International Agenda--A Quarterly Update from the International Division
August 2010
Myron Brilliant, Senior Vice President, International Affairs, U.S. Chamber of Commerce
Dear Colleagues:
Despite the intensifying campaign for the U.S. mid-term elections on November 2, the American trade agenda is showing new signs of life. In particular, President Obama recently announced a timeline to act on the U.S.-Korea (KORUS) Free Trade Agreement (FTA). He tasked U.S. Trade Representative Ron Kirk to address pending concerns relating to autos and beef by November, when the G20 reconvenes in Korea, and indicated the FTA could be sent to Congress “in the following months.”
The U.S. Chamber has given this announcement a standing ovation. We’ve made it clear to the Obama Administration that we will be tireless in making the case for KORUS. Several months ago we ramped up our work in the U.S.-Korea FTA Business Coalition, for which the Chamber serves as secretariat, with an ambitious grassroots campaign ongoing. The business community has also made it clear that the pending trade agreements with Colombia and Panama should move forward as well.
In a recent open letter to President Obama, the Chamber agreed that doubling exports can play an important role in creating the jobs so many Americans need. We highlighted the link between trade and jobs at our July 14 Jobs for America Summit, which was organized as part of our “American Free Enterprise. Dream Big” campaign. We also offered extensive comments on the president’s National Export Initiative, making the point that trade deals can open new markets for American workers and farmers -- and do so in a budget-neutral way.
The Obama Administration concurs that these trade agreements mean jobs -- and inaction means lost jobs. Citing a U.S. Chamber study, the White House’s Michael Froman referred to the risk posed by the pending trade deal between Korea and the EU, saying “we stand to lose about $30 billion in exports. We must take the initiative to avoid putting U.S. jobs and growth at risk.” Moving forward with the pending FTAs could also help energize the Trans-Pacific Partnership negotiations, where the U.S. Chamber is lending strong support.
Signs of Life on the Doha Round?
The announcement on KORUS has resonated in capitals beyond Washington and Seoul. In a fascinating dynamic, a major Chamber delegation to Geneva in July found ambassadors to the World Trade Organization (WTO) abuzz with the news and upbeat on what it could mean for the Doha Round. “The train is starting to move on trade in Washington,” Director-General Pascal Lamy told the delegation, which was organized by the Chamber’s Christopher Wenk.
It would be easy to overstate the case for optimism on the Round. However, Ambassador Kirk recently noted that “real progress” could be made in the long-stalled negotiations by the end of 2010. “There is less anxiety now over the notion that it is a desirable thing” to engage in world trade talks, Kirk said. “A year ago that was almost unanimously rejected.”
While the negotiations remain in a very difficult spot, it was clear from our meetings that quiet progress is being achieved. As the Chamber has underscored, the implicit Doha agreement now on the table is not politically saleable in the United States. This is why we need more on services, which continue to be an afterthought to the agriculture and industrial goods negotiations. We need a commitment to include sectoral agreements, which aim to liberalize trade for industries of particular promise. We also need more clarity on what tariffs countries will shield from cuts.
The breaking news on this trip was that most officials agreed with us. Also, for the first time, heads of state and government held a substantive discussion of the Doha Round at the G20 summit in Canada, with President Obama speaking out forcefully. In addition, the new U.S. ambassador to the WTO, Michael Punke, has made a very positive impression in Geneva since he arrived earlier this year.
One of the key outcomes of our trip was a transatlantic business letter our delegation negotiated with BusinessEurope in Brussels and other business groups in Washington. The letter to EU Trade Commissioner Karel de Gucht and Ambassador Kirk calls for coordination between the EU and the United States on Doha and to push for more ambition on industrial goods and services.
The letter is significant because, for the first time, our counterparts in Europe are on the record expressing the view that what is on the table is not sufficient. Peter Chase, Executive Director for the U.S. Chamber’s Brussels Office, also made the case for closer transatlantic cooperation on the Doha Round and other trade issues in his July 27 testimony to the House Ways and Means Subcommittee on Trade.
Update from the Hill
In fact, the 111th Congress has taken up a number of trade issues lately. In one recent win for the business community, Congress approved the long-stalled Miscellaneous Tariff Bill (MTB) in July. In a “key vote” letter, the Chamber explained that the “MTB is a vehicle for the temporary suspension or reduction of duties levied on imported materials or intermediate products that are not produced domestically, or where there is no domestic opposition. By eliminating these tariffs, the MTB lowers costs and helps U.S. businesses maintain their competitive edge.” Happily, members of Congress of both parties were able to overcome the misconception that these duty suspensions represent “earmarks” or a handout to special interests.
Separately, on June 24, the House and Senate overwhelmingly passed the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, which aims to prevent Iran from obtaining nuclear weapons. The Chamber had been concerned that in its effort to strengthen the Iran Sanctions Act of 1996, Congress would unfairly impose sanctions on U.S. business transactions wholly unrelated to trade or investment with Iran.
We were pleased that after much work by the Chamber and our partners, the final legislation was much improved over earlier drafts. Sanctions are more carefully tailored, and the risk of our major exporters losing their Export-Import Bank credits due to the byzantine wording of an earlier version has been avoided. Overall, while the authority to sanction companies is expanded, much of the discretion that exists for the president was preserved.
It is important to note that at no time did we argue that U.S. companies should be able to do business with or in Iran, but we did explain that experience and history shows that unilateral economic sanctions almost always fail, unless they are properly crafted and international in scope.
Also on the legislative front, the Generalized System of Preferences and the Andean Trade Preference Act will expire on December 31. Plans to expand and modernize these programs have not yet borne fruit, so we expect an 11th hour effort to secure a simple extension -- and we’ll work hard to make sure this is done before Congress adjourns for the year.
Our New Middle East Team
Finally, we are delighted to announce that the Chamber has been able to expand its Middle East Affairs department with the addition of three seasoned executives. The expanded team will allow the Chamber to more effectively advocate for the business community’s trade and investment agenda in a region full of opportunity.
However, U.S. businesses are facing serious challenges in the Middle East and North Africa, which has caused many of them to lag behind their foreign competitors. By strengthening this department, we will not only provide complete global coverage for our membership, but also enhance U.S. competitiveness in this emerging market.
The team is now led by Ambassador Shaun Donnelly, formerly senior director for international business policy at the National Association of Manufacturers, who will serve as our new vice president for Middle East Affairs. Donnelly was a career diplomat for over 35 years in the Foreign Service, and he also served as Assistant U.S. Trade Representative for the Middle East and Europe, from which position he negotiated the U.S. FTAs with Bahrain and Oman. Donnelly will be responsible for the Chamber’s overall engagement in the Middle East, including expanding relationships with American Chambers of Commerce (AmChams) in the region.
Khush Choksy, now the senior director for Middle East Affairs, previously served as the senior director at Chemonics International where he was responsible for the management of a portfolio of over $50 million in contracts in the MENA region. As Ambassador Donnelly’s deputy, Choksy will be the executive director of the U.S.-Egypt Business Council, help strengthen relationships with key U.S. trading partners such as Saudi Arabia, and work with senior trade advisor Leslie Schweitzer to advance the Chamber’s Iraq Business Initiative.
Olivia Troye, director for Middle East Affairs, has extensive U.S. government experience working on commercial and security issues and a familiarity with interagency coordination that will prove to be invaluable. She will also be taking on the role of executive director of the U.S.-Bahrain Business Council in addition to the UAE and other countries.
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The final months of the year are sure to be busy. The Chamber and many of you will be active in meetings of the Transatlantic Economic Council, the Asia-Pacific Economic Cooperation forum, the U.S.-China Joint Commission on Commerce and Trade, and the G20. The Chamber and its bilateral business councils will also lead advocacy missions to India (in conjunction with President Obama’s visit), Korea, and Mexico, among other destinations. We invite you to contact us and get involved.
Please don’t hesitate to contact me or my colleagues in Washington if you have questions or if we can be of assistance.
Best regards,
Myron Brilliant
Senior Vice President, International Affairs
U.S. Chamber of Commerce