remains a complex and challenging place to do business. Even as we see signs of progress on the BIT, other developments send discouraging signals – from sectoral restrictions to a new NGO law that threatens to restrict independent business organizations in China. The U.S. business community, including USCIB, will continue to focus on investment issues in China, working to encourage the two governments to provide clear protections and real market opening for potential investors in both directions.

This blog post was originally published on the Investment Policy Central website.

China-OECD Cooperation Crucial for International Business

Published on July 2, 2015

The seventh joint meeting of the U.S.-China Strategic and Economic Dialogue wrapped up on June 24, concluding the highest-level bilateral forum between the two countries. The dialogue is essential for fostering a constructive relationship between the two nations, as well as for paving the way for Chinese economic reform. These bilateral economic talks are complemented by multilateral initiatives, including engagement with the Organization for Economic Cooperation and Development (OECD).

The OECD and China are expected to agree on a detailed program of work for 2015-16. This is particularly timely as China will soon unveil priorities for its 2016 G20 Presidency, and will also outline objectives early next year for its 13th Five Year Plan. China is experiencing an enduring investment downturn and deeper regional divergences.

A return to strong and sustainable growth will necessitate a firm commitment to policy reforms and their implementation. The Business and Industry Advisory Committee (BIAC) to the OECD China Task Force regularly highlights the importance of strengthening rule of law and creating a level playing field for all companies in China, whether foreign or domestic, private or state-owned.

“China and the OECD need each other now more than ever,” said Joerg Wuttke, chair of the BIAC China Task Force, commenting on the visit of Chinese Premier Li Keqiang to the OECD Headquarters in Paris. “As Chinese companies ramp-up overseas investment, and as OECD-based companies continue to sow investments in China, a new and enhanced program for China-OECD cooperation should benefit both parties,” he added.

The U.S. business community supports China’s reform agenda. On June 25, USCIB Vice President Shaun Donnelly talked about the U.S. business community’s perspective on the U.S.-China Strategic and Economic Dialogue in an interview with CNBC. He noted that the prospects are good for a bilateral investment treaty between the U.S. and China, and he discussed cyber security and government procurement.

USCIB has also been engaged with the OECD’s comments on China’s 13th Five Year Plan, contributing to BIAC’s submission on the plan last year. USCIB’s China Committee will meed to discuss OECD-China relations in late July.

The OECD, a world-leader in policy tools, analysis, and advice on economic governance, is well placed to advise China on its reform agenda. OECD instruments, such as the Guidelines for Multinational Enterprises and the Anti-Bribery Convention, will be especially useful for Chinese companies investing overseas that face both the complexities and expectations of global markets.

“Sustaining China’s growth is in the interest of all parties,” commented Wuttke. “Recognizing the enormous potential for reform, the BIAC China Task Force looks forward to contributing to this next phase of China-OECD cooperation.”

A Victory for the U.S. Trade Agenda

Published on July 1, 2015

President Obama signs Trade Promotion Authority on June 29.

After going back and forth between the Senate and the House of Representatives, Trade Promotion Authority finally passed both chambers of Congress and was signed into law by President Obama on June 29. The conclusion of this legislation, along with an additional trade preferences bill that includes Trade Adjustment Assistance, represents a major victory for the pro-trade community and sets the stage for the finalization of two high standard trade deals – the Trans-Pacific Partnership (TPP) with Pacific rim countries, and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union.

Finalizing TPA required a strong advocacy push by USCIB and other members of the Trade Benefits America Coalition, an organization of American business associations dedicated to spreading the word about the benefits of trade to U.S. jobs, growth and workers. The campaign involved many moving parts including earned media, paid media, third party engagement, grassroots activity, and consistent social media engagement. In 2015 alone, coalition members made more than 250,000 direct contacts with members of congress and their staff.

Now that TPA has passed, the business community will focus its efforts on securing a high standard TPP. TPA has given Obama the leverage he needs to close out negotiations on the free trade agreement with 11 other Asia-Pacific countries.

USCIB Advocates for TTIP at McCain Institute Debate

USCIB Vice President Shaun Donnelly defended the Transatlantic Trade and Investment Partnership (TTIP) at a debate hosted by the McCain Institute in Washington, D.C. on June 22. The debate, “A New Transatlantic Trade Deal: Good for America?”, focused on whether the trade deal between the United States and the European Union would be positive for American jobs, growth, labor standards and the environment.

Donnelly and former U.S. Congressman Jim Kolbe (German Marshall Fund) argued in favor of an ambitious TTIP, explaining that a free trade agreement with the EU would boost U.S. exports to $3 billion annually and increase the purchasing power of American families. They also noted that TTIP provides an opportunity for the United States and Europe to set global trade rules and provide a new template for modern trade agreements given stalled talks at the World Trade Organization.

“We face a fundamental choice…you can either recognize that globalization is here and try to deal with it and manage it, and a strong TTIP can be part of it; or we can try and deny it and turn back the clock and live in the good old days when it was a lot simpler and you could make everything in America and you didn’t have to worry about supply chains.” Donnelly said. “We have to accept reality. Nostalgia is not a strategy for competitiveness and jobs in the 21st century. TTIP is a strategy for that, and that’s what we ought to do.”

Donnelly also urged Congress to pass Trade Promotion Authority and then for the Obama administration to negotiate an ambitious TTIP that would include Investor-State Dispute Settlement, because investment is a key component of global commerce.

Watch the debate on the McCain Institute website.

USCIB Cheers Senate Passage of Trade Promotion Authority

Published on June 25, 2015

New York, N.Y., June 24, 2015 – The United States Council for International Business (USCIB) hailed the passage of Trade Promotion Authority (TPA) by the U.S. Senate today, as the bill cleared its final legislative hurdle before heading to the president’s desk. TPA will allow the United States to negotiate high-standard trade deals with its partners in Asia and the European Union.

“We thank the Senate for moving TPA forward and urge the president to sign this bill into law as soon as possible,” said USCIB President and CEO Peter Robinson. “The passage of TPA marks a renewed U.S. commitment to trade expansion, especially the Trans-Pacific Partnership, as it will pave the way for market-opening deals that remove barriers to our exports while bringing benefits to American workers and consumers.”

Robinson thanked the TPA bill’s supporters. “This was a difficult vote for many members of Congress, and we applaud the courage and steadfastness of TPA supporters,” he said. “The business community is extremely appreciative of all the hard work that went into this legislation.” He also thanked the Obama Administration, especially U.S. Trade Representative Michael Froman, for its work with Congress in getting TPA passed.

Robinson also encouraged Congress to finalize Trade Adjustment Assistance, a bill that provides aid to American workers who have been displaced by trade, and Customs Reauthorization, which will help streamline customs procedures while securing America’s borders.

“We urge Congress and the Administration to move expeditiously on all these elements of the U.S. trade agenda,” Robinson said. “The business community is united behind TPA and we intend to keep the momentum going until it and other trade bills become law.”

USCIB is a founding member of the Trade Benefits America Coalition, an organization of American business associations dedicated to building support for the U.S. trade agenda.

About USCIB:
USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and regulatory coherence. Its members include U.S.-based global companies and professional services firms from every sector of our economy, with operations in every region of the world. With a unique global network, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment. More at www.uscib.org.

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

More on USCIB’s Trade and Investment Committee

In CNBC Interview, USCIB’s Donnelly Assesses Prospects for U.S.-China Investment Treaty

Published on June 24, 2015

In an interview on CNBC, USCIB Vice President Shaun Donnelly talked about the U.S. business community’s perspective on the U.S.-China Strategic and Economic Dialogue taking place this week. He noted that U.S. business is looking forward to a bilateral investment treaty between both countries, and he discussed cyber security and government procurement.

Watch the interview.

OECD Report: TFA Could Significantly Reduce Costs of Global Trade

Published on June 19, 2015

Implementing the WTO Trade Facilitation Agreement (TFA) could reduce worldwide trade costs by anywhere from 12.5% to 17.5%, according to the updated 2015 OECD Trade Facilitation Indicators (TFIs). The OECD TFIs are designed to inform governments on potential measures to improve border procedures, reduce trade costs, boost trade flows and reap greater benefits from international trade. The Indicators identify areas for action and enable the potential impact of reforms to be assessed after implementation.

The TFA creates a significant opportunity to improve the speed and efficiency of border procedures, thereby reducing trade costs and enhancing participation in the global value chains that characterize international trade. The 2015 OECD TFIs find that countries which implement the TFA in full will reduce their trade costs by between 1.4 and 3.9 percentage points more than those that do only the minimum that the TFA requires. The opportunities for the biggest reductions in trade costs are greatest for low and lower middle income countries.

The 2015 OECD TFIs cover 152 countries across different geographical regions and levels of development. Using cost estimates from the updated ESCAP-World Bank Trade Costs Dataset, they provide the most current assessment of the potential impact of implementing the measures included in the TFA. They also allow countries to identify their strengths and weaknesses in trade facilitation, prioritize areas for action and mobilize technical assistance and capacity building in a more targeted way.

The OECD TFIs measure the actual extent to which countries have introduced and implemented trade facilitation measures in absolute terms, but also their performance relative to others, using a series of quantitative measures on key areas of the border process.

Read the OECD’s full policy assessment.

USCIB Represents Business Views in “E15” Investment Policy Group

Published on June 18, 2015

With opinions on foreign investment, including such issues as investor-state dispute resolution, sometimes sharply divided, finding common ground is important. USCIB Vice President Shaun Donnelly was one of only three business representatives at last week’s meeting of the Investment Policy Experts group under the overall “E15” (E for Experts) initiative of 18 different subject-matter groups convened in Geneva throughout 2015 under the auspices of the World Economic Forum (WEF) and the International Center for Trade and Sustainable Development (ICTSD).

Each of the experts groups, including Donnelly’s , is debating possible policy options which the WEGF and ISCTD will package for further discussion around the WTO Ministerial in Nairobi in December and at the WEF’s annual Davos gathering in January. Other leading American experts, including from USCIB member firms, are active on other issue groups.

The range of views is vast among experts within the investment group. Donnelly and his colleagues from academia, think tanks and international organizations are struggling with issues from investment agreements and dispute settlement to how investment can drive sustainable development. After intense two-day sessions in March and last week in early June, the Investment group remains divided on specific policy initiatives. So Donnelly and his colleagues will have more tough work over the course of this year.

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