NFTC and Other Leading Business Groups Call Rule Unilateral and Cite Compliance Burdens

Washington, DC ­- The National Foreign Trade Council (NFTC) today joined 23 other prominent business associations in calling on the U.S. Secretary of Commerce to withdraw and reconsider moving ahead with a proposed export control regulation for the People’s Republic of China. In a letter sent to the Bureau of Industry and Security (BIS) today, the business groups raise concerns about the proposed rule, citing that it is unilateral and out of step with diplomatic efforts, imposes excessive compliance burdens on U.S. businesses, and does not advance national security interests.

“The proposed regulation is difficult to reconcile with broader U.S. policy towards China and other U.S. strategic goals,” the groups stated. “We believe that the regulations could well have a serious deleterious impact on the significant political, military and foreign policy relationships developed with China as well as the bilateral economic relationship,” the letter continued.

“The key problem with the proposed regulation is that it undercuts the United States’ efforts, both long-term and those stated recently, to ensure that China is a ‘responsible stakeholder’ in the global community. The reality is that we can’t have a U.S. policy where we both seek to engage China on a broad number of issues ranging from diplomacy to the value of currency to trade, and at the same time impose unilateral, broad-based regulations on U.S. exports to China,” said NFTC President Bill Reinsch.

In the letter, the business groups reference a number of key concerns about the proposed regulation, including the list of items defined as “subject to the military end-use license requirement.” The trade groups argue that the list and rule are ineffective strategies if the end goal is to deny Chinese military access to those items because many of these goods are already produced in China or are widely available in the international marketplace. The attachments to the letter provide detailed evidence of foreign availability.

“We haven’t been involved in export control issues before. We are deeply involved in this now because our members have made it clear that the proposed regulations are unrealistic and simply unworkable,” said Dirk Van Dongen, President of the National Association of Wholesaler-Distributors. “If adopted as proposed, they will shut down markets for American firms without denying Chinese buyers the products they desire. This does nothing to further our security.”

Because the proposed export controls are unilateral and will not be implemented in coordination with U.S. allies, their effectiveness is questionable. Also at issue are concerns about cumbersome compliance burdens for U.S. businesses that would result from the rule’s implementation.

“It remains unclear what benefits and positive outcomes are intended to result from this regulation. What is clear, however, are the costs to U.S. businesses,” said Robert Holleyman, President and CEO of the Business Software Alliance (BSA). “If implemented as drafted, the rule would impose increased liability risks as well as stifling financial costs on American companies seeking to comply.”

For example, as the letter details, the regulation’s application to reexports would require American firms to obtain information from their customers about their intentions for purchased goods downstream. The regulation would also impose additional certification burdens on the Chinese government. The business groups estimate that these kinds of compliance requirements and other provisions included in the rule could result in an adverse effect on the U.S. economy of way over $100 million annually.

“Requiring China to issue end-user certificates of Chinese customers for any licensed sale over $5,000 goes far beyond anything being required by our allies. We need to protect our legitimate security concerns, but not unnecessarily undermine our competitiveness,” said John Frisbie, President of the US-China Business Council.

“This rule is not a small policy change, but rather a major shift in the way we approach U.S.-China economic relations. The impact on the U.S. business community will be extensive as will the strain on ties between the United States and China, which is a vital ally,” said Reinsch. “We urge Commerce Secretary Gutierrez and Administration officials to take these very serious concerns into account as the rulemaking process continues.”

A copy of the letter is available at http://www.nftc.org/default/export%20controls/BIS%20China%20Reg%20Indus%20Ltr.pdf

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 inWashington and New York.

Highlights Changes in Views on U.S. Trade and International Engagement in 110th Congress

Washington, DC – Today, USA*Engage and the National Foreign Trade Council (NFTC) released a 2006 Elections Analysis, comparing the voting records of departing Members of Congress with the statements of incoming Members on international trade, immigration and foreign policy issues.

Key findings of the Elections Analysis include:

• In 8 of the 10 Senate races analyzed, successful candidates mentioned trade explicitly on his or her website when discussing campaign issues. Based on these websites and other statements, USA*Engage estimates that 5 of the successful candidates are clearly less-inclined towards free trade and engagement than the incumbent based upon his or her historical voting record. Two incoming Senators advocated policies that could be construed as more inclined towards free trade and/or international engagement than his or her predecessor.
  
  
• In the House races analyzed, only 29 out of 53 successful candidates made any mention of international trade in the section on his or her website devoted to key campaign issues.
  
  
• Of the 29 House races in which trade was featured in the “on the issues” section of the successful candidate’s website, only 10 winners appear to advocate policies that are clearly less-inclined towards free trade and engagement than his or her predecessor.
  
  
• Of the 29 House races, 6 candidates advocated policies on their websites or in other statements that could be construed as more inclined towards free trade and/or international engagement.
  
  
• 37 out of 53 successful House candidates discussed immigration or border security. Platforms among successful candidates ranged from building fences and deporting illegal immigrants to supporting comprehensive immigration and border reform to defeating “rabidly anti-immigrant” forces in the United States.
  

“Frankly, international trade was just not a decisive issue in most of the campaigns,” said William A. Reinsch, President of the National Foreign Trade Council. “And while we have lost a few key champions of trade and engagement, I am optimistic that there will be opportunities for Congress to support a positive international economic agenda that will benefit American companies and workers.”

“One positive trend in the report is the desire of a number of incoming Members to build diplomatic bridges with our allies and open channels of communication with our enemies,” continued Jake Colvin, Director of USA*Engage. “We hope that the new Congress will be inclined to take a fresh look at some of our sanctions programs as well as the important trade and economic issues we face. We look forward to working with new Members on these important issues.”

Click here to view the report.

Washington, D.C. – New unilateral sanctions imposed by the United States are on the rise, according to a study by Professor Michael P. Malloy commissioned by USA*Engage and the National Foreign Trade Council (NFTC). This new Study of New U.S. Unilateral Sanctions: 1997-2006 reports that although the United States has imposed or threatened significantly more sanctions on countries during this period than in years past, these new sanctions tend to be more targeted than those prior to 1996.

“We are pleased that both Congress and the President have made an effort to take a more targeted approach to sanctions as opposed to imposing broad-based unilateral measures,” said NFTC President and USA*Engage Co-Chair Bill Reinsch. “The reality is that sanctions, no matter how well-intentioned, have the potential to add innumerable complications to our foreign policy and the good faith efforts of U.S. businesses trying to comply with and enforce what are often cumbersome rules.”

The study is a follow-up to a 2002 sanctions report commissioned by USA*Engage, which showed a decline in the imposition of U.S. unilateral sanctions. The new analysis by Professor Malloy, of University of the Pacific McGeorge School of Law, catalogs 125 new unilateral sanctions against 47 countries between 2002 and June 2006. During the same period, U.S. unilateral sanctions were lifted in whole or in part from 15 states. The new report also reveals that from 2001 to 2006, the imposition of sanctions against individuals and non-governmental organizations increased, generally as a response to heightened concerns about the threat of terrorism.
 

In addition, the study shows that during this five-year period, Congress imposed new unilateral sanctions at a rate more frequent than the President, and Congress in particular continues to demonstrate an interest in pursuing broader unilateral sanctions. This summer senior U.S. Senators, backed by the Administration, thwarted such an effort to impose broad sanctions against Iran, as proposed in an amendment to the Defense Authorization Bill. These sanctions, if enacted, would have undermined multilateral diplomacy by isolating the United States from our allies around the globe.

“Though we are optimistic about the shift towards a more targeted approach, we will continue to press the Administration and Congress to consider the full impact of future unilateral sanctions proposals,” continued Reinsch. “Nobody would doubt the appropriateness of targeted sanctions aimed at freezing terrorist assets or for other important national security reasons. But as the lengthy catalog of sanctions and economic levers in this study shows, there is a patchwork of measures and potential measures already on the books. The U.S. Government needs to consider any new sanctions with great care.“

A complete copy of the new study is available at www.usaengage.org.

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, 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.

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.