Summary of Policy Issues - 2008

The below issues were presented to members of the U.S. Congress and the Administration during the Washington Doorknock, June 8-14, 2008. Click here to download a pdf version.

Executive Summary

The Asia-Pacific Council of American Chambers of Commerce (APCAC) is an association of 25 American Chambers of Commerce (AmChams), which represents the growing interests of over 50,000 executives and more than 10,000 businesses in 19 countries of the Asia-Pacific region. The APCAC membership manages trade volumes in excess of $400 billion

The AmChams of the Asia Pacific Council of American Chambers of Commerce (APCAC) are working together to highlight the need for Congressional action in the following areas:

1. U.S. Engagement in the Asia Pacific Region

While the United States government has sought to engage constructively and frequently with Asia in recent years, there is still a very strong perception and concern among government leaders about the U.S. commitment to the economic security of the Asia Pacific region, beyond the military, security, and terrorism-related areas which are frequently discussed.

APCAC would like the U.S. government to engage further at senior levels with their Asia Pacific counterparts on bilateral and multilateral issues affecting these countries’ relationships with the United States. The State Department can play a key role in this through greater public affairs efforts aimed at improving perceptions of U.S.-Asia relations.

2. Trade Liberalization

Continued progress on trade negotiations that open up markets for U.S. products and reduce tariffs and non-tariff barriers are essential to keep America competitive.

APCAC believes that Congress should extend to the Executive Branch Trade Promotion Authority (TPA) to enter into trade agreements that promote America’s competitiveness. Congress and the Executive Branch should continue to pursue trade policies that support trade liberalization through expansion of bilateral free trade agreements (FTAs), the Doha Round, and active U.S. engagement in the Asia Pacific Economic Cooperation (APEC).

3. U.S. Tax Policy

Responding to legislation in 2006 that significantly raised taxes on Americans working abroad, the Asia Pacific Council of American Chambers of Commerce (APCAC) is leading an effort with the active commitment of several AmChams to support a coalition called the Alliance for a Competitive Tax Policy (ACTP).

In the interest of supporting Americans who are working abroad to sell U.S. products, APCAC and ACTP urge Congress to reverse the specific provisions of the 2006 Tax Increase Prevention and Reconciliation Act (TIPRA), which raised taxes on working Americans overseas. APCAC and ACTP also urge Congress to enact tax reform measures that will make the U.S. tax code more competitive with the rest of the industrialized world.

1. U.S. Engagement in the Asia Pacific Region

25% of all U.S. exports (worth US$223 billion) currently go to Asia Pacific countries. Asia Pacific countries are signing more and more preferential trade agreements with U.S. competitors such as Australia and Japan. It is critical to U.S. economic competitiveness in Asia for country to remain engaged with Asian nations on areas affecting U.S. businesses abroad.

Perception of U.S. engagement in the Asia Pacific region still plays a critical role among many regional and local government leaders. While the United States has sought to engage constructively and frequently since September 11, 2001 through increased bilateral and multilateral trade, high-level U.S. government visits, providing aid assistance in cases of natural disasters, there is still a very strong perception and concern about the U.S. commitment to Asia, beyond the military, security, and terrorism-related areas which are so frequently discussed.

The U.S. government can help to strengthen further its solid, long-term commitment to Asia through greater public affairs outreach by the State Department and individual embassies in the respective Asian markets. Many senior American business executives also believe U.S.-Asian relation can be strengthened further through the following recommendations:

Recommendations:

a. Intensifying the U.S. Trade Representative’s involvement with APEC economic ministers and through associated forums. Ambassador Susan Schwab’s resumption of dialogues with her ASEAN counterparts two years ago was an important part of U.S. engagement. USTR officials have worked extensively with their counterparts. The consistency of this commitment is critical.

b. Establishing closer working ties and attaining concrete, achievable objectives from the U.S.-ASEAN Trade & Investment Framework Agreement (TIFA).

c. Reviewing and considering a potential U.S.-ASEAN FTA in the future, as well as US support and involvement in the P4 agreement.

d. Making it possible for the U.S. and Asia Pacific markets without bilateral tax treaties to develop such agreements.

e. Organizing more high-level visits to the region by senior U.S. officials, and greater recognition of the Asia Pacific region in U.S. policy decision-making processes.

f. Providing increased visibility for Asia among American companies for investment and trading opportunities.

g. Continuing to improve the visa-issuance processes for residents of Asia Pacific countries, especially in those markets where there is greater demand for non-immigrant visa travel to the United States.

h. The U.S. should participate in the APEC Business Traveler Scheme.

2. Trade Liberalization

According to the U.S. Department of Commerce, American exports of goods and services in 2007 totaled more than $1.6 trillion - the highest recorded level for the United States. In fact, the National Association of Manufacturers (NAM) reports that exports are expected to grow by 7.6 percent in 2008, doubling the projected rate of import growth. This projected export growth marks the fourth-consecutive year that export growth outpaced increases in imports - a first in 17 years.

NAM also estimates that continued growth in exports will generate nearly a quarter of total U.S. economic expansion in 2008. As the United States tries to recover from its current economic slowdown, exports are an indispensable engine of growth.

Exporters are not just the big multinational corporations; 65% of all U.S. exporters are businesses with fewer than 20 employees. More than 5.1 million Americans receive their paychecks from U.S. subsidiaries of overseas-based companies. America drives the global economy, but 95 percent of the world’s consumers (and thus potential purchasers of U.S. products and services) live outside of the United States. Over the past six years, exports to U.S. FTA partners are growing twice as fast as U.S. exports to the rest of the world

Therefore, Congress and the Administration should continue to pursue trade policies that support economic liberalization through an expansion of bilateral FTAs, the Doha round of multilateral agreements, and U.S. active engagement in the Asia Pacific Economic Cooperation (APEC).

Recommendations:

a. Support renewal of Trade Promotion Authority (TPA) to allow the U.S. government to enter into market-opening and economic-enhancing trade agreements.

b. Support approval this year of the Korea-U.S. (KORUS) Free Trade Agreement (KORUS FTA), which would support $78B in two-way trade between the United States and Korea. A KORUS FTA would eliminate tariffs on 95% of traded products within three years.

c. Support timely completion of negotiations on the U.S.-Malaysia FTA and resume negotiations on the U.S.-Thailand FTA.

d. Support continued U.S. engagement with the Association of Southeast Asian Nations (ASEAN) through the Enterprise for ASEAN Initiative (EAI), an eventual U.S.-ASEAN FTA, and pursue consideration of an Economic Integration Agreement with Japan.

e. Support U.S. participation and expansion of the Trans-Pacific Strategic Economic Partnership Agreement ( “P4”), signed by Brunei, Chile, New Zealand, and Singapore, to enhance trade opportunities for U.S. companies throughout the APEC region.

f. Support initiatives to promote fair and free trade in government procurement, to combat corruption, and support adherence to the Foreign Corrupt Practices Act (FCPA).

g. Oppose legislation that would harm U.S.-China trade relations.

h. Support a Generalized System of Preferences (GSP) program for Vietnam.

3. U.S. Tax Policy

Section 911 of the Internal Revenue Code provides a limited tax exemption for foreign-earned income of American citizens to partially offset the fact that all other industrialized countries waive taxes on income earned abroad by their citizens.

The Asia Pacific Council of American Chambers of Commerce (APCAC), and several Asia-based American Chambers of Commerce (AmChams), have formed a coalition called the Alliance for a Competitive Tax Policy (ACTP). The effort is also supported by AmChams in the Middle East, Europe and South America.
There are an estimated four million Americans living abroad. These Americans are on the sales teams and the front lines of the competitive world marketplace and deserve fair tax treatment. For the sake of America’s workers abroad, and for America’s strength in the increasingly global marketplace, we urge Congress to repeal changes made in the Tax Increase Prevention and Reconciliation Act (TIPRA) which increased taxes on working Americans overseas, and to work to bring the U.S. tax system into line with the rest of the industrialized world.

Bipartisan legislation, entitled the Working American Competitiveness Act, has been introduced in the Senate by Senator Jim DeMint (R-SC) as S. 1140, and in the House by Congressman Gregory Meeks (D-NY) as H.R. 4752. A similar bill was recently introduced by Congressman Scott Garrett (R-NJ). The bills would eliminate the unfair taxation of Americans working abroad by removing the limitation on the foreign-earned income exclusion.

Recommendations:

a. Cosponsor and support the Working American Competitiveness Act (H.R. 4752/S.1140.

b. Support efforts to remove the provisions of TIPRA which raised taxes on Americans working abroad.

c. Oppose any attempts to abolish or further limit the Section 911 exclusion.

d. Support fundamental reform of the U.S. tax system to make our tax policies more competitive with our international trading partners.