On Monday, January 31st, and Tuesday, February 1st, 2022, WITA hosted its fourth annual Washington International Trade Conference (WITC). This conference brought together leaders in international trade from across the U.S. and around the world to explore the trade landscape and look toward the future of trade.

 Secretary-General Mathias Cormann, Organization for Economic Co-operation and Development (OECD)

Moderator: Ambassador Kristen Silverberg, President & COO, Business Roundtable; former U.S. Ambassador to the European Union 

Aik Hoe Lim, Director, Trade and Environment Division, World Trade Organization

Kelly K. Milton, Assistant U.S. Trade Representative, Environment and Natural Resources

Ambassador Gloria Abraham Peralta, Costa Rica’s Permanent Representative to the World Trade Organization, Co-Chair, Trade and Environmental Sustainability Structured Discussions (TESSD), World Trade Organization

Moderator: Sarah Stewart, Executive Director, Silverado Policy Accelerator; former Deputy Assistant U.S. Trade Representative, Environment and Natural Resources

Angela Ellard, Deputy Director General, World Trade Organization

Moderator: Ambassador Rufus Yerxa, former Deputy U.S. Trade Representative; former Deputy Director General of the World Trade Organization

Amy P. Celico, Principal Albright Stonebridge Group | Dentons Global Advisors; former Senior Director for China Affairs, Office of the U.S. Trade Representative

Wendy Cutler, Vice President, Asia Society Policy Institute; former Acting Deputy U.S. Trade Representative

Bonnie Glaser, Director of the Asia Program, German Marshall Fund of the United States

Samm Sacks, Senior Fellow, Paul Tsai China Center & New America, Yale Law School

Moderator: Erin Ennis, Vice President, Global Public Policy, Dell Technologies

Ambassador Kirsten Hillman, Canadian Ambassador to the United States

Ambassador Tomita Koji, Japanese Ambassador to the United States

Ambassador Stavros Lambrinidis, European Union Ambassador to the United States

Moderator: Ambassador Susan Schwab, Strategic Advisor, Mayer Brown LLP; former U.S. Trade Representative

Orit Frenkel, CEO, American Leadership Initiative

Ed Gresser, Vice President and Director for Trade and Global Markets, Progressive Policy Institute (PPI)

Jeffrey Kucik, Associate Professor, School of Government and Public Policy at University of Arizona

Chad Thompson, Executive Director for Legal Affairs & Trade, General Motors

Moderator: Sarah Thorn, Senior Director of Global Government Affairs, Walmart

Jon Gold, Vice President of Supply Chain and Customs Policy, National Retail Federation

Phil Levy, Chief Economist, Flexport

Penny Naas, President of International Public Affairs and Sustainability, UPS

Maria Zieba, Assistant Vice President of International Affairs, National Pork Producers Council

Moderator: Ana Swanson, Correspondent, New York Times

Ambassador Sarah Bianchi, Deputy U.S. Trade Representative

Moderator: Ambassador Robert Holleyman, Partner & President & CEO, Crowell & Moring LLP and C&M International; Former Deputy U.S. Trade Representative

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On Thursday, April 9, WITA co-hosted a webinar with the Asia Society Policy Institute on the next steps in the effort to remove trade restrictions on essential goods, especially medical equipment and supplies, in the face of the COVID-19 crisis.

• Ambassador Darci Vetter, Vice Chair, Agriculture, Food, Edelman
• Wendy Cutler, Vice President and Managing Director of Washington D.C. Office, Asia Society Policy Institute
• Sabine Weyand, Ph.D., Director General for Trade, European Commission
• Ambassador Alan Wolff, Deputy Director-General, World Trade Organization (WTO)

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• Wendy Cutler, Event Cohost, Vice President and Managing Director of Washington DC Office, Asia Society Policy Institute
• Colin Bird, Director of Trade Negotiations (Multilateral and Americas) at Global Affairs Canada | Affaires Mondiales Canada
• Brody Sinclair, Trade & Economic Counsellor, New Zealand Embassy to the United States
• Julia Nielson, Deputy Director, Trade and Agriculture (OECD)

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At an event on October 30, 2019, WITA held an event to discuss how the US government is implementing new laws on foreign investment and export controls on emerging and foundational technologies, as well as the Trump Administration’s Executive Order on Securing the Information and Communications Technology and Services Supply Chain.

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Featuring:

Ambassador Darci Vetter, Former Chief Agricultural Negotiator, USTR; Vice Chair of Agriculture, Food and Trade, Edelman

David Dollar, Senior Fellow, Brookings Institution’s John L. Thornton China Center

Bonnie Glaser, Senior Advisor for Asia and Director, China Power Project, CSIS

David Goldman, Principal, Asia Times

To view more details about the event, visit the event page here.

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Summary: Introduction and Armchair Discussion with Rep. Kevin Brady

By Nikhil Raj

On Tuesday January 29, 2019, WITA hosted its inaugural Washington International Trade Conference (WITC). To kick off the event, WITA hosted an armchair discussion between Representative Kevin Brady and Ambassador Susan Schwab. Representative Brady currently sits as the Ranking Member of the influential House Ways and Means Committee, while Ambassador Schwab served as the United States Trade Representative under the Bush Administration from 2006-2009.

During the approximately 25 minute conversation between the two, several key topics in the trade world were discussed, including the recently agreed upon USMCA deal, US-China negotiations, and the future of US-EU trade relations.

Representative Brady was forceful in his defense of USMCA, saying that he believed it should be approved, citing its improvements in digital trade, customs, and locking in reforms on telecoms compared to its predecessor, NAFTA. That said, he was cleareyed about the fact that it would be a turbulent road to reaching that approval. In particular, he acknowledged that many Democrats were adamant about higher enforcement mechanisms in the deal for labor standards. Brady also mentioned that he had begun the process of briefing other members of Congress about what the deal entails alongside Vern Buchanan, who sits as the lead Republican on the Subcommittee on Trade.

Brady wondered aloud what Democrat demands would look like, while also making it clear that most members on either side of the aisle were ambivalent about moving forward with the deal while steel and aluminum tariffs on Mexico and Canada are ongoing. In his view, the USMCA deal was strong enough to stand by itself without any separate tariffs or quotas.

Rep. Brady was also broadly supportive of the President’s focus on challenging China on trade issues. Referencing the “Made in China 2025” strategic plan that the Chinese government is undergoing, he believed that structural reforms had to be made in the US-China relationship. While he was critical of China’s trading habits, he did not the importance of product exclusion within the larger framework of a trade deal in order to cause as little pain as possible within the global economic outlook. The main objective, he said, is to minimize the damage caused by an extended trade war while also accomplishing measurable reforms.

The conversation then switched to Europe, and the future of a potential US-EU trade deal. Brady was pleased to see President of the European Commission Jean-Claude Juncker visit the White House and President Donald Trump, a man with whom he has had a sometimes contentious relationship. From a US standpoint, he believed a trade deal with Europe that didn’t include agriculture would not be an easy sale to the American public and members of Congress.

With regards to Brexit, and the ongoing political turmoil surrounding its terms in the United Kingdom, Rep. Brady made it clear that he wants to see an unconstrained trade relationship with one of the US’ closest allies no matter what happens. Finally, he touched on the future of the WTO, and expressed his support for working on tangible improvements.

Featuring:

Andrew Gelfuso, Vice President, Trade Center Management Associates

Kenneth Levinson, Executive Director, Washington International Trade Association

Laura Lane, President of Global Public Affairs, UPS

Ambassador Susan Schwab, Strategic Advisor, Mayer Brown

Representative Kevin Brady, Ranking Member, House Ways and Means Committee

To view more details about the event, visit the event page here.

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WITA held an event where an expert panel discussed developments in National Security and International Trade. They specifically addressed how Congress is working to rewrite the laws concerning foreign investment and export controls, and how new and renewed sanctions are in place against countries such as Iran and Russia.

National Security & International Trade: Overview

By Oliver Colletti and Matthew Style

Introduction

On Tuesday September 18th, The Washington International Trade Association held a panel discussion on the new proposals by Congress to address national security concerns over foreign investment as well as a discussion on on-going sanctions imposed by the US on other countries. The event was broken up into three discussions, first a keynote address from Heath Tarbert, the Assistant Secretary for International Markets and Investment Policy at the United States Department of Treasury. The ensuing panel was a discussion centered around changes in provisions around foreign investment and CFIUS reform. The event concluded with a panel discussion regarding provision of sanctions against countries who may be deemed national or global security threats.

Keynote Address

WITA had the great pleasure in hosting Assistant Secretary Heath Tarbert to discuss how the Department of Treasury, as well as Congress, was responding to the changing climate around foreign investment. Tarbert was joined by David Marchick, who served as a moderator in a sit-down discussion between him and the Assistant Secretary. Heath Tarbert began with an introduction of the Committee on Foreign Investment in the United States, otherwise known as CFIUS. He cataloged the changes to CFIUS by the Foreign Investment Risk Review Modernization Act (FIRRMA) signed into law by President Trump.

This change was born by the need to update how we approached Foreign Investment as there has been both an increase in the quantity and variety of cases under review within the last couple of years. He notes that relevant cases are no longer the prototypical instances where foreign actors invest in companies used for military procurement and contracting but now companies such as Silicon Valley tech firms can pose security concerns given the overlap of usage of goods between military and commercial usages. Given these changes in the landscape of investment and technological change, there has been a great need to update CFIUS.

FIRRMA achieves this by both strengthening and modernizing CFIUS. It helps to strengthen CFIUS by giving authority to review a wider variety of transactions while still maintaining an overall open investment environment. This includes investigating real estate and land purchases which may pose a threat to critical national infrastructure such as seaports, airports, and military bases. It also allows for the ability to monitor firms which has sensitive information or technology to make sure they are not compromised. With an eye towards modernizing, FIRRMA changes the process by allowing investors and firms to submit a five-page declaration form opposed to much lengthier paperwork, increase the review time limit from 30 days to 45 days to give CFIUS and the intelligence community more time to thoroughly investigate, as well as give CFIUS hiring authority to recruit top talent to review cases.

Discussion with David Marchick

Assistant Secretary Tarbert further outlined what the process would look like in the implementation on FIRRMA. This included formulating rules and programs within the next 18 months to have an effective program, in the meantime testing pilot programs. When asked if these new restrictions were going to be aimed at China or any specific country, Tarbert emphasized that the goal of FIRRMA is to, “build an investment regime which lasts for the 21st Century” opposed to targeting any one country. He noted that the US has long held an open investment policy, welcoming all investment as long it does not pose any national security threats.

As the environment changes due to this legislation, Tarbert notes that there will an uptick in the number of cases which CFIUS will review but the exact increase will be determined by the rules as they work towards an ideal process of detecting credible threats to national security without inhibiting the market. This is seen in the provision of language to specify critical technology transfers in joint ventures as well as using the new declaration process to move cases through quickly which clearly do not pose a threat to national security to avoid any slowdowns in the investment landscape.

Panel 1: Investment and CFIUS Reform

On Tuesday, September 18th, the Washington International Trade Association held an event discussing developments in National Security and International Trade. Specifically addressing how Congress is working to rewrite the laws concerning foreign investment and export controls.

The distinguished panellists, who addressed the first topic of Investment and CFIUS reform, consisted of Clay Lowery, Nancy McLernon, Chris Padilla, and David Marchick.

The discussion started with Clay Lowery, who serves as the Assistant Secretary for International Markets and Investment Policy, U.S. Department of the Treasury. Lowery begins the conversation by commenting on how U.S. Trade Policy negotiators are facing the most difficult economic landscape in recent decades. Lowery’s experience working with CFIUS meant he was able to provide confident insight on issues that may be faced when working towards reforms. He noted that 25 years ago the most strenuous part of CFIUS reforms was going through the interagency process. He believes these difficulties will resurface with the reforms occurring over the next 18 months. Lowery comments that the FIRRMA reforms are largely benefitting both U.S. Industry and Government, due to new legislation counteracting the lengthy CFIUS refiling process, as CFIUS now has 10 days to accept or decline, meaning a more streamlined process for foreign goods. Lowery also comments that, “Information exchanging between allies is going to be a very positive thing”, as it will help make the CFIUS process easier, and encourage foreign direct investment into the U.S. Clay Lowery finalised his talk by addressing what he deemed the toughest issue surrounding the reforms, which was how to define goods under CFIUS. He described how technological advances have left CFIUS outdated, with the likes of critical infrastructure, critical technology, and sensitive personal data not being defined under current CFIUS legislation, which could cause long endured difficulties for those working with these goods.

Next to speak was Nancy McLernon, the President & CEO for Organization for International Investment. McLernon focused her discussion on the benefits of Foreign Direct Investment, and why the CFIUS reforms are imperative for supporting U.S. workers and industry. McLernon described the impact Foreign Direct Investment has on the U.S. economy. Examples of this included the 6.8 million workers across the U.S. that receive a paycheck from international company, and that 54% of new manufacturing jobs in the U.S. are created by International Companies. McLernon believes that if there is to be a resurgence in U.S. manufacturing it will be from international companies coming to the U.S., and therefore CFIUS reforms must occur to make this process easier, as to encourage these companies to migrate. Nancy McLernon made it clear that herself, as well as the Organisation for International Investment, were indefinitely in favour of CFIUS reforms. To support this statement, she remarked, “They need to implement FIRRMA in a way that leaves the U.S. open for FDI, as it makes the U.S. more resilient, it puts foreign companies and companies on the same side of the Economic Ledger as the U.S., and it is an enormous boost to the U.S. workforce.”.

The panel was finalised by Chris Padilla, who serves as the Vice President of IBM Government and Regulatory Affairs and was the Former Under Secretary for International Trade for The U.S. Department of Commerce. Chris Padilla spoke mostly on how the CFIUS reforms signified that complex issues could be solved successfully on a bipartisan basis. He gave much credit to Chairmen Royce and Engel, for the remarkable accomplishment of leading the first modernisation on export controls in decades, and stopping the President instating IEPA to impose blanket sanctions on China. Padilla spoke strongly on how these sanctions would’ve caused the largest expansion of unilateral export controls in 70 years. He then explained how the introduction of the proposed laws would mean CFIUS would review inbound investment in U.S., as well as outwards ventures. Padilla then asserts that this would have been detrimentally unilateral, as they would’ve stopped U.S. companies from investing technology abroad. He continued this by saying those who testified against these changes, including himself and the other panellists, were told they were therefore against National Security, making it a strenuous battle to stop the bill. Chris Padilla finalised the panel by declaring the overall process a success, as the updated CFIUS bill strengthened both CFIUS and Export Control, and the process, “avoided (an) outcome that could’ve been much substantially worse, completely unilateral, and it could’ve significantly discouraged investment in this country”.

Panel 2: Sanctions

The final discussion of the day revolved around the ever-changing landscape of diplomacy and how the role of sanctions factored into national security and specifically trade. This panel had the privilege of hosting years of expertise within both the public and private sector to weigh in on the strategy and potential outcomes of sanctions. Guiding this discussion was Bill Reinsch, Senior Advisor and Scholl Chair in International Business at the Center for Strategic International Studies. He began the discussion with a few brief concerns surrounding sanctions such as collateral damage delivered by sanctions, as well as complexity in language posing potential compliance issues, which the panel followed up providing great insight.

Brian Fleming began the panel discussing both his current and past roles in observing the impact of potential complexity in sanction compliance on behalf of firms. Fleming, a member at Miller & Chevalier, previously served as the Counsel to the Assistant Attorney General for National Security at the Department of Justice. He began to discuss the impact such as recent one-year-old legislation, the Countering America’s Adversaries Through Sanctions Act (CAATSA) which targeted countries such as North Korea, Iran, and Russia. As the sanctions are being put in place, even the most well-meaning companies are finding it difficult in maintaining compliance with the expanded sanctions of Russia. He notes that given the provision of secondary sanctions being imposed on those who engage in significant transactions with the targets, there are many questions asking what constitutes a significant transaction. The murkiness of this criteria has led to uncertainty for both financial institutions and supply chains, many of which are starting to lower risk by avoiding dealings with those who could end up on sanctions lists.

As for the sanctions reinstated on Iran after the US leaving the Nuclear Treaty, Fleming noticed that many firms beginning to wind down activity by subsidiaries within Iran due to provisions to sever those relationships under the sanctions. Much of this desire to wind down dealings is for firms to both maintain image and manage risk.  many though have found the winding down process to be complex and challenging as well given different contractual agreement which may be already in place. By and large the regulators are expecting corporations to self-police and to a large extent Brian sees that happening now.

The next discussant, Peter Harrell, is an Adjunct Senior Fellow at the Center for New American Security. He recounted both his time working in the Obama Administration to the empirics we now see of the Trump Administration, that there is an increase in the use of tariffs to achieve objectives. The administration has shown an interest in unilateral action while they have had some instances of utilizing multilateral action, but they appear content on using unilateral. As for the “Russian oligarchs” sanctions, the Trump Administration was a little surprised by aluminum price spikes as well as other unintended costs. Through general licenses agreements, they have mitigated the collateral damages for the most part. Brian earlier mentioned the role of unintended consequences from these tariffs and the uncertainty delivered by expiring general licenses.

Harrell than delved into the role of Congress in actions. Recent events have shown an active participation on behalf of Congress on sanctions imposed on Russia. After the election as we get into the next legislative session he thinks that Congress imposes another round of sanctions on Russia. As for enforcement of sanctions, OFAC is engaging in several enforcement actions over the years and for the most part they appear to be reasonable. Many OFAC fines are typically in the hundreds of thousands of dollars but the figures do not appear to be two extreme. This may encourage companies to self-police into compliancy without imposing a burden on them. Another difficulty within this space is that OFAC is entering some markets such as aluminum where they do not have a great deal of experience. As a result, they are grappling with issues such as supply chains which they have not been exposed to much in the past.

Our final speaker of the day, Suzanne Maloney, Deputy Director of Foreign Policy at the Brookings Institute, rounded out the group. She focused specifically on the sanctions imposed on Iran, cataloging the history of sanctions imposed on Iran for decades and what these sanctions look like in the present. She notes that due to size of Iran’s energy market, many allies avoided sanctions on Iran as the US unilaterally opts for action against Iran. This in turn has created some pressure between the US and allies. Today we see a disconnect between the US and the rest of the world towards Iran. Many analysts believe that unilateral approach is that we would be ineffective. The US market has responded to pressure by rapidly wind down from dealing with Iran as “businesses are voting with their feet”. She argues that some of our allies wanted to preserve the deal to maintain economic ties but still find economic incentives to encourage Iran to avoid constructing nuclear weapons. Concluding that moderate results with limited damage only increases the infatuation with the use of sanctions. Observing that the Trump administration plans on using sanctions more openly and total restrictions in a quick rate, while the Obama administration sought tactical sanctions and slowly move in on Iran. China and India have not been encouraged to go to zero, but Japan and Korea have started moving towards the maximalist zero. Many see this as a success of the tariffs as there has not been blowback in the oil markets the first time around.

The strategy of the sanctions has failed, sanctions are a policy tool not the policy themselves. Asking do they want Iran to capitulate on all of 12 Secretary Pompeo’s demands? Does President Trump expect Iran to come back to the table? The use of sanctions combined with reneging on the nuclear deal with Iran has made Iran reluctant to negotiate. Noting a possibility is that the administration wants to pressure Iran for the sake of applying pressure, or they want a regime change which Iran will not negotiate. Negotiations are unlikely to solve Iranian economic short-run problems, and they do not have many places to maneuver. Her final points were that the possible avenue of response from Iran is retaliation, especially within the military realm to express disapproval with the status quo. This in turn could yield collateral damage towards US and allied interests.   

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