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ABoUt APCAC
The asia-Pacific council of american chambers of commerce (aPcac) was founded in 1968 as a way for the now 27 american chambers of commerce in 21 economies spanning asiaPacific to address issues of mutual concern and share best practices. aPcac represents the growing interests of over 10,000 business entities and over 50,000 business executives in the region. The aPcac membership manages trade volumes in excess of US$400 billion and direct investments (fdi) of over US$200 billion. for more information, please see www.apcac.org.
Contents
1 2 3 4 6 8 11 12 13 leTTer from The aPcac chairman execUTive SUmmary i. inTrodUcTion: harneSSing aSian bUSineSS for global growTh ii. Key recommendaTionS for aPec 2011 iii. Key recommendaTionS for The TranS Pacific ParTnerShiP in 2011 iv. naTional exPorT iniTiaTive v. conclUSion aPcac chamberS and aSSociaTe memberS acKnowledgemenTS
APCAC Secretariat c/o AmCham Hanoi M Floor, Business Center Hilton Hanoi Opera No. 1 Le Thanh Tong Street, Hanoi Vietnam
May 2011
Sincerely,
executive suMMary
2011 marks the convergence of the U.S. Chairmanship of APEC, U.S. negotiation of the TPP, President Obamas call for Congress to approve the U.S.-Korea free trade agreement, and a National Export Initiative (NEI) focusing on key markets such as China, India, Indonesia, and Vietnam. This is an ideal time to deepen these partnerships and encourage U.S. businesses to take advantage of the growing markets, as expansion into Asian markets means more exports of American products and more jobs in the United States. We recommend: The U.S. Government continue increasing its engagement in Asia-Pacific to keep U.S. businesses competitive in the region in order to export American products and services, and increase jobs. The U.S. Government continue to play a leading role in APEC in 2011 and beyond by continuing to encourage other economies to work together to accelerate regional integration, harmonization, and reduction in barriers to trade; advocate for formation of a Free Trade Area of Asia-Pacific; and implement the APEC Business Travel Card for U.S. Professionals. The U.S. Congress ratify the U.S.-Korea Free Trade Agreement and provide President Obama with Trade Promotion Authority. Both will be key to proving that the United States is committed to free trade. The U.S. Government and TPP Partners work to complete negotiations on a comprehensive TPP Agreement by the APEC summit in November, consult with the private sector throughout the process, and include initiatives upon which APEC has achieved consensus in the agreement. In support of the NEI, the U.S. Government increase resources for the Foreign Commercial Service, amend tax policies to make American citizens working abroad competitive compared to other expatriates, assist Small- and MediumSized Enterprises (SMEs) and sectors with high potential growth, and continue to fight for market access and a level playing field for U.S. companies in Asia.
ii. key recoMMenDations for Driving aPec anD increasing engageMent witH asia in 2011
The APEC forum is an increasingly vital organization for the development of trade, investment, and regulatory architecture in the Asia-Pacific region. As host in 2011, the United States has the opportunity to develop an ambitious and forward-looking agenda to lead APEC in a more results-oriented and productive direction one that will provide tangible benefits to member economies, businesses, and workers. APCAC encourages the U.S. Government to use APEC as forum for continuing to promote regional economic integration; trade, investment, and financial liberalization; innovation; and regulatory and standards harmonization. We believe that continued progress in these areas can help boost U.S. exports, sustain employment, and lead to significant new job creation over time. ratify the u.s.-korea (korus) fta: The swift ratification of KORUS FTA will substantially benefit U.S. businesses operating in Asia-Pacific and also demonstrate U.S. commitment to trade liberalization in Asia-Pacific. The U.S. International Trade Commission has estimated that KORUS will boost U.S. exports by $10-$12 billion a year and create 70,000 jobs. As the Korea-EU FTA goes into effect on July 1, 2011, further delay on the KORUS FTA will mean certain loss of market share across sectors. implement aPec Business travel card (aBtc) to promote free flow of professionals: During the United States term as leader of APEC in 2011, APCAC urges Congress to pass legislation to enable the Department of Homeland Security to extend ABTCs to Americans. This act will increase the competitiveness of American businesspeople abroad by giving American business travelers reciprocal treatment in participating countries. Pursue regional economic integration and harmonization: The 1994 APEC Bogor Goals for trade liberalization have contributed to significant progress for APEC economies. Going forward, governments of APEC member economies should build consensus on a new set of goals and policies to promote regional economic integration and free trade and investment among the member economies. Harmonizing standards and procedures within APEC by exchanging best practices, better harmonizing product standards and conformity assessment procedures, and enforcing regulations will cut compliance costs and further foster development of a truly regional market. To further economic integration, APEC should promote open trade and investment and more rigorous pro-competition laws and enforcement to counter behind-the-border barriers to trade, such as protectionist competition policies, stifling investment rules, and technology mandates.
Place priority on the formation of the free trade agreement of the asia-Pacific (ftaaP): APEC countries should build on the TPP to take concrete steps toward the long-term APEC goal of negotiating a high-standard, World Trade Organization (WTO) Plus FTAAP. The FTAAP concept goes beyond market access and would also address market integration issues including the facilitation of the movement of goods and services, regulatory reform, and standards harmonization. supply chain connectivity: Customs is still the primary chokepoint for supply chains. APCAC urges the United States and APEC economies to leverage the APEC Supply Chain Connectivity Framework to test cutting edge best practices to enhance the regional flow of cross-border goods. These include the adoption of a competitive de minimis threshold waiver, the adoption of a competitive timeframe for the provision of advanced regulatory information, and measures that represent a balance between trade security and trade facilitation. environmental cooperation: APEC Leaders recognize the importance of mitigating climate change through transition to green economies in a manner that is consistent with international trade obligations. We encourage APEC to develop its Green Growth strategy to foster freer trade in environmental goods and services, convergent and meaningful energy efficiency standards, and to promote green technology such as regional smart grids. A key aspect of this strategy is the APEC Environmental Goods and Services (EGS) Work Program, under which APEC member economies will develop and implement a set of concrete actions to support the environmental goods and services sector. APCAC believes that the promotion of EGS and climate-friendly technologies have the potential to drive significant economic and new job growth for all APEC member economies. small- and Medium-sized enterprises (sMes): Governments across APEC should embrace the concept of inclusive growth and ensure that increased growth and regional connectivity benefit all businesses, large and small. APEC should continue capacity building efforts aimed at SMEs, such as the new Business Ethics for APEC SMEs initiative that was established in 2010, and should develop a set of concrete actions APEC can take to help SMEs address impediments to trade.
removal of trade Barriers: The U.S. Government should continue to focus on at-the-border, across-the-border, and behind-the-border barriers to trade and accommodating modern supply chain patterns in the region. Behind-the-border barriers (many of which are not addressed in our other FTAs) create increasingly costly problems for U.S. companies in the region, and can be market prohibitive for U.S. SMEs. Therefore, in addition to reducing tariffs across all products and sectors, APCAC strongly supports a comprehensive TBT Chapter which accommodates the needs of modern supply chains in the Asia-Pacific Region.
Promote u.s. services: The U.S. Government should involve U.S. companies in formulation of the negative list for services. The workforce is increasingly global, and companies must leverage both local and foreign workforces to operate most effectively. The TPP should include greater flexibility to bring in foreign talent and foreign workers, including for short-term assignments. We also urge the TPP to include reciprocity in professional licensing for fields like medicine, law, and architecture. government Procurement, government controls, and transparency: APCAC encourages the TPP to include strong provisions to require governments to divulge all state assistance and involvement in domestic companies, promote pro-competition policies with regard to Government Linked Companies, and ensure that the government procurement process is free and open. To improve transparency and open competition, the TPP should address government price setting which companies face in certain markets, require regulators of industry sectors to be independent of government entities that compete in those industries, and require notice and comment opportunities for all future laws and regulations affecting business in all TPP countries. Ensuring a level playing field between public-sector and private-sector providers of competitive goods and services is especially important in sectors that are enablers of trade and investment offering multiplier benefits to the economy, such as information and communication technology (ICT), financial services, and logistics/express delivery service providers. easing restrictions on foreign Direct investment: The TPP should address investment restrictions that many U.S. companies face in Asia-Pacific. We encourage the TPP to ease impediments to business, such as restrictions on setting up retail outlets, and to eliminate investment and national treatment restrictions impacting transportation and logistics companies in TPP member countries. Further, the TPP should liberalize or eliminate foreign ownership caps across all sectors, including those applicable to the services sector, with exceptions limited to areas of true national security needs. Protection of intellectual Property rights (iPr): Strong IPR protections are essential for companies across all industries doing business in the Asia-Pacific region, and particularly for companies in the ICT sector. With the future of trade for the United States driving more toward technology and the need to share environmental technologies to address growing global concerns, IPR rises to even greater significance. APCAC urges the U.S. government to include the strongest possible protections for intellectual property, and to strengthen, not dilute, the provisions already agreed to with our current FTA partners Chile, Peru, Singapore and Australia. With an eye towards potential future members of the TPP, assurance of IPR protection would significantly improve U.S. companies ability to compete effectively in those markets.
regulatory coherence: Promoting comprehensive, transparent, and enforceable harmonized regulatory systems and standards across TPP countries will increase efficiency and economies of scale for U.S. companies operating in the region. Where possible, APCAC urges that standards, registrations, and safety and quality requirements be coordinated among TPP partners, and in accordance with international best practices. In addition to efficiency gains, harmonization of regulatory standards could help combat parallel importation, which can negatively affect both companies and consumers. inclusive growth: The TPP is a good opportunity to promote inclusive growth, including development of the SME sector. SMEs are the lifeblood of many TPP economies, including the United States. An inclusive agreement, containing elements such as SME development and capacity building, will create more winners of trade and ensure more sustainable support for globalization. environmental issues: In support of addressing climate change, governments should encourage more efficient generation, transmission, distribution and use of electricity, and enact policies to promote the installation of high efficiency power generation including waste heat recovery, combined heat and power, intelligent grids, smart meters, low energy use buildings, and efficient appliances to achieve this objective. Policies and measures should also be applied to reduce gas flaring and redirect or reuse the associated gas in alternative applications. Such policies should take into consideration ways and means by which private sector financing can be facilitated in order to support energy efficiency.
As we seek proactive engagement with our partners in Asia, global economic recovery must necessarily be mutually beneficial and guided by mutual commitments of international reciprocity in the free movement of people, data, goods, services, and capital. APCAC believes that the U.S. Governments Asian trade policy can best strengthen the American economy by continuing to support the private sector with trade and investment initiatives oriented toward partnership with the region. improve resources for the u.s. and foreign commercial service (usfcs): Adequate funding for the U.S. Foreign Commercial Service is critical to expanding U.S. markets abroad. It is estimated that for every $1 invested in the USFCS, American firms realize an average of $359 in exports. Support for the USFCS Service is especially critical to the Asia-Pacific Region due to the enormous economic growth and import potential of these markets. However, funding for USFCS has not kept up with demand. We urge the United States Congress to develop opportunities for U.S. exports to markets in Asia to help create new jobs in the United States through increasing the USFCS budget to the level of our competitors. competitiveness of americans abroad: In order for the United States to continue to lead in the coming decades, future American business leaders must gain international experience early in their careers. In the short term, Americans working abroad directly support U.S. employment by promoting U.S. exports and drawing on their U.S. connections in their professional lives. However, the U.S. tax structure, coupled with the 2005 changes to U.S. tax law, has weakened the competitiveness of individual Americans relative to non-Americans and disincentivizes U.S. companies from hiring Americans for overseas postings. APCAC urges Congress to reverse the provisions of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), which has significantly raised taxes on Americans working overseas, and to oppose legislation that would reduce or eliminate the Foreign Earned Income Exclusion. sMes: SMEs can particularly benefit from U.S. Government assistance in exporting their products and gaining market information. For example, at international trade shows and expos, many countries provide group pavilions where small companies can present their services with significantly lower overhead costs. Providing this type of assistance for small companies in high-value markets that are key for exports could greatly help the U.S. economy. removal of trade Barriers and Promotion of a level Playing field: We encourage the U.S. Government to continue to advocate for a level playing field for U.S. companies in foreign markets. Continuing to remove trade barriers, particularly behind-the-border barriers to trade, will also greatly assist U.S. companies in exporting their goods to the region.
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High-growth sectors: In order to achieve the National Export Initiative, the U.S. Government must develop strategies for the promotion of U.S. goods and services that have a competitive advantage and high potential growth in Asian markets, such as high-value, innovation-intensive goods, agricultural goods, and the services sector.
High-value and innovation-intensive sectors: The U.S. continues to lead in higher-value goods such as pharmaceuticals, technology, environmental goods and services.
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Healthcare Products and Services: In order to allow U.S. healthcare companies to best take advantage of Asian markets, we urge the U.S. Government to strategically promote pharmaceutical products and encourage APEC to promote healthcare initiatives. This includes seeking regulatory coherence and expedited regulatory approvals as well as initiatives that enable earlier detection and treatment of disease, reward innovation in healthcare technologies, use healthcare IT to reduce cost, and promote service and coverage to traditionally underserved areas and populations. Environmental Goods & Services: Energy consumption in Asia is growing rapidly, and huge capital investments in technology are needed to improve energy efficiency, reduce and mitigate greenhouse gas emissions, and expand supply. U.S. companies stand in an excellent position to take advantage of this demand. However, the policy environment must support technological innovation by protecting intellectual property, avoiding adoption of country-unique standards, ensuring energy efficiency regulations allow the development of innovative products, facilitating investment through efficient capital markets and a sound legal framework, and promoting talent mobility. ICT Goods: Continued progress on the Export Control Reform Initiative will increase U.S. ICT companies competitiveness abroad while simultaneously better protecting key American technologies. Maintaining key elements of the intellectual property development and technical advancements through increased research staffing in the United States while locating some manufacturing and sales in Asia will ensure a positive symbiotic export program under NEI for U.S.-based ICT companies. It is also essential that the United States promote newer cross-border ICT services, such as cloud computing.
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agriculture: APCAC encourages the opening of Asia-Pacific markets to U.S. agricultural products where there are currently importation restrictions. Any importation restrictions should be limited to internationally-recognized safety standards. services: Services comprise a large and growing portion of U.S. exports, and there are vast opportunities available in Asia for U.S. companies in the services sectors to thrive. Encouraging APEC economies to allow reciprocal licensing in the professional fields will better allow U.S. services to thrive in the region. Education is also an area in which the United States excels, and facilitating visas for foreign students to study in the United States would not only boost the U.S. economy, but would also allow highly-educated foreign students to return to their home countries and share best practices.
v. conclusion
A modest, steady, yet accelerating recovery is well-underway due to the extraordinary degree of policy consensus and coordination that has been achieved in 2009 and 2010 among governments and businesses. The U.S. hosting of APEC, the expected ratification of the KORUS FTA, the TPP negotiations, and the NEI have set an appropriate tone of collaboration and a tangible vision for harnessing Asias growth to bring forward a renewed era of prosperity for Americas working families. As the United States prepares to host APEC in Hawaii in 2011, the coming year promises to be an especially critical time for Congress, and all levels of government, to continue to act on behalf of U.S. business in Asia for the benefit of our citizens at home and abroad. The business chambers of APCAC and our combined membership of over 10,000 companies stand united in our commitment to provide the innovation, ingenuity, and expertise to participate in building a secure and prosperous future together.
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Steven R. Okun, Chairman Adam Sitkoff, Executive Director Andy McGuire, Chair, APCAC Report Committee Anne Marie Brooks, Editor, APCAC Report
ASSOCIATE MEMBERS
American Chamber of Commerce in Australia (Sydney) www.amcham.com.au Israel-America Chamber of Commerce & Industry www.amcham.co.il American Chamber of Commerce in New Zealand (Auckland) www.amcham.co.nz Saipan Chamber of Commerce www.saipanchamber.com American Samoa Chamber of Commerce www.amsamoachamber.com
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ACknowledgements
The asia-Pacific council of american chambers of commerce (aPcac) was founded 43 years ago as a way for the now 27 american chambers of commerce in 21 economies spanning asia-Pacific to share best practices and address issues of mutual concern.
The aPcac report was a new initiative stemming from the 2009 aPcac conference in Singapore, and has now become an annual aPcac offering. we greatly appreciate the feedback and suggestions provided by the american chambers of aPcac that annually contribute their input.
we would also particularly like to thank andy mcguire, Steven okun, Shiumei lin, elizabeth hernandez, and Tom clark for their extensive work and guidance. finally, we would like to thank hP for their generous sponsorship of the printing of this report.
for questions on the report, please contact Anne marie Brooks Goverment Relations Manager, AmCham Singapore ambrooks@amcham.org.sg.