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U.S. Chamber Newsletter-International Policy Update (7/15)

22 July 2022 Friday

U.S. Chamber of Commerce

International Policy Update

July 15, 2022

Chamber Hosts Mexican President for U.S.-Mexico CEO Dialogue

Schumer Pivots from Bipartisan Innovation Act to Possible CHIPS-Only Vote

Clark Underscores Chamber Push for Tariff Relief

U.S., Kenya to Seek New Trade Partnership

USTR Seeks Input on Broader Forced Labor Strategy

Chamber Welcomes Launch of U.S.-Israel High-Level Dialogue on Technology

Chamber Submits Comments on U.S.-Taiwan 21st-Century Trade Initiative

Contracting-Related Russia Sanctions Measure Included in House NDAA

Chamber Sends Condolences on Death of Japan’s Shinzo Abe

Herrnstadt Confirmed as Export-Import Bank Board Member

Commentary

Key Takeaways for the Business Community from the G7 Summit

Women Taking the Lead on African Trade Policy

International Trade Makes Economies Resilient

Solar Energy Industries Association v. United States

Chamber Hosts Mexican President for U.S.-Mexico CEO Dialogue

On July 13, top U.S. and Mexican CEOs met with Mexican President Andrés Manuel López Obrador, U.S. Secretary of Commerce Gina Raimondo, U.S. Secretary of Agriculture Tom Vilsack, and other senior Mexican and U.S. government officials at the 12th U.S.-Mexico CEO Dialogue hosted by the U.S. Chamber of Commerce and the Consejo Coordinador Empresarial (CCE), Mexico’s top business organization.

The meeting allowed participants to take stock of the agreement’s benefits as well as implementation challenges that the private sector calls on both governments to help resolve. The gathered executives asked the U.S. government to prioritize:

·    Strict interpretation of USMCA text on automotive rules of origin and new efforts to ease their compliance burdens;

·    Elimination of uncertainty regarding the application of the Rapid Response Mechanism (RRM) for labor complaints; and

·    Cessation of proposals to extend the reach of discriminatory “Buy American” rules, including on North American electric vehicle supply chains.

The CEOs also expressed serious concern over the deteriorating investment climate in Mexico and called on the Mexican government to uphold its USMCA commitments by:

·    Eradicating energy sector policies that unfairly favor state-owned enterprises at the expense of private sector providers;

·    Eliminating burdensome “Carta Porte” requirements and associated USMCA Article 7 implementation challenges;

·    Addressing systemic delays and denials in permitting and licensing across key sectors such as hydrocarbons and customs;

·    Ceasing closures of installations such as energy terminals, mines, and quarries in actions often devoid of due process; and

·    Accelerating significantly the pace of approval processes for biopharmaceutical, agricultural biotech, medical device and food products.

As is the custom of the CEO Dialogue, Mexican and U.S. executives came to the table with recommendations and private sector deliverables centering around trade policy, trade facilitation, trade in services, energy, and investment. The Chamber applauded the U.S. and Mexican governments’ commitment to building a more prosperous and secure future for the people of North America.

Senior Vice President for the Americas Neil Herrington stated:

“The business community is committed to making North America the most dynamic and competitive region in the world by building resilient supply chains, advancing the economic development of southern Mexico, and driving the continent’s energy transition. To make this possible, we urge the U.S. and Mexican governments to establish an investment climate that ensures certainty, transparency, predictability, stability and sanctity of contracts.”

Francisco Cervantes, President, CCE, stated:

“Mexico is poised to enter a new stage of development and to substantially increase its position in international markets. By working in alliance with the U.S., we will be able to turn this moment into a historic opportunity for growth. The U.S.-Mexico-Canada Agreement (USMCA) is the strongest foundation from which to achieve these goals, and compliance is essential to consolidate the agreement as the instrument of legal certainty and the pillar of trust for investment and trade.”

Notably, U.S. Chamber President and CEO Suzanne Clark had addressed a number of the U.S. business community’s concerns in an op-ed published ahead of her late March visit to Mexico, originally appearing 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.

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

Schumer Pivots from Bipartisan Innovation Act to Possible CHIPS-Only Vote

Turbulence this week overtook the conference negotiations for the “Bipartisan Innovation Act,” the bill being negotiated by a conference committee drawing from the Senate-passed “U.S. Innovation and Competition Act (USICA)” and the House-passed “America COMPETES Act.” Senate Majority Leader Chuck Schumer (D-NY) announced on July 14 that he is now aiming to hold a floor vote as early as Tuesday to advance a substantially scaled-down package including funding for the CHIPS for America Act (possibly with some form of guardrails), the investment tax credit language from the FABS Act, and perhaps some other elements.

Schumer’s move followed a surprising statement by Commerce Secretary Gina Raimondo on July 12 to Axios signaling the change of tack and mounting urgency:

“Cleave off the CHIPS and pass it… There’s a real time urgency there, because these chip companies are making their decisions right now about where to expand. Obviously, we want more… The president supports a robust Bipartisan Innovation Act.”

Raimondo and other White House officials affirmed this pivot to a dramatically scaled-back bill in a stakeholder briefing on July 14, calling next week the “most critical” for the negotiations to date. One official on the call noted that a number of key priorities had been dropped to move the process forward, which may include some of the problematic elements in the BIA that the Chamber has vigorously advocated against (letter).

It remains to be seen whether this approach can win congressional approval, not least due to the parallel maneuvering on the Democratic reconciliation bill. CHIPS champion Senator John Cornyn (R-TX) initially responded by saying “we’re not gonna vote on a CHIPS bill as long as the sword of Damocles of reconciliation is hanging out there.”

However, in a further twist later the same day, Senator Joe Manchin (D-WV) dealt the talks on a reconciliation bill another blow when he said he would not support including “new spending on climate change or new tax increases targeting wealthy individuals and corporations, marking a massive setback for party lawmakers who had hoped to advance a central element of their agenda before the midterm elections this fall,” reported the Washington Post. Senate Republicans had signaled opposition to moving forward on the BIA while Democrats were maneuvering to advance the reconciliation bill.

Earlier this week, Senate Republican Leader Mitch McConnell (R-KY) expressed openness to the CHIPS funding-only approach or passing the Senate-approved USICA in the House, though House Speaker Nancy Pelosi (D-CA) has rejected the latter idea. It remains to be seen how McConnell may greet a “CHIPS plus” approach, which Pelosi said the House prefers over a CHIPS-only deal.

While these developments likely doom a number of controversial elements included in the America COMPETES trade title — at least for now — the controversial outbound investment screening proposal remains in play, along with the possibility of narrower guardrails for recipients of CHIPS funding. As laid out in a July 13 Washington Post article, the Biden administration has now explicitly endorsed an outbound investment screening notification mechanism based on an unpublished version of the National Critical Capabilities Defense Act (NCCDA) dated June 30. The Chamber has not yet seen this version — nor have some of the original proposal’s authors — signaling that a cohesive approach has yet to emerge.

According to comments to the Post by National Security Advisor Jake Sullivan, the June 30 draft was assembled with considerable input from the administration. The scope of the revised measure is said to be narrower, focusing on semiconductors, quantum technology, AI, high-capacity batteries, and critical minerals. However, the updated text would grant the president authority to include “any other sector” he considers to be a “national critical capability.” The measure apparently focuses on notification and transparency rather than a broader requirement for notice and review.

Senior Vice President for International Policy John Murphy reiterated the Chamber’s position in the Post article, stating: “The idea that the U.S. government may start vetting how and where a business can invest is concerning. It’s potentially a completely new and onerous set of constraints on companies that do business globally.” The U.S. Chamber led a coalition of 10 industry groups in sending a June 23 multi-association letter to Congress opposing inclusion of the most recent draft of the National Critical Capabilities Defense Act (NCCDA) in the Bipartisan Innovation Act.

Bureau of Industry and Security (BIS) Under Secretary Alan Estevez faced questions about the issue during a Senate Banking Committee hearing on Thursday. Senate Banking Committee Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA) questioned the current NCCDA approach. Brown went as far to say that the Bipartisan Innovation Act conference was the wrong vehicle for the measure.

The Chamber continues to engage with key offices and conferees on a wide variety of elements of the pending legislation. For further information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

Clark Underscores Chamber Push for Tariff Relief

As part of the Chamber’s ongoing advocacy on the issue, U.S. Chamber President and CEO Suzanne Clark published an op-ed in Barron’s advocating for tariff relief. Clark highlighted how the American people are feeling squeezed by the highest inflation rate in four decades, and tariff relief would put more money in their pockets.

The op-ed also highlights how industry is suffering as a result of the tariffs. Clark noted how manufacturing and agricultural industries are two of the sectors hit hardest by duties. Additionally, Clark emphasizes the fact that tariff relief would benefit American exporters, further supporting American businesses and increasing competitiveness. She wrote: “The case for tariff relief is strong: It can help counter soaring inflation, provide relief to families struggling with high prices, and shore up the competitiveness of U.S. manufacturers. What are we waiting for?”

Making similar points, U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant urged a stronger response from the Biden administration in an interview with CNBC’s “Squawk Box.” Since most of the tariffs in place apply to imports from China, the Biden administration should not only be “more decisive in its actions and respond [to China] with more force and conviction,” but also “expect something in return” from the PRC should the tariffs on Chinese goods be lifted in part.

Brilliant earlier told the Financial Times: “We see signs they [the Biden Administration] will take steps to reduce some tariffs, but will it be big enough and deep enough? We will see.”

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

U.S., Kenya to Seek New Trade Partnership

On July 14, the U.S. and Kenya announced a new trade and investment partnership to promote collaboration in areas in order to increase investment, promote sustainable and inclusive economic growth, benefit workers, consumers, and businesses, and support African regional economic integration. The U.S.-Kenya Strategic Trade and Investment Partnership will pursue the creation of high standard commitments in order to “achieve economically meaningful outcomes,” according to the press release.

U.S. Trade Representative Katherine Tai stated:

“The U.S.-Kenya relationship is critical to addressing key regional and global challenges – and this initiative represents an opportunity to work together on shared priorities including labor, environment, digital trade, trade facilitation, and good regulatory practices.

“I look forward to working with the Kenyan government over the next few months to build out this partnership and grow our trade and investment relationship in a way that promotes resilience and facilitates sustainable and inclusive economic growth that benefits our workers and our planet. We also hope that this initiative can serve as a model for trade policy engagement in Africa, one of the most dynamic and fastest-growing regions in the world.”

However, some observers noted that the lowered ambitions of the “Trade and Investment Partnership” appeared to foreclose the possibility of securing the market-opening free-trade agreement the U.S. and Kenya had committed to seek during the Trump administration.

House Ways and Means Committee Chairman Richard Neal (D-MA) avowed that the new initiative “will lay the groundwork for a comprehensive free trade agreement that includes market access, builds off AGOA, and complements both regional and continental integration.” However, he affirmed the limits of AGOA, noting that “unilateral preferences alone can only take a country so far in its economic development. Kenya has shown a willingness to deepen its economic ties with the United States, and we should embrace it.”

USTR signaled that the U.S. and Kenya will work over the next three months to solidify a detailed roadmap of policy priorities and will focus on issues including agriculture, anti-corruption, digital trade, environment and climate change action, good regulatory practices, micro, small, and medium enterprises, the promotion of worker’s rights and protections, supporting the participation of women, youth and others in trade, standards collaboration, and trade facilitation and customs procedures.

For further information, please contact U.S.-Africa Business Center President Scott Eisner (seisner@uschamber.com).

USTR Seeks Input on Broader Forced Labor Strategy

The Office of the U.S. Trade Representative (USTR) is seeking comments to help develop its forced labor strategy. The strategy, announced in January, will establish an “action plan for utilizing existing and potential new trade tools to combat forced labor in traded goods and services,” according to a July 6 notice. Comments are due by August 5.

Specifically, USTR is inviting comments that address the following:

·    What actions could the U.S. government pursue with like-minded trade partners and allies to combat forced labor as an unfair trade practice?

·    How can the U.S. government bolster the forced labor components of trade agreements and trade preference programs to have greater effect?

·    What new and innovative trade tools can the U.S. Government develop and utilize to advance efforts to combat forced labor in traded goods and services?

·    How can the U.S. government make the development of trade policy on forced labor a more inclusive process?

·    Do you have additional recommendations for monitoring, tracing, or eliminating forced labor in traded goods and services in supply chains?

If your company has interest in submitting comments, please reach out to Director for International Policy Isabelle Icso (iicso@uschamber.com) and China Center Director Don Giolzetti (dgiolzetti@uschamber.com) by June 28 after which we will assess whether we have a quorum to move forward with a submission.

Chamber Welcomes Launch of U.S.-Israel High-Level Dialogue on Technology

U.S. Chamber of Commerce Executive Vice President and Head of International Affairs Myron Brilliant issued the following statement regarding the launch of the U.S.-Israel High-Level Dialogue on Technology:

“The U.S. Chamber of Commerce applauds the Biden administration and Government of Israel for launching the U.S.-Israel High-Level Dialogue on Technology. This dialogue can serve as a vital catalyst to expand technology cooperation between our two countries. It can help us to enhance our coordination on innovation policy, expand our collaborative R&D, and ensure we have compatible standards and regulations.

“Strengthening public-private partnerships will be key in order to remove barriers to innovation and promote new ways for government and business to collaborate on critical and emerging technologies. The I2U2 initiative, also launched this week, is a great example of this kind of public-private cooperation, led by the U.S., Israel, India, and the United Arab Emirates. The initiative should mobilize capital, expertise, and innovation around new technologies and infrastructure.”

The announcement came as the Chamber led a June 26-30 delegation of more than 50 business executives to Israel’s 12th Annual Cyber Week. Held at Tel Aviv University, Cyber Week is a top international cybersecurity conference, providing the opportunity for global experts to share their knowledge on the field’s many challenges and opportunities.

The Chamber’s delegation of business executives represented sectors ranging from financial services, digital technology, infrastructure, energy, and beyond. Through meetings with public and private sector leaders including from Israel, the United Kingdom, Canada, Germany, Singapore, Estonia, the United Arab Emirates, and Italy, the Chamber helped expand commercial partnerships between American and Israeli companies, strengthened public-private dialogue on cyber policy with U.S., Israeli, and international cyber leaders, and enhanced our collective approach to cybersecurity, risk management, resilience, and incident response.

Senior Vice President for Cyber, Space, and National Security Policy Christopher Roberti stated:

“Cyberattacks have escalated in scale and severity, with criminal groups, nation states, and nonaffiliated threat groups targeting the critical infrastructure of countries around the world. The need has never been greater for increased global collaboration to combat cyber threats and for shared approaches to international cybersecurity, risk management, resilience, and incident response. While governments play a key role in facilitating alignment in this area, private sector companies—operating daily in the increasingly dangerous cyber landscape—can and do drive real progress.”

Executive Director for International Strategy and Head of the U.S.-Israel Business Council Josh Kram said:

“Israel has long been a critical U.S. security and innovation partner – including in cybersecurity, a growing threat to both governments and businesses of all kinds, all across the world. The U.S.-Israeli partnership in cybersecurity is a strong model for cooperation on cybersecurity policies, information-sharing and expert exchanges, and cooperative research and development—and the U.S. Chamber is proud to help strengthen the commercial relationship between the United States and Israel through exchanges like Cyber Week.”

For further information, please contact Executive Director for International Strategy and Head of the U.S.-Israel Business Council Josh Kram (jkram@uschamber.com) or Policy and Program Manager for the Center for Global Regulatory Cooperation Danielle Muñoz (dmunoz@uschamber.com).

Chamber Submits Comments on U.S.-Taiwan 21st-Century Trade Initiative

On July 6, the U.S. Chamber submitted recommendations to the Office of the U.S.-Trade Representative for the proposed U.S.-Taiwan Initiative on 21st-Century Trade. The comments outline the important commercial and economic relationship between the two economies and argue that the relationship would be strengthened by including market access provisions, which are currently not slated for inclusion in the initiative. The recommendations address several areas for improved regulatory and normative harmonization such as customs and trade facilitation, agriculture, digital trade, standards, climate, state-owned enterprises, and addressing non-market policies and practices.

For further information, please contact Senior Vice President for Asia Charles Freeman (cfreeman@uschamber.com).

Contracting-Related Russia Sanctions Measure Included in House NDAA

new version of Rep. Carolyn Maloney’s (D-NY) “Federal Contracting for Peace and Security Act” was included in the $839 billion National Defense Authorization Act (NDAA), approved by the House on July 14. An older version of the proposal, which would essentially bar any company that conducting business in Russia from federal contracting, was favorably reported out of the House Oversight Committee in April.

The new proposal was approved this week 330-99 as part of a larger group of amendments known as “En Bloc 2.” This version would only apply to new, extended or renewed prime contracts instead of current contracts or any tier of subcontracts. Perhaps most importantly, the new version clarifies what constitutes an exception to the definition of “business operations” when a company is in the process of winding down in Russia. Additionally, it clarifies “good faith exemptions” that apply to contractors instead of individual contracts. Such exemptions would be issued without the need for renewal. Certain compliance requirements were also extended.

However, the measure could cast confusion on the administration’s approach to sanctions and may complicate exceptions for humanitarian trade (relating to medicine, medical devices, telecommunications, and the agri-food sector) that the White House has explicitly said it will maintain. It is unclear whether the administration is engaging with legislators on the measure.

The NDAA now heads to the Senate, where the Armed Services Committee approved its draft version last month. However, the bill is not expected to come to the floor until September. The Chamber will continue to engage with committee staff — with a renewed focus on the Senate — and administration officials to discuss these issues. For more information, please contact Director for International Policy Isabelle Icso (iicso@uschamber.com).

Chamber Sends Condolences on Death of Japan’s Shinzo Abe

On July 8, the U.S. Chamber issued the following statement following the death of former Prime Minister of Japan Shinzo Abe:

“The U.S. Chamber of Commerce sends its heartfelt condolences to the people of Japan and share in the grief over the tragic death of former Prime Minister Shinzo Abe.

“Mr. Abe was a great friend of the U.S. Chamber of Commerce, and we had the honor of hosting him several times. He helped elevate the U.S.-Japan relationship, and promoted our strong business and economic ties. Both our nations saw a growth in jobs and prosperity because of this important work and partnership.

“He will be remembered as a great leader who championed multilateralism and defended democracy. He will be greatly missed by all of us. Our thoughts are with his wife and family.”

For further information, please contact Senior Vice President for Asia Charles Freeman (cfreeman@uschamber.com).

Herrnstadt Confirmed as Export-Import Bank Board Member

On July 13, the Senate voted 50-45 to confirm Owen Herrnstadt as a member of the Board of Directors of the Export-Import Bank. Herrnstadt previously served multiple terms as a member of Ex-Im’s Advisory Committee. In a September 2021 letter, the Chamber expressed support for the confirmation of a full quorum for the Ex-Im board, including Herrnstadt and other Ex-Im nominees Reta Jo Lewis as President and Chair Judith DelZoppo Pryor as First Vice President, both of whom were confirmed earlier this year.

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

Commentary

Key Takeaways for the Business Community from the G7 Summit

U.S. Chamber (June 30) by Gary Litman

Women Taking the Lead on African Trade Policy

U.S. Chamber (June 30) by Allison Dembeck

International Trade Makes Economies Resilient

U.S. Chamber (June 30) by Mary Kate Carter

Solar Energy Industries Association v. United States

U.S. Chamber and the American Clean Power Association filed a joint amicus brief (July 12)

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