Category: Press Releases and Statements
Forecast on South Africa
South Africa
South Africa is unlikely to be an issue for U.S. trade policy in 2009, although the country continues to play a sometimes adversarial role in the Doha Round. Uncertainties about South African political leadership will dominate bilateral relations which have some potential for impacting commercial relations.
The FTA negotiations between the US and SACU were suspended in 2005, leading to negotiations for a “Trade and Investment Development and Cooperation Agreement,” signed in July of 2008, which committed the parties to continued dialogue via a Consultative Group. In addition to a monitoring function the Group is to try to conclude trade and investment enhancing agreements. Agreements on customs are foreseen, but not a BIT, which would have the greatest commercial significance to the U.S. A return to US-SACU FTA talks is very unlikely in the foreseeable future.
AGOA, which in 2004 was extended to 2015, is the U.S.’s most significant commercial policy affecting Africa and South Africa, but is coming under scrutiny as are preference programs generally. Congressman McDermott and others introduced legislation in 2008 to extend AGOA benefits beyond Africa, which was unwelcome to many African beneficiaries. It is probable that this legislation will again be introduced in 2009.
AGOA’s impact has been most significant in the motor vehicle industry in South Africa whose exports of fully built-up vehicles and components to the U.S. have been increasing annually under AGOA. The original South African industrial policy program for the motor car industry, the Motor Industry Development Program, provided export subsidies and import duties, still today at 30%, was widely regarded as blatantly WTO-illegal. Under the program exports grew from nearly zero in the mid-‘90s to 150,000 vehicles in 2007, exports of components (mainly catalytic converters and stitched leather seat covers) increased and high rates of investment followed. In 2004 Australia threatened to bring a WTO case challenging the program as a prohibited subsidy and in 2008 the program was replaced by a modified program deemed to be WTO compliant.
South Africa has continued to champion developing country positions in the Doha Round, most recently demanding special relief for SACU beyond that available to other developing countries. Specifically, South Africa is asking that additional tariff lines protecting SACU’s textile and clothing sector be exempted from cuts required under the general formula..
The South African domestic political situation remains uncertain, but so far is best characterized as politics rather than political instability. In September the ANC unceremoniously replaced Thabo Mbeki as president with Khalema Mothlante who is to serve until April when Jacob Zuma is expected to be elected president for a five year term. Despite widespread nervousness over the fact that Zuma comes to power on the support of the trade unions and the Communist Party, and continues to face charges of corruption, he has been generally successful in reassuring business that he will continue the successful macroeconomic policies of his predecessors.
Business Community Calls for New Cuba Policy
Urges President-elect Obama to ‘Immediately Remove Travel Restrictions’ and Allow American Companies to Help Cuba Rebuild from Storms
Washington, DC – The National Foreign Trade Council (NFTC) and USA*Engage, along with ten other leading trade associations today sent a letter to President-elect Barack Obama, urging the incoming administration to reexamine current U.S. Cuba policy and consider new approaches that would benefit U.S. national security and economic interests and the Cuban people.
The associations, which include the American Farm Bureau Federation, Business Roundtable, and U.S. Chamber of Commerce, applauded President-elect Obama’s support for suspending restrictions on family remittances, visits, and humanitarian care packages from Cuban Americans, and noted that while “these are excellent first steps…we urge you to also commit to a more comprehensive examination of U.S. policy.”
“Your administration has a unique opportunity to take steps to end nearly 50 years of isolation from Cuba and the Cuban people. We support the complete removal of all trade and travel restrictions on Cuba. We recognize that change may not come all at once, but it must start somewhere, and it must begin soon,” they wrote.
In addition to calling for a comprehensive reevaluation of policy, the associations urged President-elect Obama to “immediately remove travel restrictions and allow Americans to act as ambassadors of freedom and American values to Cuba,” and to engage in bilateral discussions with Cuban government.
The groups also asked President-elect Obama to suspend certain restrictions on trade that would allow American companies to help Cuba to respond more effectively to the humanitarian crisis in the wake of recent hurricanes and storms in Cuba. They wrote that, “the United States could exempt agricultural machinery, heavy equipment and other exports from the embargo which would provide the goods and technology needed to rebuild from recent storms. The United States could also license direct banking services in order to facilitate these sales.”
“There is an opportunity to change policy which would open a new market for American businesses and help to demonstrate a new approach to foreign policy,” said Jake Colvin, Vice President for Global Trade Issues at the National Foreign Trade Council. “Helping Cuba rebuild from the storms could be a novel way for American companies to help reach out to the Cuban people.”
In the letter, the groups note that the U.S. embargo against Cuba is ineffective because it is unilateral. “Without the support of our allies and the larger international community, U.S. sanctions serve only to remove the positive influences that American businesses, workers, religious groups, students and tourists have in promoting U.S. values and human rights. Sanctions are also blunt instruments that generally harm the poorest people of the target country rather than that country’s leaders. There is no better example of the ineffectiveness of unilateral sanctions than in the case of Cuba.”
The associations highlighted the cost to American businesses and workers, citing a 2001 U.S. International Trade Commission estimate that showed the Cuban embargo costs U.S. businesses up to $1.2 billion annually in lost sales. “The real cost, however, is the influence that the United States has lost by voluntarily isolating itself from Cuba during an important moment of transition. Far from providing leverage, U.S. policies threaten to make the United States virtually irrelevant to the future of Cuba,” they wrote.
“Continuation of the status quo,” they concluded, “could leave the United States isolated from the Cuban people for another generation.”
In addition to the NFTC and USA*Engage, the letter was signed by the American Farm Bureau Federation, the American Society of Travel Agents, Business Roundtable, the Coalition for Employment through Exports, the Emergency Committee for American Trade, the Grocery Manufacturers Association, the National Retail Federation, the Organization for International Investment, the U.S. Chamber of Commerce and the U.S. Council for International Business.
“For the first time in years, American companies are paying attention to Cuba,” said Colvin. “They may not expect dramatic changes in policy immediately, but they want to be well-positioned for the future.”
For a full copy of the letter, please follow the URL:
http://www.nftc.org/default/Press Release/2008/BusinessAssociationLtrCuba.pdf
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USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
International Survey Summary Report: Expatriate Spouses and Partners Employment, Work Permits and International Mobility
Protocol Amending the Income Tax Convention Between The United States and New Zealand
New Report Explores Impact of Lifting U.S. Iran Sanctions on the Global Economy, Trade and the Price of Oil
Policy Changes Could Reduce World Price of Oil by 10 Percent and
Increase U.S. Service Sector Exports
Washington, DC – If the United States lifted sanctions on Iran and the nation liberalized its economic regime, the world price of oil could fall by 10 percent and Iran’s gross domestic product (GDP) could increase by 23 percent annually, according to a new paper developed by economists Dean DeRosa and Gary Hufbauer. The paper, Normalization of Economic Relations: Consequences for Iran’s Economy and the United States, was commissioned by USA*Engage, and explores the effects of lifting U.S. sanctions on Iran and how such a shift in policy could impact the world economy, the U.S. and Iranian economies, U.S. multinational corporations, the international oil-and-gas sector, and the price of oil.
“With the support of its allies and the UN community, the United States maintains economic sanctions against Iran in response to Iran’s support for international terrorism, its pursuit of weapons of mass destruction, and more recently its practice of supplying arms to insurgents operating in Iraq,” wrote DeRosa, Principal Economist, ADR International Ltd., and Hufbauer, Reginald Jones Senior Fellow, Peterson Institute for International Economics. “As with all economic embargoes, the efficacy of the sanctions in forcing political change is controversial. In economic terms, however, both sides lose from the geopolitical standoff.”
The paper was written based on the assumption that U.S. sanctions currently in place are lifted, and Iran adopts more open policies toward foreign investment and expands other dimensions of its economy. “To generate significant economic gains, any normalization of Iran’s economic relations must entail dramatic changes beyond the lifting of U.S. sanctions. Iran must adopt policies that welcome foreign direct investment in its oil sector,” wrote the authors.
According to the report, the economic benefits to the United States, Iran and the broader international community associated with these policy changes include reducing the world price of crude petroleum by 10 percent, saving the United States annually between $38 billion and $76 billion. Liberalization of Iran’s economic regime could also result in an increase in Iran’s total trade by as much as $61 billion, adding 32 percent to its GDP, and an increase in U.S. non-oil trade and trade in services with Iran by about $46 billion, 0.4 percent of GDP. The report added, “opening Iran’s market place to foreign investment could also be a boon to competitive U.S. multinational firms operating in a variety of manufacturing and service sectors.”
DeRosa and Hufbauer cautioned that unless both economic relations are normalized and policies are enacted to promote foreign investment, Iran’s energy sector may face challenges similar to those experienced by the Libyan and Venezuelan energy sectors in recent years. The paper points out that while President Bush in 2004 lifted the Iran and Libya Sanctions Act (ILSA) sanctions against Libya, “substantial new foreign investment by foreign oil companies, especially to develop the country’s potential for expanded production of natural gas, has not yet been achieved because of Libya’s antiquated infrastructure and highly regulated economy rife with corruption.”
In the case of Venezuela, though the country is not the object of current U.S. economic sanctions and until recently has attracted considerable direct investment from U.S. and other foreign oil companies, “the oil production and exploration rights of foreign oil companies have been sharply curtailed through a combination of new legislation, higher taxes and royalties, and new contractual arrangements. These measures effectively expropriate foreign rights and reduce the share of foreign companies in Venezuela’s oil energy sector.”
“We commissioned this paper, not to develop recommendations on if and how the United States should lift sanctions on Iran, but rather to illustrate the economic impact sanctions have on the global economy and specifically the international oil-and-gas and service sectors, which include many of our member companies,” said NFTC President and USA*Engage Co-Chair Bill Reinsch. “Broad unilateral sanctions intended to change the behavior of problematic regimes often miss that target, but do succeed in generating a number of significant economic consequences.”
For a full copy of the new report, please click here.
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USA*Engage (www.usaengage.org) is a coalition of small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad. Established in 1997 and organized under the National Foreign Trade Council (www.nftc.org), USA*Engage leads a campaign to inform policy-makers, opinion-leaders, and the public about the counterproductive nature of unilateral sanctions, the importance of exports and overseas investment for American competitiveness and jobs, and the role of American companies in promoting human rights and democracy world wide.
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
NFTC Issues Policy Recommendations to President-elect Obama
Underscores Need to Maximize U.S. Global Economic Leadership Through
Trade and Domestic Policies
Washington, DC – The National Foreign Trade Council (NFTC) today sent a letter to President-elect Obama, urging him to enact policies that maximize the competitiveness of U.S. businesses and workers. The letter noted that expanding international trade and investment plays a key role in U.S. economic growth, but that trade policy must be coupled with domestic policies that promote competitiveness.
“Our trade policy does not exist in a vacuum. To make certain that our citizens gain maximum benefits from our participation in an open world trading environment, our domestic policies must assure that the United States is the most attractive location for global investment, as well as for research and development, particularly of advanced technologies,” wrote NFTC Chairman and CEO of DHL Express John Mullen.
Mullen continued, “We therefore look to issues not traditionally associated with trade policy but which constitute the environment in which competitiveness is fostered. These include our education and health care systems, the need for a secure and competitive energy supply, a modern infrastructure and environmental policies that address global warming. By focusing on these longer term issues as well, we seek a better world not only for ourselves but for our children and their children.”
The NFTC offered the incoming president 11 policy recommendations regarding the Doha Round, pending bilateral and regional trade agreements, trade negotiating authority, worker adjustment assistance programs, preference programs, climate change, U.S. immigration and visa policy, unilateral sanctions, divestment, regulatory reform and international tax policy.
With regard to the Doha Round, the NFTC recommended that the incoming Administration exercise its vision and leadership to bring the talks to a successful conclusion. The NFTC also suggested that instead of simply adopting the structure of past multilateral trade negotiations, the new Administration “look at new architectures for negotiations that encompass countries interested in further liberalization instead of relying on existing frameworks that produce least-common-denominator outcomes.”
The NFTC letter pointed out that “far from undermining our prosperity, bilateral and regional trade agreements are an important mechanism for opening markets for the export of American goods and services,” and pressed Obama to support passage and implementation of pending free trade agreements with Colombia, Panama and South Korea. Equally important, the NFTC recommended that an improved and modernized Trade Adjustment Assistance (TAA) program be a top priority for the next president.
The NFTC also expressed its support for U.S. visa and immigration system reforms that will make the United States more welcoming to foreign-born professionals, students and business travelers.
In the area of tax policy, the NFTC argued that the incoming Administration should enact international tax policies that “reflect both the position of the United States in the global economy and the position of the individual American firm seeking to grow and prosper in global markets.” The NFTC also restated its strong support of the bilateral tax treaty program that “promotes greater certainty, the avoidance of double taxation and the prevention of discriminatory treatment against U.S. companies,” and recommended that the new Administration pursue policies that “permit American companies to pay roughly the same amount of tax as their foreign competitors in markets both at home and abroad.”
Further, the NFTC and its affiliate USA*Engage urged the new Administration to renounce the use of unilateral sanctions for foreign policy purposes, discourage state and local measures that require divestment by pension funds of shares in companies active in “problem” countries, and reform export control and sanctions licensing regulations.
Mullen wrote in closing, “The National Foreign Trade Council looks forward to working with your Administration to advance our common interest in a competitive U.S. private sector operating in a rules-based international economy.”
For a full copy of the letter, please click here.
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Advancing Global Commerce for Over 90 Years
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
NFTC Releases Analysis of 2008 Congressional Election Results and Their Impact on U.S. Trade Policy
Calls Results a ‘Mixed Bag’
Washington, DC – The National Foreign Trade Council (NFTC) late Friday released an analysis of what the 2008 congressional election results mean for U.S. trade and engagement policies in the 111th Congress. The NFTC conducted the analysis to explore whether there is any truth to assertions made over the past few weeks that the composition of the incoming freshman class signals a seismic shift in the future of U.S. trade policy. The NFTC analysis was designed to answer the following questions: Was trade a key campaign issue for members of the incoming class? Do new members’ views on trade differ from those of their predecessors? Is there a substantial difference between being a “trade skeptic” and being “anti-trade?” Has it become more difficult to pass trade legislation in Congress?
“After an election, it’s always tempting for representatives of each side of an issue to come out and declare victory, but it’s not that simple,” said NFTC President Bill Reinsch. “The truth of the matter is that the results of the congressional elections are a mixed bag when it comes to trade. In the majority of races, trade was not an important factor, and it is not correct to suggest that incoming members represent a sea change in the way the United States will approach trade and diplomatic policies.”
“We look forward to working with the incoming class and briefing new members on our top trade priorities, including passage of the pending free trade agreements with Colombia, Panama and South Korea, enactment of an enhanced Trade Adjustment Assistance program, and a successful conclusion to the Doha Round, among many others,” said Reinsch.
The NFTC analysis found that of the eight Senate races analyzed, only four successful candidates mentioned trade explicitly on his or her Web site when discussing campaign issues. Based on these Web sites and other statements, the NFTC estimates that perhaps two of the successful candidates are less inclined towards free trade and engagement than the incumbent based upon his or her historical voting record. Similarly, in the 52 House races analyzed, only 12 successful candidates made any mention of international trade in the issues section of his or her Web site. Further, of the 12 House races in which trade was featured, only seven successful candidates appear to advocate policies that are clearly less inclined towards free trade and engagement than their predecessors. According to the NFTC, only 23 percent of successful candidates running for a House seat mentioned trade on their Web site, which is a dramatic decline from 2006 when 54 percent of successful candidates mentioned trade.
“We believe there is an opportunity to craft a bipartisan U.S. trade policy going into next year. Republicans and Democrats have indicated a strong commitment to using the May 10th agreement as the basis for the U.S. trade agenda moving forward, and we expect to see a renewed sense of bipartisanship and greater consensus on key issues like labor and the environment,” said NFTC Vice President for Global Trade Issues Jake Colvin.
“At the beginning of new presidential terms, there tends to be greater bipartisan support for trade,” Colvin continued. “Moving forward on trade policy will require building trust between the parties and leadership from the President, and our hope is that President-elect Obama will work with both sides of the aisle to restore that bipartisan spirit in Congress.”
The analysis noted that the “CAFTA-15” were easily reelected, and survived primary challenges from trade skeptics. The NFTC also pointed out that to the extent that there is any increase in skepticism, it is regional and largely reflects concerns over loss of manufacturing jobs. While the NFTC believes these are valid concerns, they do not suggest that the new Congress is broadly “anti-trade.”
For a copy of the NFTC 2008 Congressional Election Analysis, click here.
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Advancing Global Commerce for Over 90 Years
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
NFTC Urges Japan to Extend Seven-Year Limit on Carry-Forward of Losses as Part of Emergency Tax Package Under Consideration
Washington, DC – National Foreign Trade Council (NFTC) President Bill Reinsch today sent a letter to Japanese finance and economic ministers, urging the government to adopt a proposal to extend the period of time in which corporations can use losses against profits in future years. The NFTC believes that Japan should extend the seven-year carry-forward period as part of the emergency tax package the Japanese government is considering introducing in response to the international financial crisis.
“This is much shorter than the period allowed by almost every other developed country of which we are aware. At this time, when substantial losses are being incurred, especially in the financial sector, it seems clear that a period longer than seven years will be required to fully utilize such losses,” wrote Reinsch. “If corporations are required to write off some of these losses because they cannot be utilized in the current seven-year period, that will increase the impact of such losses. It will also make Japan a less attractive place in which to invest, compared to other countries with longer carry-forward periods.”
Reinsch noted that extending the seven-year limit would benefit both domestic and foreign investors. “Our members are committed to investment in Japan, but very hard economic choices have to be made, even for businesses with a long-term view,” he wrote. “Our members believe that an increase in the carry-forward period to 20 years (or, preferably, an unlimited period, as in many countries) would significantly increase the likelihood of continued inward investment into Japan.”
“We hope that you will support this proposal, and our members would be happy to work with you in fashioning an acceptable provision.” Reinsch concluded.
For a full copy of the letter, please click here.
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Advancing Global Commerce for Over 90 Years
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
NFTC Welcomes New Senior Vice President Robert Ragan
Washington, DC – The National Foreign Trade Council (NFTC) today announced that Robert (Bob) Ragan will join the organization as Senior Vice President, effective January 12, 2009. Ragan currently serves as Principal Vice President of Bechtel, one of the world’s largest engineering and construction companies.
“As a dedicated member of the NFTC Board of Directors for the past 15 years, Bob has been a tireless advocate for this organization and its policy objectives,” said NFTC President Bill Reinsch. “From his work on the Board and our Plans & Policies Committee to his past chairmanship of the State & Local Sanctions Committee of USA*Engage, Bob has brought his expertise and leadership skills to the table time and time again, and we are so pleased to welcome him to the NFTC team in his new role.”
Prior to joining the NFTC, Ragan held numerous leadership positions at Bechtel. Following a career in the U.S. Government with the Departments of Energy and Defense, and the National Aeronautics and Space Administration, from 1980 to 1986, Ragan was responsible for Bechtel’s worldwide procurement management and strategic planning for Bechtel National, Inc. He was Manager, Defense and Space Programs from 1986 until 1990. Between 1990 and 1993, he served as Vice President of Marketing & Business Development for other international engineering and construction firms.
He then returned to Bechtel in 1993 to serve as Manager of the Washington, D.C. office until June 2007, when he became Manager of Marketing & Business Development.
In addition to his other duties in the Washington office, Ragan was responsible for international trade and government relations. During his tenure at Bechtel, he served on the Board of Directors of both Bechtel Systems & Infrastructure, Inc. and Bechtel National, Inc. Ragan has also helped to lead key U.S. business community initiatives, including serving as a board member of the U.S.-Russia Business Council and Meridian International Center, and as chairman of the Washington Export Council and the National Constructors Association’s Government & International Affairs Committee.
The NFTC, founded in 1914, is the only business association dedicated solely to trade policy, export finance, international tax and human resources. The organization represents more than 300 companies through its offices in New York City and Washington, D.C. As Senior Vice President, Ragan will focus on a number of policy issues, including trade, international tax and intellectual property, and on NFTC member relations and development.
Ragan succeeds Catherine Bennett, who recently joined Tyco International as Vice President of Public Affairs. “We appreciate all of Cathie’s work on behalf of our members, especially her leadership of the WTO Initiative and Intellectual Property Working Group, and we wish her the best in her future endeavors,” concluded Reinsch.
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Advancing Global Commerce for Over 90 Years
The National Foreign Trade Council (www.nftc.org) is a leading business organization advocating an open, rules-based global trading system. Founded in 1914 by a broad-based group of American companies, the NFTC now serves hundreds of member companies through its offices in Washington and New York.
