U.S. Chamber of Commerce

International Policy Update

April 22, 2022

Mexico’s Congress Kills Constitutional Amendment on Electricity

Western Pressure Mounts as Russian War in Ukraine Shifts to East

Chamber Engages with Bipartisan Innovation Act Conferees

Business Voices Strong Support for U.S.-ASEAN Special Summit

Chamber Comments on the WHO Pandemic Instrument

Chamber Urges Caution on Expanded Buy America Provisions

Chamber to Host 2nd Annual Global Forum

Commentary

Three Priorities to Keep America’s Innovative Edge

Mexico’s Congress Kills Constitutional Amendment on Electricity

Mexico’s House of Deputies on April 17 voted down a controversial bill to amend the country’s constitution and put control of the electricity sector back in the hands of the state. The measure would have reversed the liberalization of the sector that took place in 2013. The House voted 275 in favor and 223 against the bill, which was short of the two-thirds majority necessary to amend the constitution.

Analysts had expected Mexico’s PRI and PAN opposition parties might be able to muster the votes to block the measure in the Mexican Senate. However, the fact that it was blocked at an earlier juncture in the House of Deputies appears to have surprised President Andrés Manuel López Obrador.

The U.S. Chamber and its U.S.-Mexico Economic Council has advocated for months with member companies and partners in Mexico against the measure since it was first proposed last year. The Chamber and others argued publicly and privately that the bill would further undermine Mexico’s business climate at a time when foreign investment is needed more than ever to generate jobs and growth. Further, at a time when Mexico has ample opportunity to capitalize on the “nearshoring” trend and the hefty tariffs imposed on most Chinese imports, populist measures such as the electricity bill have threatened to squander once-in-a-generation opportunities for Mexico.

The Chamber and its allies also emphasized that the proposal violated obligations Mexico assumed in the U.S.-Mexico-Canada Agreement (USMCA) and would undermine efforts to combat climate change. The Chamber’s activities included dozens of meetings and briefings with U.S. and Mexican government officials and extensive commentary in the press.

At one critical juncture, U.S. Chamber President and CEO Suzanne Clark traveled to Mexico City three weeks ago for meetings with senior congressional and administration officials, as well as private sector partners. While Clark addressed a host of business concerns — many of which raise serious questions of USMCA compliance — the electricity reform was top of mind. She reiterated the Chamber’s message that this bill would work against Mexico’s own goals on “nearshoring” of manufacturing and the country’s vast potential to be a leader in the production of renewable energy. These themes were reflected in an op-ed that she published in El Financiero (available in English here).

Unfortunately, the electricity measure is just one example of a broader campaign by the Mexican government to roll back the country’s landmark 2013 energy reforms, which permitted private sector participation in the sector for the first time in 75 years. U.S. energy providers are also confronting challenges such as improper permitting delays, denials of export licenses and what the private sector believes to be unlawful fuel terminal seizures. These actions appear to have the aim of strengthening Mexico’s state-owned energy providers at the expense of the private sector, free enterprise, and Mexico’s trade obligations.

In other sectors, Chamber members are dealing with a weakened legal environment and other regulatory and legislative changes that stymie free market competition and violate USMCA obligations. The Chamber will continue to work with its members to address any actions that threaten our bilateral economic relationship and regional competitiveness.

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

Western Pressure Mounts as Russian War in Ukraine Shifts to East

Russia accelerated its offensive in Ukraine’s eastern Donbas region, spurring the United States and its allies to augment their military and humanitarian support to Ukraine. The West also added to the punishing sanctions on Russia, as the Chamber has summarized in recent updates to members. Among the financial and economic consequences of the war and the sanctions are the following:

• The IMF expects global economic growth to slow to 3.6% this year, from 6.1% in 2021, and down from a January forecast of 4.4% growth;
• The FAO estimates that “$115.4 million are urgently needed to prevent a further deterioration of the food insecurity situation” and “about one‑third of the crops and agricultural land [in Ukraine] may not be harvested or cultivated in 2022 and into 2023;”
• Russia is on the verge of default if it doesn’t pay its foreign debt in dollars by May 4 — which would be the country’s first default in over a century;
• Nearly 200,000 Russian workers employed by foreign companies may lose their jobs; to offset some of that fallout, Russia passed a $42 billion program to support temporary work, training, and subsidies for companies that hire these workers; and
• Exports of U.S. crude and petroleum products hit a weekly record of 10.6 million barrels a day during the week ending April 15 as buyers seek alternatives to Russian oil.

In recent developments, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) on April 20 announced a new round of sanctions that designates major Russian commercial bank Transkapitalbank and a global network of more than 40 individuals and entities led by U.S.-designated Russian oligarch Konstantin Malofeyev known for sanctions evasion. OFAC also designated what is reported to be the third largest cryptocurrency mining company in the world, Bitriver. This is the first time the agency has sanctioned a virtual currency mining company. Separately, the Russian government is taking steps to legally challenge Western sanctions freezing its foreign-currency reserves and other assets.

Following last week’s authorization of an additional $800 million in weapons, ammunition, and other security assistance to Ukraine, the White House announced another round of approximately $800 million in weapons and support for Ukraine. President Joe Biden also encouraged G7, EU, and NATO leaders to step up military assistance efforts and will seek more funds from Congress due to concerns Ukraine’s troops will run out of certain supplies in a matter of weeks.

On a related note, the House is expected to vote next week on “Lend-Lease” legislation, which unanimously passed the Senate earlier this month, to revive a World War II-era program that would cut down on barriers to the transfer of military equipment and other supplies to Ukraine.

Concerns over a global food crisis are reaching new heights. Treasury Secretary Janet Yellen warned in remarks on April 19 that countries should avoid imposing export restrictions on food and other products that exacerbate rising global food insecurity. Following Secretary Yellen’s remarks, the Treasury Department issued public guidance on “the many humanitarian and food-related authorizations issued by OFAC in support of people impacted by Russia’s war.”

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 Engages with Bipartisan Innovation Act Conferees

The U.S. Chamber has continued to meet with designated conferees on priorities for the “Bipartisan Innovation Act,” which will draw from the Senate-passed USICA and the House-passed America COMPETES bills. The Chamber has held dozens of meetings at both the member and staff level; the 107 conferees include House conferees here and here and Senate conferees here and here.

To date, many meetings have had a general, educational aspect, and several offices have noted that the Chamber is the first group they’ve met with so far. Member company representatives interested in joining a meeting or scheduling issue-specific sessions are invited to contact staff (below).

Of note, Inside U.S. Trade (subscription required) reported that Senate Finance Committee Chairman Ron Wyden (D-OR), one of the Senate conferees, emphasized the bipartisan support the Senate trade title received and expressed skepticism about the viability of the House-approved trade title: “I don’t want anybody to miss what actually happened in the United States Senate… I thought we were going to get a small number of Republican votes. But essentially, the fact that there was a lot of sweat equity put into those provisions in the Senate — not a lot of publicity, not a lot of theatrics and waving our arms around — got us to 91 votes and that brought a lot of people together.”

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

Business Voices Strong Support for U.S.-ASEAN Special Summit

On April 16, the Biden administration announced that President Biden will host the leaders of the Association of Southeast Asian Nations (ASEAN) for a U.S.-ASEAN Special Summit in Washington, D.C., on May 12-13.

U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant made the following statement upon the announcement of the summit:

“We strongly support the Biden-Harris administration’s efforts to engage across Southeast Asia and are encouraged by the announcement of the upcoming summit. We particularly commend the Administration for holding this Summit even amid the ongoing conflict and crisis in the Ukraine; in fact, doing so at this time demonstrates the seriousness of the American commitment to Southeast Asia. Engaging these countries is critical to revitalizing and expanding ties across the Indo-Pacific region, which in turn is central to American economic and strategic interests.”

US-ASEAN Business Council President & CEO, Ambassador Ted Osius stated:

“The Biden-Harris administration continues to demonstrate its commitment to our ASEAN friends and partners, even while managing a crisis in Eastern Europe. In its first year, this administration has shown up and done yeoman’s work in beginning to reinvigorate U.S. relations with Southeast Asia. The American business community looks forward to this summit as a critical opportunity to strengthen economic ties and promote American leadership in the Indo-Pacific.”

For further information, please contact Executive Director for Southeast Asia John Goyer (jgoyer@uschamber.com).

Chamber Comments on the WHO Pandemic Instrument

The U.S. Chamber was selected to offer comments on April 12 during the World Health Organization’s intergovernmental negotiating body public hearing series, “The World Together,” which took place April 12-13. The guiding question of the public hearing was: “What substantive elements do you think should be included in a new international instrument on pandemic preparedness and response?” Given a 250-word limit, the Chamber responded the following:

“Only a whole-of-society approach that includes the private sector and civil society will ensure our success in future pandemic preparedness and response (PPR). The private sector offers deep expertise and lessons learned across the entire PPR value chain, from R&D and analysis of pathogens, to manufacturing, storage, communication, and delivery of medical products. Any international agreement should commit to direct engagement with the business community and decision-making processes that allow for public-private coordination at every stage of pandemic response.

“Within the current pandemic, we have moved away from issues of vaccine supply and into broader health systems challenges related to infrastructure, logistics, vaccine hesitancy and workforce. Therefore, we must prioritize health systems strengthening for future pandemics. Predictable and sustainable financing is the foundation of strong health systems; Ministers of Finance should work more closely with Ministers of Health to establish resilient health systems.

“The lack of regulatory convergence has significantly slowed access to safe and effective medical products. Member States should adopt globally convergent regulatory requirements, good reliance practices, work-sharing, and electronic processes to drive efficient access as part of pandemic PPR.

“Finally, we must preserve IP protections. COVID-19 medical products are the result of decades of investment in R&D—investment contingent on strong and clear IP rules that enabled hundreds of international industry partnerships and unprecedented global supplies. IP laws stimulate innovation ecosystems that ensure investment in the next generation of vaccines, diagnostics, and therapeutics to combat future pandemics.”

For further information, please contact Senior Director of the Global Initiative on Health and the Economy Varnee Murugan (vmurugan@uschamber.com).

Chamber Urges Caution on Expanded Buy America Provisions

On April 19, Executive Vice President and Chief Policy Officer Neil Bradley issued the following statement regarding new Buy America guidance issued by the Office of Management and Budget:

“The U.S. Chamber of Commerce is a champion of American manufacturing and strongly supports policies that make the United States the best place to build, invest, and hire. Extending the reach of domestic content mandates will require careful consideration to maintain U.S. global competitiveness while continuing to facilitate the infrastructure investments contemplated by the Infrastructure Investment and Jobs Act.

“Maintaining and enhancing domestic manufacturing capacity is a laudable goal, but the Chamber expresses strong concerns that the Office of Management and Budget’s guidance and timeline for implementation may not offer a workable approach. We urge the Office of Management and Budget and all impacted federal agencies to engage stakeholders to address the short and long term challenges stemming from moves to extend the reach of Buy America mandates.”

For further information, please contact Director for Policy at the Chamber Technology Engagement Center Matt Furlow (mfurlow@uschamber.com).

Chamber to Host 2nd Annual Global Forum

The U.S. Chamber of Commerce will host the second annual Global Forum on May 10-11. This year’s theme for this virtual event is “Competition in the Global Marketplace.” Businesses, governments, and citizens are wrestling with substantial shifts in the global landscape. The event will explore how the competition for global markets has shifted and how today’s decisions can impact our ability to achieve sustainable, durable, and inclusive growth, creating jobs and prosperity.

The program will include conversations with heads of state, senior officials, and business executives on topics including: unlocking global financial markets, digitalization of the global economy, supply chain challenges, securing workable solutions to address climate change, energy security, and the geopolitical landscape in which all of these are unfolding.

For further information and to register for the event, please click here.

Commentary

Three Priorities to Keep America’s Innovative Edge

U.S. Chamber (April 18) by Jordan Crenshaw