Summary of Discussions of January 31, 2012 Meeting of the Advisory Committee on International Economic Policy
The meeting was open to the public; however, participants’ statements, other than those cited, are not for attribution. The meeting room was at 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 that Chatham House Rules applied and emphasized that comments were not for attribution.
The meeting examined “A New Focus on Investment: Attracting Inbound Foreign Direct Investment to the United States” and highlighted the U.S.-Turkish economic relationship and the accomplishments of the bilateral “U.S.-Turkey Economic Partnership Commission.” Assistant Secretary of State for Economic and Business Affairs Jose W. Fernandez introduced Barry Johnson, Executive Director of SelectUSA at the Department of Commerce and Kathleen Allegrone, Director for Southern European Affairs in the Bureau of European and Eurasian Affairs at the State Department.
Mr. Johnson began the discussion by providing an overview of SelectUSA. SelectUSA is a government-wide initiative housed within the U.S. Department of Commerce’s International Trade Administration, and its goal is to accelerate business investment in the United States, spur the economy, and create jobs. Established by Executive Order of the President in June 2011, SelectUSA works in partnership with state, regional, and local economic development organizations. It provides enhanced coordination of existing resources and functions across all federal agencies with operations relevant to business investment decisions. SelectUSA supports business investment in the United States by promoting the United States as the premier business location; providing comprehensive information on federal programs and services available; assisting state and local governments to overcome regulatory barriers for domestic and foreign firms seeking to invest in the United States; acting as a one-stop shop for information on federal programs; and coordinating across federal agencies to provide services that supplement state, regional, and local resources to attract, retain, and expand business investment in the United States.
SelectUSA’s pilot programs have been placed in ten target markets which represent 30 percent of the total foreign direct investment into the United States. These countries are Brazil, Canada, China, France, Germany, India, Mexico, Russia, South Korea, and Spain. The Department of State has partnered with Commerce’s Foreign Commercial Service to dedicate resources and increase support for these pilot programs at U.S. embassies. From the Ambassador to junior economic officers, the entire embassy will endeavor to welcome foreign companies and investors looking for new manufacturing sites, potential acquisitions and other investments. Resources will be tailored to the individual needs of businesses.
ACIEP members offered their support for the program. Among questions raised were why there was a 50 percent drop in foreign direct investment (FDI) into the U.S. in the last ten years, what were key obstacles in attracting FDI, and what policy changes were being made. Mr. Johnson explained that the sudden emergence of countries like Singapore and Ireland, which previously were not major players in the international marketplace, contributed to the decline in FDI. The Administration’s efforts to find solutions to the decrease in FDI have made significant advances, including reforming CFIUS policy, making improvements to the process for obtaining business visas, and establishing SelectUSA to coordinate resources throughout the federal government.
Next, the meeting turned to the U.S.-Turkey Economic Partnership Commission. Kathy Allegrone, Director of the Office of Southern European Affairs for the Bureau of European and Eurasian Affairs at the State Department, gave an overview of the strong bilateral relationship between Turkey and the United States, and Turkey’s growing role in global affairs. She outlined how the U.S. bilateral and multilateral agenda with Turkey spans a broad range of issues, including stability and security, trade and investment, counterterrorism and education. Efforts to broaden economic linkages are a natural outgrowth of the long-standing, robust bilateral relationship.
Assistant Secretary Fernandez commented specifically on the U.S.-Turkey Economic Partnership Commission (EPC). Turkey’s reputation as one of the fastest growing global economies and its strong record of growth over the last decade makes it a perfect partner for increased trade and investment. In nominal terms, Turkey has tripled its economy over the last decade, while its exports have quadrupled. In 2011, trade between the two countries increased by 35 percent. There is tremendous opportunity to build on the trade momentum built up in 2011 given that U.S. goods represent only five percent of Turkey’s imports.
Turkey seeks to become a top ten economy by 2023 (“10x23”). In addition to tripling the size of its economy, Turkey seeks specifically to broaden the financial sector, increase energy infrastructure, expand the innovation economy, and enhance the country’s overall infrastructure, including the IT sector, in support of its 10x23 goal. To do so, Turkey will need to attract significant new foreign direct investment, thus presenting significant opportunities for U.S. firms to expand trade and investment with Turkey as well as to partner with Turkish firms. Recognizing this opportunity, in 2009 President Obama and Turkish President Gul called for the creation of a strategic economic relationship to match the level of the political and security ties between the countries. This commitment led to the creation of the Framework for Strategic Economic and Commercial Cooperation (FSECC), which includes the U.S.-Turkey Economic Partnership Commission (EPC) and the Trade and Investment Framework Agreement.
As chair of the EPC, Assistant Secretary Fernandez co-chaired the second EPC meeting of 2011 last October in Ankara. That meeting focused on discussing ways to further cooperation on IPR, agriculture, energy, entrepreneurship, Istanbul as an international financial center, and third country cooperation in the Middle East and North Africa (MENA) region. Six agencies from the United States Government participated in the October EPC. Delegations discussed the importance of developing policies that encourage bilateral trade in agricultural goods, opportunities to support the development of Turkey’s energy sector, and possible cooperation with various sectors to drive exports to the Middle East and Central Asia. The United States and Turkey are working together to encourage partnerships in the energy and machinery sectors. The Near Zero Zone project is designed to illustrate how cost-effective energy efficiency investments can make industry more profitable, reduce dependence on energy imports, and cut carbon emissions. The project will help open a new market for U.S.-made energy efficient products and improve the profit margins for Turkish firms. Opportunities for cooperation in the machinery sector would enhance U.S.-Turkish machinery exports to the Middle East and Central Asia, where Turkey has a strong presence. The United States actively seeks to foster ties between U.S. and Turkish companies across all industry sectors.
Assistant Secretary Fernandez elaborated on an initiative to develop Istanbul as an International Finance Center, an effort that has been enhanced by international exchanges among regulatory and policy experts. A well-developed financial sector is increasingly important to provide the capital necessary to continue Turkey’s six-to-eight-percent annual GDP growth, expand existing sectors, and develop new ones. The EPC promotes innovation and entrepreneurship. The State Department’s Global Entrepreneurship Program is connecting Turkish partners with U.S. counterparts on technology transfer issues. At the EPC meeting, a commitment was made to promote economic development in countries in Africa, the Middle East, and Central Asia. The private sector will be the key ingredient to expanding the economic partnership with Turkey, and the American and Turkish entrepreneurial spirit will work to help fuel economic growth.
An ACIEP member commented on Turkey’s peaceful presence and political stability in a region known for political and civic unrest. Other members were interested in knowing about the likelihood of Turkey becoming a member of the European Union and if U.S. agencies like OPIC and ExIm Bank are involved in the EPC. Ms. Allegrone commented that the United States supports Turkey’s accession to the EU. Assistant Secretary Fernandez responded that U.S. government agencies, specifically OPIC and ExIm Bank, have financed several hundred million dollars in projects in the region.
The meeting then proceeded to a discussion of ACIEP member Ken Miller’s Time magazine cover article, “The China Bubble: We’re Counting on China’s Growth to Save the World.” In the article, Miller gives his perspective of China’s economy and the potential pitfalls of China’s model for growth. A number of ACIEP members voiced concurrence with the concerns raised by Mr. Miller.
Assistant Secretary Fernandez announced that ACIEP members Trevor Gunn of Medtronic Inc. and Owen Herrnstadt of the International Association of Machinists and Aerospace Workers had been named co-chairs of the Stakeholder Advisory Board (SAB). He also read the names of the SAB’s twelve members. A press release of this information was issued and is posted at http://www.state.gov/e/eb/adcom/aciep/index.htm. Under the purview of the ACIEP, the SAB will act as an advisory board to provide counsel on strategies, policies, and procedures related to the U.S. National Contact Point’s (NCP) responsibilities and efforts to promote the OECD Guidelines for Multinational Enterprises. The body will have no role in individual complaints or in reviewing the U.S. NCP’s decisions.
The Subcommittee on Women’s Economic Empowerment presented a report with recommendations to the full Committee, “Corporate Advantage: How Women Leaders Elevate the Bottom Line.” Subcommittee Co-chairs Judith Barnett and Jeff Volk presented the survey of available studies on the economic value of women at the top of corporations and organizations. The report is intended to give attention to practices and policies that encroach on women’s advancement, education, economic prosperity, wellbeing, and overall quality of life. The report provides insights, describes programs, and contains recommendations for promoting women to the most senior positions. Some of the report’s recommendations focused on sharing best practices among senior executives for incorporating diversity, an alternative promotion system for women and men, institutionalizing an ombudsman position, and talking to children about leadership, mentoring, and networking. The report was accepted by the ACIEP and sent to the State Department for consideration and potential integration into initiatives and programs. The report is available at http://www.state.gov/e/eb/adcom/aciep/index.htm
ACIEP Chairman Ted Kassinger announced Nelson Cunningham, Managing Partner for McLarty Associates, will serve as the new co-chair of the ACIEP’s Investment Subcommittee along with Thea Lee, Deputy Chief of Staff, AFL-CIO.
Sanctions Subcommittee Chairman Barry Carter reported on the Subcommittee’s briefing by State Department official Linda Specht regarding recent Administration actions pertaining to U.S. sanctions on Iran. Specht updated the Subcommittee on the sanctions announced in November, including the Executive Order 13590 which expands sanctions on the oil and gas and petrochemical sectors; section 1245 of National Defense Authorization sanctioning the Central Bank of Iran; and U.S. Secretary of State Clinton’s recent imposition of sanctions on three companies from Singapore, UAE, and China. Carter also presented the Subcommittee’s work plan for 2012. The Subcommittee will continue to analyze and possibly make recommendations about U.S. sanctions on Iran and the impact of their implementation on American businesses and jobs. The Subcommittee will also make recommendations about the implementation of provisions regarding conflict minerals and examine U.S. sanctions regarding Burma/Myanmar and Cuba.
At the conclusion of the subcommittee reports, ACIEP Committee Chairman Ted Kassinger thanked the participants and adjourned the meeting.