InternatIonal Business

Greening the Economy

page 3

Journal of the united StateS CounCil for international BuSineSS

winter 2011-2012 Vol. XXXiii, no. 4

Inside
USCIB award dinner OECD Internet principles The Big Idea: World 3.0
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the first word

Peter M. Robinson, President and CEO, USCIB

The Green Economies Dialogue aims to spur discussion of environmentally friendly innovation, jobs and trade in global markets.

Green Growth: Getting the Policies Right

hile everyone agrees on the need for greener growth, there is less consensus on how we get there.

A new project, the Green Economies Dialogue, aims to bring the policy and business communities together for intensive discussion of the best paths forward. Funded by the United States Council Foundation, USCIBs educational and research arm, the project mobilizes experts from the public and private sectors, along with leading academics and NGOs, with the goal of providing a clear road forward on green growth, green jobs and a host of related issues. The most recent UN climate talks (see page 4) underlined the critical importance for companies, national governments and global institutions of finding more environmentally friendly paths for business and economic development in the years ahead. Effectively addressing our current economic and environmental challenges will depend on international cooperation that works in synergy with global markets and rules. We expect the Green Economies Dialogue project to inform policy debate in the lead-up to Junes UN Rio+20 Summit and beyond. Industry, government and other actors must work together to make the transition to a global framework where the private sector and the marketplace have bottom-line motivations to drive improvements in technology and business practices. The Green Economies Dialogue initiative will provide a platform for discussion of key international policy questions, with the goal of ensuring that economic growth and the pursuit of environmental objectives go hand-in-hand. These include: How can environmental innovation in such areas as energy use or agriculture best be shared around the world, providing opportunities to promote sustainability while maintaining competitiveness? What role should international institutions like the G20, the United Nations and the OECD have in coordinating policies among national governments? How can the logjam of trade and climate negotiations be broken, to foster integrated policies that incentivize innovation, broadly deploy solutions and mobilize financial resources? Are subsidies an effective way to encourage start-ups and investment in new technologies, and what other options can governments pursue to help nurture as yet non-commercial options?

The Green Economies Dialogue will convene regional workshops around the world. The first of these took place in Washington, D.C. on October 12 in a day-long session bringing together more than 50 experts from business, government, academia and the NGO communities, hosted by the environmental research organization Resources for the Future. The Washington workshop was an important first step in exploring the policy options to foster green innovation and resource efficiency, said Phil Sharp, president of Resources for the Future. Another workshop was held at the OECD in Paris in November, hosted by BIAC, the Business and Industry Advisory Committee to the OECD. Over 80 participants, including representatives from a dozen OECD member countries and several OECD Directorates, attended the meeting, which was opened by Simon Upton, head of the OECD Environment Directorate. Additional workshops are planned for Japan and Brazil during the first quarter of 2012. As part of the Green Economies Dialogue, academic research is being commissioned for publication in the influential publication Energy Economics ahead of the Rio+20 Summit. Research papers by highly regarded experts will explore a variety of aspects of green growth and green jobs. The Green Economies Dialogue website (www.green-dialogue.org) is gathering informative materials from numerous points of view, including summaries, statements and papers from the various workshops, as well as summaries of the Energy Economics research. Support for the project is being provided by various private-sector sources through the United States Council Foundation. This is just another example of USCIBs convening power, and our ability to drive international debate and consensus on issues critical to global business, the world economy and the health of the planet.

Contact Peter Robinson at (212) 703-5046 or probinson@uscib.org.

USCIB International Business Winter 2011-2012 www.uscib.org

At UNs Durban Conference, Progress on Climate Change

efying low expectations and difficult circumstances, the UN Framework Convention on Climate Changes 17th Conference of the Parties, which was held in December in Durban, South Africa, opens the door to a new international climate framework, with appropriate reductions and other actions from both developed and developing countries. The Durban platform sets into operation new institutions for financing, adaptation and technology to address climate change. While it will be challenging for all major economies to construct a new international agreement, we look forward to working with governments to seek opportunities for U.S. companies to offer their insight and practical recommendations on implementation in ways that will grow economies, create jobs and advance sustainable development, stated USCIB President and CEO Peter Robinson. USCIB, which represents American business in global policy deliberations and works to expand trade and investment, applauded U.S. efforts at COP17 to promote enabling frameworks for technological innovation that protect intellectual property rights protection, and engage the private sectors expertise and resources, as well as its commitment to advancing transparency and private-sector engagement in the new architecture. USCIB was represented in Durban by Norine Kennedy, vice president for energy and environment, and executives from a number of member companies. It highlighted the need for integrated solutions that promote energy access and security, while deploying technologies and market approaches to address climate risks, since U.S. businesses doing business in international markets need long-range predictability and stability to plan, invest and operate. USCIB has encouraged countries to pursue more deliberative and effective

Maite Nkoana-Mashabane, South Africas environment minister and president of the COP17 negotiations, at a post-conference press briefing.

ways to interact with business in the design and implementation of new UNFCCC institutions and measures since Cancun. USCIB is the U.S. affiliate of the International Chamber of Commerce, which has long served as the business focal point in the climate negotiations, and also participates in the Major Economies Business Forum (BizMEF), which prepared six position papers for Durban. Ms. Kennedy said of the Durban platform: It seems that governments are coming to face the reality of a world that has changed in many ways since the Kyoto Protocol was signed in 1997. The challenge now is to set the stage for a long-term agreement that involves all major emitters, engages the public and private sectors, and works with globalized markets, in harmony with trade and investment rules.

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USCIB Award Gala

Clinton, Liveris Urge Cooperation Between Business and Government

deological bickering must end if the U.S. is to resolve its economic crisis, former President Bill Clinton told attendees at USCIBs 2011 International Leadership Award Dinner, which took place November 16 at the WaldorfAstoria in New York. Public discourse in America today is dominated by two modes of thinking: combative conflict and hangdog cynicism or pessimism, he said, adding, both are losers. Mr. Clinton stressed the need for cooperation between government and business. I cant think of any economy thats thriving where the government and private sector are at war with each other, he said. The former president praised Andrew Liveris, chairman and CEO of The Dow Chemical Company, the evenings honoree. I am grateful that an American company with an Australian president and two-thirds of its sales overseas has found a competitive way to keep 40 percent of its employees in this country, Mr. Clinton said, adding that Mr. Liveris offered the right approach in his new book, entitled Make It in America. It is a false choice to say that you can be either pro-business or pro-government, Mr. Liveris said in accepting his award. We must work in concert. If we want to create jobs, if we want to attract the industries of the future, especially those in advanced manufacturing. We must, without hesitation, venture to build bold public-private partnerships that will enable us to achieve the necessary transformation, because we cannot accomplish this alone. Mr. Liveris, co-chair of President Obamas Advanced Manufacturing Partnership, said it is not the role of government to prop up industries and sectors that cannot stand on their own. The goal, instead, is to identify that sectors that are critical to the nations future, and then support them just long enough so that they can take off on their own, he said. That is how we made microprocessors scalable, and affordable on the mass market. It is how we invented the Internet, which now represents an $8 trillion dollar global enterprise. It is how we saved the U.S. auto industry from bankruptcy. USCIB Chairman Harold McGraw III, chairman, president and CEO of The McGraw-Hill Companies, joined Mr. Clinton in praising Mr. Liveris. We are thrilled to honor Andrew for his commitment to global business and to reviving the American manufacturing sector as a pathway to job growth and long-term prosperity. Andrews leadership at Dow and on important public

L-R: USCIB President and CEO Peter Robinson, former President Bill Clinton, Dow CEO Andrew Liveris, USCIB Chairman Harold McGraw III

policy issues has distinguished him as one of the global business communitys leading voices, he said. No one government alone can solve the challenges we face, nor can one business solve these challenges alone. We need to work together to help restore public confidence, Mr. McGraw said. Mr. Liveris told the audience of over 300 business executives, government officials and diplomats: We have to make choices, strategic choices about our future and how we want it to unfold. But we have to first stop throwing stones at each other, Democrats and Republicans, business and government. He told the audience: We do not live in a global free market. We live in a global economy where countries are acting more and more like companies: competing aggressively against one another for business and progress and wealth. Governments are boosting business, creating a climate that attracts and rewards investment, spurs innovation and job creation, and appeals to companies that are less bound by national borders than ever before. Mr. Liveris said every nation that wants to succeed in the new global environment has to think deeply about the pillars of government policies, which he listed as regulations, taxes, trade, energy and education. Regulations must balance the need to protect citizens against the need to give businesses the space to thrive. Taxes must balance the collection of revenue and the distribution of wealth against the need to attract businesses. But, he added, We are underpaying for our future. The highest taxpayers, including me, should be paying more. Trade is the lifeblood of 21st century economies, he said. No country our size will succeed in the global economy without constantly opening new markets, he said, noting that it took the U.S. six years to approve freetrade agreements with Korea, Colombia and Panama. During those same six years, the European Union went ahead with 35 new FTAs. Education is the most important pillar, he said, describing it as the kernel of ultimate competitive advantage. The fuel that feeds innovation. Links to Mr. Liveriss remarks, as well as a variety of videos and photos from a very memorable event, are available at www.uscibgala.com.

USCIB International Business Winter 2011-2012 www.uscib.org

Business Welcomes OECD Internet Principles

.S. companies and the broader global business community welcomed adoption in December of the 34-nation OECDs Principles for Internet Policy-Making, which call for a light touch on regulation, saying this is essential to promote economic growth. USCIB applauded the OECD Councils call for member countries to promote and protect the global free flow of information online.

holder approach to international discussions of the Internets development. Last June in Paris, BIAC members played a central role in an OECD High Level Meeting on the Internet Economy, which highlighted that the strength and dynamism of the Internet depends on its ease of access to high-speed networks, openness and on user confidence. The OECD Councils adoption of the new principles is based on a communiqu issued at a meeting in June, when their broad outlines were drawn up. Born at a U.S.-initiated high-level meeting earlier this year, these principles are a major step in our efforts to ensure the Internet remains an open platform, continuing to spur innovation, prosperity and job creation, said U.S. Ambassador to the OECD Karen Kornbluh in a statement. This platform, that produced more growth in its first 15 years than the Industrial Revolution did in its first 50, mustnt be balkanized. We will work with others to continue building consensus for these global norms that nurture openness and freedom on the Internet. The OECD principles are non-binding. However, they will be included in the criteria used to assess the suitability of candidate countries for OECD membership.

UN Examining Chemicals in Products

Helen Medina, USCIBs director of life sciences and product policy, took part in a November meeting in Belgrade under the UNs International Conference on Chemicals Management (ICCM), which is charged with ensuring that chemicals are produced and used in ways that minimize significant adverse impacts on the environment and human health. In 2006, the UN adopted a Strategic Approach to International Chemicals Management (SAICM), which seeks to ensure that chemicals are produced and used in ways that minimize significant adverse impacts on the environment and human health. The November meeting of SAICMs Open-Ended Working Group focused on financing and technical resources for implementing SAICMs goals, and to make recommendations for the next full meeting of the ICCM, which will be held in September 2012 in Nairobi. As a voluntary policy framework, SAICM maintains a multi-stakeholder process, and sets as one of its main objectives that information and knowledge about chemicals contained in products is available, accessible, user friendly, adequate and appropriate to the needs of all stakeholders.

The OECD principles balance two mutually supportive goals: maintaining an open, dynamic Internet that can generate economic growth, and ensuring closer international cooperation on Internet issues, said USCIB President and CEO Peter M. Robinson. While the Internet has no borders, and countries should set their own policies and regulations, they must do so judiciously, in cooperation with each other and with the private sector. The OECD has given governments urgently needed guideposts in this area. Both USCIB and BIAC, the Business and Industry Advisory Committee to the OECD, which USCIB represents in the United States, have endorsed the OECD principles and sought to promote awareness of them in key international forums. In September, at the UNs Internet Governance Forum in Nairobi, USCIB representatives underscored the importance of maintaining an open, multi-stake-

6 USCIB International Business Winter 2011-2012 www.uscib.org

World Business Responds to Cannes G20 Summit Outcome

he International Chamber of Commerce (ICC), the world business organization which USCIB represents in the United States, urged G20 governments to put trade and investment at the heart of their follow-up to Octobers G20 Summit in Cannes. Trade has lifted millions out of poverty over the past 60 years by stimulating economic growth and job creation, said ICC Chairman Gerard Worms. At a time when governments are grappling with excessive debt, a new approach to trade negotiations can be a costfree stimulus to growth and job creation. The Organization for Economic Cooperation and Development (OECD) estimates that for every 10 percent of trade that opens among G20 countries, around one million jobs are created. While acknowledging the stalemate in the Doha Round, G20 leaders instructed their trade ministers to engage into discussions on the challenges and opportunities to the multilateral trading system in a globalized economy and to report back at the next G20 Summit in June 2012 in Los Cabos, Mexico.

B20 CEOs, including the 20 members of ICCs G20 Advisory Group, presented policy recommendations to G20 heads of state participating in the business summit, covered trade and investment, financial regulation, commodities and raw materials, food security, global economic policy imperatives and other topics. USCIB Chairman Harold McGraw III, CEO of The McGraw-Hill Companies and also vice chairman of ICC, took part in the B20 Summit, which began with a briefing for participating CEOs hosted by French President Nicolas Sarkozy at the Elyse Palace in Paris, and then continued with a series of roundtable meetings between the business and government leaders gathered in Cannes. Business leaders have come together to share policy priorities and to emphasize that G20 deliberations must be aligned with core business goals of open trade and investment, economic growth and job creation, said Mr. Worms. We are responsible for ensuring that the voice of world business is heard. Among the G20 leaders participating in the B20 Summit were Australian Prime Minister Julia Gillard, South Korean President Myung-Bak Lee, Japanese Prime Minister Yoshihiko Noda, South African President Jacob Zuma, Argentine President Cristina Fernandez de Kirchner, Turkish Prime Minister Recep Tayyip Erdogan and Russian Federation President Dimitri Medvedev.
2:18 PM

Business Looks to Push Trade Liberalization Forward

World Trade Organization efforts to further open up government procurement markets, admit Russia as a WTO member and identify new ways to expand global trade won cheers from the business community. USCIB welcomed the outcomes from Decembers WTO ministerial in Geneva, saying they could provide a shot in the arm for global growth, even if a more ambitious Doha Round trade deal appears increasingly out of reach. Business has been pushing for an ambitious Doha deal since day one, but we recognize the difficulty faced by WTO members in making the necessary concessions for a balanced package, said USCIB Senior Vice President Rob Mulligan, who was in Geneva for the ministerial. We are encouraged, however, that governments are looking seriously at ways to move forward on trade absent a global consensus on Doha. These have the potential to give a significant boost to jobs, growth and recovery.

Business leaders gather

Earlier, ICC and partner organizations, including the French business federation MEDEF and the World Economic Forum, held two days of intensive business meetings under the banner of the G20 Business Summit, or B20.
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USCIB International Business Winter 2011-2012 www.uscib.org

global network International Chamber of Commerce www.iccwbo.org Business and Industry Advisory Committee to the OECD www.biac.org International Organization of Employers www.ioe-emp.org

USCIB Welcomes Latin Leaders

L-R: Claudio Piacenza (Uruguay), Raquel Acosta (Costa Rica), Franois Gabriel Ceyrac (ICC), Patricia Hurtado (Bolivia), Mick Fleming (ACCE), Milagros J. Puello (Dominican Republic), USCIB Chairman Harold McGraw III, Mara Fernanda Garza (Mexico), USCIB President & CEO Peter Robinson, Yesica Gonzlez (Mexico), Philip Kucharski (ICC), Fernanda Hurtado (Chile), Diana Droulers (Venezuela), Jeff Hardy (ICC), Gizelle Reginato (Brazil), Jordi Sellars Serra (Spain), Louise Kantrow (ICC), Jorge Rubn Aguado (Argentina).

In November, USCIB hosted three days of meetings among ICC representatives from across Latin America and the Western hemisphere. The meetings, which coincided with USCIBs International Leadership Award Dinner, provided a supportive environment for national committee heads and key staff from ICC headquarters in Paris to share best practices and discuss the world business organizations key initiatives in policy advocacy and business services. Discussion centered on the varying working conditions faced by ICC national committees in Latin America, resources available from ICC headquarters, and ways to coordinate action among national committees on important public policy matters, whether these be global, regional or in-country.

USCIB at Your Service

USCIB Policy and Program 212-703-5082 USCIB Presidents Office 212-703-5049 USCIB Member Services 202-682-1291 USCIB Communications 212-703-5063 USCIB Washington Office 202-371-1316 ATA Carnet Export Service 1-800-5-DUTYFREE ICC Arbitration and Dispute Resolution 212-703-5044 ICC Books USA 212-703-5066 Visit www.uscib.org for a full list of staff including e-mail addresses (click Business Services)

Spectrum Shortage
ICC called for governments and regulators to accelerate efforts to allocate and assign adequate spectrum to support the ever-increasing traffic demand for mobile broadband. ICC emphasized that mobile broadband spectrum policy must co-exist with other critical societal priorities such as broadcast services. Eric Loeb, chair of the ICC Task Force on Internet and Telecoms Infrastructure and Services (IT IS), said: Given the enormous contribution of mobile broadband to innovation, competition, job and economic growth in developed and developing countries, it is crucial that the unprecedented potential of mobile broadband is not stifled by a lack of adequate spectrum. The speed at which governments implement additional spectrum plans is critical.

Revised ICC Rules Boost G20 Efforts to Curtail Corruption

ICC has launched the ICC Rules on Combating Corruption in response to the G20s call on business to stamp out corruption. The new ICC rules delineate measures companies should take to prevent corruption, including strong measures to end bribery and extortion. ICC pointed out that G20 efforts to stabilize the economy and stimulate economic growth, trade and employment must address the drain on the economy caused by corruption. ICC Secretary General Jean-Guy Carrier said: Corruption is a real threat to the integrity of markets, especially at a time when confidence and stability are most needed. Stamping out corruption will stimulate job creation, boost business confidence and open doors for emerging markets to attract foreign direct investment.

8 USCIB International Business Winter 2011-2012 www.uscib.org

Needed: Tax Policies to Foster Sustained Growth

Writing in the Financial Times, executives from ICC and BIAC state their opposition to the so-called Tobin tax on financial transfers stating that the business community opposes this tax for many reasons including that a financial transaction tax would raise some government revenues in the short term and it would immediately negatively affect the economy and not foster growth. Other reasons include the financial transaction tax will reduce the number of transactions and hinder optimal reallocation of assets. This will increase costs and will make corporate investments more expensive.

washington wire

Tax Reform
USCIB welcomed proposed tax reform measures put forward by Rep. David Camp (R Mi.), chairman of the House Ways and Means Committee. We are pleased to see Chairman Camps proposal on tax reform, said USCIB President and CEO Peter M. Robinson. The high rates and worldwide system of taxation of the United States are out of step with the rest of the world. U.S. business supports efforts to achieve reform of these rules. Chairman Camps proposal represents an important first step. Mr. Robinson underscored the importance of maintaining a level playing field for all companies in the context of U.S. tax reform. We must ensure that legislative alternatives intended to protect the tax base do not disfavor U.S. companies versus their competitors, he said. We look forward to working with Chairman Camp and other members of Congress and the administration to achieve bipartisan business tax reform.

IOE Takes Part in G20 Employment Session

As host duties for the G20 transitioned from France to Mexico, Mexico City was the site on December 15 of the first meeting of the G20 Employment Task Force, with youth unemployment as its principal focus. The IOE and BIAC were invited by the Mexican government to organize the participation of the business delegation, which was led by USCIB Executive Vice President Ronnie Goldberg, who serves as the IOEs regional vice president for North America and chairs BIACs Employment, Labor and Social Affairs Committee. An IOE-BIAC paper prepared for the meeting focused on enhancing youth employability, creating inclusive labor markets for young people, and ways to foster youth entrepreneurship.

a reduced burden on employees of companies which report to the Securities and Exchange Commission stating that current FBAR rules are burdensome, complex and create the potential for inadvertent errors by corporate finance employees. The primary objective of FBAR filings is to help the government detect money laundering or other criminal activity through the use of foreign financial accounts.

Postal Authorities
As postal revenue dries up around the world, many publicly operated postal organizations may be tempted to get into new lines of business presenting a vexing challenge to private-sector companies that may find themselves in competition with these state-supported entities. To address these concerns, USCIB and three other business groups sent a letter in November to the Obama Administration urging the U.S. to prepare diligently for the next ministeriallevel congress of the Universal Postal Union (UPU), which will take place in Qatar in September 2012. We see potentially important issues on the table at the UPU session, including unhelpful efforts from some quarters to extend the scope of government-run postal monopolies into new areas, potentially competing with the private sector, stated Shaun Donnelly, USCIBs vice president for investment and financial services. The business groups urged the administration to form an interagency committee to develop coordinated promarket, pro-competition positions for the U.S. delegation leading up to and at the UPU congress.

ILO Director General to Step Down

After 13 years as director general of the International Labor Organization, Juan Somavia of Chile has decided to advance his departure from his post as director general from March 2014 to September 30, 2012. No successor has been named yet.

Business Groups Seek Reporting Relief for Employees at Worldwide Firms

Earlier in November, USCIB joined several leading business groups in sending a letter to the U.S. Treasury Department, requesting less burdensome rules for Foreign Bank and Financial Accounts (FBAR) filings required by employees of worldwide American companies involved in global finance. In the letter to James H. Freis, Jr., the director of the Treasurys Financial Crimes Enforcement Network (FinCEN), the business groups sought

IOE Secretary-General Steps Down

After 33 years of service to the IOE, including the past 12 as Secretary-General, Antonio Penalosa has stepped down from his position and has become Special Adviser to the IOE President and Management Board. IOEs Brent Wilson has assumed the role of Acting Secretary-General. USCIB expresses its appreciation for Antonios leadership in modernizing the governance and activities of the organization and enhancing its visibility in representing employer interests and advancing the business agenda in high-level forums on the global stage.

USCIB International Business Winter 2011-2012 www.uscib.org

apec usa 2012

APEC Moves Forward on Privacy, Region-Wide Travel Cards

SCIB welcomed a number of developments at Novembers APEC (Asia-Pacific Economic Cooperation) CEO Summit and Leaders Meeting in Honolulu. It was represented at the meetings by Rob Mulligan, senior vice president and head of USCIBs Washington, D.C. office, and Justine Badimon, manager for APEC affairs. USCIB applauded APEC leaders for agreeing to begin to put into operation a long-awaited system to recognize corporate privacy practices in order to facilitate international commerce. In their joint communiqu, APEC leaders pledged to implement the APEC Cross-Border Privacy Rules System to reduce barriers to information flows, enhance consumer privacy, and promote interoperability across regional data privacy regimes. Cross-border data transfers are vital to conducting business in a global economy, said Heather Shaw, USCIBs vice president for information, communications and technology policy. However, differing government regulations on transfers of personal information can create impediments to the flow of information across borders, which is the lifeblood of todays dynamic global economy. We are pleased that, with the APEC Cross-Border Privacy Rules System, companies will be able to transfer customer or employee information for processing across the region

based on a one-stop validation mechanism against the APEC principles, simplifying processes and reducing costs. In addition, just in time for the summit, USCIB welcomed Congressional passage of the Asia-Pacific Economic Cooperation Business Travel Cards Act of 2011, a bill to speed business travel in the Asia-Pacific region. This move will allow American business and government personnel traveling in the APEC region access to expedited visa processing and designated airport travel lanes. USCIB and other U.S. APEC Business Coalition partners had urged passage of the bill in the House and Senate during 2011, the U.S. APEC host year. Adoption of the APEC Business Travel Card will provide a big boost for American companies and executives doing business in the Asia-Pacific region, and will contribute to improved competitiveness and job growth at home, said USCIB President and CEO Peter M. Robinson. It comes as our engagement with Asian and Pacific markets is deepening, and policy makers need to take new measures to open up trade, investment and travel in this rapidly growing market. It also levels the playing field, since the United States already gives expedited treatment to business travelers from the other APEC member economies.

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10 USCIB International Business Winter 2011-2012 www.uscib.org

The Big Idea

Our Not-So-Flat World

Editors note: In our last issue, we launched The Big Idea, a forum for thought leadership from USCIB members and others in the business and policy communities, with a column by Dow Chemical CEO Andrew Liveris on rejuvenating American manufacturing. In this issue we look at another thought-provoking perspective on international business and public policy. Views expressed by authors and those interviewed are their own, and no endorsement by USCIB is implied. To submit a column or suggest a topic, please contact Jonathan Huneke (jhuneke@uscib.org).

he world is flat, right? Well, consider the following facts: Only 20 percent of the worlds equity shares are held by investors outside a companys home market. Just three percent of people live outside their country of birth. Less than one percent of all American companies have any foreign operations and most of them operate in just one country, primarily Canada. Worldwide public opinion surveys indicate that people care about their fellow citizens from 100 to 10,000 times more than they do about foreigners.

The world, he says, is far from flat, and in fact is still largely defined by national borders. Ghemewat sat down with USCIB to discuss his ideas. World 3.0 encourages companies and policy makers to look at globalization differently. He explains how, for too long, governments, business, and the general public have been stuck in a tug of war between two opposing worldviews, World 1.0 (a protectionist, regulated world) and World 2.0 (in which the world is seen as flat and corporations as stateless entities). He argues that both these views are flawed: they dont fit the facts, and they dont provide practical direction toward a better future. He proposes a more accurate and useful worldview, based on evidence that we are in a state of semi-globalization. Pointing to data on flows of trade, capital, information and people, Ghemawat shows that actual levels of globalization are far lower than many of us think, and that there is tremendous

potential to expand prosperity by increasing integration. Whats more, with protectionism on the rise, Ghemawat points out how exploding some of the myths about globalizations scope can defuse anxiety about its purported side-effects.

Were not as globalized as we think, according to Pankaj Ghemawat, author of World 3.0.
For example: Recognizing that goods made in China account for just 1-2% of U.S. personal consumption expenditures undercuts those seeking to blame the trade deficit for Americas problems shifting the focus on jobs away from protectionism and toward domestic policies.
continued on page 12

Pankaj Ghemewat, professor of global strategy at IESE Business School in Barcelona and author of the well received book World 3.0: Global Prosperity and How to Achieve It, has thought a lot about this. Ghemewat takes issue with common assumptions about globalization.

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The Big Idea: Our Not-So-Flat World

continued from page 11 Recognizing that international air transportation accounts for 1-2% of greenhouse gas emissions one-tenth as much as ground transportation would help prevent an overemphasis on localizing production that sacrifices important production efficiencies. Recognizing that foreign aid accounts for just 1% of the U.S. federal budget instead of the 30% or so that Americans tend to guess can help build support for more cross-border aid. World 3.0 recounts the track records of numerous companies in adapting or failing to adapt to this semi-globalized world, where attention to national differences can still spell the difference between success and failure. Perhaps most intriguing for USCIB members are Ghemawats policy prescriptions. Here he places the emphasis on the importance of more or less unilateral decisions by national governments. Interestingly, he contends that trade liberalization by itself offers limited prospects for growth. Success in the Doha Round, he says, would lift global GDP by a mere 0.1 percent, and even the complete elimination of trade barriers would raise growth by only 0.5 percent. In contrast, Ghemawat contends that very rapid increases in integration undertaken unilaterally or by small groups of governments could spur far greater growth. One example, says Ghemewat, is Mexico under NAFTA, where the single biggest benefit of integration with the U.S. and Canada has been to drastically reduce the price-setting power of oligopolies. Ghemewat says governments can foster integration at both the national and global levels through policies such as improved infrastructure and Pankaj Ghemawat education. Poor road and port infrastructure in his native India, for example, is a huge constraint on growth, because it limits access to global markets. Ghemewat criticizes the view that deregulation is the best way to achieve growth. A hands-off approach to regulation is untenable, he says. Minimum wage laws, for example, help reduce inequality. And while popular perceptions of globalizations impact on unemployment are vastly out of line with reality, Ghemewat stresses the importance of improving the social-safety net for people who are negatively affected. Hes skeptical about trade adjustment assistance laws, and says improved unemployment benefits, access to health care, and education are a better approach. World 3.0 makes for fascinating reading, and while you may not agree with everything Ghemawat prescribes, he presents a very convincing case that there is still a long, long way to go before the world is truly flat.

12 USCIB International Business Winter 2011-2012 www.uscib.org

Business Seeks Reversal of Foreign Trade Zone Changes

Looming changes to the way goods are treated in U.S. Foreign Trade Zones have drawn an appeal from a range of pro-trade business groups, which say the changes will undercut the Obama administrations National Export Initiative and cost American jobs. USCIB and other industry groups have appealed to Acting Commerce Secretary Rebecca Blank and Treasury Secretary Timothy Geithner to halt a planned rule change by the U.S. Foreign Trade Zone Board (FTZB), an interagency body chaired by the Commerce Department, that would automatically apply U.S. anti-dumping and countervailing duties on imports processed through foreign trade zones. Given the administrations high priority for export growth, the FTZB rules should strongly promote, rather than inhibit, U.S. exports, the business groups wrote in their letter. Unfortunately, the proposed FTZB regulations would harm President Obamas National Export Initiative and result in a loss of manufacturing jobs in U.S. Foreign Trade Zones. For the past 20 years, such duties have been waived on imports provided the finished products were not ultimately imported into the customs territory of the United States. The new rule would make such a waiver dependent on a finding that it was in the public interest, effectively nullifying the benefit to businesses of utilizing U.S. foreign trade zones. Foreign Trade Zones are one of the critical avenues for promoting exports and manufacturing jobs in the United States, stated Jerry Cook, vice president, international with HanesBrands, Inc. and chair of USCIBs Customs and Trade Facilitation Committee. We must do all that we can to foster these vital functions, rather than inhibit them. In their letter, USCIB and the other business groups noted that foreign trade zones accounted for $28 billion in exports in the most recent year available and employ 330,000 American workers. They said the rule change would drive U.S. manufacturing to other countries, where the same activity could take place without undue delay, risk or expense. U.S. manufacturers would suffer in competition with foreign factories, which will lead to the further loss of U.S. manufacturing jobs, they wrote.

Self-Regulation in Marketing at Chile Conference

With business facing calls from Chilean legislators for significant new regulation in marketing and advertising, Chiles Direct Marketing Association invited Chris Martin, USCIBs manager for marketing and ICT policy, to address an October conference promoting self-regulation as a better alternative. USCIBs Marketing & Advertising Committee is focused on promoting strong and effective marketing self-regulation around the world. In response to some privacy concerns around the potential tracking of consumer information, Chile is considering an acrossthe-board opt-in provision, which would require consumers to opt in to marketing communications on any platform, including mail, telephone, and digital. While some countries have privacy laws around marketing and advertising, very few have in place or are considering quite as sweeping regulation as that being proposed in Chile. It is important for Chilean businesses and policymakers to understand how self-regulation is addressing similar privacy issues in other jurisdictions like the U.S. and Europe, said Mr. Martin. Especially with regard to digital advertising, the U.S. business community has pioneered self-regulation that responds to privacy concerns and USCIB has been a forceful advocate for harmonizing a global self-regulatory approach, one that balances these important privacy issues with the need to ensure that innovative content and services on the Web can continue to be funded through advertising in order to keep them free or low-cost to consumers. As the U.S. affiliate to the International Chamber of Commerce (ICC), USCIB actively promoted new principles and standards around online advertising in the ICCs recently revised Marketing & Advertising Code available and searchable online at www.codescentre.com.

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USCIB International Business Winter 2011-2012 www.uscib.org

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USCIB member and staff news

Reach Out! 2012 USCIB Member-Get-a-Member Drive

By Abby Shapiro Senior Vice President for Business Development, USCIB For over 60 years, USCIB has been the voice for American multinationals around the world by working to shape a level playing field where trade and investment can flourish. You depend on USCIB to represent your interests, both through direct representations to the U.S. and foreign governments, and through our engagement in international policy-making and regulatory bodies. And we count on you, too! We know our current members are the best possible source for new members who could benefit from all USCIB has to offer. Every time you recruit a new member, you strengthen USCIB. And a stronger, growing and vital USCIB means greater recognition of our mission and the advancement of our global advocacy to address international regulatory policies affecting your business. This year, with our Member-Get-a-Member drive, were made referring a colleague to USCIB easier than ever. There are several ways you can help USCIB grow: You can simply provide us with your colleagues names and contact information and well send them a membership information package. You can make a personal introduction, let them know why you support USCIB and ask them to talk with us about membership. Send us their name and contact information and well contact them. You can invite a colleague to join you at a USCIB event or committee meeting to experience USCIB in action. Let us know and well be sure to flag this for follow up. You can direct them to www.uscib.org to see what we offer. Again, let us know your colleagues name and contact information so we can follow up. So help us Reach Out! And together well make 2012 a banner year for membership in USCIB. For more information on how you can help, contact Alison Hoiem, Manager of Member Services at 202-682-1291 or email her at ahoiem@uscib.org. Contact Abby Shapiro, at 212-703-5064 or ashapiro@uscib.org.

Adam Greene, USCIBs vice president for labor affairs and corporate responsibility, has been named by Secretary of Labor Hilda Solis to serve on the National Advisory Committee for Labor Provisions of U.S. Free Trade Agreements. The recently reconstituted advisory committee provides advice to the Secretary of Labor on the implementation of labor rules in existing free trade agreements, and on the labor provisions of FTAs being negotiated. Adam joins other business representatives (all from USCIBs membership): Darryl Knudsen of Gap Inc., Ed Potter of The Coca-Cola Company (chair of USCIBs Labor and Employment Committee) and Anna Walker of Levi Strauss & Co. In October, Charlene Flick, USCIBs director of intellectual property and competition at USCIB, addressed the Silicon Valley Association of General Counsel in Santa Clara, California. Ms. Flick discussed emerging legal challenges for U.S. companies as they expand internationally, and specifically how USCIB helps American industry navigate an increasingly complex global marketplace Justine Kharnak has joined USCIB as development assistant for our ATA Carnet department. Justine will support outreach to customers with the goal of growing the Carnet business across the United States. She comes to us from the law firm Jones Day, and is a graduate of Baruch College.

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14 USCIB International Business Winter 2011-2012 www.uscib.org

upcoming events

Engaging Business: Addressing Human Trafficking in Labor Sourcing

February 14, 2012 The Coca-Cola Company Headquarters Atlanta, GA Sponsored by USCIB, the U.S. Chamber of Commerce and the International Organization of Employers and jointly hosted by The Coca-Company and LexisNexis, the 5th International Business Forum on Engaging Business: Addressing Human Trafficking in Labor Sourcing will focus on solutions, networks and best practices for eliminating human trafficking in labor sourcing. Attendees will leave with a deeper understanding of legal implications and stakeholder expectations, the various forms of human trafficking, and how to identify and address instances of human trafficking in labor sourcing. The forum will be an opportunity for companies and other business representatives to review emerging domestic and international legal trends, assess the business impacts of human trafficking, discuss opportunities for proactive business engagement, and share strategies and tool to help companies address human trafficking. There is no fee to attend, but all participants must register in advance. This program is reserved for business participants only. To register, please send your full contact information to Alexandra Garcia (agarcia@ uscib.org).

Save the Date!

2012 OECD International Tax Conference

June 4-5, 2012 Four Seasons Hotel Washington, DC Join the OECD, USCIB and BIAC, in cooperation with a number of tax-focused business groups, for our latest annual conference on the OECDs new international taxation initiatives. Panels will address current OECD tax projects and will include speakers from business, the OECD, and U.S. government. The event provides a unique opportunity for U.S. business representatives to interact directly with key representatives from the OECDs Center for Tax Policy and Administration as well as senior tax officials from the U.S. and other OECD countries. For a list of featured speakers, key topics and sponsorship information, visit www.uscibtax.org. Registration and logistical information is available from Erin Breitenbucher (202682-7465 or ebreitenbucher@uscib.org). For information on how you can become a sponsor, please contact Abby Shapiro (617242-0205 or ashapiro@uscib.org).

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For advertising opportunities, please contact Kate McVeigh on (212) 275-6791

USCIB International Business Winter 2011-2012 www.uscib.org

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1212 Avenue of the Americas, New York, NY 10036

calendar

january 2012
19-20 19-20 1 6 14 14 8-10 12 13-14 21 22 23 25-29 27-28 29 2-3 19-20 25 16 22 22-23 23 23-24 4-5 Paris Palo Alto Paris Paris Paris Atlanta, Georgia San Francisco Geneva Geneva Paris Paris Paris Doha Washington, DC New York Paris London Paris Paris Washington, DC Paris Washington, DC Paris Washington, DC ICC Marketing & Advertising Commission 2012 Pacific Rim Tax Institute OECD Consultative Meeting on Best Practices for Competitive Neutrality BIAC Chemicals Committee ICC Commission on Competition Human Trafficking in Labor Sourcing 3rd Annual ICC Asia Pacific Arbitration Conference ICC Commission on Trade and Investment Policy ICC Business World Trade Agenda: CEO Policy Conference BIAC Tax Committee ICC Commission on Taxation ICC Corporate Responsibility & Anti-Corruption Commission ICC Banking Commission OECD Symposium on Assessing the Economic Value of Nanotechnology Financial Times Investing in a Sustainable Future Conference ICC Commission on E-Business, IT and Telecoms (EBITT) ICC Commercial Law & Practice Commission BIAC Education Committee ICC Commission on Arbitration USCIB Labor and Employment Policy Committee OECD Forum 2012 USCIB Corporate Responsibility Committee OECD Ministerial 2012 USCIB/OECD/BIAC Tax Conference

february 2012

International Business is published quarterly by the United States Council for International Business. It is intended for informational use only and should not be construed as an authoritative statement of USCIB views or policy. We welcome your comments and submissions E-mail them to news@uscib.org or submit by mail to: Editor, International Business, United States Council for International Business, 1212 Avenue of the Americas, New York, NY 10036. Visit www.uscib.org or see our monthly e-newsletter, Whats New at USCIB, for the latest news and information from USCIB and our global business network. USCIB members may also visit our password-protected Members Only section to review materials from USCIB committees and other exclusive information. How to subscribe: USCIB members may request this publication free of charge by contacting USCIB Member Services (212-703-5095, membership@ uscib.org). Non-members may subscribe to this and other USCIB print publications for a nominal fee by contacting USCIB Communications (212-703-5063, news@ uscib.org). Editor: Jonathan Huneke, VP communications & public affairs, USCIB United States Council for International Business 1212 Avenue of the Americas New York, NY 10036 Tel: 212-354-4480 Fax: 212-575-0327 Web: www.uscib.org Copyright 2010 United States Council for International Business. All rights reserved.

march 2012

Global Business Leadership as the U.S. Affiliate of:

International Chamber of Commerce

april 2012

may 2012

Business and Industry Advisory Committee to the OECD

june 2012 ICC Incoterms 2010 Seminars Nationwide through June 2012 To view dates and locations, visit http://www.uscib.org/calendar.asp?cat=Incoterms

International Organization of Employers

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To reach an elite readership of USCIB members and friends, join our growing roster of advertisers. Contact Abby Shapiro (ashapiro@uscib.org) for more information.

ISSN 1939-8301