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U.S. Chamber Newsletter-International Policy Update (4/1)

5 April 2022 Tuesday

U.S. Chamber of Commerce
International Policy Update
April 1, 2022
Clark: U.S. Businesses Committed to Mexico, but Rule of Law, Transparency are Key
Brilliant: It’s Time for a Digital Trade Agreement
Tai Urged to Adopt a More Ambitious Trade Agenda
U.S. Unveils New Sanctions on Russia
Saudi Arabia Postpones Data Law Enforcement until March 2023
Bipartisan Innovation Act on Path to Conference
Chamber Comments on USMCA Automotive Rules of Origin
Senate Foreign Relations Advances U.S.-Chile Tax Treaty
Pryor Confirmed as Ex-Im Bank First Vice President
Clark: U.S. Businesses Committed to Mexico, but Rule of Law, Transparency are Key
On the eve of her visit to Mexico, U.S. Chamber President and CEO Suzanne Clark released an op-ed, originally published in Mexico City’s El Financiero, entitled American Businesses See Challenges and Opportunities in the U.S.-Mexico Relationship. Clark traveled to Mexico City to meet with senior officials and offer the U.S. business community’s help in achieving shared objectives.
In the op-ed, Clark touted the strength of the bilateral economic relationship and how open communication can “make our indispensable partnership even stronger.” Clark also outlined several areas of concern in the bilateral relationship, such as Mexico’s plans to overhaul its electricity market, other energy issues, and implementation and compliance challenges regarding the U.S.-Mexico-Canada Agreement. Further, she looked ahead to the CEO Summit of the Americas, which the Chamber will host, as an opportunity to advance shared goals throughout the region. The op-ed reads in part:
“Our governments must hold each other accountable to full USMCA implementation and compliance. The same is true with Mexico’s plans for a constitutional overhaul of its electricity market which as currently written violates a number of commitments Mexico made in the USMCA. It also works against Mexico’s vast potential to be a global leader in production of solar, wind, and other renewable energy sources… we cannot seize that potential with protectionist policies.
“Beyond the energy sector, U.S. businesses also face USMCA compliance and implementation challenges in Mexico in areas such as trade facilitation, digital trade, and biopharmaceutical procurement. From our perspective, these issues are creating greater investment uncertainty at a moment of historic opportunity for Mexico—an opportunity that would be undermined by misguided policies. U.S. companies want nothing more than to enhance investments in Mexico to support a robust recovery from the pandemic, but the lack of legal security and transparency is making it difficult.
“We raise these concerns in the spirit of friendship, and only because we know the extraordinary growth potential of our partnership.”
In related news, U.S. Chamber Senior Vice President for the Americas Neil Herrington participated in a March 25 roundtable with USTR on Mexico. Herrington and other business participants urged USTR to press Mexico vigorously to comply with the obligations it assumed in the USMCA (a number of which are cited in the op-ed).
For further information, please contact Neil Herrington (nherrington@uschamber.com).
Brilliant: It’s Time for a Digital Trade Agreement
Fortune on March 30 published an op-ed entitled “It’s time for a digital trade agreement” by U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant. In the op-ed, Brilliant makes the case that the U.S. has fallen behind on trade but is well-positioned to exercise leadership by engaging in digital trade negotiations to set binding and enforceable rules that benefit the digital economy.
The op-ed builds upon The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement, a Chamber report showing how digital trade has the potential to benefit millions of Americans working in a wide range of sectors, including many far removed from what are generally thought of as “digital companies.” The report includes 50 state fact sheets that show the footprint of the digital trade economy across the country. It also discusses the rise of digital protectionism worldwide and policy recommendations to address that threat.
The op-ed reads in part:
“It is no secret that the U.S. has fallen behind on trade. While other nations have been racing to sign mutually beneficial trade agreements with one another, the U.S. has not entered into an agreement with a new trade partner in a decade.
“This lack of progress is not due to a lack of opportunity. U.S. exports are no longer limited to physical goods and services and digital trade remains an opportunity with tremendous untapped potential… However, global barriers to U.S. services exports are also on the rise. Due to other nations’ protectionist and discriminatory digital rules, many of which unfairly target American businesses, the U.S. has fallen behind.
“The Biden administration must not overlook this prime opportunity for American leadership. It is time for the U.S. to negotiate a digital trade agreement.”
For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).
Tai Urged to Adopt a More Ambitious Trade Agenda
The House Ways and Means Committee and Senate Finance Committee convened hearings on March 30 and March 31, respectively, on the Biden administration’s 2022 Trade Policy Agenda, featuring U.S. Trade Representative Katherine Tai as the sole witness. In her opening remarks, Ambassador Tai reiterated the administration’s commitment to a worker-centered trade policy, engaging with allies, enforcement, and inclusive stakeholder engagement. Tai faced questions from committee members on issues ranging from competition with China, environmental policy, USMCA implementation and issues with Mexico, agriculture trade barriers, and many others, but several issues stood out:
Market access: The theme of the week, on both sides of the aisle, was a desire for the USTR to seek greater market access in negotiations, including with regard to the administration’s Indo-Pacific Economic Framework. Tai faced repeated questioning on why the administration isn’t pursuing market access commitments in trade discussions. Most notably, in an exchange with Senate Finance Committee Ranking Member (R-ID) Mike Crapo, Crapo asked “why take the carrot of market access off the table?” to which Tai responded, “we are facing considerable backlash that we are listening to from our own people about concerns regarding the offshoring and outsourcing of American jobs and opportunities through these types of arrangements.” Tai continued by saying these negotiations will still produce “economically meaningful outcomes” that will “enhance access to each other’s markets.”
TRIPS waiver: Ambassador Tai also received a great deal of heat from lawmakers on both committees on the administration’s efforts to secure a TRIPS waiver for vaccines at the World Trade Organization (WTO). Tai defended the administration’s stance, stating the issue “isn’t about whether we respect intellectual property or we give intellectual property away. It is about where we set the balance between the rights of the innovators and the rights of users and patients to access that.” Senator Bob Menendez (D-NJ) also expressed frustration over the lack of consultation between Congress and the administration on this issue: “We were kept in the dark… There is a difference between notification and consultation.”
Bipartisan Innovation Act: Lawmakers raised various elements under consideration for the Bipartisan Innovation Act. In reference to updating and expanding the U.S. trade toolbox, Ambassador Tai commended Representative Terri Sewell (D-AL) and others for work developing the Leveling the Playing Field 2.0 Act, which would overhaul current antidumping and countervailing duty (AD/CVD) laws in ways the Chamber and other business groups oppose. Representative Bill Pascrell (D-NJ) and Senator Robert Casey (D-PA), respective sponsors of the House and Senate bills creating a new outbound investment screening mechanism, both asked her views on the measure. In responding to Representative Pascrell, Tai said the U.S. should “leave no stone unturned” to better enhance supply chain security; to Senator Casey, Tai stated: “I think it is critical for us to be taking a look at tools like the one you have proposed.” On the Generalized System of Preferences (GSP), Tai told lawmakers that USTR is happy to support the reauthorization process, but GSP renewal is a congressional effort.
China: Under questioning from Chairman Richard Neal (D-MA), Ambassador Tai called competition with China “one of the most important issues that we face as an economy.” In her testimony, Tai stated the administration will “turn the page on the old playbook with China, which focused on changing its behavior” and engage in a strategy that includes “vigorously defending our values and economic interests from the negative impacts of China’s economic policies and practices.” She added under questioning that doing so will mean using new tools “formerly outside the trade lane” such as “rebuilding our industrial manufacturing base.” Several members also expressed frustration over the Section 301 tariff exclusions, many of which have expired and only a small fraction of which have been renewed, to which Ambassador Tai pledged to work with them to “improve the process for stakeholders.”
FTAs: Ambassador Tai was called on by many lawmakers, including Chairman Richard Neal (D-MA), to resume FTA negotiations with trade partners, such as Kenya, the EU, and the UK. Tai said the “sky’s the limit” on what could be done in the future with these countries. She continued: “These are all three important trading partners for the United States and important strategic allies.”
To view a replay of proceedings in the Senate Finance Committee, please click here.
To view a replay of proceedings in the House Ways and Means Committee, please click here.
On a related note, USTR released its 2022 National Trade Estimate Report on Foreign Trade Barriers. The report provides “a comprehensive review of significant foreign barriers to U.S. exports of goods and services, U.S. foreign direct investment, and U.S. electronic commerce in key export markets for the United States.”
For further information, please contact Director of International Policy Isabelle Icso (iicso@uschamber.com).
U.S. Unveils New Sanctions on Russia
On March 31, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), in coordination with allies, announced new sanctions “targeting operators in the Russian technology sector to prevent it from evading unprecedented multilateral sanctions and procure critical western technology.” OFAC is designating 21 entities and 13 individuals, including Joint Stock Micron, which exports more than 50 percent of Russian microelectronics and is Russia’s largest chipmaker. The Treasury Department is also expanding sanctions to the aerospace, marine, and electronics sectors of Russia’s economy and designating “Russian government malicious cyber actors.” See the Chamber’s summary of U.S. sanctions actions.
On March 31, President Biden announced he would release one million additional barrels in strategic petroleum reserves for the next six months to combat rising gas prices related to Russia’s invasion of Ukraine. He also called on Congress to press companies to start producing oil on currently unused lands or pay a fee. U.S. Chamber Global Energy Institute President Marty Durbin issued a statement following the announcement:
“We agree with President Biden that American oil and gas production is essential to relieving high fuel prices and to energy security for the U.S. and our allies. However, the Administration continues to mischaracterize the obstacles to ramping up production, one of which is their own reluctance to process permits. American energy companies have paid significant funds for leases and have every incentive to produce energy where they can. However, it takes years and many permits to explore for energy and even then, not every well drilled on a federal lease is ultimately suitable for energy production, which the Administration continues to ignore. Further, punitive policies and rhetoric send exactly the wrong message to industry and its investors at a time when the Administration should be seeking to collaborate, not punish.
“America clearly needs to develop a robust and homegrown strategic minerals supply chain, so we appreciate that recognition in today’s announcement. However, the Administration should develop a comprehensive strategic minerals strategy in collaboration with stakeholders so that U.S. mining projects and processing facilities get the regulatory approvals they need.”
On other fronts, Chairwoman Carolyn Maloney (D-NY) introduced the “Federal Contracting for Peace and Security Act,” which would require the termination of existing federal contracts and prohibit awards and extensions—including subcontracts—with any company that has conducted business in Russia since Feb. 21. The House Oversight Committee plans to mark up on April 6.
If enacted, the measure would apparently bar from federal contracting a wide range of U.S. companies, including companies with only residual operations in Russia, operations in sectors that the administration has chosen not to sanction, operations that are continuing under General Licenses issued by OFAC, or operations that may be scrutinized under the bill’s ambiguous exception for activities for “humanitarian purposes to meet basic human needs.”
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).
Saudi Arabia Postpones Data Law Enforcement until March 2023
The Saudi Data and AI Authority (SDAIA) on March 23 announced that it will postpone enforcement of its Personal Data Protection Law until March 2023 to allow for further consultations with private sector stakeholders. This follows continued engagement by the Chamber’s U.S.-Saudi Arabia Digital Economy and ICT Working Group, which is chaired by Google and Vice Chaired by Meta and IBM, on the data law over the last several months.
In December 2021 the Working Group submitted private sector input to SDAIA on the first draft of the law and held a workshop with SDAIA in February to discuss the input and industry’s concerns with the law. The Chamber and our private sector partners had continued to express concerns with the law including issues around data localization, consent, cross border data flows, and criminal liabilities. The Chamber’s efforts, which included working with Saudi’s National Competitiveness Center and Ministry of Investment as well as allies in the U.S. government, were recently profiled in Bloomberg. Now the postponement will provide more opportunity to continue engagements with the Saudi government to develop data privacy regulations consistent with international best practices and give companies the time to be in full compliance with the final law.
For further information, please contact Senior Manager for Middle East Affairs Liz Clark (lclark@uschamber.com).
Bipartisan Innovation Act on Path to Conference
On March 30, the House, by unanimous consent, rejected the Senate’s competitiveness legislation and requested a conference. Senate Majority Leader Chuck Schumer (D-NY) said the Senate would also pass a motion requesting a conference and that the formal conference process is on track to start before the end of next week. Conferees could also be named as soon as then, according to a Senate staffer.
Given the breadth of issues the package covers, it is likely chairs and ranking members of Senate Commerce, Finance, Homeland Security, and Foreign Affairs committees are named as conferees. Additional conferees could be pulled from committees with expansive jurisdiction. A similar cross-section of conferees will likely be named in the House.
On March 16, the U.S. Chamber sent a letter to Congress weighing in on several provisions under consideration for inclusion in a final package, to be called the Bipartisan Innovation Act. The Chamber also led a coalition of business groups in sending a multi-association letter to Congress opposing the inclusion of legislation which would overhaul antidumping and countervailing duty laws (AD/CVD). Additionally, the Chamber joined a multi-association letter opposing a provision that would place restrictions on the use of de minimis and “would impose sweeping costs on American businesses, workers and consumers, add new inflationary pressures on the U.S. economy, and exacerbate ongoing supply chain disruptions at U.S. ports.”
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 Comments on USMCA Automotive Rules of Origin
The U.S. Chamber submitted comments to the Office of the U.S. Trade Representative (USTR) in response to its request for input on the operation of the U.S.-Mexico-Canada Agreement (USMCA) with respect to trade in automotive goods. Targeting certain provisions in the USMCA that incorporated complex and far-reaching rules of origin to claim preferential treatment, including Regional Value Content (RVC) and Labor Value Content (LVC), the Chamber expressed opposition on behalf of its members to the methodology used to determine RVC which makes it harder for suppliers working to comply with the USMCA.
The Chamber also called for less reliance on “Buy American” rules, which have “forced suppliers to ‘pick and choose’ the procurement and origination rules with which they will comply.” Additionally, the Chamber pushed for additional time for producers under the alternative staging regime (ASR) to meet USMCA’s new standards as current supply chain challenges are further exacerbated by Russia’s invasion of Ukraine. Both Canada and Mexico have claimed that these strict RVC calculations are inconsistent with USMCA and have joined in requesting a dispute settlement panel under the pact.
For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).
Senate Foreign Relations Advances U.S.-Chile Tax Treaty
The Senate Foreign Relations Committee reported out favorably the U.S.-Chile Tax Treaty at a business meeting on March 29. The committee rejected several amendments put forth by Senator Rand Paul (R-KY) and approved the accompanying reservations language that conforms the treaty to the 2017 Tax Cuts and Jobs Act. Following ratification by the full Senate, the Chilean Congress will also have to consider the Treaty.
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).
Pryor Confirmed as Ex-Im Bank First Vice President
On March 30, the Senate voted 69-30 to confirm Judith DelZoppo Pryor as First Vice President of the Export-Import Bank. The Chamber sent a letter of support for the nomination, calling her confirmation an important step in guaranteeing a full complement of Senate-confirmed board members at the Bank who can ensure “a robust role for Ex-Im in restoring economic growth and job creation in the wake of the disruption to international trade caused by the pandemic.”
For further information, please contact Senior Vice President for International Policy John Murphy (jmurphy@uschamber.com).

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