Bureau of Economic, Energy and Business Affairs
June 20, 2011


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

Committee Chairman Theodore Kassinger of O’Melveny & Myers, LLP, opened the meeting of the Advisory Committee on International Economic Policy (ACIEP) and welcomed members and other participants. Chairman Kassinger reminded participants about the Chatham House Rule and emphasized that comments were not for attribution. The meeting focused on “The Advent of Cloud Computing as a New Business Model in International Trade, the Implications of this for Multinational Corporations, and the Role of U.S. Trading Partners.” Jose W. Fernandez, Assistant Secretary of State for the Bureau of Economic and Business Affairs (EB) introduced the U.S. Special Coordinator for International Communications and Information Policy, Ambassador Philip Verveer.

Ambassador Verveer gave an overview of cloud computing. He explained how cloud computing offers enormous opportunities to bring the advantages of enterprise-class information technology (IT) infrastructure to small and medium- sized enterprises and individuals. He noted that efficiency gains and potential security improvements clearly warrant the attention of business leaders and policymakers. Specifically, Ambassador Verveer noted that the cloud offers various IT solutions to match customer needs, including infrastructure-as-a-service (Saas), platform-as-a-service (PaaS), and software-as-a-service (Saas), and lowers entry barriers that are challenges to individuals and small-to-medium-sized businesses (SMEs). This affords SMEs and individuals the same opportunities for increased accessibility and use of state-of-the-art technology as multi-national enterprises (MNEs). Currently, U.S. companies dominate the market of global cloud service providers. This leadership position presents significant advantages and economic opportunities for the United States.

Ambassador Verveer then addressed several of the issues raised by cloud computing. Trans-border data flows from the use of cloud computing solutions raise issues of data privacy, data security, limitations on liability, and jurisdiction, including government access to personal data. Issues related to cloud computing play an increasingly prominent role in U.S. discussions with foreign governments, including notably those of the EU and Japan.

An ACIEP member responded to Ambassador Verveer’s presentation by underscoring the risks of transferring capability and functionality from personal computers to the cloud. As security continues to be an issue, concentrating resources for information technology in a few hands poses risks, and regulation of the system is difficult. He also cited some benefits of cloud computing for industries specializing in high-tech devices (e.g., heart monitors) which can receive important updates easier as a result of the cloud capabilities. The number of SMEs in the U.S. using the cloud has increased.

Other committee members opined on balancing security and privacy concerns, including having a plan to negate the impact of terrorism and hackers without decimating the high tech market. It was also noted that a number of well- known MNEs are working to help develop standards for the cloud. A member pointed out that cloud computing has to be presented in a way that mitigates risks. CEOs and executives think in terms of how to minimize risks for their company. For many companies, putting client information in the hands of a third party and the potential for disruption is a risk too large to take. Another member emphasized the importance of how the U.S. government defines privacy.

The meeting then turned to subcommittee reports, beginning with the report of the Subcommittee on Investment regarding the U.S. National Contact Point (NCP) under the Organization for Economic Cooperation and Development’s (OECD) Guidelines for Multinational Enterprises. A/S Fernandez discussed the efforts, under his leadership, to improve the function of the NCP. The 2011 update to the Guidelines adds a new Human Rights chapter, clarifies the actions enterprises should take to exercise due diligence in the supply chain, improves procedural guidance for NCPs, and advocates a more positive, proactive agenda by NCPs.

Assistant Secretary Fernandez thanked the ACIEP Subcommittee on Investment for providing recommendations to the Department on how the role of the U.S. NCP could be improved. From the Subcommittee’s report, 19 consensus recommendations will be adopted to the extent they are consistent with the updated Guidelines, and subject to the budget constraints faced by the Department. These recommendations for improvements concern the structure and oversight of the NCP and the handling of specific instances. The U.S. NCP function will remain within the Bureau of Economic, Energy and Business Affairs. Permanent staffing of this position has been requested, and current resources have been reallocated to create a new team to work on corporate social responsibility issues. This team will undertake as many outreach and promotional activities as resources will allow. The U.S. NCP website is being expanded and updated along with training and informational materials. Procedural guidance will be fully incorporated into the standard operating procedures of the U.S. NCP. There will be a 12 month target time frame for processing and concluding work on specific instances. The U.S. NCP will have clearer communications throughout the stages of the process. At the conclusion of the proceedings, the U.S. NCP will make public its decisions consistent with the 2011 Procedural Guidance. A complete listing of the procedures for handling specific instances under the Guidelines is available at http://www.state.gov/e/eb/ifd/oia/usncp/index.htm. All of these measures are designed to increase the visibility, accessibility, transparency and accountability of the U.S. NCP, as recommended by the ACIEP Subcommittee on Investment’s Report.

The Investment Subcommittee’s co-chair, Thea Lee, expressed her support for the U.S. NCP reform and noted the improvements on human rights issues, transparency of proceedings, and establishing a more proactive agenda to advocate for the OECD’s Guidelines.

The Chairman of the Sanctions Subcommittee, Barry Carter, then updated the ACIEP on his subcommittee’s recent meetings on U.S. sanctions policy and U.S. efforts to get other countries to support the U.S. sanctions on Iran. The Sanctions Subcommittee will meet with State Department officials in July to discuss conflict minerals and related issues under the Dodd-Frank Legislation, supply chain issues, and abuses of women and children, as potential areas to provide policy advice and recommendations. The State Department has a major role in formulating U.S. policy on conflict minerals.

The Subcommittee on Women Co-Chair, Judith Barnett, discussed her efforts to highlight the economic benefits of women in the workforce and the economic value of women to the nation’s economic bottom line. The subcommittee will also conduct a survey of the research that quantifies the contributions of women to the global community. For instance, Norwegian law dictates that women make up 40% of all corporate boards. The subcommittee is looking at research studies and statistics as a basis for subcommittee recommendations.

At the conclusion of the subcommittee reports, ACIEP Committee Chairman Ted Kassinger thanked the participants and adjourned the meeting.