Category Archives: Policy

Bilateral, Shmilateral

An unexpected, at least by me, turn of events in the trade policy landscape is the Trump administration’s announced preference for bilateral rather than plurilateral (TPP) or multilateral (WTO) negotiations. While it is encouraging to learn that they are in favor of negotiating — there was some doubt about that after statements made during the campaign — there are four reasons why they have seized on the wrong strategy.

First, bilaterals are inefficient. These days, with the low hanging fruit of tariff reductions already largely picked, our negotiations are mostly about rules. Indeed, our anticipated gains in TPP related primarily to improvements in IP protection, rules for digital trade, and disciplines on state owned enterprises. Those are all disciplines that an economy of innovation like ours needs to defend itself. By promoting them collectively in a plurilateral framework we not only establish rule of law but rule of our laws which will stand us in good stead competitively. Proceeding bilaterally means, in the case of TPP, having five negotiations rather than one (there are five TPP members with whom we do not already have an FTA), and, potentially, five different sets of rules which may not be compatible with others — a nightmare for business compliance and government enforcement.

Second, a plurilateral negotiation means a bigger pie to share. Given our relatively open economy, we may not have much to offer a bilateral partner in return for what we are asking, but in a larger framework countries can calculate gains from more than one source. In addition, we have learned from experience that countries might be prepared to concede things in a larger group that they are not prepared to concede directly to the Americans. We are not the only country with domestic politics, and for many countries standing up to the Americans is good politics, whereas being the outlier in a group effort that includes regional friends is not.

Third, the premise that we get our pockets picked in plurilateral negotiations is simply wrong. If you talk to current and former negotiators you will learn that the process does not consist of the U.S. lurching from party to party making separate concessions. While some issues may be negotiated bilaterally because they are of specific concern to only two countries, most reflect a collective effort in which countries calibrate their offers to what they can get from all the members of the group rather than a single member.

Fourth, leverage with sovereign countries is not the same as leverage with other real estate developers. The argument for a bilateral negotiation is, apparently, that because we are big and the other guy is small, we can push him around and get our way. Of course, the other guy is not always small — witness China, Japan, India, and Brazil — so the premise is flawed from the beginning. Even if our partner is small, however, we should have learned from past negotiations that sovereign nations dance to their own tune, even to the point of making decisions that might not be in their long term interest but which are unquestionably in their short term political interest. If the administration continues its predilection for offending world leaders, it will find that not having any friends makes a difference in trade negotiations as well as other aspects of diplomacy.

Finally, if you want to see both irony and hypocrisy at work, pay attention to the looming NAFTA negotiations. The administration has recently started talking about upgrading NAFTA by addressing issue like digital trade and state-owned enterprises that were not covered in the original agreement. Good idea. The business community has been urging that for months. But where will the language for those “new” provisions come from? In all probability, from TPP, where the topics were thoroughly addressed. So, it appears we are going to take a “terrible” agreement — NAFTA — and fix it by adding language from an even worse agreement — TPP. This would actually be a smart thing to do, but it will be interesting to watch our negotiators explain it with a straight face.

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William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative. This piece was originally published here on March 15, 2017.

Border Adjustment Tax – Australia Tax Alert

This article was written by Betsy-Ann Howe (AmCham Taxation Commitee Member), Rebecca Bolton and Mary Burke Baker from AmCham Premium Member K&L Gates. It is republished with permission.

DOING BUSINESS IN AMERICA?

The House Republicans have proposed sweeping changes to the U.S. tax system, specifically that income from the export of goods, services and intangibles will not be subject to federal income tax, and that the cost of such imports into the U.S. will not be deductible. By incentivising exports and deterring imports, the proposed “Border Adjustment Tax” (BAT) is intended to increase domestic production, strengthen the U.S. economy and create new jobs, and deter corporate inversions and erosion of the U.S. tax base. It also is estimated to pay for approximately one-third of the cost of the Republicans’ comprehensive tax reform plan – known as the “Blueprint” – of which the BAT is a major component.

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High-Skilled Business Immigration under Trump

As President Trump delivers a host of Executive Orders on immigration, AmCham member Berry Appleman & Leiden LLP’s article below is worth reading for any individual or organisation wishing to know more about how the Trump administration’s immigration policies will affect business. You can follow all the latest updates through BAL here.

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Trump: Campaign Promises and Priorities

Innauguration (2)

During the campaign, Trump issued a 10-point plan for overhauling the immigration system. The plan focused on building a wall along the US-Mexican border and other enforcement measures, but Trump also called for a reduction of legal immigration and new “immigration controls to boost wages and to ensure that open jobs are offered to American workers first.” Based on his stump speeches and the positions he took during the primary and general election debates, Trump is expected to focus on the following priorities:

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High-Skilled Immigration Policy Under President Trump

Donald Trump’s surprise victory in the presidential election has upended the political and policy landscape for immigration. It will still fall to Congress to make substantial changes to the immigration system, but the Trump administration will have authority to reshape the lives of hundreds of thousands of unlawful immigrants and influence the ability of US companies to access and retain highly-skilled foreign workers. This paper explores how the Trump administration will approach the issue of immigration and analyses how administrative reforms will impact US companies.

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Focus on trade facilitation: A single window for trade in Australia

With US President-Elect Donald Trump promising to withdraw the US from the TPP, now is a good time to shift our focus to other trade facilitation measures that have been developing in the background. One of these is the implementation of a Single Window for trade. What is it, why is it important to know about it and how will it affect trade?

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U.S.-Australian Business Community Starts Final Push For TPP Vote With Capitol Hill Outreach

This article was written by Jenny Leonard, Associate Editor at Inside U.S. Trade. It originally appeared here

The American Chamber of Commerce in Australia is beginning a final push for a lame-duck vote on the Trans-Pacific Partnership, with global CEOs attempting to convince U.S. lawmakers of the agreement’s overall benefits despite individual provisions that might have left some members “disappointed” — and warning that the window for passage of the deal is closing rapidly. Continue reading