U.S. Chamber of Commerce

International Policy Update

March 18, 2022

U.S. Issues Further Sanctions on Russia, Aid for Ukraine

Chamber Weighs in on Bipartisan Innovation Act

Chamber Opposes WTO Proposal to Waive Intellectual Property Rights

U.S.-Korea Business Council Celebrates 10th Anniversary of KORUS

Congress Comments on IPEF as USTR, Commerce Seek Input

Senate Foreign Relations to Take Up U.S.-Chile Tax Treaty

ICYMI: Uyghur Forced Labor Prevention Act Public Hearing Notice

From the Home Front

Chamber Welcomes Long-Overdue Fiscal 2022 Funding and Crucial Assistance for Ukraine

Commentary

CPTPP: Can We Expect Additional Southeast Asian Members Soon?

On the Road to Global Vaccinations, the Last Mile Remains the Hardest

U.S. Issues Further Sanctions on Russia, Aid for Ukraine

The United States and its allies have continued to announce punishing sanctions on Russia in response to its invasion of Ukraine, as the Chamber has summarized in recent updates to members. Among the global financial and economic consequences of the Russian invasion of Ukraine and the sanctions on Russia are the following:

In the latest trade move, the House of Representatives on March 17 passed the “Suspending Normal Trade Relations with Russia and Belarus Act” in a 424-8 vote, clearing the way for increased tariffs on Russian and Belarusian imports after stripping those provisions from a bill banning Russia oil imports last week. The bill also includes language reauthorizing and amending the Global Magnitsky Act, which imposes sanctions on human rights violators. A recent analysis by the Progressive Policy Institute showed that revoking PNTR would have an unusually small impact on Russia, a significant exporter of raw materials, because “America’s ‘non-MFN’ tariffs on natural resources are usually low.” Many U.S. allies are also moving to revoke Russia’s MFN treatment.

The bill, according to a press release, also includes the following trade provisions:

Senate Majority Leader Chuck Schumer (D-NY) indicated the Senate would quickly pass the bill for President Biden’s signature. A summary of the legislation is available here, and full text is available here.

President Joe Biden announced on March 16 an additional $800 million in security assistance to Ukraine, surpassing $1 billion in the past week, comprised of a range of weapons and military equipment. Rumored to be on the list but not explicitly named are Switchblade drones, which could be devastating to Russian supply lines. White House Spokesperson Jen Psaki emphasized in a press conference “these are all defensive weapons systems” and shouldn’t be misconstrued as an escalation.

The U.S. Treasury also sanctioned additional individuals with ties to the Russian government, including Belarusian President Alexander Lukashenko. The State Department announced additional sanctions on Russian military leaders.

The U.S. and a group of allies launched the Russian Elites, Proxies and Oligarchs (REPO) group, an international task force charged with collecting and sharing information to seize the assets of and take other concrete actions against Putin’s political and business allies.

Russia placed sanctions on Americans, including President Joe Biden, Secretary of State Antony Blinken, and Secretary of Defense Lloyd Austin, but unlike Russians subject to sanctions, “none of us have bank accounts that we won’t be able to access,” remarked Jen Psaki at a press conference.

In addition to the Chamber’s summary of recent actions, members are directed to the United States Treasury’s Office of Foreign Assets Control (OFAC) frequently-updated FAQs and the OFAC hotline/feedback account (ofac_feedback@treasury.gov) for information and guidance on sanctions compliance. The Department of Commerce’s Bureau of Industry and Security (BIS) also published resources for companies including compliance guidance, seminar opportunities, and contact information.

The Chamber will continue to monitor developments and engage with the administration and Congress as these policies are implemented. For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com) or Director for International Policy Isabelle Icso (iicso@uschamber.com). On matters related to Ukraine’s humanitarian crisis, please contact U.S. Chamber of Commerce Foundation Senior Vice President Marc DeCourcey (mdecourcey@uschamber.com).

Chamber Weighs in on Bipartisan Innovation Act

On March 16, the U.S. Chamber sent a letter to Congress weighing in on several provisions under consideration for the final bill stemming from the Senate-passed “United States Innovation and Competition Act (USICA)” and the House-passed “America COMPETES Act.” The Chamber supports work to achieve a final package, to be called the Bipartisan Innovation Act, that will enhance American competitiveness while avoiding a number of problematic elements in one or the other of the earlier bills.

In the letter, the Chamber reiterated its support for funding for the CHIPS for America Act and FABS Act to respond to the global chip shortage and strengthen U.S. industry through incentives for semiconductor research, design, and manufacturing in the U.S. The Chamber also urged several provisions be removed from the final bill that would “hinder the ability of American firms to compete with foreign competitors” and expressed a strong preference for the USICA trade title, “which was developed in a bipartisan manner and won Senate approval on a 91-4 vote, over the more problematic and partisan COMPETES version.” The Chamber commented on the following provisions in its letter:

Senate Majority Leader Chuck Schumer filed cloture on the America COMPETES Act on March 17, paving the way for Congress to enter into formal conference negotiations. Schumer stated on the Senate floor: “In order to go to conference, the Senate needs to amend the House-passed [COMPETES] bill with the Senate-passed U.S. Innovation and Competition Act and send it back to the House… That’s what we’ll aim to do next week, as quickly as we can.”

As an overview of the formal conference process, the Senate must take the House bill (H.R. 4521), replace the House text with its own, and then re-pass the USICA language as H.R.4521. At that point, the House and Senate can name conferees to work on a compromise bill, which then must pass both the House and Senate.

According to a Senate staffer close to the process, the plan is to vote next week on the motion to proceed and then begin the process of naming conferees. This process allegedly involves unlimited motions to instruct conferees, which pass with a simple majority threshold. The staffer noted that this process could take weeks.

The Chamber is engaged in efforts to shape the final 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).

Chamber Opposes WTO Proposal to Waive Intellectual Property Rights

On March 16, Senior Vice President of the Global Innovation Policy Center Patrick Kilbride issued the following statement on news that four WTO members had reportedly moved closer to agreement on a waiver for intellectual property rights relating to Covid-19 vaccines at the World Trade Organization:

“This proposal is fundamentally misguided and should be rejected. It ignores that the overwhelming problem is not vaccine production, it is last-mile delivery, and it will erode the ability of innovative companies to develop the cure for the next pandemic or global health threat.

“Business is delivering on the promise to manufacture safe and effective COVID-19 vaccines for the whole world. Vaccine production is estimated to reach over 20 billion doses this year, enough for everyone. As of March, over 65% of global population has received at least one dose, and this number is growing every day. Some patients remain hard to reach. Governments and international organizations should avoid political distractions and more quickly achieve comprehensive global vaccination against COVID-19, by focusing on real, practical ongoing issues with last-mile distribution.

“Intellectual property waiver proposals distract from the real issues preventing more shots in arms such as logistical hurdles, supply chain bottlenecks, and vaccine hesitancy. Worse yet, dismantling IP rights threatens the licensing arrangements that are enabling rapid global production and technology transfer. Any WTO action undermining IP will harm multiple U.S. industries, who are global leaders in their fields, and who depend on IP protections. Any agreement of this kind would bargain away US competitiveness.”

The compromise outcome would only cover vaccines and limits the waiver to developing countries that have exported less than 10 percent of the world’s coronavirus vaccine doses in 2021. The proposal must now gain agreement from all WTO members.

The Office of the U.S. Trade Representative (USTR) released a statement calling the process “difficult and protracted” but said it resulted in “the most promising path toward achieving a concrete and meaningful outcome.”

The U.S. Chamber has also published a blog post on the successes and challenges business are facing in their effort to deliver vaccinations to individuals globally, underscoring the significant barriers that exist at the ‘last-mile’. Despite this, the U.S. has played a leading role in helping to alleviate global health challenges in the global response to COVID-19.

For further information, please contact Senior Vice President for the Global Innovation Policy Center Patrick Kilbride (PKilbride@USChamber.com).

U.S.-Korea Business Council Celebrates 10th Anniversary of KORUS

The U.S.-Korea Business Council hosted a celebration of the 10th anniversary of the U.S.-Korea Free Trade Agreement (KORUS), “Towards a Stronger U.S.-Korea Economic Alliance,” on March 15 in-person at the Willard Hotel in Washington, D.C. The event was co-hosted by the Korea Chamber of Commerce and Industry (KCCI).

Speakers, including U.S. Trade Representative Katherine Tai, Korean Trade Minister Han-koo Yeo, Representative Ami Bera (D-CA), and Representative and Chairman of the Commerce & Industrial Committee of the National Assembly Hack-young Lee, delivered remarks on KORUS and the future of bilateral trade relations.

U.S. Chamber Senior Vice President for Asia Charles Freeman opened the event:

“2021 has highlighted Korea’s status as an integral part of the global economy and its important role in strengthening global supply chains. The past year has also shown the resilience of the Korean economy and demonstrated the perseverance of its people in overcoming moments of crises. The Chamber sees potential for bilateral cooperation in many areas, especially as we recover from the COVID-19 pandemic, including strengthening global health security, promoting digital trade, bolstering supply chain resiliency, and accelerating the global energy transition. These are some of the areas that we highlighted in our recent recommendations to the administration on its efforts to develop an Indo-Pacific Economic Framework. Central to the Framework should be an enforceable digital trade agreement that builds on the high standards the U.S. has already negotiated in its agreements with Japan and with Mexico and Canada.”

U.S. Trade Representative Ambassador Tai provided remarks during the opening session of the event:

“Today, we mark the 10-year anniversary of the U.S.-Korea Free Trade Agreement, an agreement that has survived a number of significant adjustments before its passage by the U.S. Congress, and a re-negotiation in 2018. KORUS, as it is often called, is a manifestation of the resilience in our bilateral economic relationship — and the ability of our two nations to confront challenges head on. Trade agreements, as I’ve often said, are not trophies to be put on a shelf and admired. They are living arrangements that require constant tending and continued attention in order to remain relevant and responsive to the evolving dynamics in our relationship and the world economy.”

In his remarks, South Korean Trade Minister Han-koo Yeo noted:

“In this vein, ‘the Indo-Pacific Economic Framework’ that the U.S. is currently developing as a new cooperation framework in the region serves as a good platform for our two countries to build on the successful experiences of the last 10 years of KORUS FTA, and work together eye to eye, shoulder to shoulder, as an ironclad Korea-U.S. alliance that shares the same fundamental values of democracy, market economy and the rule of law.”

The program also featured a private sector panel discussion with industry representatives on ways that KORUS has enabled trade and investment and U.S.-Korea collaboration in many areas such as supply chain resiliency.

For further information, please contact Executive Director of the U.S.-Korea Business Council Espie Jelalian (ejelalian@uschamber.com).

Congress Comments on IPEF as USTR, Commerce Seek Input

On March 15, the Senate Finance Committee held a hearing on “The Promise and Challenge of Strategic Trade Engagement in the Indo-Pacific Region.” The administration’s Indo-Pacific Economic Framework (IPEF) initiative was a primary focus of the hearing. Senate Finance Committee Chairman Ron Wyden highlighted in his remarks the enforceable labor obligations that the U.S.-Mexico-Canada Agreement included as a guiding example for the IPEF. He also emphasized the importance of transparency in consultation with Congress on IPEF, though the administration has indicated it is unlikely the IPEF will need formal approval from Congress.

Ranking Member Mike Crapo (R-ID), echoed by many of his colleagues, warned in his remarks of the consequences if the U.S. does not secure new market access commitments in the region: “We are losing ground in the Indo-Pacific… Economically, our workers, businesses and farmers will lose out on important opportunities if we stay on the sidelines.”

Watch a full video of the hearing and read written testimony here.

On a related note, the Office of the U.S. Trade Representative (USTR) is seeking comments on the “Fair and Resilient Trade” pillar of the IPEF. The Department of Commerce also issued a request for comments on the three pillars it will lead: 1) supply chain resilience; 2) infrastructure, clean energy, and decarbonization; and 3) tax and anti-corruption. Both sets of comments must be submitted by April 11.

The Chamber previously shared business recommendations with administration officials engaged in the development and formulation of IPEF. The recommendations will serve as the basis of the Chamber’s comments to USTR and Commerce.

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

Senate Foreign Relations to Take Up U.S.-Chile Tax Treaty

The Senate Foreign Relations Committee will consider the U.S.-Chile Tax Treaty at a business meeting on March 23. On March 17, the U.S. Chamber sent a letter to the committee in support of the treaty and urged the committee to support its prompt approval.

The Chamber wrote in the letter:

“Approval of this treaty has become an urgent priority for U.S. companies doing business in Chile. Due to changes in Chilean tax legislation that went into effect in 2014, corporate tax rates in Chile have increased. Without a ratified treaty to avoid double taxation, taxes on U.S. companies with Chilean operations will climb as high as 44%. However, companies headquartered in the two dozen European, Asian, and Western Hemisphere countries with which Chile already has a tax treaty in force will benefit from a much lower tax rate and would thus secure a significant competitive advantage over their U.S. competitors. Senate action is required to spare U.S. workers and companies this unfair treatment.

“This treaty would also benefit a growing number of Chilean companies that are keen to increase their investments in the United States. These investments have the potential to create thousands of good jobs.”

For further information, please contact Senior Vice President for the Americas Neil Herrington (nherrington@uschamber.com).

ICYMI: Uyghur Forced Labor Prevention Act Public Hearing Notice

The Forced Labor Enforcement Task Force (FLETF) will hold a public hearing, as required by the Uyghur Forced Labor Prevention Act, on April 8. The hearing notice states it “will allow for public testimony on the use of forced labor in China and potential measures to prevent the importation of goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the PRC into the United States.” Registration details for those interested in testifying or listening in to the hearing can be found here.

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

From the Home Front

Chamber Welcomes Long-Overdue Fiscal 2022 Funding and Crucial Assistance for Ukraine

Executive Vice President and Chief Policy Officer Neil Bradley made the following statement regarding passage of the Fiscal Year 2022 Appropriations legislation:

“The U.S. Chamber welcomes passage of long-overdue funding for the remainder of fiscal year 2022, as well as crucial support for Ukraine. The business community supports strong actions in response to Russia’s invasion of Ukraine. We are pleased this bipartisan legislation provides much-needed assistance for Ukraine and its suffering people through humanitarian, military, and economic aid. Enactment of this bill will also contribute to our economic recovery and future growth here at home. Specifically, the legislation provides full funding for the landmark Infrastructure Investment and Jobs Act, extends important visa programs such as EB-5, closes the visibility gap between the federal government and private sector on cyber threats to critical infrastructure, and maintains longstanding policy riders. We thank the Members of Congress who negotiated and helped pass this important legislation.”

Commentary

The Diplomat (March 10) by Shannon Hayden and Javiera Heine

U.S. Chamber (March 16) by Robert Grant