U.S. Chamber of Commerce

International Policy Update

February 11, 2022

Business Leaders Urge Resolution of U.S.-Canada Border Blockade

Chamber Releases Report on Vast Promise of Digital Trade

Use of Export Controls to Sanction Russia Under Consideration

U.S., Japan Reach Deal to Ease Steel Tariffs

Chamber Discusses Saudi Arabia’s Personal Data Protection Law with Regulators

House-Senate Conference on Competitiveness Bills on Hold

Lewis Confirmed to Lead Export-Import Bank

USTR Requests Comments on USMCA Automotive Rules of Origin

Chamber Member Views Sought on Foreign Judgments Convention

Commerce Requests Comments on Section 232 Exclusions Process

Senators Call for Robust Tariff Exclusion Process

White House Updates Critical and Emerging Technologies List​​​​​​​

Commentary

The Time is Now for the U.S. to Lead on Digital Trade

Business Leaders Urge Resolution of U.S.-Canada Border Blockade

The U.S. Chamber of Commerce, National Association of Manufacturers, and Business Roundtable on February 10 issued the following statement on the disruptions to trade at U.S.-Canada border crossings:

“The disruptions we are seeing at the U.S.-Canada border — at the Detroit-Windsor Ambassador Bridge and at other crossings — are adding to the significant supply chain strains on manufacturers and other businesses in the United States.

“The business community is rolling up its sleeves to find workarounds and keep facilities up and running, but we are already seeing some production cuts, shift reductions, and temporary plant closures. The North American economy relies on our ability to work closely together, including our manufacturing sectors. We need to apply the same spirit of cooperation to tackle this problem.

“We respectfully urge the Canadian government to act swiftly to address the disruption to the flow of trade and its impact on manufacturers and other businesses on both sides of the border. We appreciate that the Biden Administration is engaged with the Canadian government, and we strongly encourage officials to continue efforts to resolve these blockages at the border.”

The Chamber is in communication with the Biden administration and counterparts in Canada on the issue and will remain engaged. For further information, please contact Senior Vice President for the Americas Neil Herrington (nherrington@uschamber.com).

Chamber Releases Report on Vast Promise of Digital Trade

On February 9, the U.S. Chamber released a major report entitled The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement. The report underscores the promise of digital trade as a driver of dynamic growth and good jobs in the U.S. and abroad. With details on a host of industry sectors and state-by-state fact sheets, the report shows that most U.S. services exports now have the potential to be delivered to customers abroad digitally. It also reveals how companies of all sizes have the potential to benefit from digital trade.

Executive Vice President and Head of International Affairs Myron Brilliant made the following statement upon the report’s release:

“The digital trade revolution is already delivering benefits for workers and companies across the country. Americans working in companies of all sizes and sectors can now sell their goods and services digitally to customers around the globe, yet the potential of this sea-change is nearly untapped.

“While Americans are well placed to seize these opportunities, rising digital protectionism abroad presents a serious threat. Scores of countries have imposed data localization measures and other trade barriers. In our view, the best defense is a good offense: The United States should pursue a high-standard digital trade agreement with a coalition of like-minded countries that share U.S. ambitions. We need this to secure opportunities for American workers, small businesses, services industries, and others. The time to act is now.”

The Chamber report also lays out principles to guide the negotiation of a digital trade agreement. It also identifies a group of economies — dubbed the “Digital Dozen” in this report — considered potentially suitable partners to join the United States in a high-standard digital trade agreement, including markets from the Indo-Pacific and the Americas to the UK. Several media outlets reported on the study, including Bloomberg, Inside U.S. Trade (subscription required), and Politico’s Morning Trade (subscription required).

On a related note, Executive Vice President and Head of International Affairs Myron Brilliant and Senior Vice President held a press conference on February 9 to announce the digital trade study and the launch of the Chamber’s #LeadOnTrade Campaign to send a clear message to the administration and the Congress. Brilliant stated at the press conference:

“Our message and our goal is to get the United States back on the offensive on trade — seeking new market-opening trade agreements — be they a digital trade agreement, or full free-trade agreements with the UK or Kenya, or with other partners.

“As our President and CEO Suzanne Clark said in her State of American Business address last month: ‘By one vital measure—trade—we’re standing still. And that means we’re falling behind.’ Other nations are entering into sweeping new trade agreements that offer benefits to their own workers, farmers, and companies. Meanwhile, the competitive disadvantage facing our own companies in global markets is growing.”

For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).

Use of Export Controls to Sanction Russia Under Consideration

As has been widely reported, the administration is considering the application of export controls as part of its sanctions on Russia should Moscow further invade Ukraine. Officials indicate they are focused on sectors critical to the Russian government’s military capabilities as opposed to consumer-level goods. However, the potential measures appear to target specific end-users while also seeking to ensure that sensitive information is not diverted to military end-users, and the ultimate scope of the measures may expand.

Given the relatively limited volume of U.S. exports to Russia (approximately $6 billion out of total Russian imports of $330 billion), the administration is looking to target areas where Russia is dependent on foreign suppliers in sectors that have most impact on its military capabilities and ambitions. A significant share of Russia’s imports come from China and elsewhere in Asia.

The administration is considering applying the Foreign Direct Product Rule (FDPR) in a way that would restrict the export of specifically identified U.S. technologies to Russia regardless of where the product in question is manufactured or assembled. Other areas that could be targeted with further restrictions include items on the EAR99 list as well as Russian parties on the Military End User list.

The administration is working is to have a Federal Register notice ready so that it can respond to an invasion immediately. Delaying the effective date, officials believe, could be counterproductive and allow Russia to stockpile sensitive products. While the publication of the FDPR in the Federal Register would be effective immediately, companies will still be encouraged to submit comments (similar to the process used for FDPR on Huawei).

The administration is emphasizing publicly and privately that it has tools available to sanction firms that fail to fully to comply with FDPR. Further, the rule is not yet final, and there are varying views inside the administration as to the scope of the approach. Commerce continues to emphasize a “high walls around small gardens” approach, with others suggesting the final approach may be considerably broader.

Outreach is under way to other governments around the world — allied and otherwise — whose cooperation would enhance the efficacy of the export controls. Officials indicate they are pleased with the response from key allies so far, citing multiple productive exchanges with EU and Asian counterparts. U.S. officials are in the EU this week to continue work on coordinated package.

In addition, exceptions could be considered for deemed exports, as well as items related to humanitarian needs — such as essential medicines and medical devices — that would qualify for license exceptions.

Companies with supply chains that touch Russia — i.e., those dependent on inputs from Russia or whose distribution passes through or ends in Russia — should be thinking about alternatives. Additionally, companies with humanitarian concerns should start thinking about the kinds of license applications they may want to seek.

For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

U.S., Japan Reach Deal to Ease Steel Tariffs

On February 7, the U.S. and Japan announced an agreement on tariffs for Japanese steel products entering the U.S. stemming from the U.S. Section 232 tariffs on steel and aluminum imports first imposed in 2018. Akin to the agreement reached between the U.S. and EU in October, this deal reworks the U.S. Section 232 tariffs and replaces them with a new tariff-rate quota (TRQ) system for steel imports that will take effect April 1. Aluminum imports are unaffected.

U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant commented on the deal, recognizing the progress made but urging more be done:

“The Chamber welcomes the relief today’s deal will offer American industries suffering from soaring steel prices and shortages, but further action is needed. When these tariffs were imposed in 2018, the Chamber warned they ‘would directly harm American manufacturers, provoke widespread retaliation from our trading partners, and leave virtually untouched the true problem of Chinese steel and aluminum overcapacity.’ All of that came to pass. This deal marks a step toward remedying these problems.

“Meanwhile, Section 232 tariffs and quotas remain in place on imports from many other countries. The U.S. should drop the unfounded charge that metal imports from the U.K., Korea, and other close allies represent a threat to our national security — and drop the tariffs and quotas as well.”

Under the agreement with Japan, the U.S. will replace the existing 25% tariff on Japan’s steel products under Section 232 with TRQ levels based on a historical baseline of Japanese steel import volumes between 2018-2019. These TRQ levels are divided into 54 different product categories. Any steel products entering above-quota will continue to be subject to the Section 232 tariff. The U.S. is also engaging in bilateral talks with the United Kingdom to resolve the tariff dispute.

For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).

Chamber Discusses Saudi Arabia’s Personal Data Protection Law with Regulators

The Chamber’s U.S.-Saudi Arabia Business Program, in partnership with the National Data Management Office (NDMO) of the Kingdom of Saudi Arabia, hosted a virtual workshop on February 8 to address U.S. business concerns with the Saudi Personal Data Protection Law (PDPL) that was issued in September 2021. Prior to the workshop, the Chamber solicited comments from member companies regarding issues with the PDPL and submitted the final input to NDMO in December.

In addition to the NDMO and member companies, representatives from the following Saudi entities were present during the workshop: the Communications and Information Technology Commission (CITC), Ministry of Communications and Information Technology (MCIT), the National Cybersecurity Authority (NCA), and the National Competitiveness Center (NCC). Following remarks from Dr. Majed Alshammari, CEO of Data Governance at NDMO, industry representatives from our U.S.-Saudi Arabia Digital Economy Working Group spoke about concerns the U.S. business community has with the PDPL, such as data localization and cross-border data transfers, the legal basis for processing personal data, consent, use of data for marketing purposes, anonymized data, and unifying digital policy across the Saudi government, among other topics.

During the meeting, NDMO reiterated that a majority of the concerns raised by companies would be addressed in the updated executive regulations to the PDPL which are to be published on March 1. The Chamber plans to review and coordinate closely with industry to submit additional inputs to the Kingdom should there be issues not adequately addressed.

For further information, please contact Senior Manager for Middle East & Turkey Affairs Liz Clark (lclark@uschamber.com).

House-Senate Conference on Competitiveness Bills on Hold

The House of Representatives on February 4 passed the “America COMPETES Act,” setting the stage for conference negotiations with Senate-passed “U.S. Innovation and Competition Act (USICA).” Representative Adam Kinzinger (R-IL) was the lone Republican to join Democrats in support of the bill, and conversely, Representative Stephanie Murphy (D-FL) joined Republicans in voting against it. House Speaker Nancy Pelosi (D-CA) praised the House bill while Republican Leader Kevin McCarthy (R-CA) lambasted the legislation.

Senate Majority Leader Chuck Schumer (D-NY) released a statement saying he looked forward to a “bicameral conference process that builds on the broad bipartisan support of the Senate-passed U.S. Innovation and Competition Act” (which he has since renamed the “Make it in America Act”). Senate Minority Leader Mitch McConnell (R-KY) took to the Senate floor on February 7 expressing his opposition to the House’s final bill and dismay at House Democrats’ refusal to operate in a bipartisan manner as the Senate did on USICA. He further said the House-passed bill is laden with “poison pills.”

There has been no official indication on whether the conference process will be formal, with designated conferees to reconcile differences, or informal, with House and Senate leadership offices making the final determination as to the make-up of the final bill.

The Chamber weighed in with a letter to the House ahead of the vote opposing the bill due to numerous provisions, including many in the trade title, “that would undermine U.S. competitiveness.” In efforts to secure quick passage of the long-awaited $52 billion in domestic semiconductor funding in the CHIPS for America Act — a provision which the Chamber supports — some reports suggest Congress may cast aside the trade provisions altogether.

Secretary of Commerce Gina Raimondo stated as much in a press conference following passage of the America COMPETES Act: “While trade is, of course, an incredibly important part of our competition strategy, we have to find common ground, however limited that might be, and not let those controversial pieces of the trade title bog down this whole negotiation.” The statement is curious given that the Senate added its trade title (“The Trade Act of 2021”) to USICA on a 91-4 vote.

The Biden administration is also involved in another controversial provision, the “National Critical Capabilities Defense Act,” which would establish a new regime to regulate outbound investment transactions. Spokesperson Jen Psaki, under questioning, said the White House and Congress are “in touch” on the issue. The Chamber maintains that this “ill-defined new bureaucracy” would “complicate efforts by U.S. businesses to compete, grow, and expand in global markets.”

The Chamber is engaged in efforts to shape the final China competition bill as House and Senate lawmakers look to reconcile differences in their two versions. For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

Lewis Confirmed to Lead Export-Import Bank

On February 9, the Senate voted to confirm Reta Jo Lewis to serve as President and Chair of the Export-Import Bank (Ex-Im) in a 56-40 vote. Senator John Kennedy (R-LA), the lone Republican to vote to advance Lewis out of the Senate Banking Committee, was joined by five other Republicans in voting to confirm.

On February 2, the U.S. Chamber sent a letter to the Senate in support of Lewis’s nomination. The Chamber’s letter reads in part:

“Ex-Im plays a vital role supporting U.S. exporters by leveling the trade finance playing field for American companies. Without Ex-Im’s support, U.S. exporters are competing for customers with one arm tied behind their backs.

“Senate-confirmed leadership is crucial to ensuring a robust role for Ex-Im in restoring economic growth and job creation in the wake of the COVID-19 pandemic. Ex-Im reported a backlog of $39 billion in projects in its financing pipeline awaiting approvals at the end of 2020, and a significant share of this backlog remains. Expediting these projects will support good American jobs. Additionally, confirming Ms. Lewis will ensure that many of the reforms Congress has mandated are fully implemented, including the Program on China and Transformational Exports.”

Lewis previously served as Vice President and Counselor to the President at the U.S. Chamber, where she led the Chamber’s initiatives focused on fostering strategic alliances between small businesses, especially women and minority-owned businesses, entrepreneurs, and executives. In a September letter, the Chamber supported Lewis and other Ex-Im nominees Judith DelZoppo Pryor as First Vice President and Owen Herrnstadt as a Member of the Board.

For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).

USTR Requests Comments on USMCA Automotive Rules of Origin

On February 10, the Office of the U.S. Trade Representative (USTR) published a request for public comment “concerning the operation of the United States-Mexico-Canada Agreement (USMCA) with respect to automotive goods, including the implementation and enforcement of the USMCA rules of origin for automotive goods, as well as whether the automotive provisions of the USMCA are relevant in light of technological and production advances.” Comments received will guide USTR as it conducts a review of auto trade under USMCA and prepares a report for the Senate Finance Committee and House Ways and Means Committee. Responses are due on March 28.

USMCA’s rules of origin provisions tighten the requirements to claim preferential treatment for automotive goods, including higher thresholds for regional value content, rules to produce core parts in the region, steel and aluminum purchasing requirements, and a labor value content threshold. Both Canada and Mexico oppose the U.S. interpretation of how to apply the regional value content calculations, claiming that USTR’s stricter interpretation is inconsistent with USMCA. They have joined in requesting a dispute settlement panel under the pact.

The Chamber welcomes input on this issue. Members wishing to express a view should contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

Chamber Member Views Sought on Foreign Judgments Convention

Chamber staff — including from the Chamber’s Litigation Center and Institute for Legal Reform — are recommending that the Chamber support signature and Senate ratification of the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (“Foreign Judgments Convention”). In July 2019, the Hague Conference on Private International Law finalized this new multilateral treaty, which sets minimum standards for the recognition and enforcement of foreign judgments in each contracting country’s legal system. The United States participated in the negotiations but has not yet committed to join the Convention.

The State Department has asked for input from stakeholders, including the U.S. business community, about whether the United States should sign and ratify the Convention. The Convention is primarily of interest to U.S. companies that want to ensure money judgments they secure in U.S. courts against foreign persons or companies are enforced in non-U.S. courts.

Today, foreign judgment recognition in the United States is governed by a patchwork of state statutes and common law, which generally allow for liberal recognition of foreign judgments in U.S. courts. Foreign courts, on the other hand, routinely refuse to recognize judgments rendered by courts in the United States. Joining the Foreign Judgments Convention would help to level this currently uneven playing field by ensuring that other countries recognize judgments rendered by U.S. courts in favor of U.S. businesses and apply the same standards for recognition. More information is available here.

Chamber members wishing to express a view — especially an adverse view, given the positive staff recommendation — should contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).

Commerce Requests Comments on Section 232 Exclusions Process

The Department of Commerce’s Bureau of Industry and Security published on February 10 a request for public comment on the Section 232 exclusions process. Commerce was directed by the White House to establish a comment period on the Section 232 exclusions process in the Presidential Proclamation implementing the U.S.-EU agreement on steel and aluminum. Responses are due on March 28.

The notice requests comments on “the responsiveness of the exclusions process to market demand and enhanced consultation with U.S. firms and labor organizations.” The request also welcomes comments on specific aspects of the exclusions process, such as the forms and information required, the request, objection, rebuttal, and surrebuttal process, and the overall transparency of the process, among others. Commerce notes in its request that to date, it has processed over 382,000 requests, rejected or made determinations on more than 369,000 requests, and that approximately seventy percent of exclusion requests do not receive objections.

Chamber members with perspective to share are directed to contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

Senators Call for Robust Tariff Exclusion Process

On February 7, U.S. Senators Rob Portman (R-OH) and Tom Carper (D-DE) led 39 of their colleagues in a bipartisan letter to U.S. Trade Representative (USTR) Katherine Tai calling for a “more comprehensive exclusion process for imports from China subject to tariffs under Section 301 of the Trade Act of 1974 in order to allow more small businesses and manufacturers to access relief,” as stated in their press release. House members addressed parallel concerns in a January 20 letter to Ambassador Tai.

In the letter, the senators urge Ambassador Tai to expand upon the narrow and limited October 2021 exclusion process. They argue, “we believe that a comprehensive exclusion process that gives an opportunity for businesses affected by the tariffs to apply for limited, yet renewable, relief is a valuable component of our strategy to counter China’s unfair trade practices. In addition to easing the tariffs’ negative impacts on U.S. businesses, it would also give those businesses additional time and resources to move supply chains out of China and return manufacturing to the United States.”

They also reiterate the need for a tariff refund that extends beyond October 2021, so that importers may receive retroactive relief as far back as January 2021, when the prior round of exclusions expired. The senators go on to suggest “excluding any product for which imports from China represent nearly all imports to the United States” because “the exceptional reliance on China for those specific imports suggests that moving these supply chains out of China is uniquely unlikely, and that our efforts to diversify production locales and reshore manufacturing would be better spent on other products.”

The Chamber weighed in with offices encouraging them to sign on. For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

White House Updates Critical and Emerging Technologies List

On February 7, the White House National Science and Technology Council released an updated list of critical and emerging technologies (CETs), defined as a subset of advanced technologies that are potentially significant to U.S. national security. The council’s update notes that the updated list “will inform a forthcoming strategy on U.S. technological competitiveness and national security.” The revised list now includes several identifiable CET subfields under 18 different technology areas.

Commentary

U.S. Chamber (February 9) by Mary Kate Carter