Bureau of Economic, Energy and Business Affairs
April 15, 2010

The meeting was open to the public; however, participants’ statements, other than those cited, are not for attribution. The meeting drew near room-capacity attendance from the membership, general public and media.

Committee Chairman Theodore (Ted) Kassinger of O’Melveny & Myers, LLP, opened the meeting of the Advisory Committee on International Economic Policy (ACIEP) and welcomed the members and participants. Chairman Kassinger reminded participants that the meeting would be conducted under the Chatham House Rule and introduced Jose W. Fernandez, Assistant Secretary of State for the Bureau of Economic and Business Affairs (EB). The topic of discussion for the meeting was “Current International Economic and Commercial Priorities for the State Department.”

Assistant Secretary (A/S) Fernandez announced the names of the fourteen new members to the Advisory Committee and indicated Secretary of State Hillary Rodham Clinton planned to join the group later to meet the Committee and discuss key international priorities for the Department and the membership. A/S Fernandez expressed his intent to use ACIEP as a vehicle to advance the relationship between the government and the private sector. He stressed that government-private sector communication is vital at this critical time for our nation’s economy, where policies are being put into place that will guide our interactions worldwide. ACIEP, with its diverse membership, brings a variety of views to the table and provides a forum for both the government and private sector participants to come together to share insights and experiences on international challenges, opportunities, and best practices. This Committee will continue to be a sounding board for the Department and a mechanism for the members to provide input into the development of our foreign and economic policy planning.

A/S Fernandez led the discussion on current international economic priorities by giving an overview of the Economic, Energy, and Business Affairs Bureau’s efforts to accomplish these goals; he also provided an opportunity for the senior members of the EB team to outline some of their work for the Committee. He talked about the Bureau’s vast array of policy issues, including trade and development, intellectual property rights, infrastructure, rule of law, and open skies negotiations, but also emphasized its primary goal to promote U.S. business and trade while creating jobs. A/S Fernandez highlighted the President’s announcement of the National Export Initiative (NEI) that focuses on the goal of doubling U.S. exports over the next five years and supporting two million jobs that provide security, dignity, and a sense of hope for the future. This initiative is set apart from previous attempts to elevate exports because it involves a government-wide approach with attention from the President and his cabinet. The Economic Bureau’s Office of Commercial and Business Affairs (CBA) is leading the Department’s role in the NEI. Sue Saarnio, Deputy to the Special Representative for CBA Lorraine Harrington, provided an additional synopsis of the NEI and discussed CBA’s work in planning the Presidential Summit on Entrepreneurship which will be held in Washington, April 26-27, focuses on bringing together entrepreneurs from Muslim-majority countries. A strategy for promoting U.S. exports in that part of the world is being reviewed. Bill Craft, Deputy Assistant Secretary for Trade Policy and Programs, informed the ACIEP of recent developments in the Doha Round of the WTO, the status of Russia’s accession to the WTO, pledges for food security assistance, the Pathways to Prosperity Initiative, and the Transpacific Partnership Agreement. Principal Deputy Assistant Secretary Anna Borg stated that she and her team in the Office of International Finance and Development have been working on priorities that include the Haiti Donors’ Conference, international development, investment policy, the anti-bribery convention, the framework from which bilateral investment treaties are negotiated, and securing bilateral investment treaties with Rwanda, China, India, and Georgia to name a few.

The State Department is the lead U.S. government agency on international aviation and communication issues. John Byerly, Deputy Assistant Secretary for Transportation Affairs, described U.S. efforts to open new transportation markets overseas for U.S. businesses. In December, DAS Byerly led U.S. efforts which resulted in an “open skies” air services agreement with Japan, a critical destination in the rapidly growing transpacific market.

Ambassador Phil Verveer, who leads the Office of Communications and Information Policy, was absent due to official travel; however Deputy Jack Spilsbury reported that the U.S. communications team recently guided a successful effort in the International Telecommunications Union (ITU) to craft a new framework for national cybersecurity plans, a multi-billion dollar issue for U.S. companies. Ambassador Verveer’s staff coordinates the overall U.S. information policy in key areas such as market access, internet freedom, regulatory reform, and cybersecurity.

Deputy Assistant Secretary for Energy, Sanctions, and Commodities Douglas Hengel described his team’s priorities on energy security and crafting and implementing sanctions policy. Closer engagement with China and India on energy issues is a high priority, as is pressuring Iran to comply with its international obligations and UN Security Council resolutions to cease uranium enrichment.

The Office of Economic Policy Analysis and Public Diplomacy works to ensure that there is a sound basis for the Department’s economic policy planning and that the Economic Bureau’s information and message gets out to the general public. Director Sandra Clark stated that the EPPD team provides policy support for the United States’ engagement at the Organization for Economic Cooperation and Development (OECD). It also coordinates the Secretary of State’s Award for Corporate Excellence (ACE program), and the ACIEP Committee. The Economic Bureau works closely with the regional bureaus to make sure the economic agenda is well represented in our bilateral relations through strategic economic dialogues with key partners and in our multilateral engagement.

Several members of the ACIEP responded with their views of key economic and commercial priorities for their industry or sector. One committee member opened the discussion by stressing that uniquely among the Cabinet agencies, the Department of State is positioned to integrate and advocate policies that balance international trade and investment policies with environmental, labor, and human rights concerns. The member stressed that human rights and worker rights are economic issues and that the U.S. and developed countries need to do more to incorporate internationally recognized labor rights into trade and other economic agreements. The member concluded that protecting labor rights is the starting point for a fair labor environment.

A second respondent provided key statistics that should guide the formulation of international economic policy initiatives. These notably included appreciation of the fact that 7.4% of all private sector jobs were lost during the economic recession, with the manufacturing sector particularly hard hit: Employment in that sector fell 16% (resulting in total manufacturing employment falling to a level last seen in March 1941). This respondent also stressed the difference in consumption levels in the United States and China; prior to the recession, consumption accounted for 71.1% of U.S. GDP, but only 35% in China. The member opined that the United States needs to move away from consumption, and he stressed the importance of working to achieve the high goal set by President Obama in the NEI.

A third ACIEP respondent gave his view of the outlook for business and industry. He opined that U.S.-China trade relations, ratification of the free trade agreements already negotiated, and immigration reform are the immediate priorities for the international economic agenda. U.S. businesses have legitimate issues with China that need to be addressed, including inadequate protection for intellectual property rights, barriers to market access and the inflexibility of exchange rates. A member stated that manufacturing jobs are still being lost every week indicating that job loss is becoming more of a structural issue than cyclical. Other members addressed priorities and challenges that included: determining immigration priorities through managing by objectives; focusing on the economic empowerment of women; lowering the U.S. tax rate to encourage foreign investment; ensuring small businesses have access to credit and are included in the supply chain; working to pass the free trade agreements; having environmental cooperation agreements in place to address problems before they become disputes; learning lessons from Haiti as a strategy for economic development; addressing competitiveness in the economic development model; and rebalancing the U.S. economy.

Secretary of State Hillary Rodham Clinton joined the meeting. The Secretary engaged in a dialogue with the members and responded to comments about the NEI, job loss in the agricultural community, Iran sanctions, and the need for multi-national corporations to open markets for small and medium enterprises. A transcript and video of the Secretary’s discussion with the ACIEP is available at: http://www.state.gov/secretary/20092013clinton/rm/2010/04/140299.htm

Subcommittee Updates
ACIEP Chairman Ted Kassinger gave the update on the Subcommittees.

Mr. Kassinger announced that ACIEP member Barry Carter, Professor of Law at Georgetown University Law Center, is the new Chairman of the Subcommittee on Sanctions.

Mr. Kassinger further announced that following on the work of the ad hoc Subcommittee formed last year to advise the State Department and USTR regarding the Model Bilateral Investment Treaty, a new Investment Subcommittee will be constituted under the leadership of the two ACIEP members who co-chaired last year’s BIT review: Thea Lee, Deputy Chief of Staff for the AFL-CIO, and Alan Larson, Senior International Policy Advisor for Covington & Burling LLP.

Finally, Mr. Kassinger announced that following the retirement of former Subcommittee Chair Dan Christman and consultation with Assistant Secretary Fernandez, the Subcommittee on Economic Empowerment in Strategic Regions (EESR) would be discontinued.

Chairman Ted Kassinger thanked the Committee for the robust discussion with Department officials and the insightful questions and comments for the Secretary of State. The meeting was adjourned.