Major Country Developments
FCIA - 11 August 2016
After a month pondering the likely economic fallout from the UK's referendum to leave the European Union, the Bank of England confirmed that the economy has weakened markedly. The BOE cut its growth forecast for 2017 to 0.8% from 2.3% previously. With that in mind, the BOE cut interest rates for the first time in seven years to 0.25% and announced a package of stimulus measures designed to support growth amid signs that the economy has slowed since the Brexit vote. The consensus is that a recession is likely in the UK and growth will be depressed across the EU over the course of the next two years. The GfK survey, Britain's longest-running gauge of consumer sentiment, has shown consumer confidence falling at the fastest monthly rate since 1990.
The BOE agreed to pump an additional $79 billion of new money into the economy each month through the purchase of government bonds. The injection of extra liquidity demonstrates how seriously the BOE views the potential economic damage from the Brexit vote. Businesses are particularly worried about whether to make investments or hire in Britain without knowing what the country's trade relationship with the EU will be. That could take years to figure out. Meanwhile, the British pound has weakened and is expected to remain weak for the foreseeable future. Warnings from officials in London and Brussels suggest that formal talks over the UK's exit may not begin until the fall of 2017 or later. Such a delay will mean continued business uncertainty.
There are growing concerns that the scale of the task of reaching an agreement with the EU is so complex that it may require much more time than the two-years envisioned under EU rules. Article 50 outlines a path of mutually assured stability for the exit process. During this period the UK would remain an EU member with all the rights and obligations that entails. This is important if European and British corporations and citizens are to make informed decisions about their futures or commit to future spending, investments or residency. Indeed, the article exists precisely because somewhere in the sign-up process the legal authorities advising the state signatories realized that an exit option must not only be included but be properly defined.
This is why it is worrying that a case for unilateral action, which would amount to direct revocation of the UK's participation in EU treaties, is attracting support in political circles. If this road were taken it would send a clear message to the world that long-stated British policy of observing international treaties is over.
While Brexit is not impossible, it can only be brought about with sufficient political skill and will power. In its rewriting of domestic law and policy and its reconfiguration of foreign and trade policy, Brexit will be the biggest single exercise by any UK government in peace time - and all this on top of governing a country in a period of austerity with limited public spending and a small majority in parliament. The 52% vote to leave the EU in a non-binding referendum will increasingly seem flimsy against the sheer magnitude of the task ahead.
Joint Media Statement from the ASEAN Economic Ministers - US Trade Representative Consultation
Press Week: August 8 - 12 - Vientiane, Lao PDR
Consultations between the ten ASEAN Economic Ministers (AEM) and the United States Trade Representative ("the Ministers") were held on 4 August 2016 in Vientiane, Lao PDR. The Consultations were co-chaired by H.E. Mrs Khemmani Pholsena, Minister of Industry and Commerce of Lao PDR and Ms Barbara Weisel, Assistant United States Trade Representative (AUSTR) for Southeast Asia and the Pacific, Office of the United States Trade Representative (representing H.E. Michael Froman, the United States Trade Representative).
The United States (US) commended the establishment of the ASEAN Economic Community (AEC) in 2015 as a major milestone in regional economic integration. The US also welcomed the new AEC Blueprint 2025, which envisages an AEC by 2025 that is highly integrated and cohesive; competitive, innovative and dynamic; with enhanced connectivity and sectoral cooperation; a more resilient, inclusive, and people-oriented, people-centered community; and integrated with the global economy.
The Ministers noted the performance of ASEAN-US bilateral trade and investment. Merchandise trade reached USD 212.8 billion and accounted for 9.3 per cent of ASEAN's total merchandise trade, while services trade reached almost $40 billion, according to ASEAN statistics and the US data, respectively. Foreign direct investment (FDI) flows from the US to ASEAN amounted to USD 12.2 billion in 2015, as per ASEAN statistics, placing the US as ASEAN's third largest source of FDI. Meanwhile, according to US statistics, the US remains one of the largest investors in the ASEAN region in terms of cumulative FDI, reaching over USD 273.4 billion in 2015.
The ASEAN Ministers noted the progress of implementation of US-ASEAN Connect as the new strategic framework for coordination of the extensive US economic engagement with the ASEAN region to deepen and strengthen the economic relationship, as well as the progress of the implementation of the US-ASEAN Trade Workshops, announced by President Obama during the Special US-ASEAN Summit. The Ministers welcomed the progress in implementing the ASEAN-U.S. Trade and Investment Framework Arrangement (TIFA) and the Expanded Economic Engagement (E3) Initiatives Work Plan.
Transparency is one of key to success of trade liberalization and facilitation, and is essential to addressing and eliminating unnecessary barriers to trade. The businesses engaged in international trade and investment, especially small- and medium-sized enterprises, value the predictability that comes with a clear understanding of how policies and practices that will affect them are being developed and how they will be applied. Improving transparency in international trade and investment helps leverage trade to achieve more inclusive growth by improving predictability and accountability.
Therefore, the governments of the ten ASEAN Member States and the United States share a common understanding that the following best practices on transparency and good regulatory practices help improve and deepen the international trade and investment relationship among ASEAN countries and the United States to the benefit of our economies, businesses, workers and consumers:
Developing, using, or strengthening processes, mechanisms or bodies to enable a whole-of-government approach in the development of measures that may affect international trade and investment, including coordination across relevant government agencies. Ensuring that draft regulatory measures define the problem they seek to address, set clear policy objectives, assess all feasible options that may constitute viable means for fulfilling the objectives, and analyze the impacts arising from these options.
Publishing plainly written, clear and concise draft measures for public comment with adequate time for the public to review, so that a broad range of stakeholders " public and private, foreign and domestic " can provide input that may is taken into account and can lead to improved outcomes.
Providing that final measures are promptly published, for example via the Internet, in such a manner as to enable stakeholders to become acquainted with them. When possible, providing a reasonable period of time before entry into force. Designating an official journal or journals, which are made readily available to the public, and publishing any proposed and final measures in such journals.
Maintaining public mechanisms for the correction of administrative actions.
ASEAN-US Cooperation in Fostering International Investment
The Government of the United States of America and the Association of Southeast Asian Nations recognize the importance of creating and maintaining open and stable investment climates and policies in promoting sustainable economic development and growth, job creation, increased productivity, technological innovation, and competitiveness.
We therefore reaffirm our shared support for the following non-binding principles regarding international investment, which we believe are essential elements that provide general guidance for developing and maintaining open investment policies worldwide. ASEAN and the United States agree to undertake increased cooperation, including capacity building, and provision of technical assistance.
We share the view that these elements do not preclude governments from adopting and maintaining legitimate, non-discriminatory measures to pursue certain public policies.
Open and Non-Discriminatory Investment Climates: Governments should, subject to limited exceptions, provide broad market access to foreign investors and allow them to establish investments and conduct business on terms no less favorable than those available to domestic investors or other foreign investors.
A Level Playing Field: Governments should seek to enhance their understanding of the concrete challenges posed by state influence in relation to commercial enterprises, which is playing an increasingly significant role in the global economy, and work to coordinate their approaches to address these challenges. To this end, we recognize work in the area of "competitive neutrality", which focuses on the importance of state-owned entities and private commercial enterprises being subject to the same external environment and competing on a level playing field in a given market.
Strong Protection for Investors and Investments: Governments should provide legal certainty and protection against discriminatory, arbitrary, and otherwise unfair or harmful treatment to all investors and investments, including both tangible and intangible property, such as intellectual property rights, in their territories. This includes the right to prompt, adequate, and effective compensation in the event of a direct or indirect expropriation or nationalization.
Fair and Effective Dispute Settlement: Governments should provide access to effective dispute settlement procedures, including investor-to-State arbitration, and ensure that such procedures are open and transparent, with opportunities for public participation, as available.
Robust Transparency and Public Participation Rules: Governments should seek to ensure transparency and public participation in the development of domestic laws and other measures relating to investment.
Responsible Business Conduct: Governments should urge that multinational enterprises operate in a socially responsible manner and promote responsible business conduct, as reflected in instruments such as the OECD Guidelines for Multinational Enterprises.
Narrowly-Tailored Reviews of National Security Considerations: Governments should ensure that their reviews of national security implications of foreign investments focus exclusively on genuine national security risks.
Trade Drives America's Growth & Jobs
Here are four fast facts about how America benefits from trade and trade agreements:
MORE JOBS: The US economy relies on international trade as a source of growth and job creation, with trade now supporting more than one in five American jobs - totaling 41 million jobs.
HIGHER GROWTH: Trade agreements, and in particular the 14 current US free trade agreements (FTAs) with 20 countries, have contributed importantly to US growth, competitiveness and jobs.
TRONGER STANDARDS: Trade agreements, especially FTAs, have also helped put in place strong, enforceable and fair rules governing trade in services, manufactured goods and agricultural products, promoting innovation and protecting intellectual property rights.
GREATER OPPORTUNITY: The fact is that future customers and sales growth for American companies and their workers are located outside the United States. To take fullest advantage of these growing markets, we need to complete more trade agreements. Expanding opportunities for America's exporters, including through trade agreements like the Trans-Pacific Partnership (TPP), is good for business, good for the US economy and US jobs.
All Americans win when we compete with the rest of the world on an even playing field. And that is exactly what the Trans-Pacific Partnership (TPP) does when it comes to trade between the United States and 11 Asia-Pacific countries with nearly half-a-billion potential consumers of American goods and products. The TPP ensures that other countries don't keep US products out and will increase demand for made-in-the-USA manufactured goods while supporting higher-paying jobs right here in America.
AES Message Helps Shippers Keep Track of Export License Values
American Shipper - August 11, 2016
US Commerce Department's Bureau of Industry and Security, along with US Customs and Border Protection, have released a new function in the Automated Export System that helps shippers keep track of their export license value thresholds. Each export license has a value limit for the amount of the good that a company can legally ship. BIS tracks the value amount exported against the license through a "decrementation" process.
AES now provides an automatic informational message to the filer each time a shipment is exported against its Commerce Department license. The BIS informational message was recommended by President's Export Council Subcommittee on Export Administration's Process Improvement Team and activated July 28.
Depending on the circumstances of the filing, notifications may alert the filer that:
* BIS license value has been met or exceeded by a prior filing;
* BIS license value has been exceeded by the current filing;
* The allowable shipping tolerance (10% over BIS license value) has been exceeded by the current filing;
* Or the remaining value on the BIS license (may be negative).
"These messages will not preclude the issuance of an ITN, nor will they result in a fatal error," BIS said. "The intent of this action is to enable filers to better track their own license usage and to identify potential filing errors so that corrective action can be taken immediately," the agency added. This function is conducted in a similar way to licenses issued by the State Department's Directorate of Defense Trade Controls for items subject to the International Traffic in Arms Regulations.
Questions and comments about this change may be directed to the BIS Office of Technology Evaluation by phone at (202) 482-4933 or by email at ECR_AES@bis.doc.gov. In addition, the BIS Office of Technology Evaluation recently recreated the agency's data portal. The new data portal features statistical reports on US trade with other countries and export control reform analyses. It also has two data sets featuring 2015 aggregate export totals by value, country, Export Control Classification Number (ECCN) and license type. These data sets are in open, machine-readable formats to allow users to create their own reports, BIS said.
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