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U.S. Chamber Newsletter-International Policy Update (5/20)

23 May 2022 Monday

U.S. Chamber of Commerce

International Policy Update

May 20, 2022

Chamber Weighs in on U.S.-EU Trade and Technology Council Ministerial

Chamber, Industry Groups Press WTO Negotiators Ahead of MC12

Democrats Push Ambitious Timeline for Bipartisan Innovation Act

Russia Sanctions, Export Controls Continue to Evolve

Commentary

Chamber Weighs in on U.S.-EU Trade and Technology Council Ministerial

On May 15-16, the U.S.-EU Trade and Technology Council (TTC) held its second ministerial meeting in Paris, France, where the U.S. co-chairs — Secretary of State Antony Blinken, Secretary of Commerce Gina Raimondo, and United States Trade Representative Katherine Tai — were joined by EU Co-Chairs European Commission Executive Vice Presidents Margrethe Vestager and Valdis Dombrovskis to review progress and advance cooperation on a range of key issues.

The leaders issued a joint statement where they announced a series of initiatives to deepen coordination on export controls, artificial intelligence, international standards, semiconductor supply chains, IT infrastructure, digital platforms, trade and labor, global food security, and cybersecurity for small and medium-sized businesses.

U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant participated in the U.S.-EU TTC Ministerial stakeholder meeting, which can be viewed online here, and issued the following statement after his remarks:

“We are facing a daunting set of global challenges – including Russia’s unprovoked invasion of Ukraine and the huge impact it is having on food and energy supplies around the world. Now more than ever, we need government partners to help overcome these obstacles.

“We’re pleased to have been included in today’s stakeholder session. We’re also gratified that the principals and the working groups are addressing many of the issues we’ve raised as priorities. Now is the time to translate words into actions. Here are the six priorities we flagged today:

“First, to the specific work of the Council: Finalizing a new Transatlantic Data Privacy Framework is critical. Without secure data flows, meaningful progress on many other critical elements of the Council’s agenda is not possible.

“Second, ending Europe’s dependence on Russian energy. This can be tackled on two fronts: increasing U.S. energy exports to Europe, consistent with commitments already made by U.S. and European governments, and by working with partners worldwide to increase production of strategic minerals used in electric vehicles, wind turbines, and other green energy technology.

“Third, curbing export restrictions, especially on food. Food export bans will only translate today’s tight food supplies into a global hunger crisis.

“Fourth, boosting semiconductor production. So many sectors have been impacted by semiconductor shortages. One easy solution is to work together on the very expensive basic research behind chip development especially as the U.S. and EU both seek to significantly boost their investment in chip production.

“Fifth, addressing China’s anticompetitive market practices. Coordinated, meaningful actions are needed to address issues like industrial subsidies, digital protectionism, export controls, forced tech transfer, and competition policy. Coordination will increase our impact, avoid sending mixed messages, and allow companies in both markets to work off similar rules.

“And finally, on the important matter of engaging stakeholders. We appreciated today’s session because ongoing two-way engagement is key to realistic and durable outcomes. Even where parties are not always aligned, outreach should be transparent and inclusive of different interests. On that note, the U.S. Chamber is committed to engaging in the new Trade and Labor Dialogue being launched today.

“The U.S. Chamber remains committed to working with American and European policymakers to drive solutions to our biggest challenges. Now is the time to step up and address these essential issues.”

The U.S. Chamber, in collaboration with BusinessEurope, previously issued an open letter to U.S. and EU officials outlining priorities ahead of the U.S.-EU TTC meeting. The letter outlines six specific areas where closer collaboration and concrete deliverables are essential.

Following the TTC Ministerial, the European Affairs Program led a member delegation to Brussels for a series of meetings with European officials and business leaders to discuss how the U.S. and EU can work together to address issues such as energy security, transatlantic trade, the digital economy, and nonmarket practices by third countries.

For further information, please contact Senior Vice President for European Affairs Marjorie Chorlins (mchorlins@uschamber.com).

Chamber, Industry Groups Press WTO Negotiators Ahead of MC12

As the 12th Ministerial Conference of the World Trade Organization (WTO) scheduled for June 12-15 draws near, the Chamber is engaging on several business priorities with governments and industry partners. The Chamber’s Global Innovation Policy Center (GIPC) and Chamber members met with USTR intellectual property leads on May 17 to reiterate industry opposition to the proposed TRIPS waiver for Covid-19 technologies, pointing yet again to the widespread availability of vaccines and the catalytic role IP has played in their rapid development and rollout. At this time, prospects for a deal on the waiver are unclear given widespread reports that China opposes being carved out while the U.S. is unwilling to see a waiver extended to Beijing.

However, the Chamber understand WTO Director-General Ngozi Okonjo-Iweala continues to pressure all members to reach an agreement ahead of MC12, and negotiations on the text are proceeding in Geneva. The UK and Switzerland are seemingly the only holdouts among the WTO members who are prepared to question the rationale of the “orphan” proposal, which the WTO Secretariat has advanced without clear support even from the “quad” members (the U.S., EU, India, and South Africa) that have been engaged in talks on the matter. GIPC earlier this month led a delegation to Geneva and Brussels to press on the matter.

Separately, the U.S. Chamber this week joined a multi-association letter to WTO delegates participating in the Joint Statement Initiative (JSI) on E-Commerce urging the ministers to commit at the June ministerial conference to renew the Moratorium on Customs Duties on Electronic Transmissions until the next ministerial (traditionally two years later). The groups also call upon the ministers to deliver a Ministerial Declaration regarding the JSI to “give political weight to the initiative.” The groups encourage a prompt conclusion to the negotiations with provisions that enable the cross-border flow of data and permanently ban customs duties on electronic transmissions.

Additionally, the Chamber joined with more than 40 other organizations to sign a global industry statement calling for an “ambitious tariff-elimination initiative to significantly expand product coverage of the Information Technology Agreement (ITA).” The groups write that no products have been added to the agreement in seven years, despite vigorous innovation and growth in the digital economy. Expanding coverage to an array of emerging technologies, the groups state, “would yield immediate and sweeping benefits, removing tariffs on a vast array of tech products not currently covered, giving a helpful boost to the WTO, and spreading the benefits of digital innovation around the world to developing and developed economies alike.”

On May 11, the Chamber’s John Murphy hosted an armchair conversation with Dr. Okonjo-Iweala as part of the Chamber’s second annual Global Forum. Dr. Ngozi discussed the global trade landscape, how the WTO is approaching supply chain issues, and prospects for MC12.

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

Democrats Push Ambitious Timeline for Bipartisan Innovation Act

timeline has been agreed by Democratic leadership in the House and Senate for the “Bipartisan Innovation Act,” the bill being negotiated by a conference committee that is drawing from the Senate-passed “U.S. Innovation and Competition Act (USICA)” and the House-passed “America COMPETES Act.”

Their extremely ambitious goal is for professional staff to close out all legislative items by May 25, after which a hand-off to staff directors will occur. Committee leaders will then have the week of June 6-10 to finish up before “four corners” leadership discussions settle any outstanding issues. According to Punchbowl News, leadership has set a June 21 goal for filing a completed conference report. Speaker Pelosi said on May 19 that she hopes Congress can pass the package by the Independence Day recess.

In recent weeks the Chamber has held meetings with nearly half of the 107 conferees at both the member and staff level and will continue to engage in efforts to shape the final bill. The Chamber’s Government Affairs team is in weekly contact with the conference leaders.

Neil Bradley, executive vice president and head of strategic advocacy at the Chamber, was quoted in The Wall Street Journal on May 16: “If you zoom out for a second, the real issue is that we have a fairly narrow bill passed on an overwhelmingly bipartisan basis in the Senate, and we have an everything-but-the-kitchen-sink bill passed on a partisan basis in the House,” Bradley said in arguing for a narrower bill that closely resembles the Senate’s USICA. (The article wryly corrects Bradley by pointing out that the “legislation includes kitchen sinks, under the heading ‘Stainless steel handmade kitchen sinks,’ in a section seeking lower tariffs on them.”)

Chamber staff convened a member briefing on May 18 on the state of play and advocacy strategy around the bill. Members were invited to weigh in on an issue-by-issue basis (and indeed are invited to do so still).

The fact that formal conference proceedings have been extremely rare in recent years has obliged many in the trade community to brush up on their legislative basics. Upon successful completion of a conference, the conference committee generally presents its agreements via a conference report and a joint explanatory statement, also known as the “statement of managers.” The conference report offers the formal legislative language on which the committee has agreed. The joint explanatory statement clarifies elements of the conferees’ agreement regarding positions taken by the House and Senate during the committee’s work.

Issues yet to be resolved are included in a 20-page “crosswalk,” which delineates the committees involved and status for each. However, the Chamber understands that this crosswalk is not yet complete.

In our view, such an ambitious timeline makes it increasingly likely that controversial items — such as those included exclusively in the House trade title — wind up on the cutting room floor. Nonetheless, the Chamber is continuing to meet with conferees both at the member and staff level to raise our priorities and concerns, most of which are summarized here.

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

Russia Sanctions, Export Controls Continue to Evolve

The Chamber and its members have continued to confer regularly with Biden administration officials on the ongoing evolution of U.S. and allied sanctions and export controls on Russia. Key points of contact are, of course, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS).

Some recent exchanges have focused on recent prohibitions on new investment and services in Russia. On the investment ban, officials have advised that the investment measure only covers new investments (i.e., those occurring after the effective date) and does not cover divestments.

The services ban, which is set to take effect June 7, excludes (1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; or (2) any service in connection with the wind down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.

Questions have also arisen about whether an extension may be in the offing for General License 13 relating to transactions involving the Central Bank of Russia; the license will expire June 24. Officials have indicated that OFAC and the State Department are actively working on that issue and understand the need for action and more information. An indefinite extension is unlikely.

With regard to export controls, officials continue their extensive coordination with allies as well as efforts to avoid “backfilling,” when foreign companies overtake contracts or other business opportunities that have been abandoned by a U.S. or allied country because of the sanctions. The United States is working with at least 37 allies that have imposed nearly identical export controls on Russia, and officials are also in close communication with other nations to ensure respect for the export controls regime.

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).

Commentary

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