Policy Areas Archives

USCIB Welcomes Bipartisan Trade Policy Accord

Published on May 14, 2007

3699_image002New York, N.Y., May 14, 2007 – The United States Council for International Business (USCIB), which represents hundreds of America’s top global companies, welcomed the agreement between the White House and Congress on a new trade policy “template,” which it said should clear the way toward approval of pending U.S. free trade pacts and renewal of the president’s trade negotiating authority.

USCIB, the U.S. affiliate of the International Organization of Employers, which represents business in the International Labor Organization, said it was especially pleased that negotiators had forged a compromise approach to incorporating international labor principles into U.S. trade agreements that recognizes the role of the ILO to help its member countries advance labor conditions.

USCIB President Peter M. Robinson applauded the efforts of U.S. Trade Representative Susan Schwab and Rep. Charles Rangel, chairman of the House Ways and Means Committee, to conclude the deal.

“Ambassador Schwab and Chairman Rangel have worked tirelessly to forge a bilateral consensus on trade policy, paving the way for further trade liberalization that will benefit business, workers, consumers and farmers,” stated Mr. Robinson.  He noted that, at last December’s USCIB annual award dinner, Congressman Rangel had underscored his strong interest in promoting a forward-looking trade agenda.  “The Chairman delivered, and we are most appreciative.”

Mr. Robinson said the way was now clear to gain approval of the free trade agreements currently before the Congress.  “Hopefully, Congress will approve these FTAs and extend the president’s trade promotion authority,” he stated.  “Extension of trade authority is urgently needed to generate movement in the Doha Round, which is a high priority for U.S. business.”

Mr. Robinson said he was gratified that the agreement’s labor provisions prominently feature the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, which was developed at the initiative of the International Organization of Employers’ members, including USCIB.  The ILO’s tripartite structure encompasses representation from governments, employers and trade unions, so the ILO declaration’s principles have the support of all three groups in the U.S. and internationally.  It is therefore appropriate to reaffirm them in U.S. trade agreements as objectives that all countries should recognize and strive to realize in their national laws.

USCIB said it recognized that the negotiations on transforming the agreement, presently in the form of a joint “concept paper,” into legislation would require continued bipartisan cooperation between the Executive Branch and Congress.  It also recognizes that concerns may persist in the business community on non-labor issues covered by the agreement, particularly on intellectual property.  “We are confident that, at the end of the day, the same sense of bipartisanship that led to this agreement will carry forward in the drafting of actual legislation,” stated Mr. Robinson.

The United States Council for International Business 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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3.5 trillion.  As the exclusive American affiliate of three key global business groups – the International Chamber of Commerce, the International Organization of Employers, and the Business and Industry Advisory Committee to the OECD –  USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade.

Contact:

Jonathan Huneke, USCIB

Tel: +1 212 703 5043 or +1 917 420 0039 (mobile)

E-mail: jhuneke@uscib.org

More on USCIB’s Trade and Investment Committee

More on USCIB’s Labor and Employment Committee

Head of Leading Industry Group Applauds President’s Statement on Open Economies

Published on May 10, 2007
USCIB Chairman William G. Parrett speaking at the G-8 Business Summit in Berlin (Photo: BDI).
USCIB Chairman William G. Parrett speaking at the G-8 Business Summit in Berlin (Photo: BDI).

New York, May 10, 2007 – The chairman of the United States Council for International Business, William G. Parrett, applauded President Bush’s reaffirmation today of an open-door policy toward foreign investment in the United States and his encouragement that other nations follow this approach.

President Bush today issued a ringing endorsement of open markets worldwide, urging other nations “to join us in supporting an open investment policy and protecting international investments.”

Mr. Parrett, chief executive officer of Deloitte, welcomed the administration’s statement, calling it an important signal to markets and U.S. trading partners. “This is the first time in some 15 years that the U.S. has made such a high-level reaffirmation of the importance of open markets,” he said.  “Business sees U.S. government leadership as critical to preserving open markets, and I applaud the President’s commitment announced today.”

At last month’s first-ever G-8 business summit in Berlin, Mr. Parrett joined the heads of business federations from the other G-8 nations in appealing to governments to avoid recourse to investment protectionism.

“Governments need to take action at the highest level to avoid investment protectionism if we want to encourage the free flow and benefits of international investment,” Mr. Parrett said at the April business summit.  “They need to affirm, in word and practice, their commitment to open, cross-border investment.”

The business community has seen worrisome signs that the pendulum is swinging away from open markets in many countries.  Mr. Parrett said, “U.S. business recognized that the world had changed dramatically since 9/11 and that governments must pay more attention to national security issues, but a legitimate concern for national security needs to be considered alongside the benefits of allowing foreign investment.”

The United States Council for International Business 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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3.5 trillion.  As the American affiliate of several leading global business groups, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade.  More information is available at www.uscib.org.

Contacts:
Jonathan Huneke, VP Communications, USCIB
Tel: +1 212 703 5043 or +1 917 420 0039 (mobile)
E-mail: jhuneke@uscib.org

Madonna Jarrett, Director, DTT Public Relations and CEO Communications
Tel: +1 212 492 3738 or +1 646 388 2335 (mobile)
Email: mjarrett@deloitte.com

President Bush’s statement on open economies (White House website)

G-8 Business Declaration: Joint Statement of the G-8 Business Organizations (PDF file, 1.8 MB)

More on USCIB’s Trade and Investment Committee

Deloitte website

US Executives to Engage Top International Tax Officials at OECD Conference in Washington

Published on May 10, 2007

3695_image002Washington, D.C., May 10, 2007 – U.S. executives and tax counsel will have unparalleled access to key tax officials from the Organization for Economic Cooperation and Development, as well as United States and other OECD member nations, at a major conference, “New OECD International Tax Initiatives: Looking Ahead,” June 4 and 5 at the Ronald Reagan Building and International Trade Center in Washington, D.C.

The conference, organized by the OECD, the United States Council for International Business (USCIB), and the Business and Industry Advisory Committee (BIAC) to the OECD, is the third in a series of annual events spotlighting the increasingly important work of the OECD in the area of international taxation.  It is produced in association with the International Fiscal Association-USA Branch, the International Tax Policy Forum, the National Foreign Trade Council, the Organization for International Investment, the Tax Council Policy Institute and the Tax Foundation.

“This conference provides an excellent opportunity to learn more about the important tax policy work being done through the OECD, and for U.S. business to further engage in this process,” said Lynda K. Walker, USCIB’s vice president and international tax counsel.  “It is evidence of the significance of the projects being undertaken by the OECD that such high-level officials are planning to join us for this important event.”

The United States, as a founding member of the OECD, has played an active role in developing the organization’s tax program.  The OECD presently consists of 30 advanced industrialized nations, although in the tax area Argentina, Chile, China, India, Russia and South Africa play an active role in the development of the organization’s work.  It facilitates cooperation through the development of standards for international tax policies affecting multinational business and other taxpayers.

The June conference will feature an impressive line-up of tax policy experts from the U.S. Treasury/Internal Revenue Service, the OECD’s Center for Tax Policy and Administration, and private industry.   Eric Solomon, assistant secretary of the Treasury for tax policy, will be a keynote speaker.  Ambassador Constance A. Morella, the U.S. representative to the OECD, will open the conference, along with OECD Deputy Secretary General Thelma Askey.

The OECD seeks to promote growth through the coordination of economic and regulatory policies between its member nations, which are all democratic market economies.  BIAC is composed of major business federations from the 30 OECD countries, and provides policy guidance to OECD members and its Paris-based secretariat.  USCIB is BIAC’s representative in the United States and regularly fields American industry experts for BIAC and OECD activities.

Ms. Walker noted that the top OECD tax officials have been involved in the planning of the program.  Among those participating from the OECD are Jeffrey Owens, the director of the Center for Tax Policy and Administration, Mary Bennett, head of its division on tax treaties, transfer pricing and financial transactions, Caroline Silberztein, head of its transfer pricing unit, and Jacques Sasseville, head of its tax treaty unit.

Panels at the conference will address:

  • Attribution of Profits to Permanent Establishments
  • Achieving Greater Consensus on the Application of Transfer Pricing Guidelines
  • Issues Arising from Business Restructurings
  • International Tax Administration:  Co-operation and Information Exchange
  • Other Tax Treaty Issues, including: A Re-examination of the Nondiscrimination Principle and Tax Treaty Application to Collective Investment Vehicles
  • Current OECD Work on Cross-Border Services
  • OECD’s Dispute Resolution Report

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 BIAC, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contact:

Jonathan Huneke, VP communications, USCIB

(212) 703-5043 or jhuneke@uscib.org.

Conference agenda, registration form and other information

More on USCIB’s Taxation Committee

OECD website

Joint Business Letter on Iran Sanction Legislation (S 970 S 1234)

Published on May 9, 2007

Dear Senator:

We agree that preventing Iran from developing the capability to produce nuclear weapons is a very important U.S. national security objective.  We are concerned, however, that both S. 970 and S. 1234 contain provisions that will undermine rather than promote this critical objective.

First, the extraterritorial extension of sanctions would over-ride and preempt provisions of 17 Executive Orders issued over a 28 year period that provided the legal authority for current sanctions.  Second, as explained more fully below, extraterritorial extension of sanctions will reignite economic, diplomatic and legal conflicts with our allies that will frustrate rather than promote multilateral action against Iran.

Both S. 970 and S. 1234 propose, among other troubling provisions, that the existing unilateral U.S. prohibitions on trade and investment with Iran by U.S. persons and entities be expanded by making the parent company liable for the actions of its subsidiaries that are domiciled in foreign countries.

The history of similar efforts demonstrates clearly that such a unilateral effort will provoke a negative response from our allies that will divert attention from developing an effective economic and diplomatic multilateral response to Iran:

  • During the Soviet invasion of Afghanistan in the early 1980s, the U.S. sought to ban participation in the Siberian pipeline project by European subsidiaries of U.S. companies.
  • In response to the U.S. sanctions on the pipeline project, the U.K., France, the Netherlands, and other countries passed blocking statutes, requiring the subsidiaries to honor existing contracts and disobey the U.S. sanctions, thereby putting the subsidiaries and their parents in the impossible position of not being able to obey both U.S. and applicable foreign law at the same time.
  • Under considerable pressure from EU governments and American corporations, the Reagan Administration withdrew the extraterritorial measures to avert adverse rulings in multiple pending legal cases in both U.S. and overseas courts.  Beginning with the regulations implementing sanctions on Libya in 1986, the United States has repeatedly recognized that extraterritorial sanctions will not work.

The United States and its allies are making progress in assembling broad, multi-national economic and diplomatic action against Iran.  Enacting either S. 970 or S. 1234 and thereby imposing mandatory U.S. penalties on entities in the same countries that are assisting us would only undercut the progress that our diplomats are making.  At worst, these other governments could use existing or new blocking statutes and other measures to counteract the threat of U.S. penalties.

In targeting our allies for penalties, these bills would draw international attention away from the core problem: Iran’s threatening behavior in seeking nuclear weapons.  As Ambassador Nicholas Burns noted on March 29 in testimony before the Senate Foreign Relations Committee, the administration “could not support… modifications to this act now being circulated in Congress that would turn the full weight of sanctions not against Iran but against our allies that are instrumental in our coalition against Iran.” It is counterproductive to penalize entities and individuals in the very countries whose cooperation we need to effectively counteract Iran’s dangerous behavior.

In addition, Section 5 of S. 970 would make the United States more vulnerable to international commercial complaints and damage U.S. global financial leadership by greatly expanding the universe of entities subject to sanctions to include insurers, creditors and foreign subsidiaries.  The United States would undoubtedly face complaints and lawsuits from our trading partners questioning their legality if sanctions were imposed on these entities.

Congress must ensure that the world’s focus remains on applying multilateral pressure on Iran and that the United States and our allies continue to present a united front to influence Iran’s behavior.  S. 970 and S. 1234 would not further the interests of U.S. national security – indeed, they might detract from current efforts.  We respectfully request that any action on these bills be preceded by a thorough and careful review of its potential for counterproductive and harmful consequences.

Sincerely,

Business Roundtable

Coalition for Employment Through Exports

Emergency Committee for American Trade

National Association of Manufacturers

National Foreign Trade Council

National U.S.-Arab Chamber of Commerce

Organization for International Investment

U.S. Chamber of Commerce

U.S. Council for International Business

USA*Engage

More on USCIB’s Trade and Investment Committee

EU’s Barroso Calls for Easing of Transatlantic Regulatory Hurdles

Published on April 30, 2007
At the New York Stock Exchange, NYSE CEO John Thain (left) and President Barroso (center) visit a trader. (Photo: NYSE)
At the New York Stock Exchange, NYSE CEO John Thain (left) and President Barroso (center) visit a trader. (Photo: NYSE)

Speaking to an audience of USCIB members and other invited guests gathered at the New York Stock Exchange, José Manuel Barroso, the president of the European Commission, delivered remarks on “Strengthening the Transatlantic Economy” on April 27.

Joined by German Chancellor Angela Merkel, who holds the rotating presidency of the European Union, and other European leaders, President Barroso later met with President Bush at the White House in the annual U.S.-EU summit.  Topics on the agenda included rekindling the WTO’s Doha Round and efforts to deal with climate change.

The European Commission chief used his remarks in New York to call for joint measures between the United States and Europe to ease regulatory burdens that can impede trade, investment and other cooperative action.  He cited OECD estimates that removal of such barriers could lead to permanent gains in per capita GDP on both sides of the Atlantic of between 3.0 and 3.5 percent.

“It is no longer tariffs, but non-tariff barriers and regulatory burdens which act as the biggest brake on the transatlantic engine,” said Mr. Barroso.  “By further reducing unnecessary obstacles to trade and administrative burdens linked to different standards, we will do much to stimulate further economic growth.”

Mr. Barroso called for both parties to work together, through a joint commission, to address existing, unnecessary barriers posed by divergent regulations, and take steps to avoid the emergence of new ones.

“This of course does not prejudice the right of each party to adopt measures to achieve legitimate policy objectives, like protecting consumers or our environment,” he stated.

At the April 30 summit meeting at the White House, President Bush and the European leaders said they had made progress in efforts to address global warming, agreeing that climate change requires global action but that countries have the right choose their own ways to tackle it.

“I think that each country needs to recognize that we must reduce our greenhouse gases and deal, obviously, with their own internal politics, to come up with an effective strategy,” stated Mr. Bush.

The leaders also promised to press their respective Doha Round negotiators to reach agreement on a comprehensive package in the multilateral trade talks.

Staff contact: Justine Badimon

Remarks by President Barroso, “Strengthening the Transatlantic Economy” (PDF file)

More on USCIB’s European Union Committee

European Commission website

NYSE website

World Trade Week NYC Spotlights Small Business Success in the Global Marketplace

Published on April 30, 2007
The hustle and style at Grand Central Terminal epitomizes the spirit of New York’s smaller traders.
The hustle and style at Grand Central Terminal epitomizes the spirit of New York’s smaller traders.

New York, N.Y., April 30, 2007 – This year’s World Trade Week celebration in New York City, which takes place May 21-25, will spotlight small and medium-sized enterprises (SMEs) that have built their businesses by accessing global markets and made the world their oyster.

In the public mind, international trade has become synonymous with big business and big money, seemingly far removed from the needs and concerns of smaller entrepreneurs.  Yet recent statistics from the U.S. government tell a different story.  For example, SMEs make up over 90 percent of all New York State exporters, and the value of the goods they sell abroad accounts for fully half of the state’s merchandise exports – the third-highest percentage of any state in the nation.

“The question is no longer whether SMEs can go global,” said Peter M. Robinson, president of the United States Council for International Business (USCIB), a lead partner organizations for World Trade Week NYC.  “The real questions are when and where.”

Patrick J. Foye, chairman of the Empire State Development Corp./Downstate, and Roy W. Hoffman, managing director for international client service with RSM McGladrey, will serve as co-chairs of World Trade Week NYC 2007, part of a nationwide celebration of international trade, to be observed by business and trade-related organizations across the New York metropolitan area.

Kicking off the week’s events is the annual International Trade Awards Breakfast on Monday, May 21, at the Weissman Center for International Business, Baruch College/CUNY.  World Trade Week NYC 2007 organizers are proud to announce the following award recipients:

  • S.S. Sampliner & Co., Inc. will receive the Export Achievement Award
  • Max Brenner Chocolate will receive the NYC International Achievement Award
  • The New York State Small Business Development Center at LaGuardia Community College/CUNY will receive the Export Appreciation Award
  • Stewart B. Hauser, Chairman, NY/NJ Foreign Freight Forwarders & Brokers Association, Inc., will receive the Global Trade Award

World Trade Week NYC 2007 is hosted by the New York District Export Council and supported by Presenting Sponsor, RSM McGladrey.  The United States Postal Service, Empire State Development, HSBC and Roanoke Trade are also sponsors.  Many nonprofit economic development organizations are involved, including several internationally based chambers and trade associations.  Complete, up-to-the-minute information on World Trade Week NYC 2007 events and supporting organizations is available at www.worldtradeweeknyc.org.

The United States Council for International Business 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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3.5 trillion.  As the exclusive American affiliate of three key global business groups – the International Chamber of Commerce, the International Organization of Employers, and the Business and Industry Advisory Committee to the OECD –  USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade.

Contact:

Jonathan Huneke, USCIB

(212) 703-5043

jhuneke@uscib.org

World Trade Week NYC website

More on USCIB’s Trade and Investment Committee

More on USCIB’s Business Services to Expedite Trade

Other Upcoming USCIB Events

Striking the Balance Between Open Investment, Mergers and Acquisitions, and National Security

Published on April 25, 2007

Remarks Delivered to the Federation of German Industries (BDI) G8 Business Summit

Berlin, April 25, 2007

William G. Parrett

Chairman, United States Council for International Business and

CEO, Deloitte Touche Tohmatsu

  1. Introduction

Thank you Herr Gloss.

It is a pleasure to be here and participate in this timely and important event.

I wish to congratulate Chancellor Merkel for the vision and foresight to seek the views of the private sector on three critical issues being considered by G-8 governments: investment, intellectual property rights, and climate change.

I have been asked to speak on striking the right balance between keeping markets open for foreign investment/mergers and government measures to protect the national security.

Let me state the U.S. business position at the outset:  Governments need to re-gain self restraint in the use of national security as a reason to interfere with foreign investment and mergers and acquisitions!

  1. Why Liberal Investment Regimes Are Important

As the Chairman of the United States Council for International Business, an organization representing some 300 multinational companies who trade and invest globally, the benefits of open investment regimes are readily apparent.

Our members know that open investment regimes by governments enables them to compete in global markets on the basis of their best offerings—their product design, development, production, sales and service.

And over the years, governments have recognized and welcomed the contribution foreign investment brings to their economies in terms of increased employment, output, productivity, technology and managerial skills and the like.  Increasingly from the mid 1990’s and into the mid 2000s, governments tore down their barriers to foreign investment.

The data on foreign investment flows reflect this attitude of governments.  In 2005, the value of global cross border investment flows throughout the world exceeded ten trillion dollars, nearly triple the amount of 1995.

III.  The Beginnings of Change

In the early years of this century, the drive to continue liberalization of barriers to foreign investment began to change in the United States and throughout the world.

September 11, and subsequent bombings in Spain, UK, India and Bali led to heightened security concerns in the U.S. and eventually these concerns found their way into the world of international investment.    

The failed attempt by a Chinese firm, CNOOC, to acquire a medium size U.S. oil company Unocal, raised questions in Congress and the public about foreign investors acquiring vital assets in the U.S.  Subsequently, the Dubai Ports transaction, which cleared the U.S. CFIUS national security review process, was unwound in the face of intense Congressional and public pressure.

Examples of government interference or potential interference with foreign takeovers are not limited to the U.S.:

  • Legislation has been proposed in Canada to amend the Investment Canada Act to provide clearer authority to review and prohibit if necessary foreign investments that could threaten the national security.
  • Japan is enhancing its pre-notification system regarding foreign takeovers of Japanese firms.
  • China has issued new rules that allow the government to vet foreign investments that involve a major industry, the impact of the investment on its economic security or the transfer of famous Chinese trademarks.
  • India is considering a new law to intensify its rules to restrict foreign investment in sensitive areas.
  • Russia is adopting legislation that would restrict foreign investment in natural resources and selected other industries and the ability of foreign enterprises to develop natural resource industries.

Beyond these pending legal changes there are a number of other disturbing developments:

  • The investment community has witnessed public declarations by political officials that certain industries were “off limits”
  • Market observers readily noted Pepsico’s failed bid for Danone Yougurt and Arcelor’s bid for Mittal Steel to foreign investors.
  • Italy had informed a foreign bidder for its toll road system that their investment “would not be welcomed” and the potential investor withdrew. (Since then Italy’s new Central Banker stated that Italy will not interfere with foreign takeovers in the financial sector).
  • French Presidential candidate Sarkhozy stated in a campaign speech that if elected President, French owned companies would be off limits to foreign buyers.

The investment community also witnessed seizing of property or forced sale of companies by Bolivia and Venezuela and Russia’s pressure on a large Western oil company (Shell) to sell a major stake in its Sakhalin Island oil project to a state-owned firm, Gazprom.

The point here is not to cast stones at the practices of others, but to demonstrate that in my view the cumulative effect of these actions has created a new policy challenge for global business and governments—to combat investment protectionism

  1. The Task Ahead

Business recognizes governments’ responsibility to protect the national security whether the threat comes in the form of military action or is imbedded in some aspects of a commercial transaction.

The difficulty for business is that governments seem to be losing self-restraint as the concept of national security has become extremely elastic when applied to foreign takeovers.  Moreover, in addition to national security constraints, governments are using their political influence to protect “strategic industries” and establish “national champions” from foreign takeovers.

Contributing to these developments, informal barriers such as public declarations or statements from high level officials that a bid for one of their companies “would not be welcomed,” and/or tacit arrangements with leading firms/financiers in the private sector supported or condoned by the authorities also have a deleterious effect on foreign investment.

Structural and cultural barriers may also have an adverse impact.  In many countries shares are not listed, some countries maintain a golden share, which can be used to block a takeover, and there may be cross holdings of shares that deter takeovers.  In some countries it just is not possible to undertake a “hostile” takeover.

  1. Recommendations

Transparency:

Last fall, the OECD Secretariat compiled an inventory of member practices to restrict investment on grounds of national security. Transparency of such measures can be an extremely helpful tool to hold governments accountable to their commitments.

Recommendation:

The OECD should update this inventory on an annual basis, and expand its scope to include the use of informal barriers, as these types of barriers can be quite powerful in deterring foreign takeovers.

Protecting the National Security:

Business recognizes that the world has changed dramatically since 9/11 and that governments must pay more attention to national security issues. But a legitimate concern for national security should not serve as an excuse to impede foreign investment. Blocking a foreign takeover for reasons of national security should be an extremely rare occurrence and should be taken as a measure of last resort, only when all other rules or tools that are designed to protect the national security are not adequate or effective. Further, blocking a foreign investment should not be used to obtain a commercial advantage for domestic firms.

Recommendation:

Governments need to take action at the highest level to avoid investment protectionism and to affirm in word and practice, their commitment to open, cross border investment.

Further, the G-8 should encourage the OECD to reach out to the Business and Industry Advisory Committee to the OECD to provide their input on the ways in which informal barriers can impede foreign investment and engage in a dialogue with OECD governments on ways in which these barriers can be reduced.

Taken together, these actions can make a difference and will serve to encourage the free flow and benefits of foreign investment.

Thank you for your attention!

At G8 Business Summit, USCIB Chairman Urges Governments to Avoid Investment Protectionism

Published on April 24, 2007

Joint statement by business federation heads also presses for Doha Round’s completion

USCIB Chairman William G. Parrett (second from left) joined other top business chiefs at the first-ever G-8 Business Summit in Berlin (Photo: BDI).
USCIB Chairman William G. Parrett (second from left) joined other top business chiefs at the first-ever G-8 Business Summit in Berlin (Photo: BDI).

Berlin, April 25, 2007 – At today’s first-ever G-8 Business Summit, the chairman of the United States Council for International Business (USCIB), William G. Parrett, also CEO of Deloitte, urged the leaders of the Group of Eight nations to maintain their commitment to the open flow of international investment across borders, realizing countries still need to address local issues such as national security.

“Governments need to take action at the highest level to avoid investment protectionism if we want to encourage the free flow and benefits of international investment,” said Mr. Parrett, who represented the United States in the G-8 business preparatory meeting, which was organized by the Federation of German Industries (BDI).  “They need to affirm, in word and practice, their commitment to open, cross-border investment.”

The Berlin summit brought together the heads of top business federations from Germany, which hosts this year’s G-8 leaders summit in Heiligendamm this June, and the other G-8 nations along with the trans-European business federation Business Europe.  The business leaders signed a joint G-8 Business Declaration that will be presented to the G-8 government leaders, urging completion of the WTO’s Doha Round “as a matter of urgency and top priority,” and proposing ways to address related trade and investment issues, innovation challenges such as intellectual property rights, and climate protection.  They were scheduled to meet with German Chancellor Angela Merkel later today.

Investment protectionism has been on the rise both in the G-8 nations and elsewhere, and curtailing such measures was among the top priorities spelled out by the business leaders in a joint statement.  Mr. Parrett pointed to a number of recent measures that he said needlessly interfered with foreign mergers, acquisitions and greenfield investment under the guise of security concerns.

Mr. Parrett said business recognized that the world had changed dramatically since 9/11, and that governments must pay more attention to national security issues.  “But a legitimate concern for national security needs to be balanced against the benefits of allowing foreign investment,” he said.  “Blocking a foreign takeover for reasons of national security should be an extremely rare occurrence, and should be taken as a measure of last resort, only when all other rules or tools that are designed to protect national security are not adequate or effective.  Further, blocking international investment should not be used as a means to give unreasonable commercial advantage for domestic businesses.”

Mr. Parrett called upon the G-8 governments to support annual updates by the OECD of measures to restrict investment on grounds of national security, and the extension of this study to the issue of informal barriers to investment.  He urged that the business community be fully engaged in helping identify such informal barriers.

The business leaders focused on a number of other issues they said required attention by their governments at the Heiligendamm summit.  These included completion of the WTO’s Doha Round, fostering intellectual property rights, enhancing efficient capital markets, strengthening environmentally friendly technologies and facilitating private-sector participation in African development.

Peter M. Robinson, president of USCIB, who was also in Berlin, drew attention to the need for immediate action by the G-8 governments to protect intellectual property rights and stamp out product piracy.  “The issue has moved far beyond movies and music,” he said.  “Nowadays no industry, and no country, is immune from counterfeiting and piracy.  Government action is urgently needed at the highest levels to stamp out this scourge.”

The United States Council for International Business 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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $3.5 trillion.  As the American affiliate of several leading global business groups, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade.  More information is available at www.uscib.org.

Contacts:
Jonathan Huneke, VP Communications, USCIB
Tel: +1 212 703 5043 or +1 917 420 0039 (mobile)
E-mail: jhuneke@uscib.org

Madonna Jarrett, Director, DTT Public Relations and CEO Communications
Tel: +1 212 492 3738 or +1 646 388 2335 (mobile)
Email: mjarrett@deloitte.com

G-8 Business Declaration: Joint Statement of the G-8 Business Organizations (PDF file, 1.8 MB)

More on USCIB’s Trade and Investment Committee

More on USCIB’s Intellectual Property Committee

G-8 2007 Summit website

Federation of German Industries (BDI) website

Deloitte website

 

USCIB Welcomes Free Trade Agreement with Korea

Published on April 2, 2007

3682_image001New York, N.Y. April 2, 2007 – The United States Council for International Business (USCIB), a pro-trade group representing America’s top global companies, today applauded completion of the U.S.-Korea Free Trade Agreement.

“This agreement with the world’s tenth largest economy has the potential to bring huge economic benefits to U.S business, workers, consumers and farmers,” said USCIB President Peter M. Robinson. “It is one of the most important free trade pacts the U.S. has ever achieved.”

Yesterday, the U.S. and Korea announced completion of a comprehensive trade agreement that would eliminate nearly all tariffs on manufactured goods and offer substantial new market access for U.S services exports and agricultural products.

Korea is the seventh largest U.S. trading partner and export market, with $72 billion in bilateral trade in goods in 2005.  The United States exported almost $40 billion worth of goods and services that year.

“We understand that not all of our objectives were realized in this compromise agreement,” stated Mr. Robinson.  “We will closely examine the text of the agreement before offering views on the substantive results.”

USCIB provided comprehensive industry views on objectives for the U.S.-Korea free trade agreement in March 2006.

USCIB promotes an open system of global commerce.  Its membership includes some 300 leading U.S. companies, professional services firms and associations.  As the American member 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.

Contact:

Timothy E. Deal, SVP Washington

+1 202 371 1316 or tdeal@uscib-dc.org

USCIB statement on objectives for the U.S.-Korea free trade agreement (March 2006)

More on USCIB’s Trade and Investment Committee

Office of the U.S. Trade Representative’s website

 

Trade and Labor remarks by Abraham Katz

Published on March 25, 2007

Remarks by Abraham Katz

President, International Organization of Employers

(also former U.S. Ambassador to the OECD and President Emeritus of USCIB)

“Trade and Labor”

Delivered to the ILO Governing Body

Geneva, March 25, 2007

I am not a member of the Governing Body: others will speak for employer members of the Governing Body. I speak to you on behalf of the world’s employers as organized in IOE.

Any observation: I was impressed by the study. It sheds valuable light on the policy issues in both employment and trade and their interaction.

But we must, recognize, as the study does, that trade is only one of the factors impacting employment on labor markets.

FDI swamps trade in size – some aspects of FDI are mentioned but there is much to be said. On the negative side, I have seen domestic companies fight FDI because it generally brings more progressive labor relations and productivity and competitiveness. FDI was one of the issues not included in the Doha Round Singapore 1996 Declaration.

But there is no denying beneficial effects on receiving, as well as on sending countries, of most FDI in terms of bringing needed capital, technical skills and spurring local industries.

Technological change is recognized but it is increasingly clear that it is far more significant than trade in affecting wage structures. And of course there are macro policies and financial developments.

All are included in the concept of globalization, and by now there is oft commented fact that perceptions in my country, in Europe and other developed countries is that globalization is the source of considerable anxiety in many countries about increasing insecurity and inequality.

The study correctly raises necessary policies to alleviate these anxieties – examples:

  • country social dialogue
  • active labor market policies
  • retraining; education for lifelong learning
  • portability of pensions, health insurance

All this implies an assumption that globalization is inevitable and irreversible and lets put a human face on it by policies which mitigate the pain and facilitate adjustment.

But I personally am concerned that globalization can suddenly go into reverse. Perhaps it’s the Cassandra in me but I fear we are today in danger of that happening and again the possible cause lies in the trade arena.

The paper speaks of trade reforms. I do not know what that means. Economists have often said trade liberalization is good for you and can well be done unilaterally – in fact, it might be better if tailored to a country’s needs.

However, we know that politically trade liberalization can only be accomplished by negotiating tit for tat balancing off import access for export access whether multilaterally (which I think we all agree in the best way) or bilaterally or regionally – most should feel it is a winner.

Assume then with me that one or more major trading power – I mean large markets – is suddenly impaired significantly its ability to negotiate.

Assume therefore that trade liberalization suddenly stops cold or is severely reduced – what does this do to confidence which is essential to globalization, to investment, to growth, to employment, to workers’ welfare, to decent work, to work.

We are in danger of this happening now. A populist wave expressing the anxieties that we are all aware of gives new impetus to the old 19th century idea of the social clause.

The IOE’s social partner, the International Trade Union Confederation, has posited new regulation of trade and investment to cope with the perceived iniquities and although they speak of doing this in the long run, they clearly mean the social clause.

But the discussion today is not theoretical or hypothetical; it is imminent and extremely political.

As an American, I do not think it appropriate to go into details about current policies in my country nor as President of the IOE about the movements and various signals coming out of other countries.

Let me simply cite Jagdish Bhagwati and other academics as well as Rod Abbot. If Doha fails it may be because of the political elevation of the social clause. I fear the entire study may become moot and we may suddenly find ourselves in a World reminiscent of the thirties when there was national legislation in major markets implementing the social clause, the spread of protectionist policies and drastic shrinking of foreign trade – sauve qui peut.

Not only will the trading system become a victim, but also the ILO, which is based on voluntarism and cooperation will become an anachronism.

Quoting from the letter of Rod Abbot to the FT, former European Commission trade negotiator and Deputy Director-General of the WTO:

“Given the fragile state of the Doha Round negotiations at present, and the past history of developing country members rejecting ideas for broader rules in the WTO (on investment and competition issues, and on procurement), any renewed effort in the labor arena would likely be the “kiss of death”.

and further from a more trenchant letter to the same newspaper from Jagdish Bhagwati, speaking of major developing countries they:

“…oppose the demands for inclusion of such standards in trade treaties, seeing them as continuing generalized, non-transparent and invidious export protectionism by fearful rich-country trade unions and politicians acting out of fear and self-interest to raise the cost of production abroad rather than from the altruism and empathy they occasionally profess.”

What are we talking about? Aren’t we all in favor of improving and assuring workers’ rights? Giving the benefit of the doubt to all those who seek to impose and improve those rights, especially in developing countries, for altruistic motivations we should look to their own statements for a clarification.

I cite part of a recent statement on TPA by the American trade unions:

“Congress should lay out “readiness criteria” to assess any potential trade agreement partner. These criteria should include economic opportunities for U.S. workers, firms and farmers; a country’s legal framework and enforcement regimes; a country’s compliance with International Labor Organization Standards, multilateral environmental agreements and fundamental human rights; and the existence of a democratic governance system. Only countries that meet these readiness criteria would be eligible for trade negotiations.”

Thus one major trading power would judge the eligibility of other trading partners for trade negotiations, both bilateral and multilateral. Let us assume further, however, that we could multilateralize this judgment of eligibility through some reform of trade and labor regulations and while ILO would judge transgression, the WTO would apply or authorize trade sanctions. Would it be likely to attain the unanimous consent of WTO and ILO members who would always be suspicious that the social clause cannot be repeated from its protectionist roots and impulses?

This is an old issue – the framers of our ILO Constitution eschewed compulsion or coercion through the trading system as some advocated at the time and adopted a voluntary approach, which informs the procedures and all the activities of this House.

Employers – the IOE as their organized representative – do still believe and support the principles, which are our foundation. They recognize that much remains to be done in the area of workers’ rights. This is why we actively supported the conclusions of the High-level meeting of 1987, which dealt with the problem of adjustment to exigencies of globalization and which spelled out nine tasks the ILO should undertake to facilitate adjustment. This is why we sponsored and supported what became the Convention on the worst forms of child labor. This is why we initiated and actively promoted the Declaration of Principles and Rights at Work.

Employers recognize that much remains to be done to assure the effectiveness of the Declaration. We have indications that our worker colleagues share this view and we stand ready with our tripartite partners to work on new ideas to accomplish this. In testifying before the Senate on the same issues after the Uruguayan Round, my colleague from the AFL/CIO complained that the ILO lacked teeth. Making the Declaration follow-up more effective is the way to go and not the surgical implantation of teeth – through the trade mechanism, which can lead to disastrous results for the world economy and especially for the workers themselves.

More on the International Organization of Employers

More on USCIB’s Labor and Employment Committee

ILO website