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U.S. Chamber Newsletter-International Policy Update (1/28)

31 January 2022 Monday

 U.S. Chamber of Commerce
International Policy Update
January 28, 2022
House Takes Up Massive “China Competition” Bill, Related Trade Measures
Chamber Hosts Forum Building Momentum to COP27
USIBC President Urges U.S. and India to Set Bold Trade Goals
Global Task Force on Pandemic Response Announces New Aid for Southeast Asia
 Chamber Comments on “Distributional Effects of Trade on Workers”
Senate Finance Republicans Voice Concerns Over EV Proposals
Commentary
How Tariffs are Hitting Small Business and Why Congress Needs to Renew GSP
10 Trends in 2022: Global Perspectives for Business
House Takes Up Massive “China Competition” Bill, Related Trade Measures
On January 25, the House released its “China competition” bill with the aim of approving it and entering into conference negotiations to iron out differences with the Senate, which last June approved the “U.S. Innovation and Competition Act (USICA).” The House bill, entitled the “America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (COMPETES) Act of 2022,” could receive a vote as early as February 2. However, the drama in the House is just beginning.
House Speaker Nancy Pelosi (D-CA) lauded the bill as “bold, results-oriented legislation that will strengthen America’s national and economic security and the financial security of families, and advance our leadership in the world.” Most House Republicans, including Republican Leader Kevin McCarthy (R-CA), released statements opposing the legislation in strident terms.
The White House weighed in following the bill’s release, calling it a “an important step forward today in advancing legislation that will make our supply chains stronger and reinvigorate the innovation engine of our economy to outcompete China and the rest of the world for decades to come.” Spokesperson Jen Psaki, under questioning, spoke favorably of the Senate-approved bill and the bipartisan process that produced it.
The legislation includes $52 billion in CHIPS for America Act funding to promote U.S. semiconductor manufacturing and research and an increase in funding for the National Science Foundation (read a section-by-section summary or the full text). However, the House bill’s funding for basic research and commercialization is a pale shadow of the nearly $200 billion the Senate bill would provide in the “Endless Frontier” title that was the genesis of the entire process.
The House bill also contains a House Committee on Foreign Affairs offering, the “Ensuring American Global Leadership and Engagement (EAGLE) Act,” that aims to “revitalize and reassert” American influence in Asia. That measure is strongly opposed by many Republicans in part due to the billions of dollars in funding it would provide to the UN Green Climate Fund.
The legislative package includes the following elements of particular interest to international business and the trade community:
  • The “National Critical Capabilities Defense Act” would establish an inter-agency process dubbed the Committee on National Critical Capabilities chaired by the Office of the U.S. Trade Representative to review certain outbound investments for national security concerns. The Chamber has advocated against the measure for a year, arguing it would complicate efforts by U.S. businesses to compete, grow, and expand in global markets. The Committee would saddle USTR with new responsibilities for which that office is ill-equipped. USTR’s mission is to develop and coordinate international trade policy and negotiations with other countries, and it lacks the resources and experience to scrutinize U.S. investments abroad for potential national security risks. Instead, Congress should press the administration to prioritize implementation of the Foreign Investment Risk Review Modernization Act and the Export Control Reform Act, rather than seek passage of new and conflicting legislation.
  • The “Eliminating Global Market Distortions to Protect American Jobs Act” would make sweeping changes to U.S. antidumping and countervailing duty (AD/CVD) law in ways that the Chamber argues have not received sufficient scrutiny and deliberation. This major overhaul of U.S. trade law could add to inflationary pressures by raising costs for a wide variety of imports, including many products sourced from U.S. allies. It would fast-track AD/CVD investigations based on the findings of earlier, unrelated cases in a manner that could injure U.S. businesses that had nothing to do with the past cases in question. The bill would change methodologies in ways that would increase tariffs and extend the reach of duties to goods from all producers in a given country in the event a single firm was found to engage in dumping or to receive countervailable subsidies. The bill also glosses over the substantial challenges of determining third-country subsidization contemplated in the bill. In sum, the bill has the potential to favor a handful of businesses at the expense of a much wider swath of industries employing many more American workers, thereby undermining the global competitiveness, productivity, and growth prospects of many more U.S. firms in high-growth sectors.
  • The “Import Security and Fairness Act” would terminate the application of de minimis rules — which allow import shipments valued at less than $800 to be cleared through U.S. customs duty free — from non-market economies such as China and Vietnam. The bill has not been addressed in committee and was first introduced on January 25 by Rep. Blumenauer. The Chamber argues this measure would add to the challenges supply chain bottlenecks and backups at U.S. ports of entry pose to the U.S. economy, and it risks adding to inflationary pressures. By diverting a share of the 5 million shipments that enter the United States under the de minimis process, it would add substantially to the workload of CBP personnel who are already stretched thin as U.S. ports of entry struggle with record imports and exports. Further, it would increase taxes at a time when the economic recovery has taken a hit due to the Omicron variant — with particularly large impacts on U.S. small businesses. Above all, any legislation on this matter should be delayed pending the conclusion of the pilot programs on Section 321 and Type 86 data pilots that CBP is conducting with the business community. These pilot programs have allowed CBP to segment risk and target shipments more accurately, but they have yet to come to their conclusion. Instead of legislating on this issue now, Congress should allow these pilots to continue, and the lessons that can be learned upon their conclusion can inform any future changes to de minimis.
  • The “GSP and MTB Modernization Act of 2021” is the House answer to the Trade Act of 2021, which the Senate approved with 91 votes in favor as an amendment to USICA, though the House measure is less comprehensive. The Chamber has been arguing for the Senate trade title. The proposed language in the House bill barring duty suspensions or reductions for finished goods in future Miscellaneous Tariff Bills (MTBs) would harm industry and consumers. The MTB process — as established in the American Manufacturing Competitiveness Act of 2016 — allows for a fulsome and transparent vetting process overseen by the U.S. International Trade Commission. Members of Congress and industry have ample opportunity to object to the temporary duty suspensions afforded under this process. Blocking the inclusion of finished goods in future MTBs only closes the door on the possibility of relief from tariffs on goods generally not available from domestic sources and to which no one has objected.
  • On the Generalized System of Preferences (GSP), the House bill proposes a reauthorization period that is two years shorter than the Senate proposal, which would create uncertainty and undermine the capacity of the program to accomplish its objective of fostering economic development in developing countries. On the program’s eligibility criteria, the bipartisan, bicameral reforms approved in the Senate bill already address a number of concerns; the House version goes further in ways that analysts warn could lead foreign governments to conclude that GSP’s compliance burdens outweigh its economic benefits. This would undermine the program’s viability as a tool to foster trade-based economic development while also failing to advance the new criteria’s goals. The Chamber supports the Senate bill’s bipartisan approach and also supports the inclusion of other bipartisan changes such as the CNL Update Act (H.R. 6171).
  • Finally, the Chamber is urging the House to include language from the Senate bill reinstating the Section 301 tariff exclusion process as well as language on digital trade. The Congressional Budget Office has estimated that U.S. tariffs imposed in 2018-2019 — the overwhelming majority of which are Section 301 tariffs on goods from China — would cost the average American household more than $1,200 in 2020 alone. Multiple studies show that nearly the entire burden of these duties has fallen on U.S. families and companies. Meanwhile, USTR is currently considering the possibly reinstatement of just 1% of previously granted tariff exclusions. The House bill should include the Senate-approved language ensuring a fair, consistent, transparent tariff exclusion process.
  • In addition, the House bill includes “The TAA Modernization Act of 2021,” which updates and expands the Trade Adjustment Assistance (TAA) program. TAA enrollment has fallen dramatically over the past decade even as trade has risen sharply, but this proposal would increase funding for the program substantially. Separately, the House bill includes Sense of Congress language expressing U.S. commitment to the World Trade Organization.
A team of Chamber staff is working with company representatives and other associations in a number of ad hoc coalitions on these issues.
The Chamber will provide a member briefing on the House bill and recent legislative developments on Tuesday, February 1, from 11:00 – 11:45 a.m. (register). For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).
Chamber Hosts Forum Building Momentum to COP27
On January 24 and 25, the U.S. Chamber’s U.S.-Egypt Business Council, in partnership with the American Chamber of Commerce in Egypt (AmCham Egypt), hosted a hybrid two-day forum on building momentum to the United Nations 27th session of the Conference of the Parties (COP27). Tarek Tawfik, President of AmCham Egypt, kicked off day one, followed by His Excellency Mostafa Madbouly, The Prime Minister of Egypt. Madboudly stated that “Egypt intends to utilize its incoming COP Presidency and leadership on global climate action to enhance public-private partnership, sustainability, green growth, and to achieve just transition to the green economy. To this end, we see huge potential for collaboration between Egypt and the United States in these areas and we look forward to a continued partnership.”
Following the Prime Minister's keynote speech, the U.S. Chamber's Executive Vice President and Head of International Affairs Myron Brilliant spoke about the Chamber's longstanding relationship with Egypt and discussed the opportunity to play a meaningful role in ensuring that the business community is at the table and substantively contributing toward a successful COP27.
U.S. Chamber President and CEO Suzanne Clark then moderated a fireside chat between The Honorable John Kerry, U.S. Special Presidential Envoy for Climate, and His Excellency Sameh Shoukry, Egypt's Minister of Foreign Affairs and COP27 President Designate. Secretary Kerry and Minister Shoukry reflected on the successes of COP26 and outlined their visions for COP27. During the discussion, both leaders highlighted the critical role of the private sector in fighting climate change. Secretary Kerry highlighted the important role that liquid natural gas will continue to play in developing economies, while also reiterating that “we have to be thinking hard about deploying more renewables."
Click here to watch Day 1 and Day 2 of the forum.
For further information, please contact Executive Director of the U.S.-Egypt Business Council Steve Lutes (slutes@uschamber.com).
USIBC President Urges U.S. and India to Set Bold Trade Goals
In an interview with Press Trust of India on January 21, U.S.-India Business Council President Atul Keshap outlined reasons U.S.-India trade relations should be taken to the next step, pressing for a $500 billion target in bilateral trade. The interview with Keshap received substantial coverage from major news outlets in India such as The Hindu and The Economic Times.
In the interview, Keshap emphasized the importance of the U.S. and India working together on a global trade agenda, particularly in light of the pandemic recovery:
“I think it’s vitally important that we show that democracies can deliver; that the United States and India can be a driver of global growth, growth and a model for prosperity and development in the 21st century.”
“This is where the government and the private sector have to work together hand in hand. They have to build an argument that people of our free countries can believe in. Ours are democracies. We have to obey the will of the people: 1.7 billion Americans and Indians working together.”
For further information, please contact President of the U.S. India Business Council Atul Keshap (akeshap@uschamber.com).
Global Task Force on Pandemic Response Announces New Aid for Southeast Asia
On January 27, the Global Task Force on Pandemic Response (GTF) — a public-private partnership of major U.S. companies organized by the U.S. Chamber of Commerce with support from Business Roundtable — announced $10.3 million in support to help Indonesia and Vietnam respond to the COVID-19 pandemic.
The assistance includes much-needed technology, including genomic sequencing equipment critical to identifying new COVID-19 variants. In addition, the aid will provide the countries with more robust COVID-19 diagnostics and ancillary equipment, including rapid antigen tests, PCR testing systems, and personal protective equipment (PPE).
Collaborating with local partners on the ground including the US-ASEAN Business Council (USABC), the American Indonesian Chamber of Commerce (AICC), the American Chamber of Commerce in Indonesia (AmCham Indonesia), and the American Chamber of Commerce in Vietnam (AmCham Vietnam), and in cooperation with the Governments of Indonesia and Vietnam, GTF members will work to provide these critically needed supplies to areas of highest need.
The Chamber’s Senior Vice President for Asia Charles Freeman made the following statement upon the announcement:
“The GTF remains focused on expanding COVID-19 testing, prevention, and care in parts of the world that need it most. This donation to Indonesia and Vietnam comes at a critical moment for both countries, as the Omicron variant threatens their slow emergence from a year of rampant COVID-19 outbreaks. Adequate technology to sequence variants is a significant gap in many countries and the GTF is playing a critical role in helping Indonesia and Vietnam address this issue.”
Specifically, the GTF will save lives and help detect, prevent, and respond to COVID-19 in Indonesia and Vietnam through the donation of critical diagnostic supplies procured by the U.S. Chamber of Commerce Foundation with generous support from Accenture, Deloitte and Microsoft:
  • Over 430,000 Abbott point-of-care rapid antigen tests that can easily be deployed across Vietnam,
  • 1 Illumina genomic sequencing machine, critical in identifying and tracking new COVID variants, to Sanglah Hospital in Bali, Indonesia,
  • 15 Thermo Fisher PCR testing systems to upgrade the capacity at labs across Indonesia, with a specific focus on internal border provinces.
In addition to life-saving diagnostics, vital ancillary products are being provided through in-kind donations and financial support, including:
  • Over 1.9 million N95 masks, 176 ventilators, over 1.6 million gowns, over 2 million specimen collection kits, and 1.4 million swabs to Indonesia, donated by the City of New York and through the support of the GTF,
  • Freeport-McMoRan  provided $300,000 to ship 60 containers of masks, PPE, and other equipment donated by the City of New York to Indonesia, with shipping container space made available through FedEx at a steeply reduced cost,
  • 800,000 masks to Vietnam donated on behalf of GM, and through the support of the GTF,
  • Donations of $200,000 and $250,000 from ConocoPhillips and Chevron respectively towards the Oxygen for Indonesia initiative by the YCAB Foundation, in coordination with the GTF.
The Global Task Force’s pandemic response efforts in Indonesia and Vietnam are a continuation of its mobilization to help countries throughout Southeast Asia in their pandemic response and recovery.
The U.S. Chamber of Commerce Foundation has also launched a COVID-19 Business Response portal, a platform for U.S. businesses to offer essential in-kind products and services needed outside of the United States. Visit the portal to review a list of critically needed supplies or offer in-kind donations.
For more information on the Global Task Force’s work, visit pandemictaskforce.org.
Chamber Comments on “Distributional Effects of Trade on Workers”
The Chamber on January 26 submitted comments to the U.S. International Trade Commission (ITC) on its investigation into the “Distributional Effects of Trade and Trade Policy on U.S. Workers.” U.S. Trade Representative (USTR) Katherine Tai requested the ITC launch the two-part investigation to provide new research, data, and analytical tools to “better inform U.S. trade policy and enable USTR to better develop an equitable, durable, worker-centered trade policy that contributes to our nation’s competitiveness in a 21st century global economy.” The Chamber may submit additional comments as the investigation proceeds.
For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).
Senate Finance Republicans Voice Concerns Over EV Proposals
On January 25, Republicans on the Senate Finance Committee circulated a letter to colleagues that questioned the administration’s proposed tax credits and subsidies for U.S.-made electric vehicles (EV) included in the stalled Build Back Better Act. The letter criticizes the legislation, which it says entails “discrimination against American workers who choose not to unionize; subsidization of luxury vehicle purchases by the well-to-do; [and] hamstringing our ability to compete in foreign markets.”
The Finance Committee Republicans highlighted that the EV provisions “pick clear winners and losers” in the automotive marketplace. They also insisted the proposed EV subsidies disproportionately benefit the wealthy. Finally, the letter asserts that the domestic content and assembly provisions undermine American trade interests — more than 25 ambassadors have expressed to Congress that these proposals violate U.S. trade obligations. Key trade partners including Mexico, Canada, Japan, and the European Union have publicly objected to these provisions.
In closing, the senators write:
“The United States is home to the world’s greatest auto companies precisely because Americans embrace free and fair markets, both as producers and consumers. There is no reason to turn our back on that winning formula by moving forward with proposals to undermine the foundation of what makes our markets so successful.”
For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).
Commentary
U.S. Chamber (January 26) by Isabelle Icso
U.S. Chamber (January 21) by Myron Brilliant

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