Category: Press Releases and Statements

NFTC Statement on Collapse of Doha Round Negotiations

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Washington, DC – Following news that the Doha Round of World Trade Organization (WTO) negotiations have reached an impasse that cannot be overcome, the National Foreign Trade Council (NFTC) today issued this statement.
 
“We deeply regret the news coming from Geneva today. After seven long years of negotiations, we certainly hoped that a breakthrough on negotiating modalities and a successful signaling conference on services liberalization this week would lay the groundwork for an ambitious conclusion of the Round,” said NFTC President Bill Reinsch.

“In the Round, the international community had a chance to come together to reject the protectionism and isolationism that seems to be creeping slow but steady across the globe, and stand together to achieve a universal goal larger than the ambitions of each individual country,” Reinsch continued. “It is unfortunate that not all countries at the negotiating table were committed to such an outcome.”

NFTC Senior Vice President Catherine Bennett, who just returned from Geneva, said, “Just last week it seemed that there was a basis for optimism at the Ministerial gathering.  Ministers of the G-7 countries had come together to keep the talks intact and were working with Director General Lamy to advance positions with a fair balance of demands and concessions. While the U.S. Government agreed to move forward on this basis, it now seems that not all countries had the same level of commitment to the process.

“The Round appeared to be standing the test of time, but today’s news makes it clear that no matter how long the process could have gone on, its success depended on all of its participants. Unfortunately, while the spirit of cooperation and compromise had a positive effect on some, others were not moved. It is truly an opportunity lost,” Bennett concluded.

NFTC Issues Statement on Doha Round

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Washington, DC – National Foreign Trade Council (NFTC) Senior Vice President Catherine Bennett, who just returned from Geneva following a U.S. business community delegation visit last week, today issued the following statement:
 
“It would be premature to comment definitively on the Lamy text. For one thing the negotiations are not over. In addition, we have not had the chance to talk with our member companies or the opportunity to fully analyze the proposed formulas. The devil is in the details and we are concerned about the extent to which ‘flexibilities’ diminish the commercial benefits of any trade liberalizations. Many of our member companies also have a strong interest in sectoral trade negotiations. As you know, the Lamy text sites the possibility of two sectorals. If key countries like China, India and Brazil choose not to participate, then even this benefit is illusory.
 
“We were heartened by the apparent results of the services signaling conference held yesterday. A number of countries, including the United States, made some positive, forthcoming comments. The outcome on services will be critical to how companies judge the overall balance of concessions in the negotiations.  Finally, many of our companies have opposed the inclusion of the expansion of GIs and provisions relating to the Convention on Biodiversity in the single Doha undertaking. It is our understanding that a decision on the TRIPS issues has not yet been made.
 
“The NFTC has long supported an ambitious and balanced outcome of the Doha Round. That means significant liberalization in all three pillars of the Round – agriculture, NAMA and services. We do not believe WTO trade negotiators are there yet, but remain hopeful for positive developments in the next few days.”

NFTC Opposes Germany’s Proposal to Transfer Accounting Records to EU/EEA Countries

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Accounting Changes Unnecessary, Would Unfairly Penalize U.S. Companies

Washington, DC – The National Foreign Trade Council (NFTC) today sent letters to 16 German finance and economic ministers, in response to Germany’s proposal to transfer electronic accounting records to European Union (EU) and European Economic Area (EEA) countries. The NFTC opposes the proposal because it would inflict undue penalties on U.S. companies already acting in compliance with international accounting and audit rules.

“We welcome Germany’s interest in attracting and retaining investment and the German tax rate reductions recently enacted to that end,” wrote NFTC President Bill Reinsch. “Our member companies are concerned, however, about the proposed change in the rules relating to the transfer of electronic accounting records to EU/EEA countries. By requiring records to be kept in Germany, the EU or the EEA, Germany is failing to recognize the global nature of today’s marketplace.”

Reinsch continued, “The provision requiring the immediate relocation of electronic financial records to the tax entity’s home country, if so requested by the German Tax Authorities, is unreasonable in today’s global marketplace….The NFTC opposes the imposition of the new territorial restrictions. Generally, all accounting activities not located in EU countries, e.g. the United States, would be considered illegal, and would be subjected to penalties of up to €250,000. The penalties should be eliminated.”

“For a US-based multinational, the main accounting function is likely to reside in the U.S., and this typically includes data relevant for the companies’ German operations. Under current law, companies have generally been able to maintain records in a third country without incurring punitive penalties,” wrote Reinsch. “It has been possible to satisfy the record maintenance requirements by preparing regular secure backups of the data and transferring this information, when needed to the Germany-based subsidiary. The pending proposal will nullify these arrangements.”

The NFTC letter requests that Germany modify the proposed rule significantly, pointing out that Germany’s proposal goes beyond the reach of comparable rules in other EU member states. Reinsch concluded by citing the tax treaty recently ratified by the United States and Germany, arguing that “under the provisions of the tax treaty, financial records of U.S.-based multinationals doing business in Germany, should be permitted to be retained in the U.S., or another non-EU or non-EEA country, without penalty.”

For a full copy of the letter, please click here.

NFTC Urges Sweden to Refrain from Adopting New Tax Proposal with ‘Dramatic’ Interest Deductibility Restrictions

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Washington, DC ¬– National Foreign Trade Council (NFTC) President Bill Reinsch today sent letters to Swedish Minister of Finance Anders Borg and State Secretary Ingemar Hansson, urging the ministry to refrain from adopting tax policies, which would place greater restrictions on the deductibility of interest. The NFTC sent the letters in response to a recent report developed by Sweden’s Tax Administration.

“Sweden has, in part, been a favored destination for inward investment both because of its stable tax regime, and because of a consistent effort by Swedish lawmakers to provide an attractive investment environment. However, the Ministry of Finance has now released a report from the Tax Administration which proposes dramatic restrictions on the deductibility of interest in certain related party settings,” wrote Reinsch. “Were this proposal to be enacted in its current form, it could have a very serious effect on inward investment into Sweden.”

Reinsch continued, “We would, at the very least, encourage you to postpone the effectiveness of any provisions until 2010, and extend the comment period to allow proper consultation on, and consideration of, these proposals.” Further, while Reinsch acknowledged that Sweden is entitled to protect its tax base through a potential law change, he argued, “any such rules should take into account international norms, as well as legitimate business practices. The proposed rules, as currently drafted, would not do this.”

The NFTC outlined its objection to the proposed rules, including that they would put companies doing business in Sweden at an unfair disadvantage, as they are much stricter than any other similar rules. The proposed rules also ignore “several important areas of normal and legitimate business,” including post-acquisition restructurings, and the loan tracking provisions could potentially be “exceptionally burdensome.”

 “We would urge you not to jeopardize your hard-won reputation as a stable, welcoming environment for multinational business and investment. You could do this by a hasty adoption of an interest restriction regime which would hit legitimate business transactions, and greatly add to the cost of doing business in Sweden,” Reinsch concluded.

For a full copy of the letter, please click here.

NFTC Warns Against Including TRIPS Amendments in Doha Negotiations

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Council Says Ministerial Meetings Should Instead Focus on ‘Three Pillars’ of the Round

Washington, DC – In response to reports from Geneva that the European Union (EU) and several nations are pressing for inclusion of Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement amendments as part of the Doha Round negotiations, the National Foreign Trade Council (NFTC) today sent letters to U.S. Trade Representative Susan Schwab and EU Trade Commissioner Peter Mandelson, warning against such action.

“Specifically, this group is advocating expanded coverage of geographical indications and mandatory disclosure of genetic resources in patent applications, along with provisions relating to access and benefit sharing,” wrote NFTC President Bill Reinsch. “In our view, both these issues are beyond the negotiating mandate of the Doha Round and have no place in the crucial discussions taking place in Geneva this week.”

“Negotiators should focus their attention on making substantive progress on the three pillars of the Doha Round – agriculture, NAMA and services – and not be diverted by the introduction of new and controversial topics. This could only undermine the chances for a successful ministerial gathering and progress toward completion of the Round this year,” he wrote.

For full copies of the letters, please click here.

NFTC Calls on Advanced Developing Nations to Help Break Doha ‘Deadlocks’ Next Week

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Washington, DC – The National Foreign Trade Council (NFTC) today in advance of next week’s World Trade Organization (WTO) ministerial meeting on the Doha Development Round, sent letters to the Ambassadors of the key advanced developing nations, urging each country to constructively contribute to a successful outcome to the negotiations. As the letter points out, an estimated 40 Trade Ministers of WTO member countries will gather in Geneva next week to try to achieve progress in the areas of agriculture, non-agricultural market access (NAMA) and services.

“Unless substantial progress is made next week, we fear that the Doha Round will flounder for the foreseeable future,” wrote NFTC President Bill Reinsch in letters to the Ambassadors of Brazil, China, India, Malaysia and South Africa.

“If, however, countries step up to the challenges and hard choices necessary to achieve breakthroughs on the modalities relating to agriculture and NAMA as well as real commitments on services, there is an opportunity for substantial progress towards concluding negotiations in 2008 and completing the Round in 2009. Your country is critical to a successful outcome in Geneva next week,” he continued.

“As an advanced developing country, your government should see the tremendous opportunities presented by a successful Round for future economic growth… The potential benefits are real and significant, and it would be a shame to lose this opportunity,” Reinsch concluded.

For full copies of the letters, please click here. 

NFTC Sends Treasury Secretary Letter on Brazil Tax Treaty

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The Treasury Department has been involved in informal negotiations with the Brazilian government on a tax treaty between the U.S. and Brazil.  Treasury has been getting a lot of pressure from the U.S. business community to negotiate with the Brazilians.  Unfortunately, the Brazilians want to negotiate the treaty almost entirely on their own terms.  The Brazilians have included many of the same provisions in their tax treaties since the 1970’s.    The NFTC has sent the attached letter to Treasury clarifying our position on a tax treaty with Brazil.    The NFTC strongly supports a tax treaty that follows recent tax treaty precedents and lowers the withholding rates on interest, dividends and royalties to zero, and provides for the arms length standard for transfer pricing, a reasonable mutual agreement procedure, and a permanent establishment provision that reflects that traditional position of the United States.  We will not support a treaty that codifies the current high Brazilian tax rates and would be a step backward in the overall tax treaty network.  The NFTC will continue to work to strengthen our tax treaty network, particularly in those countries of highest priority to NFTC members. 

We have sent the letter to both Treasury Secretary Paulson and Commerce Secretary Gutierrez.  Michael Mundaca, John Harrington and Henry Louie have all received copies of this letter. 

To view the letter follow the link.

NFTC Releases Draft “Trade Negotiating Authority Act of 2009”

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Council Says Trade Authority to be Major Subject of Debate ‘No Matter the Outcome’ of the Presidential Election

Washington, DC – The National Foreign Trade Council (NFTC) today released a draft “Trade Negotiating Authority Act of 2009,” which the Council developed to initiate debate over the appropriate objectives for negotiating trade agreements and an efficient “fast track” process for congressional consideration of implementing legislation. The NFTC’s draft bill, which builds on existing Trade Promotion Authority and includes new provisions that update negotiating objectives and reform the Congressional-Executive consultation process, represents the first U.S. business community effort this year to critically examine Trade Negotiating Authority (TNA) in the context of the next Congress and Administration.
 
“Trade negotiating authority is vital to the future of U.S. trade policy, no matter the outcome of the election in November,” said NFTC President Bill Reinsch, who unveiled the draft bill during a press roundtable at the NFTC this afternoon. “Regardless of whether we have a President Obama or a President McCain, the new Congress and the new Administration will have to have a trade policy and will have to grapple with what to do about the process for negotiating trade agreements. We are releasing our draft bill today to catalyze that deliberative process.” 

Reinsch, continued, “Our bill is based on two fundamental ideas:  that our trade policy objectives need to be updated to reflect the demands of a much more competitive global economy, and that a successful trade policy requires close consultation and cooperation between the President and the Congress and between the two political parties.”
 
Trade Promotion Authority expired June 30, 2007, and the NFTC believes that negotiating authority is a fundamental part of U.S. global economic leadership and should be renewed, with some modifications. The Council’s “Trade Negotiating Authority Act of 2009” includes significant reforms with respect to procedure and negotiating objectives. For example, the draft bill expands congressional authority, as it calls for the creation of Joint Committee on Trade (JCOT) in lieu of a Congressional Oversight Group and requires a JCOT vote of approval before the president can begin an FTA negotiation. In addition, the NFTC draft bill includes transition rules, which clarify that agreements concluded and not acted upon by Congress retain their existing “fast track” status.
 
With regard to negotiating objectives, the draft “Trade Negotiating Authority Act of 2009,” recognizes that trade is part of a larger set of overall competitiveness issues; focuses on development and maintenance of global supply chains; eliminates most of the sector-specific objectives in previous law; focuses multilateral objectives on moving toward a “two-track” system within the WTO in which countries willing to undertake greater liberalization can do so on a non-MFN basis, and on tougher enforcement of the “substantially all trade” requirement for FTAs; focuses bilateral objectives on countries that would provide the greatest economic benefit or those that would provide useful precedents in areas like investment, regulatory policy, due process, labor and environment; and promotes harmonization of the rules in the various bilateral and regional agreements.

“Last May, Congress and the Administration came together in a bipartisan fashion to craft a new framework for U.S. trade policy. It is our hope that both branches will continue to work together to chart a productive course forward on trade, including renewing and reforming negotiating authority,” Reinsch concluded.

Follow the links to view the draft of the bill and the draft summary.

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.