Trade and Investment Archives

G8 Business Federation Heads Unite on Need to Avoid Credit Crunch

Published on April 24, 2009

Meeting in Sardinia, they also call for open trade and a concerted effort on climate

Sardinia was host to this year’s G8 Business Summit.
Sardinia was host to this year’s G8 Business Summit.

Santa Margherita di Pula, Italy, April 24, 2009 – Business leaders from the G8 nations gathered in Sardinia yesterday and today to address urgent global economic issues.  Their conclusions and recommendations are contained in a joint declaration that will be presented to the G8 heads of state in preparation for July’s G8 Summit in Abruzzo, Italy.

The G8 Business Summit, hosted by Confindustria, the Italian Confederation of Industry, focused on three pressing issues: responses to the financial and economic crisis, free trade and investment, and the need to tackle climate change.

The United States was represented by William G.  Parrett, chairman of the United States Council for International Business, Harold W.  McGraw III, CEO of The McGraw-Hill Companies and chairman of the Business Roundtable, and Thomas Donohue, president and CEO of the U.S.  Chamber of Commerce.

The business summit is the fourth multilateral meeting to be organized by the main business associations representing the private sector in the countries that make up the G8.  The first G8 Business Summit was held in Berlin in 2007, followed by Tokyo in 2008 and an extraordinary Summit dedicated to the financial crisis, held in December 2008 in Paris.

The main conclusions of the 2009 summit, contained in detail in the G8 Business Summit joint declaration, are:

Response to the financial and economic crisis: Business Leaders addressed the need to find short- and medium- to long-term solutions to address recovery of the real economy by stimulating economic growth, employment, global trade and investment.  The greatest and most urgent efforts must be directed at avoiding and mitigating the impact of a broader credit crunch.  It is crucial to restore companies’ access to finance at reasonable prices.  The need to durably reinforce financial stability requires proper financial market reforms ensuring a suitable balance between better regulation and risk prevention.

Free trade and investment: Business Leaders called for open trade and sound investment policies, which are vital in strengthening economic growth, job creation and industry competitiveness, and are especially important to small and medium companies, severely affected by the credit and liquidity crunch and by increasing limitations on market access worldwide.  The economic situation requires G8 governments to strengthen and publicly renew their full commitment to an open global economy.  The successful conclusion of the Doha Round in 2009 lies at the heart of all possible strategies as it is the most effective way to establish a level playing field at the global level and its positive conclusion would weaken the drifts towards protectionism and isolationism in the global economy.  The delivery of an ambitious and balanced WTO agreement would be a concrete symbol of effective international cooperation and the strongest possible stimulus for the recovery of the global economy and for the growth of developing and less developed economies.  G8 Business also calls for the conclusion of the negotiations for the accession of Russia to the WTO before completion of the Doha Round.

Tackling climate change: the road to Copenhagen.  Business Leaders called for a concerted global effort based on long-term cooperative action as the only way to succeed in tackling the issue of climate change.  The forthcoming Copenhagen UNFCCC conference is a great opportunity to reach a global agreement based on clear, equitable and firm worldwide commitments to emission reduction.  Business accepts its share of the responsibility and has already made major changes in operations including introducing new processes, products and services to reduce greenhouse gas emissions and will continue to tackle climate change.  However, business calls for the full burden of emissions reduction to be shared among all emitters.  Tackling climate change can unleash numerous business opportunities, provided that innovation and technological development are properly encouraged.  To effectively achieve emissions reduction targets, business needs to remain competitive.  Clear, predictable and stable frameworks are essential for long-term planning and investments at national, regional and international levels.  At the same time, policies must be balanced to avoid diverting resources away from innovation and encouraging protectionist barriers to trade.

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation.  Its members include top 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 encompassing leading international business organizations, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment.  More information is available at www.uscib.org.

Contact:
Jonathan Huneke, VP Communications, USCIB
Tel: +1 212.703.5043 (office) or +1 917.420.0039 (mobile)
E-mail: jhuneke@uscib.org

G8 business leaders declaration 

G8 Summit official website

More on USCIB’s Trade and Investment Committee

More on USCIB’s Environment Committee

Business, Anti-Poverty and Faith-Based Groups Unite in Support of Open Markets

Published on March 20, 2009

handshakeNew York, N.Y., March 20, 2009 – Faced with rising signs of the damage the global economic crisis is causing in poorer nations, the United States Council for International Business (USCIB), which represents America’s top global companies, and other business groups joined with the anti-poverty and faith-based communities in appealing for U.S. leadership to maintain open markets and keep millions in the developing world from falling back into poverty.

In a joint letter to President Obama and the House and Senate leadership, the organizations noted that it was highly unusual for such disparate groups to join forces on an issue, but that “there are aspects of the current global financial crisis that warrant such common efforts.”  Chief among these is the need to keep markets open and avoid turning inward, they said.

The groups wrote: “The economic welfare of Americans is inextricably linked with the well-being of men, women, and children across the globe.  It is essential, therefore, that the United States reject those policies that will worsen the impact of the current economic crisis on global economic growth and development, particularly with respect to poor nations, and work instead alongside the people of these nations to further their own sustainable development.  By doing so, we ultimately secure our own economic future.”

The letter cited worrisome evidence of the damage the crisis is having on developing countries, with recent reports from the IMF, World Bank and World Trade Organization all pointing to the urgency of the situation.  Sharp decreases in investment flows, export demand, export credits and commodity prices will hit developing countries hard, the groups said, with Africa being especially vulnerable.  The World Bank estimates that each one-percent drop in global economic growth traps 20 million more people in poverty worldwide.

The groups joined in urging the Obama administration and Congress to reaffirm at April’s G20 Summit in London the earlier commitment by G20 nations to reject destructive protectionism.  They also called upon the United States to strive for a successful conclusion of the WTO’s Doha Round that opens major markets for both developed and developing countries, review and reform U.S. trade-preference programs to give special attention to uniquely vulnerable countries, and reinforce the commitment to increase development assistance.

“It is important to remember that at the heart of the global financial system are working families and local communities whose fate is bound together in a globalized economy,” the letter stated.  “Our nation is undergoing severe distress in terms of jobs, businesses and investment that is taking a daily toll on people.  Such problems should motivate us to seek solutions that reject destructive protectionism on the one hand and global indifference to the plight of the poor on the other.”

Groups joining USCIB in signing the appeal included the National Foreign Trade Council, Business Roundtable, Center for Global Development, Emergency Committee for American Trade, the Episcopal Church, ONE, Oxfam America, Progressive Policy Institute, United States Conference of Catholic Bishops and World Vision.

USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation.  Its members include top 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 encompassing leading international business organizations, USCIB provides business views to policy makers and regulatory authorities worldwide, and works to facilitate international trade and investment.

Contact:
Jonathan Huneke, VP Communications, USCIB
Tel: +1 212.703.5043 (office) or +1 917.420.0039 (mobile)
E-mail: jhuneke@uscib.org

Joint letter on Doha Round and development

More on USCIB’s Trade and Investment Committee

G8 Business Summit Preparations Well Underway

Published on March 2, 2009
This year’s G8 Business Summit will be held in Sardinia.
This year’s G8 Business Summit will be held in Sardinia.

Preparations for this year’s G8 Business Summit are well underway.  The summit process, launched two years ago as a way for leading industry groups to provide input to the annual summits of G8 leaders, has taken on added urgency with the onset of the global economic crisis.  Business federation heads met in extraordinary session in Paris last December to craft a response to the G20 meeting in Washington and help chart a way forward.

Timothy E. Deal, USCIB’s senior vice president for Washington, attended a February 24 preparatory meeting in Rome aimed at reviewing an initial draft of a joint declaration to be issued at the G8 Business Summit in Sardinia, Italy on April 23 and 24.

The declaration will address the following issues:

  • the impact of the economic and financial crisis
  • protectionism and freedom of investment
  • climate change: the road to Copenhagen.

G8 business leaders will address these topics in a public session on the second day of the summit, following an informal “brainstorming” session on the opening day.  The summit will conclude with a gala dinner hosted by Italian Prime Minister Silvio Berlusconi.  USCIB Chairman William G. Parrett will head the USCIB delegation in Sardinia and will be joined by leaders of the U.S. Chamber of Commerce and the Business Roundtable.

Staff contact: Rob Mulligan

More on the December G8 Business Summit meeting

G8 Business Leaders: Crisis Demands Urgent Response But Does Not Indicate a Failure of Market Economics

Published on December 4, 2008
Leaders of the G8 business federations (USCIB President Peter Robinson is at far right).
Leaders of the G8 business federations (USCIB President Peter Robinson is at far right).

Paris and New York, December 4, 2008 – Meeting in Paris, business federation heads from the G8 nations called for urgent measures by governments to correct “real dysfunctions” in the world financial system.  But they said the crisis did not call into question the basic assumptions of private sector-led growth, and they pressed for an immediate re-launch of WTO trade talks as a way to revive the global economy.

“We came to Paris to voice our common support for efforts to make the market economy work better, increase financial transparency and foster closer international cooperation,” said USCIB President and CEO Peter M. Robinson, who joined business leaders from North America, Europe and Japan in issuing a joint statement prior to a meeting with French President Nicolas Sarkozy.  “Where more clarification and regulation is needed, it must be smart regulation, and policy makers must avoid over-regulation at this delicate time for the global economy.”

In their statement, the business leaders stated that “the present crisis does not call into question the basic principles of the open market economy but calls for urgent responses mainly in technical and regulatory terms.”  They said the causes of the crisis were multiple, and included monetary policies leading to excessive liquidity, lack of regulation or inappropriate regulation, attempts to achieve high yields without an accurate assessment of risks and inadequate coordination of macro-economic policies.

“These are real dysfunctions which have had serious consequences and which in concrete terms call for a revision of the rules governing agents, products and operations on the financial open markets,” the statement said.  “On the other hand, these dysfunctions do not in any way cast doubt on the open market economy, which requires clear and shared rules to make private companies and entrepreneurs free to create, grow and innovate.  Businesses have today the talented people, technologies, and drive to succeed as before the crisis.  This is the cause for our optimism.”

The business chiefs welcomed pledges made by leaders at last month’s G20 Summit in Washington to avoid protectionist policies.  They echoed the G20’s call for efforts to restart the struggling Doha Round of trade talks as an immediate priority.  “The business community fully supports all of the efforts that will result in a prompt, ambitious and balanced conclusion to the Doha Development Agenda,” the statement said.  “This is necessary to ensure the world’s economic growth in the coming years.”

USCIB’s Mr. Robinson applauded the French business federation MEDEF for convening the business leaders, and for working rapidly and effectively to develop a consensus approach all parties could support without reservation.

The other participants in the G8 Business Summit were:

Fujio Mitarai, president of Nippon Keidanren (Japan)

Perrin Beatty, president of the Canadian Chamber of Commerce

Laurence Parisot, president of MEDEF (France)

Jürgen R. Thumann, president of BDI (Germany)

Emma Marcegaglia, president of Confindustria (Italy)

Alexander Shokhin, president of RSPP (Russia)

Martin Broughton, president of the Confederation of British Industry

Thomas J. Donohue, president of the U.S. Chamber of Commerce

Ernest-Antoine Seillière, president of BusinessEurope.

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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $4 trillion.  As American affiliate of three 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, VP Communications & Public Affairs, USCIB (212) 703-5043 or jhuneke@uscib.org

Statement From the G8 Business Summit Leaders (click here for summary)

Watch the press conference (MEDEF website, French/Japanese/English)

USCIB statement on the G20 Summit (November 2008)

More on USCIB’s Trade and Investment Committee

China Daily (Hong Kong edition): A revitalized global trading system needed to avert protectionism

Published on November 10, 2008

By Victor K. Fung

As a key component of the global economy, international trade is a major source of economic revenue and a major source of employment for any country. The present financial crisis and a looming recession will undoubtedly have a negative impact on trade and severely curtail growth because of liquidity and deteriorating consumer sentiment.

To avert disaster, leaders of the industrialised world have reacted swiftly to restore trust and confidence in the banking system. Such a brave move is now required to ensure that the global trading system does not collapse under the burden of an unstable world. But it is vital that, at this crucial moment, we should reflect upon where we have come from, before taking potentially disastrous measures that may precipitate protectionist action.

The last 20 years have witnessed an unprecedented expansion of the global market and unprecedented global economic growth and welfare. During the last two halcyon decades, it perhaps hasn’t been surprising that people were not especially interested in the apparent complex intricacies of trade negotiations.

The stark paradox of the last decade is that while the global market boomed, the global trade policy process stalled. More and more countries joined the WTO — growing from about 90 in 1990 to 153 now — but they then proved incapable of moving the agenda forward.

The paralysis may, in part, be a consequence of the system’s success. The multiple reforms of the latter part of the 20th century in developing countries have resulted in many more actors, big and small, engaged in global trade. The trade regime is no longer the sole province of the OECD countries as it was throughout most of its existence until recently.

Not only the fast-growing economies of China and India, but many other countries, such as Pakistan, Bangladesh, Vietnam, Indonesia, Chile, Argentina, Mexico, Turkey, Morocco, Kenya, and Egypt, increasingly want to have a say in the trade-policy process, because their stakes in the trade regime have increased significantly.

Vietnam has probably experienced, in proportionate terms, a greater poverty reduction, within the shortest period of time, than any country in history; the growth that drove that poverty reduction in considerable part emanated from the trade regime that Vietnam joined in the mid-1990s.

One consequence of this feverish   activity has been to question why one should bother with what appears remote and arcane trade negotiations, when in the real world, things were going so well.

Another rather different consequence has been that the increase and diversity of actors has made the process far more complex. The repeated failures of the Doha Agenda since its launch in 2001 can be ascribed to two forces: a lack of sustained public interest and support, including from the business community; and incapacity on the part of negotiators to bridge the cultural and economic divides.

In appealing for the application of global solutions to the present financial turmoil, British Prime Minister Gordon Brown stated: “Successful market economies need trust, which can only be built through shared values”. Given the immense benefits that trade has generally conferred upon the people of many nations, it follows that one of the potentially strongest foundations on which to build shared values is in a solid and fair rules-based multilateral trade system that reflects the new realities of this potentially exciting and dynamic new global age. In this context, it is encouraging to note that China has committed to strengthen multilateral trade and economic cooperation, as stated in the country’s 11th Five-Year Program and in the 17th National Party Congress.

The financial crisis has prompted urgent and unprecedented globally co-ordinated actions. Without doubt, the world economy requires emergency surgery. At the latest Asia-Europe Meeting Summit convened in Beijing, Chinese Premier Wen Jiabao called for enhanced efforts to prevent the financial crisis from evolving into trade protectionism. The host country also proposed to establish a mechanism for multilateral trade cooperation and facilitation.

What is being recognized is that at the very heart of a global and sustainable economic revival, the multilateral trading system must be strengthened. We still live in perilous times; we live in a global environment in which, as Cordell Hull, Franklin Roosevelt’s secretary of state and a subsequent Nobel Peace Prize winner, wrote “The welfare of nations is indissolubly connected with friendliness, fairness, equality and the maximum practicable degree of freedom in international trade.”

To escape from the abyss of protectionism, the world needs a revitalized global rules-based multilateral trading system that will provide a robust global framework and restore a sense of global trust.

The author is Chairman of the International Chamber of Commerce.

More on USCIB’s Trade and Investment Committee

ICC website

Key Officials Address Critical Role of Sovereign Wealth Fund Investment

Published on October 14, 2008
Deputy Treasury Secretary Robert Kimmitt: Without access to capital, growth will seize up.
Deputy Treasury Secretary Robert Kimmitt: Without access to capital, growth will seize up.

Washington, D.C., October 14, 2008 – On the heels of a landmark agreement by leading sovereign wealth funds (SWFs) to increase their transparency, representatives of major governments and SWFs gathered yesterday in Washington, D.C. to discuss ways to keep major markets open for investment from these increasingly important sources of capital.

At a forum organized by the United States Council for International Business (USCIB), senior officials from the U.S. Treasury and the 30-nation Organization for Economic Cooperation and Development (OECD) were joined by representatives of China’s leading SWF, Goldman Sachs and other leading experts.  Speakers emphasized the critical importance of maintaining market openness to all forms of investment, including from SWFs, as the world contends with the ongoing financial crisis.

“In these times of heightened uncertainty, it is imperative that we don’t turn inward, but rather embrace free investment and trade,” stated U.S. Deputy Treasury Secretary Robert Kimmitt.  “Allowing capital to flow freely is vital for economic growth and will enable healthy institutions to emerge from the current turmoil.  Without access to capital, the engines of economic growth seize up and risk the health of the broader economy.”

Amid a severe credit crunch, more and more companies and governments are turning to SWFs for much-needed capital.  SWFs have been in existence for decades, but their role and the number of funds has grown significantly in recent years, along with concerns about the management and intention of some funds.

Jesse Wang of China Investment Corp. (center), with USCIB’s Stephen Canner and Peter Robinson.
Jesse Wang of China Investment Corp. (center), with USCIB’s Stephen Canner and Peter Robinson.

The forum examined the International Working Group on Sovereign Wealth Funds’ recently released Generally Accepted Principles and Practices for sovereign wealth funds, as well as implementation of the OECD’s recommendations for keeping markets open to SWF investment.

Reflecting on efforts to address the financial crisis at the IMF/World Bank meetings over the weekend, OECD Secretary General Angel Gurría commented that IMF members were now “less of a cacophony, more of a choir.”  He said it was essential for countries seeking to benefit from investment by sovereign wealth funds to abide by fundamental OECD principles of openness and non-discrimination.

“We want to avoid the illegitimate use of national security to stop bona fide investments,” he said.  Mr. Gurría told the audience efforts by the IMF and OECD to develop rules and standards for SWFs and host governments had fostered confidence and removed suspicion about sovereign investment.

Other speakers at the USCIB forum included Daniel Sullivan, assistant secretary of state for economic and business affairs, Jesse Wang, executive vice president of the China Investment Corp., John Waldron, managing director at Goldman Sachs, and Edwin Truman of the Peterson Institute for International Economics.  Jerry Leamon, global managing partner with Deloitte, and Scott Miller, director of national government relations with Procter & Gamble and chair of USCIB’s Trade and Investment Committee, also participated.

The forum was co-sponsored by the Business and Industry Advisory Committee to the OECD, TransAtlantic Business Dialogue, National Foreign Trade Council, Emergency Committee for American Trade, National Association of Manufacturers, Financial Services Forum and Financial Services Roundtable.

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 more than 300 U.S. companies, professional service firms and associations, whose combined annual revenues exceed $3.5 trillion.  As American affiliate of the leading international business and employers organizations, USCIB provides business views to policy makers and regulatory authorities worldwide and works to facilitate international trade.

Contact:

Jonathan Huneke, VP communications, USCIB

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

Remarks by Deputy Secretary Kimmitt

Generally Accepted Principles and Practices for Sovereign Wealth Funds

More on USCIB’s Trade and Investment Committee

USCIB Regrets Breakdown in Doha Trade Talks, Urges Parties to Keep Offers on the Table

Published on July 30, 2008

3818_image002New York, N.Y., July 30, 2008 – The United States Council for International Business (USCIB), which represents America’s top multinational companies, expressed deep disappointment at the breakdown of the WTO’s Doha trade talks in Geneva.  It called on governments to keep their offers on the table as the basis for further negotiations.

“We deeply regret that ministers failed to deliver an ambitious, balanced and comprehensive result acceptable to all parties,” stated USCIB President Peter M. Robinson.  “So much has already been achieved, including important progress this past week.  We urge parties to find ways to build on these accomplishments going forward.”

Mr. Robinson said leaders in emerging market countries needed to demonstrate flexibility commensurate with their new weight in the global economy.  “In addition, established trading parties must continue to demonstrate collective leadership and willingness to compromise,” he stated.  “We support the efforts of Ambassador Schwab and her team in this regard.”

The timing of the latest setback is unfortunate because of slowing economic growth and increasing protectionist sentiment in some major trading nations, Mr. Robinson added.   He also pointed to the importance of freer trade and multilateral cooperation in confronting such challenges as climate change and resource scarcity.

USCIB believes the Doha Round has tremendous potential to increase global economic growth by improving market access for goods and services around the world, especially for the developing world by reducing south-south trade barriers.  It is the main opportunity to reduce distorting subsidies and trade barriers to agriculture.

USCIB has long supported multilateral liberalization of trade, investment and financial flows.  Together with its international affiliates, including the International Chamber of Commerce, and in partnership with other national industry groups in the ABCDoha coalition, USCIB strongly supported the launch of the Doha Round in 2001, and it has sought a result that would improve global market access for products and services.

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 more than 300 leading U.S. companies, professional services firms and associations whose combined annual revenues exceed $4 trillion.  As American affiliate of three 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:

Joseph G. Gavin, VP Trade & Customs, USCIB

+1 202.682.1291 or jgavin@uscib-dc.org

More on USCIB’s Trade and Investment Committee

WTO website

Top Treasury Official Urges Openness to Foreign Investment Including Sovereign Wealth Funds

Published on May 19, 2008
Deputy Treasury Secretary Robert M. Kimmitt
Deputy Treasury Secretary Robert M. Kimmitt

Now more than ever, open investment policies benefit all countries, including the United States, a top Treasury Department official told USCIB members at a May 8 briefing in New York. Deputy Treasury Secretary Robert M. Kimmitt said the U.S. was concerned at rising barriers to investment in overseas markets and would work to curtail these, while seeking to keep U.S markets open.

Mr. Kimmitt said the U.S. was also working with the International Monetary Fund and the Organization for Economic Cooperation and Development to develop best practices for foreign investment from sovereign wealth funds, including standards of transparency and governance.

The briefing was hosted by law firm Sullivan & Cromwell at its Wall Street-area headquarters. Firm Chairman Rodgin Cohen presided along with USCIB President Peter M. Robinson.

Sovereign wealth funds have existed since the 1950s but only recently taken on a leading role in international finance, especially as countries reaping the benefits of export and oil booms seek to gain higher returns. Mr. Kimmitt said sovereign funds currently had an estimated $3 trillion in assets – a number he said could grow to over $12 trillion over the next five years.

“Sovereign wealth funds have been a force for good for the global economy,” stated Mr. Kimmitt. “They’ve been patient, long-term investors, not highly leveraged, they don’t shift asset allocations in times of distress. Even those who have raised the most significant hypothetical concerns cannot point to a single example in the past 55 years where a sovereign wealth fund has invested for other than commercial purposes.”

Nevertheless, he said the U.S. and other host countries “need to be vigilant as these funds grow significantly both in number and size.” Mr. Kimmitt said existing national security and antitrust rules would largely serve to address any concerns should sovereign investors seek to extend their role beyond this traditionally passive approach. But he also pointed to the IMF and OECD efforts as a way to increase openness on both sides of the investment equation.

Representatives of some two dozen sovereign wealth funds met with IMF officials on May 1 to begin work on transparency and governance guidelines for such funds. Mr. Kimmitt told USCIB members he expects the final set of guidelines to be presented at the IMF’s fall meetings.

Meanwhile, building on its established expertise in the area, the OECD is developing guidelines host governments on maintaining market openness in the face of new forms of investment such as sovereign wealth.

In introductory remarks, Mr. Robinson noted USCIB’s active role in helping Congress strike the right balance between market openness and national security in its recent revisions to the Exon-Florio law. He also cited a recent International Chamber of Commerce paper, “Recommendations to Safeguard Freedom of Investment,” which he said presented a strong framework for dealing with new investment challenges like sovereign wealth.

On May 13, as part of their high-level Transatlantic Economic Council meeting in Brussels, the U.S. and the European Union sought to quell rising protectionist sentiment in key markets by declaring their openness to outside investment, including sovereign wealth funds. They issued a joint statement condemning barriers to capital flows except on ground of protecting national security. Any such restrictions must be “transparent, predictable and proportionate,” they said.

More on USCIB’s Trade and Investment Committee

ICC paper, “Recommendations on Safeguard Freedom of Investment”

Facing the Challenges of Sovereign Investment

Published on February 27, 2008
L-R: USCIB Secretary John Merow (Sullivan & Cromwell), Ruth Morrison (Brooklyn International Trade Development Center), Deputy U.S. Trade Representative John Veroneau.
L-R: USCIB Secretary John Merow (Sullivan & Cromwell), Ruth Morrison (Brooklyn International Trade Development Center), Deputy U.S. Trade Representative John Veroneau.

The recent surge in U.S. investment by overseas sovereign wealth funds should spur efforts to develop best practices for such funds, while ensuring that major markets continue to welcome this much-needed source of capital, Deputy U.S. Trade Representative John Veroneau told a USCIB audience in New York on February 26.

“It is essential that governments and sovereign investors take complementary steps to mitigate calls for measures that could have the effect of limiting the benefits of commercial investments by such investors,” Ambassador Veroneau stated in remarks delivered at The Bank of New York Mellon’s Wall Street headquarters.

Established sovereign wealth funds from Abu Dhabi, Norway and Singapore have been joined on the world stage by new actors from the Middle East, China, Russia and elsewhere.  Often flush with rising oil and other export revenues, sovereign investors have taken significant equity stakes in a number of major financial institutions and other companies at a time when the credit squeeze in many markets is drying up other sources of investment.  This has led some observers to question the motivations of sovereign investors and call for new scrutiny of their actions.

Amb. Veroneau conceded that, given the growing economic significance of sovereign wealth funds and other sovereign investors, “a closer look at the objectives and consequences of their investments is warranted.”  But he said such examination should bear in mind the importance of cross-border investments from all sources for job-creation, economic growth and productivity.

USCIB President Peter Robinson (right) welcomes Amb. Veroneau and presents him with a new International Chamber of Commerce statement urging governments worldwide to maintain open investment regimes.
USCIB President Peter Robinson (right) welcomes Amb. Veroneau and presents him with a new International Chamber of Commerce statement urging governments worldwide to maintain open investment regimes.

Existing U.S. law governing the potential national security implications of foreign direct investments should apply equally to sovereign and non-sovereign funds from abroad, said Amb. Veroneau.  He also called on managers of sovereign wealth funds to be equally mindful of the “unique questions and concerns” that governments have about sovereign investors.

To help allay fears that sovereign investment might be used for political or other non-commercial purposes, the Treasury Department last year called upon the International Monetary Fund, with the support of the World Bank, to develop best practices for sovereign wealth funds, building on existing best practices for foreign exchange reserve management, noted Amb. Veroneau.

“Such ‘best practices’ would serve to demonstrate that sovereign wealth funds can continue to be responsible, constructive participants in cross-border investing,” he stated, observing that the United States had also called upon the Organization for Economic Cooperation and Development to identify best practices for countries receiving foreign government-controlled investment, as a safeguard against the adoption of protectionist measures.

USCIB President Peter M. Robinson too the opportunity to deliver a new position paper by the International Chamber of Commerce, part of USCIB’s global network, on safeguarding freedom of investment worldwide.  In its statement, ICC observed that, over the years, the global economy had witnessed a sharp diminution in the barriers to foreign investment as governments embraced foreign capital to spur economic growth and jobs.  These positive contributions of foreign investment, said ICC, “must be safeguarded by a strong commitment by governments, in words and in deeds, to freedom of investment and the avoidance of protectionist measures.”

Staff contact: Shaun Donnelly

Remarks by Amb. John Veroneau, “The Challenges of Sovereign Investment”

ICC Recommendations to Safeguard Freedom of Investmen

More on USCIB’s Trade and Investment Committee

The New York Times: Saving Our Oceans

Published on January 29, 2008

To the Editor:

Your timely Jan. 21 editorial, “Until All the Fish Are Gone,” correctly underscores the growing negative environmental and social effects of overfishing. What once seemed simply a conservation concern is now a global issue with tremendous social and economic ramifications.

We are fast approaching a critical crossroads in the future of our oceans. But unlike many other global issues, where business and the environmental community are often at odds, here we completely agree on a solution.

Members of the World Trade Organization are now negotiating new trade rules to reduce the government subsidies that promote overfishing. These subsidies provide fleets with money, fuel and incentives to fish longer, harder and farther than ever before. As a result, fish populations are declining, along with the quality of life of people around the world who depend on fishing for food and livelihood.

Reducing fishing subsidies is the single greatest action that can be taken to protect the world’s oceans.

Will the W.T.O. members seize the opportunity to stop overfishing and begin restoring the health of the oceans, and in turn, the health of mankind? That is the question.

Peter M. Robinson
Andrew F. Sharpless
New York, Jan. 22, 2008

Mr. Robinson is president and chief executive of the United States Council for International Business. Mr. Sharpless is chief executive of Oceana, an international environmental ocean advocacy group.

More on USCIB’s Trade and Investment Committee

Oceana website