Category: Press Releases and Statements
USA*Engage and NFTC Caution Against Bills Which Would Hinder Multilateral Effort with Iran
U.S. Business Community Letter Says New Legislation Will Create Divide with U.S. Allies
Washington, DC – USA*Engage and the National Foreign Trade Council (NFTC) today joined eight other prominent trade associations in urging Senators to reconsider S. 970 and S. 1234 – two bills which would impose broad, unilateral U.S. sanctions resulting from foreign entities doing business with Iran, including many companies organized under the jurisdiction of key U.S. allies.
In a letter to Senators, the associations argued that preventing Iran from developing a nuclear weapons capability is a “critical objective,” but signaled that both bills would detract from that objective by “targeting our allies for penalties,” thereby “draw[ing] attention away from the core problem.”
As drafted, both bills contain extraterritorial provisions that would make U.S. parent companies liable for the actions of their foreign subsidiaries.
According to the letter, whose signatories also include Business Roundtable, the National Association of Manufacturers, the U.S. Chamber of Commerce and the U.S. Council for International Business, “The United States and its allies are making progress in assembling broad, multinational economic and diplomatic action against Iran. Enacting either S. 970 or S. 1234 and thereby imposing mandatory U.S. penalties on entities in the same countries that are assisting us would only undercut the progress that our diplomats are making.”
Citing the Reagan Administration’s response to the Soviet invasion of Afghanistan in the early 1980s when the U.S. sought to ban participation of foreign subsidiaries in the Siberian oil pipeline, the associations highlighted the diplomatic difficulties associated with imposing U.S. unilateral sanctions with extraterritorial extensions. In the case cited, foreign governments where subsidiaries of U.S. companies were located, including the U.K., France and the Netherlands, instituted blocking statutes to disregard U.S. sanctions.
“History should serve as a guide and policymakers should recognize that these kinds of unilateral sanctions with extraterritorial reach have been unsuccessful in changing the behavior of governments,” said NFTC President Bill Reinsch. “What we’ve learned instead is that these types of measures exacerbate tensions with our allies and distract from the real issue at hand.”
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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 Urges Political Leadership on the Doha Negotiations
Council Leads
“This is an important visit for the NFTC and its members,” stated Mary Irace, NFTC Vice President of Trade & Export Finance. “There is an increasingly narrow window of opportunity to achieve a needed breakthrough in the Doha Round. The
The NFTC today also released a policy statement, entitled “A Call to Leadership on the Doha Round,” which urges WTO Members to make a concerted effort to reaffirm their commitment to multilateral trade liberalization by concluding the negotiations successfully and in a timely manner.
“The stakes are high and failure is not an option. As the WTO enters its thirteenth year of existence and builds on the GATT established 60 years ago, the vision of an ambitious and successful outcome to the Doha Development Agenda is within reach if WTO Members exert the necessary political will and leadership,” noted the statement.
“It is a vision of enormous economic promise and development through a higher level of openness and multilateral commitment to expanding global economic engagement. The vision is there, now is the time to seize it,” the statement concluded.
For a copy of the statement, 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
NFTC and Other Members of Visa Policy Coalition Press Congress for National-Interest-Based Reform
Reinsch Says Current Visa Policy Hurts U.S. Competitiveness
Washington, DC National Foreign Trade Council (NFTC) President Bill Reinsch today participated in a joint policy briefing on Capitol Hill to urge Members of Congress to reform current U.S. visa policy to establish a national-interest-based system, which welcomes international business and academic visitors, and helps to bolster U.S. competitiveness. The briefing was hosted by a newly formed, broad-based coalition of trade associations concerned about the current state of U.S. visa policy, including NAFSA: Association of International Educators, the NFTC, the Coalition for Employment Through Exports, the Heritage Foundation and the Alliance for International Educational and Cultural Exchange.
“ America has become the world’s leader in significant part because for more than 200 years, we have taken in smart, hard-working people from all over the world,” said Reinsch. “They have stayed here, become inventors, artists, researchers, and the backbone of our industrial base, contributing immeasurably to our GDP and to our culture.”
However, citing numerous examples of how current U.S. visa policy is unwelcoming to international business and other visitors, Reinsch warned, “We are in the process now of throwing that away and telling a generation of foreigners they are not welcome here – as businessmen, as employees, as students, as tourists. And we are doing this at precisely the time when competition for talent is the most intense globally.”
In late January, the coalition of academic, exchange and trade groups released new visa policy recommendations, titled “Realizing the Rice-Chertoff Vision: A National-Interest-Based Visa Policy for the United States.” The recommendations call on Congress and the Administration to take a clear set of actions to reform U.S. visa policy.
“Realizing the Rice-Chertoff Vision” recommends that Congress:
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Restore to the Secretary of State the authority to grant U.S. consulates discretion to waive the personal interview requirement based on risk assessment;
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Strengthen and expand the Visa Waiver Program; and
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Exercise vigorous oversight of Executive Branch implementation of the Rice-Chertoff vision, especially those that pertain to the coalition’s recommendations regarding the Executive Branch.
The coalition further recommends that the Executive Branch:
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Articulate a clear, operational visa policy that fully realizes the Rice-Chertoff vision; and
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Improve efficiency, transparency, and reliability in the visa process.
“We support national security but think the balance needs to be readjusted in light of the damage our policy is causing,” said Reinsch. “We are committed to working with Congress and the Administration to develop a visa policy that is truly a win-win for both the United States and our friends across the globe.”
Click here for a copy of the coalition’s recommendations.
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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.
U.S. Export Controls and Economic Sanctions for the Oil and Gas Industry
William A. Reinsch
President, National Foreign Trade Council
March 8, 2007
The issue of export controls is becoming hot once more – unfortunately in the worst possible way under the worst possible circumstances – the conjunction of fear of terrorism and paranoia about
The result is a wave of xenophobia, which has manifested itself not only on export controls, but also in episodes like the Dubai Ports World acquisition case and our continuing disastrous visa policies. Perhaps we should consider ourselves lucky that we had four years of benign neglect, but that changed in 2005, and now we have to deal with the consequences.
· Two years ago the Commerce Department published a Federal Register notice soliciting comments on what would have been significant expansion of the deemed export rule. That followed its proposal in 2004 to change the definition of “knowledge” in a way that many believed would have lowered the bar to prosecutions.
· Both of those were subsequently withdrawn, although deemed exports will surely return.
· Last July the Commerce Department published a proposed regulation expanding the scope of controls on exports to
These proposals are a misguided approach to the right problem. They continue the movement we began toward controlling items based on the end use and end user rather than the blanket approach of the Cold War and on controlling technology more than items. The reality of globalization is that everything is made everywhere. A system that only controls things across the board is ineffective because of alternative sources of supply that do not adhere to our restraints and because technology is no longer contained in a convenient black box that we can simply hold onto. Focusing on specific end uses and end users forces us to learn more about the items we are controlling and more about our adversaries’ efforts to use those items, both of which improve the system’s efficiency.
Trying to do that through deemed exports and through the proposed
Last year the NFTC led a coalition of companies and associations that opposed the deemed export proposal, and we were pleased to see Commerce throw in the towel on it. Instead it has turned the problem over to a committee of experts, and we will simply have to wait and see what they come up with. The appointment of the committee’s chair, Bob Gates, as Secretary of Defense will probably slow down the committee process, but on the other hand it puts someone in DOD who clearly understands this issue.
The entire proposal, of course, demonstrated the extent to which we have lost touch with what is actually happening in the marketplace.
Bill Perry was the first to really understand that with respect to defense technology. Because of rapid technological change, the military has been shifting to commercial products and away from specially designed items. That puts them in the position of relying on civilian producers whose major markets are civilian and export. Those producers win the competitiveness race by staying ahead of their competition, and they do that by plowing their profits back into R&D on next generation products.
That only works if they have profits, which requires exports. Thus, Perry concluded that exporting was a key element of our ability to make advanced defense technologies and the Pentagon’s ability to buy them.
Unfortunately, this Administration has abandoned Perry’s approach and is going down a road that threatens to harm our security rather than enhance it.
- Expanding the deemed export program will drive smart people away – the same smart people that have been the key to our economic success for the past 200 years.
- This is also true of our visa policy for students and others, which is doing exactly the same thing.
- Companies will respond by putting their research labs and other facilities off shore, creating a brain drain away from the
US - This is magnified by episodes like DP World. If we let xenophobia get the best of us, there will be a chilling effect on inward investment that will retard innovation here without affecting the outward investment that will facilitate it offshore.
The threat is similar in the case of the proposed
- The definition of knowledge goes beyond actual knowledge and, in conjunction with the other provisions, creates a far-reaching liability chain.
- The definition of “military end use” is likewise extensive and ambiguous and requires companies to make a very sophisticated judgment about military use that they are not prepared to make and which should properly be the government’s, not theirs.
- The proposed regulation’s application to reexports multiplies the compliance burden and effectively means that exporters of components will have to determine whether their customer’s product is going to a military end use. The reexport provision will reinforce the perception of American firms as unreliable suppliers and further encourage foreign customers to design-out
U.S. - Finally, of the 47 new items listed, none of which had been previously controlled for national security purposes, it appears that a good number of them are not only produced elsewhere in the world, but are produced in
China
None of this is good news. Despite having begun in 2001 with a set of promises to the high tech community and a constructive effort that same year on the EAA, 9/11 and the paranoia it has created dominate the political landscape – a wave the anti-China team is cheerfully riding.
So, what should we do instead? For 50 years no one has disagreed with the premise that we do not want critical technology to fall into the hands of our adversaries. The argument has been over precisely what technology we care about. Even today most of the key actors in this play give the same speech – we want higher fences around a smaller number of items; by trying to control everything, we end up controlling nothing. I’m sure you’ve all heard this speech. I gave it myself many times.
It is still true, but there are several problems with it, the main one being that once you get past nuclear weapons components and stealth technology, there is no agreement on what else should be inside the fence.
To attempt to deal with that, a group of associations, including the NFTC, have formed the Coalition for Security and Competitiveness and announced two days ago a program of administrative reforms that will bring some sense to both the dual use and weapons control programs. Among the dual use proposals are:
- Create a license exception for the transfer of controlled items within companies
- Certify foreign end-users with strong compliance programs for favorable treatment
- Enhance procedural transparency in the licensing process to help companies comply
- Enhance the Commerce Department’s role in the “commodity jurisdiction” process for determining whether dual-use products should be subject to State Department licensing
- Ensure timely updates of the Commerce Control List to reflect market availability
- Expand factors used to determine “foreign availability” of controlled items
- Revise the “re-export” controls to level the playing field for U.S. companies.
The beauty of these proposals is that they don’t require legislation. They are all things the government can do on its own, and we intend to spend the next several months persuading them to do it.
Now let me say a few words about sanctions. My organization believes unilateral sanctions have proven ineffective in virtually every instance in which they have been implemented. Put simply, they do not work and often do more harm than good.
- US sanctions caused a reduction in US exports by nearly $20 billion annually in the mid-90s, contributing to the loss of over 200,000 American jobs in the export sector and nearly $1 billion in lost wages. (Hufbauer/Elliot, IIE – 1997 Paper)
- According to IIE, unilateral sanctions in the 90s achieved the desired results in less than 1 in 10 cases when implemented. (2006 Elliot speech)
History shows us that sanctions rarely work to change behavior. Instead they foster anti-American sentiment, prevent access to vital export markets, and strengthen backing for regimes hostile to the United States while harming ordinary people in the process.
In the face of new threats, unilateral sanctions are reemerging as a way for legislator to signal that they are “doing something” to address important problems in our world. We call this chicken soup diplomacy. It makes you feel better but doesn’t really cure anything.
Let me cite some examples.
IRAN
Our most important and visible unilateral sanctions regime affects Iran. In addition to the domestic sanctions, the Iran-Libya Sanctions Act was amended last year and will likely be the subject of further amendments this year. All this just as we are involved in a sensitive negotiation with the Iranians on their nuclear program.
- Current law calls for sanctions on foreign firms investing in the oil and gas sectors of Iran or exporting certain items that could help them develop weapons of mass destruction.
A bill that would have significantly toughened the sanctions passed the House last year, but thanks to the leadership of Senators Warner, Biden, Hagel and Levin, and to Secretary Rice and the Administration what was ultimately sent to the President only extended the sanctions for 5 years, codified the executive orders already in place and provided for new penalties related to entities contributing to wmd proliferation. The Administration retained flexibility to conduct investigations and waive sanctions. - This year, the more extreme sanctions, which would expand the law to cover banks and other institutions that finance or facilitate the investments or exports and which would broaden the degree corporate parents would be liable for their subsidiaries’ actions – fondly known in Washington as the Halliburton Amendment – will be back, as will proposals for divestment legislation against Iran as well as the provisions from last year’s bill that were dropped. Congressman Lantos recently introduced this legislation as H.R. 1400.
USA*Engage has serious concerns about this kind of legislation.
- The timing is poor; toughening sanctions would poison the ongoing delicate efforts by the United States and its allies to dissuade Iran from embarking on a nuclear program.
- It would take attention away from the behavior of the Iranians and refocus it on the actions of European and Asian companies in Iran, thereby creating divisions between the United States and our allies at the time we need them the most.
- The bills would make the United States more vulnerable to international commercial complaints by expanding the entities subject to sanctions to include insurers, creditors and foreign subsidiaries. The United States would undoubtedly face complaints and lawsuits from our trading partners questioning their legality.
- The bills would limit the ability of the President to conduct foreign policy. By putting a time limit on investigations, they would require sanctions to be imposed or waived. If they’re imposed, we would find ourselves in a difficult situation with our trading partners. If they’re waived, Congress would complain and toughen the law further. This is a sledgehammer approach when a scalpel is called for.
SUDAN
Finally, let me say a few words about state sanctions, which are rearing their ugly head just a few years after we thought we had killed them off at the Supreme Court.
- Seven states have enacted laws regarding public pension fund divestment from companies doing business with Sudan.
- This type of legislation has created a compliance nightmare for pension fund managers and investment banks, while catching a broad swath of U.S. and foreign companies with very tenuous ties to Sudan.
- Indeed, some legislation has identified U.S. firms who are operating legally under U.S. federal licenses as forbidden entities. For example, the Illinois statute would punish US business involvement in southern Sudan and in Darfur, areas where our government has welcomed US investment.
- The situation in Darfur is tragic by any measure. The Sudanese people deserve the attention and help of the people of the United States and our leaders. But actions by individual states are highly unlikely to benefit the people of Sudan.
- Both Congress and the President have spoken on the issue of Sudan. As a result, we believe that state legislative sanctions are unconstitutional. The Supreme Court agreed with us, in NFTC vs. Crosby in 2000 regarding Burma, that where the federal government has acted on an issue of foreign policy, states are preempted. Just two weeks ago federal district court in Illinois also agreed with us and struck down the Illinois statute, using many of the same arguments.
- Simply put, having 50 different foreign policies would severely limit our country’s ability deal with global issues in a constructive and efficient manner.
- The things that will benefit the situation there – such as increased aid or a new peacekeeping force – are hard to achieve. Ultimately, however, they are the only policies worth pursuing – and can only be pursued at the federal level. States cannot let their desire to do good blind them against doing what is right.
Remarks to the National Foreign Trade Council International Human Resources Management Conference, Houston, Texas, March 7, 2007
Remarks to the National Foreign Trade Council International Human Resources Management Conference,
I’d like to begin with some short comments on
- What is
China - Average annual GDP growth of 14.8% since 1988. Still hovering around 10% per year, despite efforts to contain it.
- Global trade has grown from $20.6B in 1978 to $474.3B in 2000 to $1.7T last year.
- After a long period of fairly balanced trade, they are starting to post large surpluses — $177 billion in 2006.
- Total trade makes them 3rd or 4th in the world.
- Total foreign investment grows from essentially zero to over $½ trillion.
- Foreign exchange reserves grow from $20.6B in 1992 to over $1 trillion, largest in the world..
- We estimate $700B of that is in US paper.
- In fact, China is doing what Japan did in the 50s and 60s, what Korea and Taiwan did subsequently, and what
Malaysia , thePhilippines ,Indonesia ,Thailand - In many respects we are mirror images. We buy their products; they depend on our market to grow. They save 40% of their income while we save virtually nothing. We are the world’s largest debtor ($3 trillion plus), while their reserves reach new records.
- So, why are we worried about
China - The easy answer is size. Nobody is too worried about
Malaysia China - The other answer, of course, is politics. While we had many of the same economic worries about
Japan China - This is not a new condition. It has characterized debate in
Washington - The business community likewise maintains some ambivalence toward
China - Size
- Low labor costs
- Work ethic
- Of course, lemming effect
On the other hand, it is enormously frustrating for them:
· Forced technology transfer – creating competitors
· Rule of law issues – theft of company
· IP theft
· Access difficulties if your product is not one they’re particularly interested in. (selective capitalism)
· Exchange rate imbalances
· In short, the Chinese don’t make the relationship easy, and the business community often finds itself in the awkward position of opposing Congressional attempts to “fix” the problems – like last year’s Schumer-Graham amendment – knowing that the concern Congress is trying to address is a legitimate one.
B. Integrating the domestic and the foreign
We are also not very good at understanding what is going on inside
C. China’s future
- In that regard and to oversimplify, there are two general theories on
China
o A government with little legitimacy or inherent credibility maintaining itself by repression and on the strength of its economic growth policies, which will not last forever, no matter how successful they are right now.
o The obligations
o The absence of a rule-of-law tradition and corruption-free bureaucracy, which are fundamental requirements for operating successfully in a globally integrated world, and which will ultimately drive people and money away, particularly in the face of new competition from India. If there is no consistent, effective means of seeking redress, investors ultimately go elsewhere, probably India, no matter how attractive the market.
o A related concern is the growing view that corruption is systemic and not a problem that can be solved through the usual Chinese approach of a national campaign and a few arrests. Party members retain status in their communities through a network of favors and interventions. Take that away and you ultimately take away the reason why people tolerate the Party.
Jim Mann has recently propounded a third theory – that
- We may not know for years how this is going to turn out. And, in fact, the truth is usually somewhere in the middle. Their internal problems are serious and getting worse, and the government has not been consistently skillful in dealing with them. At the same time, many Chinese believe in stability more than they believe in democracy. That may change somewhat as the older generation dies off, but we cannot realistically expect any scenario that will lead to Western-style democracy.
- Even so, the
United States Iraq ,Iran ,North Korea - What we can do, however, is help build rule-of-law, insist on WTO compliance, help with IP protection, and work, in the process, for the development of a more accountable government. That is called engagement, and we do it in significant part via a
U.S. business presence inChina - It is also this Administration’s policy – so far – just as it was the last one’s. That is important to the business community because it is losing patience with
China
· While companies have not joined labor and others in supporting protectionist legislation – and will not – they are impatient for meaningful change and annoyed at the new problems they are encountering.
- On the slightly better news front, there is evidence that our call for China to become a “responsible stakeholder” — based on the idea that their exposure to the West would give them a stake in global stability, promote their own growth and prosperity, and through that help them become a responsible actor on the international scene — has caught Chinese attention and precipitated debate there over what it means, particularly among those who are, at their end, trying to figure out what “Peaceful Rise” means.
The
- Just as
China
- The other danger of overreaction comes from an Administration which is showing growing signs of paranoia about
China
- That latter issue is particularly important. We trade with
China ; we invest inChina ; we visitChina China is the education of thousands of its brightest students – over 60,000 are here right now — many of whom have returned to help their country grow, taking with them Western standards and values that may ultimately produce social and political change inChina
- These regulations suggest a turning of the tide within the Administration in favor of those see security as our paramount consideration, many of whom regard military conflict with
China
- The dilemma of the paranoid is that they can complain all they want about what’s happening, but they have precious few means of stopping it. Are we going to stop trading with
China
- These are unlikely steps. China is, after all, the world’s largest market, and those who think the US can be the world’s greatest military power without simultaneously being the greatest economic power, need a refresher course in economics and globalization, so they understand why closing ourselves off cannot enhance our competitiveness and innovative capabilities.
- Instead of paranoia, the real policy response should not be what to do to
China but rather what to do in theUnited States
- Approaching the problem that way actually gives us some answers. If you have an adversary, or a competitor – and we have defined
China
USA*Engage, NFTC and Other Leading Trade Associations Call for Congress to Reconsider New Iran Sanctions Bill
Letter warns legislation undermines new
Washington, D.C. – USA*Engage and the National Foreign Trade Council (NFTC) today called on Congress to oppose H.R. 957, a bill to impose new U.S. unilateral sanctions on a number of companies in Europe and Asia and that would expand the scope of the Iran Sanctions Act. In a letter to Members of Congress, USA*Engage and NFTC joined other business associations, including the Coalition for Employment Through Exports (CEE), the U.S. Council for International Business (USCIB) and the Organization for International Investment (OFII), to warn that the bill would compromise ongoing diplomatic efforts.
The groups highlighted the potential for legal headaches associated with this type of legislation, which would extend liability for conducting transactions with Iran that are prohibited under U.S. law to subsidiaries of U.S. companies. The associations observed in the letter that “governments could implement blocking statutes and other measures to counteract the threat of
“This type of legislation puts foreign companies between a rock and a hard place – forcing them to comply with often conflicting laws in the U.S. and the country in which they are incorporated,” said Bill Reinsch, President of the NFTC and USA*Engage Co-Chair.
The groups argued that the bill would “undercut – not support – ongoing diplomatic efforts to increase worldwide pressure on
“If enacted, H.R. 957 would damage our relationship with our allies at a time when we need them to generate strong multilateral pressure on
“The Administration’s intentions to participate in regional talks with
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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 Applauds District Court Ruling in Illinois Sudan Sanctions Case
Washington, DC - The National Foreign Trade Council (NFTC) released the following statement in response to today’s ruling by the Federal District Court for the Northern District of Illinois to deem the Illinois “Act to End Terrorism and Atrocities in the Sudan” unconstitutional.
“We are very pleased that Judge Kennelly agreed with us that the Illinois Sudan Divestment Act is unconstitutional and has enjoined the state from enforcing it,” said NFTC President Bill Reinsch. “The judge has written a lengthy opinion, and we will have to study it carefully before commenting in detail.”
On August 7, 2006, the NFTC and eight boards of Illinois public employee pension funds filed a lawsuit (NFTC v. Topinka) in challenging the constitutionality of the Illinois Act.
NFTC retained law firm Winston & Strawn, LLP, to litigate the case.
The NFTC lawsuit followed the precedent set in the U.S. Supreme Court’s 2000 decision in Crosby v. NFTC, in which the Court struck down sanctions enacted by Massachusetts on Burma. In that decision the Court ruled that if the federal government has enacted sanctions on a country, state and local governments are preempted from imposing sanctions of their own.
As Reinsch stated when the lawsuit was filed in August, “NFTC supports the efforts of the Bush Administration to bring peace to Sudan and to end the brutality that has been occurring in Darfur,” said Bill Reinsch, president of NFTC. “However, state sanctions, like those enacted by the state of Illinois, work at cross purposes with federal policy. That is why the Supreme Court ruled as it did in 2000 and why we brought suit under that precedent,” said 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
NFTC Lauds New U.S.-Mexico Cross Border Trucking Pilot Program
“The cross-border trucking pilot program will encourage expansion of an already robust trading relationship with
Currently open access is restricted to the commercial zones adjacent to the border. This program will allow access to all of both countries although it only covers international cargo and hazardous material will be prohibited. After one year, a review of the pilot program will occur, and barring no problems, both governments will go forward with full NAFTA implementation of cross border trucking.
“We believe that trade produces the best returns for the
In 2006,
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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
Summary of House Committee on Financial Services Hearing on H.R. 556
On February 7th, the House Committee on Financial Services held a hearing on H.R. 556 “National Security Foreign Investment Reform and Strengthened Transparency Act of 2007” which proposes reforms to the Committee of Foreign Investment in the United States (CFIUS) investment review process. Those at the hearing included Chairman Barney Frank (D-MA), Rep. Carolyn Maloney (D-NY) and Rep. Adam Putnam (R-FL). The witnesses testifying before the Committee included Clay Lowery, Assistant Secretary of the Treasury, David Heyman, Director of the Homeland Security Program at the Center for Strategic International Studies, Michael O’ Hanlon, Senior Fellow at the Brookings Institution and Todd Malan, President and CEO of the Organization for International Investment (OFII).
The Committee agreed that after the Dubai Port World controversy, CFIUS needed to reform the review process of investment transactions and improve the means of communication between the different branches of government. The U.S. needs to protect national security but at the same time maintain our open market for incoming foreign investment. When reviewing cases, CFIUS focuses its attention on the country, type of investment, and the national security implications of the transaction. Lowry told the Committee that using these criteria should not necessarily deter investments from countries that might raise national security concerns.
The consequences of not getting this right are significant. Todd Malan indicated that the benefits of incoming investment include foreign subsidiary company employment of 5.1 Americans in all 50 states, 31 percent of the American workforce concentration in subsidiary companies within the manufacturing sector, and subsidiaries’ reinvestment of 59 billion dollars of profit into their U.S operations. He stated, “Global companies want to invest in the United States because of the size of our market, the quality of our workforce, and the certainty and predictability of our local regime.” In order to retain investments and attract more in the future, CFIUS must reform its reviewing process.
The bill contains a number of provisions agreed upon by the Department of Treasury with Congress; including Congressional Committee briefings on cases that fall under the Exon-Florio amendment, notification to senior policy officials within CFIUS agencies to ensure accountability, efficient communication and reviewing process, and notifying parties involved in the transactions of all procedures. Secretary Lowery discussed the importance of foreign investment to the U.S economy and noted that the controversy over DP World “coupled with some troubling signs that other countries are pursuing trade barriers to foreign investment, and increasingly negative media coverage of the U.S. investment climate, underscore the need to improve and reform the CFIUS process.”
Last year, the number of CFIUS filings increased by 73 percent, investigations increased by 350 percent, and company filing withdrawals from CFIUS by 250 percent. Mitigation agreements, conditions imposed on companies, tripled last year, led by the Department of Homeland Security which conducted “an average of 4.5 mitigation agreements per year between 2003 and 2005” and fifteen in 2006. The heightened interest in the CFIUS process was a response to the Dubai Port World controversy and the criticism expressed by the public and elected officials over initial CFIUS approval of that transaction. As O’Hanlon pointed out, the UAE “recognized the Taliban government of Afghanistan, [that it was] the country of origin for two 9/11 hijackers and a nexus for much of the funding needed to organize that plot. […] these concerns were at least partially counterbalanced by the fact that the UAE has become a responsible player in port security…” Because of these concerns, many members of the House and Senate were uneasy about foreign ownership of US port facilities and focused on means of improving the CFIUS process so similar cases would be less likely to recur.
The Department of Treasury, the Bush Administration and Congress view foreign investment as essential to economic growth and job creation; conversely, protecting U.S. national interests may conflict with foreign investment as did Dubai Port World. David Heyman argued that the importance of H.R. 556 rests on being able to attract foreign investment without at the same time not creating lengthy and problematic CFIUS procedures that many investors would view as a deterrent to such investment.
