USCIB Reports on Public Hearing on Digital Services Tax

USCIB submitted comments on August 19 to the Section 301 Committee on the Investigation of France’s Digital Services Tax (DST).  According to USCIB’s taxation and trade policy experts Carol Doran Klein and Eva Hampl, USCIB believes that France’s DST is actionable under Section 301 because it is unreasonable and discriminates against U.S. companies.

USCIB’s comments note that the DST is also inconsistent with France’s obligations under the World Trade Organization (WTO), the U.S.-France Income Tax Treaty, and the Convention of Establishment between the United States and France. USCIB urges USTR to engage toward a negotiated outcome, including through multilateral channels, such as the Organization for Economic Cooperation and Development (OECD) and the WTO.

The Section 301 Committee, chaired by USTR, held a public hearing on Monday. According to Klein and Hampl who attended the hearing, all of the witnesses expressed great support for the work being done at the OECD and the Inclusive Framework process, noting that unilateral measures will undermine the OECD process and make it more difficult to reach agreement. USCIB has been actively engaged at the OECD on this issue, providing business input to governments, to help guide them to a workable multilateral solution.

Donnelly Offers US Perspectives to Nordic Business Delegation

USCIB joined with the local Washington offices of key international partner business groups, including the Representative of German Industry and Trade RGIT/BDI, CII from India, TUSIAD from Turkey, Keidanren from Japan and CBI from the UK, in a very useful free-wheeling briefing session for a visiting delegation from leading Nordic business associations.

The visiting Nordic delegation included senior representatives from the Confederation of Swedish Enterprise (”SE”), Confederation of Danish Enterprise (“DI”), Confederation of Finnish Industries (“EK”), and Confederation of Norwegian Enterprise (“NHO”), all of which are national committee partners of USCIB in one or more of USCIB’s international groupings of Business at OECD (BIAC), the International Organization of Employers and the International Chamber of Commerce.

Shaun Donnelly, USCIB vice president for investment and financial services, was the only representative in the room from a U.S. trade association, offering American perspectives and explanations for some of the unprecedented current policy developments in the U.S. and globally.

“Our Nordic partner business organizations are generally strong pro-market, pro-liberalization allies for U.S. business globally and, importantly, within the EU,” said Donnelly. “The delegations had met with the usual suspects on the Washington trade scene in their packed three-day visit but, frankly, left town with as many questions as answers. USCIB will continue to work our Nordic partner associations and other allies across our unique global network to advance our key policy objectives.”

CEO of ICC Finland Talks US-Europe With USCIB Washington Team

L-R: Meghan Giblin, Barbara Wanner, Eva Hampl, Timo Vuori, Rob Mulligan, and Shaun Donnelly

ICC Finland’s Executive Director/CEO and Executive Vice President of the Finland Chamber of Commerce Timo Vuori met with USCIB Senior Vice President for Policy and Government Affairs Rob Mulligan and key staff members of USCIB’s Washington office on February 13.  Vuori, a longtime and influential ICC insider and a good friend of USCIB, is also a key board member of the influential “Eurochambres” continental business leadership group.

The wide-ranging discussion with USCIB staff touched on the challenging U.S.-European Union trade agenda including “232” steel and aluminum tariffs, possibly to be expanded to the automotive sector, as well as digital economy, data and tax issues, and the prospects for some sort of U.S.-EU trade negotiations. The underlying political developments on both sides of the Atlantic, including the Brexit developments were also of interest to all. The group discussed the global trade issues including China and WTO reform while touching on challenges in global customs, regulatory and investment policies. The group compared notes on developments inside the global ICC network and possibilities for promoting U.S.-Finnish trade and investment relationships.

“As usual, our USCIB assessments, priorities and concerns often closely aligned with Timo’s,” noted USCIB Vice President Shaun Donnelly.  “We very much value our close relationships with key partners in USCIB’s unique global network. ICC Finland has long been one of our closest and most reliable partners.  It was a great meeting and we very much appreciate Timo making time to meet with us.”

Vuori was in Washington as part of a Finnish business delegation to meet with the Hill, U.S. agencies and U.S. businesses like USCIB. Vuori also attended an Embassy of Finland dinner, along with USCIB Senior Director Eva Hampl. The theme of the February 12th dinner was “Competitiveness in a Globalized World” and provided an opportunity for a discussion on the impact that trade policies, global companies, technological revolution and politics have on competitiveness. The event was organized on the occasion of the Finnish Minister for Foreign Trade Anne-Mari Virolainen‘s visit to Washington DC.

Hampl Gives Testimony on US-UK Trade Agreement

Eva Hampl provided testimony before the Trade Policy Staff Committee, chaired by USTR, on January 29.
USCIB supports negotiation of a comprehensive trade agreement with the UK as part of a broader strategy to open international markets for U.S. companies and remove barriers and unfair trade practices in support of U.S. jobs.

 

Following USCIB’s submission on January 16 to USTR regarding negotiating objectives for a U.S.-UK Trade Agreement, USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl provided testimony before the Trade Policy Staff Committee, chaired by USTR, on January 29.

“USCIB supports negotiation of a comprehensive trade agreement with the UK as part of a broader strategy to open international markets for U.S. companies and remove barriers and unfair trade practices in support of U.S. jobs,” said Hampl in her testimony. “We strongly believe that continued U.S.-UK free trade is overwhelmingly in the interests of both countries and their global trading partners, provided that the agreement is a high standard and comprehensive bilateral trade and investment agreement. A successful trade agreement with the UK should cover not just market access for goods, but also address important services issues.”

Hampl’s testimony also emphasized the importance of regulatory cohesion across the United States, the UK and the European market as a key component in further liberalizing trade. Regulatory discrimination and differentiation between trade partners can be an obstacle to trade, investment and the ability to conduct business. Affected sectors include pharmaceuticals, chemicals and fintech.

Hampl also raised the issue of digital trade. “U.S. companies rely on cross-border data flows as part of their day-to-day operations,” said Hampl. “A U.S.-UK agreement should include requirements that data can flow unimpeded across borders except for limited and well-defined public policy exceptions, ensuring that they are not used as disguised barriers to trade.”

Regarding intellectual property (IP) protection, Hampl noted that at a minimum, a U.S.-UK agreement should enshrine existing protections and enforcement mechanisms. It should also address sectoral IP issues, such as in the pharmaceutical space.

To read Hampl’s testimony, please click here.

USCIB Submits Negotiating Objectives for US-UK Trade Agreement

Given a recent request for comments by the United States Trade Representative (USTR), USCIB submitted negotiating objectives for a U.S.-UK Trade Agreement on January 16. USCIB believes that continued U.S.-UK free trade is overwhelmingly in the interests of both countries and their global trading partners, provided that the agreement is a high standard and comprehensive bilateral trade and investment agreement. The UK is an important trade partner for the United States, currently being the seventh largest goods trading partner of the United States. U.S. goods and services trade with the UK totaled an estimated $231.9 billion in 2017, with exports totaling $123 billion.

“USCIB’s submission is based on the assumption that the UK will be successful in exiting the EU by March 29, 2019, allowing for the ability to negotiate trade agreements with trade partners outside of the EU,” said Eva Hampl, senior director for investment, trade and financial services. “With that in mind, priority issues for negotiations of a U.S-UK Trade Agreement raised in our submission include digital trade (including cross border data flows, forced localization, cybersecurity and digital taxation), intellectual property, media and entertainment services, financial services, electronic payment services, customs and trade facilitation, express delivery services, regulatory cohesion, investment, government procurement, and chemicals.”

The submission also emphasized the importance of improved regulatory cohesion across the United States, the UK, and the European market, which would likely be among the greatest gains from a future trade agreement between the United States and the UK.

“The objective of such improved regulatory cohesion is to facilitate trade in a way that ensures the existing market remains intact,” added Hampl. “It should thus be a key component in furtherance of the liberalizing trade objective that is driving the U.S.-UK trade relationship.”

USCIB’s submission also recalled its support of a comprehensive, high-standard Transatlantic Trade and Investment agreement, eliminating of tariff and no-tariff barriers on goods and services trade, including between the United States and the UK. The range of issues that were on the table at the time, ranging from strong investment protections, to increased trade facilitation, and regulatory coherence, continue to be of great importance to USCIB members.

USCIB will also provide testimony at the public hearing scheduled to take place on January 29, 2019 before the Trade Policy Staff Committee (TPSC) at the United States International Trade Commission.

USCIB Submits Negotiation Objectives for US-EU Trade Deal

USCIB submitted negotiation objectives for a U.S.-EU Trade Agreement to USTR.
The EU countries together make up the number one export market for the U.S., with goods exports to the EU in 2016 totaling $269.6 billion, constituting 18.6% of total U.S. goods exports.

 

USCIB submitted negotiation objectives for a U.S.-EU Trade Agreement to the United States Trade Representative (USTR) on December 11. The submission was filed in response to USTR’s request for comments and emphasized the importance of a comprehensive negotiation, covering not only market access for goods, but also critical services issues.

The USTR request for comments follows the Trump administration’s announcement to Congress on October 16 of its intention to initiate negotiations on a U.S.-EU Trade Agreement. USCIB supports negotiation of a comprehensive trade agreement with the EU as part of a broader strategy to open international markets for U.S. companies and remove barriers and unfair trade practices in support of U.S. jobs. USCIB priority issues for negotiation of a U.S.-EU agreement include investment, customs and trade facilitation, express delivery services, improved regulatory cohesion, digital trade, intellectual property, government procurement and SOEs, and financial services.

“The EU is an important trade partner for the United States,” said USCIB Senior Director for Investment, Trade and Financial Services Eva Hampl. “USCIB members see the value of common approaches toward establishing a more integrated and barrier-free transatlantic marketplace. Regulatory discrimination and differentiation across the Atlantic is an increasingly frustrating obstacle to trade, investment and the ability to conduct business.”

USCIB supported the negotiations of a comprehensive, high-standard U.S.-EU trade agreement, the Transatlantic Trade and Investment Partnership (TTIP), which commenced in 2013 and aspired to eliminate tariff and no-tariff barriers on goods and services trade between the U.S. and the EU. These negotiations were halted by the current administration, but the range of issues that were on the table at the time, ranging from strong investment protections, to increased trade facilitation, and regulatory coherence, continue to be of great importance to our members.

The EU countries together make up the number one export market for the United States, with goods exports to the EU in 2016 totaling $269.6 billion, constituting 18.6% of total U.S. goods exports. U.S. goods and services trade with the EU totaled nearly $1.1 trillion in 2016, with exports totaling $501 billion. The United States also has a surplus in services trade with the EU, totaling $55 billion in 2016. According to Hampl, a successful trade agreement with the EU should cover not just market access for goods, but also address important services issues.

Donnelly Talks Trade and EU at Chautauqua

USCIB Vice President for Investment and Financial Services Shaun Donnelly is serving as a speaker at a week-long Foreign Policy seminar at the historic Chautauqua Institution in Chautauqua, New York.  The biannual Foreign Policy seminar is  a joint effort of the Chautauqua Institution, the “Road Scholar” continuing education program, and the American Foreign Service Association (AFSA).

Donnelly, a retired U.S. diplomat, former Ambassador, and senior trade negotiator, is a long-time AFSA member.  In Chautauqua the week of October 1, he will be one of six experienced U.S. diplomats leading discussion sessions.

Donnelly will talk on two topics of interest of USCIB and its member companies – “U.S. Trade Policy in the Trump Era” and “The U.S. and the European Union – Partners? Rivals? Or Both?”

Post-Brexit Trade: An Opportunity to Set New Standards

By Chris Southworth

As the United Kingdom prepares to leave the European Union, the country is at a crossroads. To deliver success means delivering trade deals fast, and the only way to do that is to be more innovative, explains Chris Southworth, the secretary general of ICC UK, USCIB’s partner in the global International Chamber of Commerce network. This was also the topic of a recent ICC UK podcast featuring USCIB’s Rob Mulligan. The views presented here are the author’s own and do not necessarily reflect USCIB policy positions.

ICC UK Secretary General Chris Southworth

The UK government has committed itself to renegotiate its entire stock of trade relationships and bring home the largest number of trade deals ever delivered in a short space of time – the task has no precedent.

The first round of post Brexit deals will be with 88 countries and nine trade blocs, covering non-EU countries with EU deals – almost half the world. The scale and pace at which this task must be delivered presents a unique opportunity to be innovative – it’s the only way the government will deliver on its promises of a “free trade model that works for everyone.”

The government has begun the process of passing legislation to set up a new Trade Remedies Authority, share customs data and maintain an open procurement market, but there is currently no proposal for how the government will deliver so many deals in such a short space of time. The government says that the 60-plus countries with EU deals will roll over on the same trade terms, so no extra consultation is required, but that is highly unlikely according to the experts.

In a rare display of unity, business groups, NGOs, unions and consumer groups all agree that to move forward on trade, the UK needs a more transparent, inclusive and democratic framework to handle trade policy if there is any chance of ensuring trade benefits everyone.

The UK has become one of the most centralized G7 countries, with wide disparities across its regions, a stubborn trade deficit and a history of under-performance on productivity and competitiveness. London now dominates the UK economy, with every other region a long way behind. Brexit presents a golden opportunity for trade to play a central role in boosting regional economies as well as address the frustration and disparity that is all too clear to spot, but only if the mode of engagement changes.

If the government wants to deliver new trade deals at the pace and scale required, fresh thinking and reinvented processes are required – those who generate trade will need to be consulted on what works, not only because it is necessary, but because it is democratic. To deliver a trade model that works for everyone means giving stakeholders a say in the decisions.

The Trade Bill

The Trade Bill – currently under review in Parliament – sets out an initial framework for an independent trade policy: a Trade Remedies Authority, an open procurement market, rolling over terms with countries with third party EU agreements sharing customs data. Controversially, the bill also proposes “Henry VIII” powers giving the government the ability to overrule Parliament.

Being a member of the EU means that the UK has no formal structures or procedures for reviewing treaties, and Parliament does not have to debate, vote on or approve deals. Trade agreements are scrutinized via the usual Parliamentary means such as written questions and answers, internal debates and select committee inquiries.

If government negotiators have any chance of delivering trade deals on the scale and pace required, there needs to be a more structured approach that provides organised forums for the international community, business, unions, NGOs and civil society organisations to engage on the issues and make consensus based decisions.

There is a myth that consultation and transparency slows the decision-making process. But without dialogue there is scope for mistrust to grow, which if unchecked, has more than enough weight to derail trade negotiations – as we saw with the lack of public support for the Transatlantic Trade and Investment Partnership (TTIP). As hard is may be to hear, public services and food standards trumped trade and that is exactly how people expressed their views.

The TTIP negotiations collapsed, losing five to seven years of negotiation with no sign of an opportunity to restart discussions. It was a colossal waste of resources that could have been easily avoided if the engagement process had been better organised and more inclusive from the start.

The Canada-EU trade agreement (CETA) very nearly went the same way. The issues surrounding Wallonia’s role in Belgium that almost derailed CETA could very well apply in a host of UK regions. Good-quality engagement throughout the decision-making process would prevent such scenarios happening in the future and most importantly give people a stake in making trade a success.

Trade policy now influences all walks of life – it’s not possible to separate trade from public policy and it’s imperative to have the public on board if deals need to be done.

International Models

The US trade model is often cited as an option for the UK but it’s not the only country that has a better system of engagement. New Zealand has successfully integrated private sector groups, civil society and the Maori – its indigenous population – into its model for developing trade positions.

Beyond regular public meetings regarding trade policy, the government established a ministerial advisory group to oversee high-level consultations. The group consists of representatives from key export sectors, NGOs, business and minority groups to reflect the overall priorities of New Zealand’s trade agenda, and to provide feedback to the nation’s minister of trade. In short, it’s a more inclusive system.

The scale of the UK challenge provides an opportunity to set a new international benchmark – no country has it completely right. A deal with 27 EU countries, followed by 60-plus countries with EU agreements, and then the rest of the world is a lot of ground to cover in a short space of time – if the UK government is going to return the benefits of Brexit as promised.

In fact, the success or failure of Brexit will hinge on the government’s ability to deliver trade deals – this is central pillar of the Brexit strategy to offset costs incurred from leaving the EU, especially for SMEs. To do that, it means breaking from the past, opening up and building a model of engagement that is more transparent, consensual and democratic in approach – and doing it fast!

Published March 12, 2018

2017 USCIB International Leadership Award Dinner

USCIB is delighted to honor Ajay Banga, president and chief executive officer of MasterCard. Each year this gala event attracts several hundred industry leaders, government officials and members of the diplomatic community to celebrate open markets and the recipient of USCIB’s highest honor.

Established in 1980, USCIB’s International Leadership Award is presented to a senior business executive who has made significant policy contributions to world trade and investment, and to improving the global competitive framework in which American business operates. Join us for what will be a truly memorable evening!

USCIB in the News

ICC United Kingdom, which serves as the British national committee of the International Chamber of Commerce, was featured in the Financial Times on January 18 in response to British Prime Minister Theresa May’s speech on the UK’s position on Brexit. The article, reprinted below, is also available on the FT’s website.

We encourage you to share this with others as well as follow ICC UK on Twitter: @iccwboUK


UK BUSINESS MUST MAKE THE CASE FOR TRADE DURING EXIT TALKS

Sir, Signs that the British government will sacrifice access to the single market during Brexit negotiations are indeed worrying. I find the assertion that “many are now becoming increasingly relaxed about a hard Brexit” (January 17) genuinely concerning. The Brexit negotiations will dictate the future of UK-EU trade relationships, jobs and livelihoods for generations to come.

The UK is one of the largest trading economies in the world, so the impacts will be felt far beyond its and the EU’s borders. Whatever happens, we must all come away with a deal that works for all parties. For business, particularly small and medium-sized enterprises, retaining access to the single market is the best option — keeping red tape, costs and disruption to a minimum. Don’t be conned into thinking the numbers are irrelevant: a 2-3 per cent tariff increase can mean the difference between an SME being successful or going bust. For foreign investors, 2-3 per cent can totally change the business case for investing in the UK. More paperwork means someone has to be paid to fill it in — someone has to pay for that. International businesses do not operate in silos.

UK, EU and non-EU businesses are often intertwined through integrated supply chains that move goods, services and finance across borders. Now is not the time to put up barriers or add costs if we want more trade, jobs and investment. We must all work hard to keep borders open — this is not just a UK priority, but also a G20 priority. Negotiations haven’t even started yet. We need to remain cool headed and must not get comfortable with the idea that the UK will leave the single market. Small businesses need the next best alternative with maximum freedom and minimal red tape. UK business isn’t powerless. We must communicate with the government and electorate, we must loudly make the case for trade, and we must not give up.

Chris Southworth Secretary-General, International Chamber of Commerce, London WC1, UK