Volume 1
Issue Friday, October 06, 2006
Amcham Newsletter October 2006 Issue Volume 2
Volume 2 Issue 3, October 2006 Official Newsletter of AMCHAM - Mauritius AmCham President's Welcome Address Dear AmCham Member, The American Chamber of Commerce- Mauritius is pleased to issue the October-December 2006 issue of its Newsletter. We have been busy the past few months organising various initiatives for your business needs as well as your enjoyment. Recent business lunches have welcomed Richard Zurba, Director of Zurcom International & The Council of Great Lakes Governors of North America and the Minister of Finance & Economic Development, Hon. Rama Sithanen. On June 13, the AmCham was honored to present former US Ambassador to Mauritius, Mr. John Price with an Honorary Membership to the Chamber for his contribution both past and present to our work advancement. Mr. Price returned in October and attended the lunch hosting Mr. Sithanen. The AmCham board and membership were sad to see the departure of Mr. Lee John (LJ) Updike, who served as Vice President during the past 18 months. LJ and his family moved back to the US in August and will keep close touch with us. We are pleased to advise that Mr. Randall Buday has kindly stepped in as Vice President for the remainder of this mandate. Several member hotels recently proposed to offer preferential rates to AmCham members. Le Labourdonnais and Le Suffren Hotels and the Paradise Cove Hotel are now offering discounts on room rates to AmCham members. Please call AmCham at 213 4294 for further details. The AmCham is currently organizing its annual Thanksgiving Charity Event to be held in late November. We are planning a variation to the theme for this year. Any members who wish to assist with the event, please call at 213 4294 to submit your name. Thank you for your continued support. Sincerely, Aleda Koenig President American Chamber of Commerce _______________________________________________________________ US Embassy Address SEPTEMBER 11, 2001 - FIFTH ANNIVERSARY COMMEMORATION Monday marked the fifth anniversary of the September 11th, 2001 terrorist attacks in the United States. We remember the horrible visions of watching planes fly into the World Trade Center and seeing the towers collapse before our eyes. We remember the sight of the Pentagon broken and in flames. We remember the brave passengers who charged the cockpit of their hijacked plane and stopped the terrorists from reaching their target and killing more innocent civilians. The victims of September 11th were citizens of more than 90 different countries and adherents of many faiths, including Christianity, Hinduism, Judaism and Islam. Terrorism affects all of us. It has brought tragedy, destruction, death and terrible grief to innocent people across the world, from Indonesia to Morocco, Spain, Jordan, United Kingdom, India and Egypt. Since Osama Bin Laden declared war on America ten years ago, thousands of people of many nations, religions, races and beliefs have been murdered pointlessly as a result of his instigation or incitement of acts of terror. Terrorist attacks against the United States and our friends and allies began long before we acted to remove the Taliban regime, which was harboring al Qaeda in Afghanistan, or to remove Saddam Hussein's brutal regime from power in Iraq. The terrorists, such as those who were responsible for September 11 and those who were behind the most recent mass murder plot targeting airplanes flying between the United Kingdom and the United States, and the July attacks on trains in India, have long targeted innocent people. Al-Qaeda and its associates want to impose a Taliban-like tyrannical regime on the many proud and sovereign nations of the Islamic world, and they have nothing but intolerance for all those who do not share their extremist beliefs. Through the indiscriminate killing of innocent people, they have repeatedly shown their contempt for human life, regardless of race, ethnicity or religion. We saw the type of society they seek in the former Taliban rule of Afghanistan, when little girls were not allowed to go to school, women were not allowed to work, music banned, and cultural and historical icons were destroyed. The fight against terrorism is a concerted fight for values and principles that are universal. Much more unites the citizens of the world than divides them. Across all borders, we share a common humanity. While the color of our skin, the language we speak, or the way we worship may be different, people everywhere aspire to speak their minds, participate in their society, worship freely, live in security, and pursue education, jobs and greater opportunities for their families. As we look back on the events of September 11, 2001, we must also look forward. Americans seek to work in a spirit of partnership with all people of all nations across the world to confront this ideology of hate and work together to foster a climate of hope, peace, and opportunity. America is far from perfect, yet we believe the ideals of freedom and justice that guide us are widely shared by people throughout the world. We want to work with nations throughout the world in ways that will result in a more peaceful and prosperous world, and a better life for people everywhere. In memory of those who lost their lives that tragic day, we renew our commitment to our founding conviction that all people are equal and equally deserving of justice, respect, opportunity and dignity. New U.S. Ambassador to Arrive in October Mr. Cesar Benito Cabrera, the next U.S. Ambassador to Mauritius (and Seychelles), plans to arrive in Mauritius in October 2006. Mr. Cabrera is from the Commonwealth of Puerto Rico where he owned and operated several companies involved in real estate, construction, and development. On September 13, 2006, the U.S. Senate confirmed Mr. Cabrera to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Mauritius and Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Seychelles. He was sworn in as Ambassador by Under Secretary of State Nicholas Burns on October 2. US Chamber of Commerce President's Address July 5, 2006 To: U.S. Chamber Board of Directors From: Tom Donohue SUBJECT: President's Update - June 2006 In June, several pieces of important legislation moved forward in Congress. The Chamber's National Chamber Litigation Center continued to score significant legal victories. The Chamber unveiled an initiative to improve K-12th grade education, which is unprecedented for our organization. I joined transatlantic business and government leaders in Vienna and Madrid for discussions on the challenges facing the global trading system. And, Chamber Chair Maura Donahue turned over the gavel to Caterpillar's Gerry Shaheen at our June board of directors meeting. It was a very busy month! Update on Key Business Legislation Let me briefly update you on some recent legislative developments. Immigration - The House Republican leadership has announced that field hearings would be held around the country during this summer's Congressional recesses. The plan was widely seen as part of a strategy to delay convening a conference committee to reconcile the major differences between recent immigration bills passed by the House and Senate. The Chamber, you will recall, strongly opposed the House bill, which focuses on enforcement only and fails to address the current and future needs of the American workforce. We prefer the Senate bill despite some shortcomings. The Chamber's immigration goals are to better protect our borders, deal compassionately and practically with the 11-12 million undocumented immigrants now in the country, and establish a guest worker program so that we can meet our workforce needs at all skill levels. The hearings will have no legislative value. More likely, they will lead to further polarization on this emotional subject rather than consensus-building. We will nonetheless ensure that the business voice is heard throughout the process in all appropriate ways. Immigration opponents might do well to check their assumptions as to where the majority of Americans stand. In a conservative district in Utah, where immigration was the number one issue, Rep. Chris Cannon faced off last month against a primary challenger who based his entire candidacy on opposition to a comprehensive approach to immigration reform. Rep. Cannon supports us on this issue, and the Chamber devoted money and manpower in his district to mobilize business community support. In fact, we were the only national organization to do so. Rep. Cannon prevailed by a vote of 56-44 percent. For more information on our ongoing push for comprehensive immigration reform, please contact Randy Johnson, Vice President of Labor, Immigration and Employee Benefits, at (202) 463-5522. Death Tax - On June 22, the House passed the Permanent Estate Tax Relief Act, reducing the death tax burden on small businesses and families. This bill would exempt more small businesses from the death tax and significantly reduce the rate for others. Most importantly, it brings much-needed certainty to small businesses planning. The House bill raises tax exemption levels for estates from $2 million currently to $5 million for individuals and $10 million for couples and indexes the amount to inflation. Estates worth up to $25 million would be taxed at rates equal to the capital gains rate, currently 15%. We are now lobbying the Senate to adopt this approach. Majority Leader Bill Frist hopes that after the July 4 recess, there will be sufficient Senate support to move the bill out of his chamber. For more details, please call the Chamber's Chief Economist Marty Regalia at (202) 463-5620. Pension Reform - It is critical that Congress pass a final pension reform bill this year, and the Chamber is working hard to achieve this goal. Both the House and Senate have passed bills, and now conferees are working to iron out differences. The Chamber's primary objective is that any legislation encourage rather than discourage companies from continuing to provide voluntary retirement benefits for workers. More specifically, we are telling House-Senate conferees: The state-of-play on the complex negotiations surrounding pension legislation is changing almost daily. For updates, please contact Aliya Wong, Director of Pension Policy, at (202)-463-5458. Offshore Energy Development - The great contradiction of current U.S. energy policy is this: On the one hand, members of Congress repeatedly decry our dependency on foreign oil and browbeat our energy companies over high prices and refinery capacity. On the other hand, many of these same lawmakers support policies that have locked away the tremendous untapped domestic resources that we know exist. In a positive sign that reality may finally be taking hold, the House has voted to significantly loosen the restrictions on offshore energy exploration and oil and gas drilling. A number of Democrats as well as labor union leaders supported this Chamber-backed measure. Adding to the impetus for change were recent reports that countries such as China are making plans with Cuba to develop energy off the Cuban coast - and close to the American coast - while our own companies are locked out. The bill must now pass the House and then as usual, face more difficult hurdles in the Senate. For the latest developments on energy, please call Bill Kovacs, Vice President, Environment, Technology and Regulatory Affairs at (202) 463-5533. CFIUS Reform - Following the political uproar over the recent effort (since withdrawn) by a Dubai company to operate terminals within a number of U.S. ports, lawmakers in both the House and Senate rushed to toughen the procedures governing the approval of foreign purchases of U.S. companies and assets. Currently, reviews and approvals are handled by a Department of Treasury-led interagency group called the Committee on Foreign Investment in the United States (CFIUS). The Chamber has led the fight against undue restrictions that could jeopardize investment and job creation in our country, while triggering retaliation against our own companies abroad. We have mobilized companies and the business community and, while the battle is not over, we have thus far been successful in keeping Congress from messing up a major source of jobs and capital for Americans. The House Financial Services Committee recently approved a CFIUS reform bill which meets most of our goals. We support it over a more burdensome Senate proposal. Foreign investors already employ 5.1 million Americans and indirectly support tens of millions of additional U.S. jobs. We must not allow our legitimate security concerns to choke off the current and future livelihoods of Americans who work for international companies in an increasingly interdependent global economy. For more information, please contact Bruce Josten, Executive Vice President of Government Affairs, at (202) 463-5310. National Uniformity for Food Act - Earlier this year, the House passed a measure we strongly support to amend the federal Food, Drug, and Cosmetic Act by extending national uniformity to food safety and warning label laws. These requirements have been governed by a patchwork quilt of inconsistent state and local regulations. This is not only a wasteful burden for companies, but the resulting confusion diminishes the effectiveness of such warnings for consumers. The National Uniformity for Food Act strikes a reasonable balance between national and state interests. There would be ample time for review and harmonization of pre-existing state rules. Inspection and enforcement would still be handled by the states. With the House on record and a Senate version introduced in May, we are now seeking additional Senate cosponsors and hearings. For more information, please contact Amy Ericksen, Counsel to the Chamber's Environment, Technology and Regulatory Affairs Department, at (202) 463-5783. Supreme Court Victories and Expanding our Legal Advocacy While business legislation moves through Congress, the Chamber's law firm, the National Chamber Litigation Center (NCLC), continues to contribute to important business victories in the courts, including the nation's highest court. Completing its most recent term, the U.S. Supreme Court handed NCLC a record 10 victories in cases critical to the business community. Among the most significant victories were: Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, which reduced the kinds of securities class actions that can be litigated in state court; Anza, et al. v. Ideal Steel Supply Corp., which limited the scope of civil RICO (Racketeering Influenced and Corrupt Organizations) litigation; and DaimlerChrysler v. Cuno, which struck down challenges to Ohio's ability to award investment tax credits to a company engaged in economic development. NCLC also was successful in persuading the high court to accept review of four other important business cases, including Philip Morris v. Williams, the first punitive damages case to be heard by the court since it decided the landmark State Farm v. Campbell case in 2003. This is a critical victory because lower courts have already started veering from the "State Farm" guidelines which significantly restricted punitive damages. Hopefully, the Supreme Court will see fit to "crack the whip" again. The Litigation Center has also just announced the formation of the California Litigation Advisory Committee to solely focus on California cases that adversely impact the business community. More and more companies are expressing increasing concern over the regulatory climate in California, particularly the state's propensity to undermine national policy. This committee's goal is to help us design a litigation strategy for businesses operating in such a challenging climate. For details regarding NCLC's Supreme Court record and its California project, please contact Robin Conrad, Senior Vice President of NCLC, at (202) 463-5343. Chamber Announces Reform Strategy for K-12 Schools After a long tradition of staying out of most aspects of the K-12 school reform debate, the Chamber can no longer sit on the sidelines. America is at risk of being left behind if it doesn't improve its education system. There are warning signs everywhere. Thirty percent of our young people are not even graduating from high school. Many who do are ill-prepared for higher education or the workplace. Our students are lagging behind in math and science. In order to improve education, we must first assess what works and what doesn't. Our goal is to inform citizens and businesses on how their state is performing and then promote improvement. To accomplish this, we are launching a new program to assess how each state's K-12 education system is preparing its students to compete in the 21st century and will recommend specific reforms necessary to improve competitiveness. The Chamber has assembled a bipartisan team of experts to aggregate and analyze current data and supplement it with new research that examines return on investment, budget transparency, and the relationship between per pupil spending and student achievement. We will use the results of the analysis to formulate and aggressively advance public policies to improve state education systems across the country. The partnership is being led by Arthur Rothkopf, president emeritus of Lafayette College and a senior vice president at the Chamber. It includes the Center for American Progress, a research and educational institute led by former Clinton White House Chief of Staff John Podesta, and Frederick Hess, director of education policy studies at the American Enterprise Institute for Public Policy Research and a leading voice for education reform in America. The team will grade state education performance in a number of key areas. The results will be released in the beginning of 2007. Without world-class education, our nation has little hope of maintaining and building on our global economic leadership in the 21st century. We are in the process of committing national economic suicide by refusing to face up to the serious inadequacies of our K-12 public education system. For more information, please contact Arthur Rothkopf, Senior Vice President and Counselor to the President, at (202) 463-5359. Improving Commercial Relations with Europe I have just returned from a 5-day trip to Europe where I participated as a senior business advisor at the Transatlantic Business Dialogue in Vienna. As you may know, this is a roundtable of CEOs from both Europe and United States, with participation from senior leaders in our governments. Our discussion mirrored, in part, the talks between President Bush and EU leaders at their summit. We had a good opportunity to consider the issues of energy security, pushing ahead on the Doha round, working together to thwart the theft of intellectual property, and the need to make regulatory systems more compatible across the Atlantic. I then went on to Madrid to explore these and other issues with business and government leaders. Meetings with top Spanish companies, many of whom are anxious to tap the growing Hispanic market in the United States, resulted in new membership support for the Chamber. For more information about the Chamber's expanding links with European business organizations, companies and governments, please contact Gary Litman, Vice President, Europe and Eurasia Affairs, at (202) 463-5482. Chamber Welcomes New Business Leadership Our chair for 2005-2006, Maura Donahue, will certainly be a tough act to follow. She not only did a tremendous job promoting the Chamber's policy priorities, but she was a highly visible and vocal advocate for gulf coast businesses impacted by the 2005 hurricane season. While Maura assumes the Chair of our Executive Committee, the board has chosen two outstanding leaders to serve as chairman and vice-chairman in the coming year. Chairman Gerald L. Shaheen, Group President of Caterpillar Inc., is immensely admired in the business world for his pivotal role in building Caterpillar into a competitive and profitable company around the world. During his term, Gerry will focus on the steps the U.S. needs to take to remain globally competitive, including providing greater access to health care, improving the deteriorating education system, reducing lawsuits, and engaging in global trade and investment. Gerry will be ably assisted by our new vice chairman, Paul S. Speranza, Jr. Paul is Vice Chairman, General Counsel, and Secretary of Wegmans Food Markets, Inc. He brings an excellent combination of both business and leadership experience to this position. Paul will address state and local chambers, associations, and other business groups to advance pro-growth policies and programs. Please don't hesitate to contact me at (202) 463-5300 if you ever have any questions. In my absence, feel free to call Suzanne Clark, the Chamber's COO, at (202) 463-5549. Until next month... Update From US Chamber 1 June 26, 2006 TO: American Chambers of Commerce Abroad FROM: Daniel W. Christman Senior Vice President, International Affairs U.S. Chamber of Commerce SUBJECT: Update - June 2006 As we approach the year's mid-point, it's clear this has been a tumultuous period for the international trade and investment agenda. While the U.S. Chamber team has been laboring to secure approval of new trade deals with Oman, Peru, and Vietnam in the U.S. Congress, we have also focused on making sure that Americans understand the benefits of international trade and investment. Consider these facts: _ International trade now accounts for 27% of the $12 trillion U.S. economy. _ Our exports to the world support at least 12 million American jobs, jobs that generally pay 18% more than other jobs. _ Tuitions paid by foreign students on our university campuses, which are counted as "exports" of educational services, exceed the value of our arms exports to the entire world. I'll highlight below our efforts on a range of issues that impact many of your members, including the latest Congressional action on national security reviews for foreign investment in the United States, comprehensive immigration reform, and Section 911. I'll also share a few words about the various trade bills in the Congress. Given the plethora of opinions on the state of the U.S. economy, I'll conclude with a short synopsis of how the U.S. Chamber currently sees the economic outlook. National Security and Foreign Investment As discussed in some detail in my March letter, the DP World fiasco led to a variety of Congressional proposals purporting to "reform" the workings of the Committee on 2 Foreign Investment in the United States (CFIUS). The Chamber and other business organizations have been laboring to ensure that any changes to the process for vetting foreign investments maintain a focus on true national security issues. Above all, any legislative changes to enhance the CFIUS review process must retain its focus on legitimate national security issues and avoid measures that would unduly discourage foreign investment in the United States, which currently supports more than five million American jobs. In recent weeks, members of Congress have engaged in a dialogue with experts from academia, think tanks, and the business community to bring a more clear-headed approach to this issue. On June 14, the House Financial Services Committee approved a bill that would offer some carefully modulated reforms to the CFIUS process. It would require all transactions involving state-owned companies to receive an additional 45-day review and would afford greater transparency for the review process. We will remain closely engaged on these issues in the weeks and months ahead and will keep you informed. Pushing for Comprehensive Immigration Reform As evidenced by the large demonstrations in April across the United States, proposals for comprehensive immigration reform have generated a passionate debate. The fundamental issue facing the United States in the current debate is whether we can shape a policy that balances our openness and compassion as a people while protecting our security and meeting the workforce needs of our economy. The U.S. Chamber supports comprehensive immigration reform that strengthens border security; provides an earned pathway to legalization for the estimated 12 million undocumented residents; establishes a guest worker program that provides the workers we need for a growing economy and an aging society; and creates a workable verification system. Such a system must be supported by the federal government as part of its fundamental border and homeland security responsibilities - so that employers can accurately and fairly determine the legal status of potential employees. Where do things stand now? In late May the Senate passed S.2611, the Comprehensive Immigration Reform Act of 2006. The bill is designed to improve security and border enforcement, increase employer sanctions for knowingly hiring illegal aliens and establish an employment eligibility confirmation system. The bill addresses the country's need for workers by creating a new temporary worker program and implements a workable way to deal with the undocumented immigrants working in the United States by providing avenues for certain undocumented workers to achieve legal status and ultimately lawful permanent residency, provided strict criteria are met. The House and Senate have passed very different bills, and the House has decided to hold hearings around the country during the August district work period to gather more information. While coming up with a compromise between the two bills will be difficult, the Chamber will continue to fight for a principled and practical approach to comprehensive 3 immigration reform. Recognizing President Bush's commitment and the leadership of key members of Congress, we will continue to press for a bill to be passed this year. Defending Section 911 Unfortunately, new legislation signed into law in May will present Americans working overseas with higher tax bills. A bill providing billions of dollars in tax relief for American companies (it extends rates on capital gains and raises exemptions to the Alternative Minimum Tax) at the same time reduced the benefits provided to U.S. citizens living and working abroad through the foreign-earned income and employer-provided housing exclusion rules included in Section 911 of the Internal Revenue Code. Chamber staff have laid out in earlier communications the anatomy of this expensive setback. We've known for years that Senate Finance Committee Chairman Grassley has opposed the Section 911 foreign-earned income exclusion, and we've worked diligently to counter this position. Many AmChams joined with the U.S. Chamber to underwrite a study that laid out the economic benefits of Section 911, and Chamber staff held dozens of meetings on Capitol Hill in late 2005 and early 2006 to educate members and staff about the benefits of Section 911 for the U.S. economy. However, the provisions to curtail Section 911 appeared in the bill only in the final phase of the legislative process, at which point the legislation was no longer open to amendment (though the U.S. Chamber was the only major business organization to protest at the provisions to limit Section 911 benefits). A wide variety of experts believe these changes cannot be reversed at present, and, indeed, we must work hard to ensure Section 911 benefits are not trimmed further. Senator Jim DeMint has proposed legislation to eliminate the current ceiling set on the foreign earned income exclusion under Section 911 - and so to truly treat Americans working abroad in the same way foreign governments do their own nationals. However, the odds that this bill or any legislation with this intent will become law appear remote. The Chamber will continue to fight for these important benefits to be maintained. On June 16, the Chamber's Executive Vice President for Government Affairs, Bruce Josten, wrote a letter to the Senate emphasizing that "In today's global business environment, companies require employees with strong international experience. Unfortunately, our tax policy is often an impediment to this goal. The U.S. operates under a world-wide tax regime, taxing all income regardless of where it is earned. This treatment often makes it cheaper for U.S.-based multinational firms to hire foreign workers when expanding operations overseas, rather than develop American talent, especially in lower-tax countries." Our goal is to work closely with key members of the Senate on the implementation of the law to ensure that the positive aspects are fully utilized while minimizing the unfortunate consequences of the recent changes to Section 911. But rest assured, we have not given up the fight! 4 Advancing the Trade Agenda On June 21, the Chamber sent to the Congress an urgent letter signed by over 150 companies and associations urging action before the August Congressional break on the U.S.-Oman Free Trade Agreement, the U.S.-Peru Trade Promotion Agreement, nd legislation granting Permanent Normal Trade Relations to Vietnam. The Chamber organized this push to get the trade agenda back on track after disputes over labor provisions in the Oman and Peru agreements threatened to stall these agreements. The logjam also threatened the Vietnam legislation, despite the fact that it enjoys significant support on both sides of the aisle. Recent U.S. free trade agreements have a solid record of promoting U.S. export growth. For example, the U.S.-Chile Free Trade Agreement was implemented on January 1, 2004, and immediately began to pay dividends for American businesses and farmers. U.S. exports to Chile surged by 33% in 2004 and by an additional 43% in 2005. While the U.S. International Trade Administration had forecast total export growth of 18-52% for the first 12 years of the agreement's implementation, U.S. exports to Chile nearly doubled - a combined 91% in just two years. Under the Peru and Oman trade agreements, U.S. business and agriculture exporters would receive excellent access to these growing markets immediately. Over two-thirds of U.S. agricultural exports will be given immediate duty-free access to the Omani and Peruvian markets. U.S. consumer and industrial products will enjoy similar benefits, with over 80% of U.S. exports to receive duty free access upon implementation. Vietnam PNTR would enable the United States to receive the full benefits of Vietnam's impending accession to the WTO and would advance and deepen a burgeoning bilateral economic relationship with one of the fastest growing economies in Asia. These agreements are also important because they promote the rule of law in emerging markets around the globe and in many areas establish WTO-plus commitments. For example, with respect to government procurement, the trade agreements guarantee transparency in government procurement, mandate competitive bidding and require information be made publicly available - not just to well-connected insiders. The trade agreements also create a level playing field in the regulatory environment for services, including telecoms, insurance, and express shipments. Furthermore, these trade agreements improve legal protections for U.S. intellectual property rights as well as the actual enforcement of these rights. Finally, these trade agreements are critical elements of U.S. foreign policy and national security objectives. The Oman and Peru agreements come at a time when these countries have taken positive steps to deepen economic and strategic ties with the United States - solidly rejecting threats from those who reject democratic principles. The Oman Agreement is the fourth trade agreement with countries in the Middle East and is part of a strategic vision of building closer and more prosperous allies in the region. In Peru, the stakes are also high in supporting a newly elected leader who is committed to deepening economic ties with the United States. Granting PNTR to Vietnam represents the capstone of the normalization process with Vietnam. The Chamber is working to ensure that the United States seizes the opportunities of these agreements and these new partnerships. Whither the U.S. Economy? According to the U.S. Chamber's Chief Economist, Dr. Martin Regalia, the U.S. economy overall remains fundamentally sound, but it is transitioning from a prolonged period of growth above its long-run potential to a growth rate at, or slightly below, its long-run sustainable rate. As such, the current environment exhibits greater uncertainty contains somewhat more risk and will undoubtedly have a higher "heartburn" quotient than what we were used to over the past three years. The transition process, which is being driven by rising oil and energy prices as well as the Federal Reserve's tightening of monetary policy, will involve not only a general slowing in the overall growth rate, but also a shift in the composition of growth. Consumption, the primary driver over the last few years, will moderate, while investment takes on a more prominent role. Rest assured that we are not projecting a collapse in consumer spending. Job growth and increases in wages should be sufficient to support consumer spending- albeit at a reduced pace. While it appears that the housing market has clearly reached its cyclical peak, we do not anticipate a broad collapse in housing or the bursting of a housing bubble that would seriously erode consumption. Conclusion Finally, I wanted to let you know that at the June meeting of the Chamber's Board of Directors, Gerald L. Shaheen, group president of Caterpillar, Inc., was elected Chairman for 2006-2007. Caterpillar, Inc., is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. During his term as Chairman, Shaheen will focus on the steps the United States needs to take to remain globally competitive, including providing greater access to health care, improving the deteriorating education system, reducing lawsuits, and engaging in global trade and investment. As always, I welcome your thoughts on these, and any other issues, that impact the way your members, and ours, do business around the globe. Last Round? We're about to find out if Doha really is too important to fail by John G. Murphy Vice President, International Affairs, U.S. Chamber of Commerce Since their launch in late 2001, government officials and business leaders from around the globe have affirmed time and again that the Doha Development Agenda (DDA) trade negotiations are too important to fail. In the United States, studies have forecast impressive gains from an ambitious outcome in the round, which is being negotiated under the auspices of the World Trade Organization. The University of Michigan has estimated that a one-third cut to global trade barriers could raise the income of the average American family by $2,500 a year. The potential gains in the developing world are even greater: the Center for Global Development estimates that a successful conclusion to the Doha negotiations could lift more than 500 million people out of poverty. But on July 1, the latest ministerial conclave in Geneva ended without an agreement, and WTO Director-General Pascal Lamy dubbed the situation a crisis. Without a deal on modalities - the framework for the negotiations themselves - by the end of July or early August, the DDA cannot be completed by December. And the round must be concluded by the end of 2006 if it is to be considered by the U.S. Congress before the expiration of Trade Promotion Authority in the United States in mid-2007. Mystery, Irony, Contradiction With so much trade jargon in the air, Winston Churchill might have called the Doha Round and the WTO itself a mystery wrapped in an irony inside a contradiction.* The mystery known as comparative advantage was first revealed by Adam Smith and David Ricardo, who explained how all countries benefit from free trade when each specializes in its particular areas of relative advantage. * Credit to R.K. "Judge" Morris of the Global Business Dialogue for this phrase and his description of the "contradiction" laid out further below. 2 . Setting aside the economics textbooks, the gains from trade are plain in the real world, too. Economists at the World Bank have found that per capital real income grew three times faster in developing countries that lowered trade barriers (5% per year) than in other developing countries (1.4% per year) in the 1990s. The growing prosperity of free traders such as Australia, Chile, and Ireland exemplifies this simple truth - as does the poverty of closed economies such as Cuba, North Korea, and Syria. The irony of trade policy is that negotiations such as the DDA are premised on an understanding of the gains from trade, but they also treat trade barriers as the currency of negotiation - a currency to be hoarded. "U.S. tariffs and quotas are not assets to be relinquished only in exchange for better access abroad," explains Daniel J. Ikenson of the Cato Institution. "In fact, they are liabilities that raise the costs of production for U.S. producers and the cost of living for American consumers." Nonetheless, the very language of trade negotiations affirms that the home market's tariffs and other barriers to trade are the coin with which negotiators bargain. As Bill Lane of Caterpillar points out, a country that cuts its own tariffs "too much" gets low marks for "overpaying" at the negotiating table, regardless of the greater prosperity that follows. By contrast, those acceding to a broad agreement to open foreign markets without doing much to open their own win the ultimate compliment of being called "free riders." Of course, the international obligations of trade agreements are a useful foil for politicians who want to cut domestic tariffs or subsidies, recognizing such reform s as the path to prosperity. For this reason, the irony noted above is ignored most of the time. However, this may be an instance in which language has shaped perceptions - Which leads to the perilous contradiction at the heart of the DDA. The bedrock principle of the multilateral trading system is the commitment by each member to extend to all other members the same treatment given to one's "most favored nation." The MFN obligation is set forth in Article 1 of the General Agreement on Tariffs and Trade (GATT), the predecessor and foundation of the WTO. Everyone is Special Alas, MFN is a phrase seldom heard in the DDA talks today. Rather, the negotiations are dominated by requests for special treatment and except ionalism. In Geneva in late June, U.S. Trade Representative Susan Schwab pointed out that the "loopholes" sought by countries around the globe have proliferated alarmingly. The U.S. team spoke of the three "sss's" that constitute the "black box" of the DDA's farm market access pillar, i.e., "sensitive products," special products" and a "special safeguard mechanism." A detailed knowledge of the jargon is not required to understand that these exceptions threaten to leave the DDA bereft of market-opening power. Indeed, there's scarcely a country that isn't clamoring for special treatment: 3 _ The European Union has yet to improve the agricultural market access offer it issued last fall, which called for the right to categorize 8% of all tariff lines as "sensitive products" subject to almost no tariff cuts. Such a broad exclusion could mean no new market access for agricultural exporters to the largest consumer market in the developed world. _ Brazil and other developing countries will have the right to exclude 5% of their tariff lines for manufactured goods from cuts - or to limit cuts on 10% of these tariff lines. As with the EU proposal, the upshot could be to limit sharply any new access to these emerging markets. _ Thirty-two mostly African "least developed countries" (LDCs) have already won the right not to make any tariff cuts whatsoever under the DDA, though the developed countries have already agreed to eliminate tariffs on virtually all LDC exports. _ In similar fashion, Barbados is one of the group of "small and vulnerable economies" that argue they, too, should not have to cut their own tariffs. _ China and a few other "recently acceded members" of the WTO protest they recently slashed their tariffs upon joining the organization and so should not have to make further cuts. The upshot is that the offers on the negotiating table to date offer very little real new market access - and so, very little likelihood that the DDA will generate new trade flows, let alone development and growth. In this context, it's no wonder a deal has proven elusive. - such an agreement would be dead on arrival in the U.S. Congress, and in legislatures elsewhere. So it's interesting to see the fundamental difference in the criticism focusing on the United States in recent months. Uniquely, the United States has been criticized for its excessive level of ambition in the round. Countries are indeed calling for the United States to improve its offer to cut its trade-distorting domestic support, though Washington is already offering a cut on the order of 55-60%. But it's curious that the EU and other key players should be so critical of the U.S. offer to cut its own tariffs as "unrealistic." The United States should take pride in this sort of criticism. As noted at the top, numerous studies confirm that cutting tariffs - especially for farm goods - is the key of the DDA's potential success as a boost to development. The U.S. offer suggests we actually believe this is true. The Furnaces of Geneva Tensions are high in Geneva because the stakes are, too. The potential of the round is well known. Many of the issues on the table - from agricultural subsidies to services liberalization - cannot be comprehensively addressed in any context other than a global negotiating round, so the failure of the round would close the door on a world of possibilities. 4. But perhaps the principal factor weighing on delegates to the WTO is the cost of failure. The multilateral trading system was liberalized through a series of eight previous negotiating rounds under the GATT, which in turn gave rise to the WTO and the Doha Round. Both the process of trade liberalization since 1945 and the institutions that have supported it are among the great legacies of what Americans call the Greatest Generation - those who fought World War II and then went on to win the peace. No one wants to oversee the first failed round. Indeed, if the round fails, the cost for the WTO is difficult to calculate. As one longtime denizen of Geneva told me last month, "the WTO isn't about development and doing good - it's about enforcing the law." Many countries are worried that the rules and accords governing global trade today could break down in the recrimination that would surely follow Doha's failure. One likely upshot would be an explosion of cases brought before WTO dispute settlement panels as countries sought to obtain through litigation what they could not achieve through negotiation. The stakes are also high because this may indeed be the last round of global trade negotiations, not least because, with 149 member states, the WTO's negotiating processes have become horrendously complex. More interestingly, Doha looms as the final round because key players such as the United States are running out of the trade barriers that serve as negotiating chits at the WTO. Even a hypothetical "Doha light" agreement would cut U.S. tariffs on the manufactured goods that dominate world trade - which are already very low - to the point that Washington would have nothing to trade away in a subsequent round. Something similar has happened in services, in which the United States made extensive commitments in the previous round; you can't offer what you already committed. The result is that Doha looms as the round to end all rounds. Washington has invested blood, sweat, toil and tears in the WTO and the Doha Round. Not only was the United States the driving force the creation of the GATT, the U.S. Congress has more recently worked hard to comply with the WTO's terms. In fact, Congress has approved legislation on five occasions since 2004 to comply with adverse rulings by dispute settlement panels. This was done with great difficulty, but in each case with success. And so, the negotiators have no choice but to return to the "furnaces of Geneva," as Lamy has called the city's sweltering meeting rooms, in hopes of forging an agreement. For the United States, we hope the fires of ambition burn hot enough to produce a strong final agreement - strong enough to win Congressional approval as an unalloyed success. Update on AGOA Forum By Mukesh Gopal July 03, 2006 Following is a report of the AGOA Forum held in Washington, D.C. from 5-7 June 2006. I represented AMCHAM at this forum and this was my fourth participation in the AGOA forum and the 2nd in Washington. The theme of the forum 2006 was Private Sector and Trade Powering Africa Growth. There were many workshops organized and unfortunately due to time constraints, all could not be attended. However apart from the opening, I managed to attend as many as possible namely: The Private Sector meeting was held at the Hilton on 05th June and chaired by Ms Rosa WHITAKER of the Corporate Council for Africa. This was a full day session and the main issue of the importance of the lobby campaign was also discussed but it came out that members were divided on this lobby campaign. The Forum started on 6th June at the State Department and was opened by Secretary of State Ms Condoleezza RICE and Senegal Foreign Minister Honourable Cheikh Tidiane GADIO. After the opening, there was a plenary session. The Private Sector Driving Growth: This session was a brainstorming among members and the moderating team. It was focused on how foreign assistance would become a facilitator to the process of growth. A few examples were earmarked of personal lessons learned in the private sector. Proper trade environment and good governance can expand exports and promote trade and private sector development. Workshop 2 - Protecting IPR - a Key to African Competitiveness This workshop emphasized on the importance of strong IPR regimes. This was recognized as the way forward to both attracting investment as well as working new business growth. A few concrete examples were taken on how Africa is being flooded with fake brands and nothing is being done to stop their entry, e.g Eveready batteries and Kiwi shoe polish were highlighted. Pleinary 2 -Afternoon Session - Overview on AGOA Implementation This was focused on US-African trade and ways to increase country and product utilization of AGOA benefits. Workshop 6 - Facilitating Financial Services for Regional Trade This workshop reviewed the trade settlement process within Africa and highlighted the initiatives to improve access to Finance and the flow of trade payments through the formal banking system. Workshop 8 - Way Forward to SSA Apparel This was a very meaningful workshop which focused on restructuring, re-investing and diversification as a way to stay competitive. It was a joint session by USTR and USAID. AGOA contribution towards building on the apparel success in Africa. The continent experiences were examined. The constraints that must be addressed in country and success stories that continue to emerge during the restructuring and diversification post MFA. After this workshop, Heads and Ministerial delegation and Ambassadors went to Capitol Hill for the Congressional Committee Meeting. Workshop 10- Opening Markets Through Aviation Sector Partnership This workshop emphasized how safe and secure aviation links provide access to markets as well as increase tourism and encourage investment in partnership - aviation and development. Aviation security was given high importance. A special session was held on Trade investment and HIV/AID issues solutions and future direction. This was very relevant to our present context of Chikungunya and describes the status and investment of HIV/AIDS and other diseases and action plan. Ministers and Government could take to enhance trade and development in the face of these diseases. June 7- Plenary 3- The Private Sector as the Engine of Growth This session highlighted the key importance of private sector as the Engine for Africa growth. Update on International Labour Conference By Mukesh Gopal The 95th Session of the International Labour Conference was held in Geneva from 31 May to 16 June 2006. The Conference was attended by 2448 delegates and advisers representing the three social partners. 166 countries were represented at the Conference out of the 178 Member countries. 159 Ministers or Vice Ministers were accredited to the Conference. The ILO has a budget of 371 million Swiss Francs for 2007 with the United States contributing 22 per cent and Japan contributing 19.485 per cent. Germany and the United Kingdom contribute 8.67 per cent and 6.133 per cent respectively. The Mauritian Government contributes 40,859 Swiss Francs or 0.011 per cent. The Mauritian delegation was led by Dr the Hon. Vasant Kumar Bunwaree, Minister of Labour, Industrial Relations and Employment. I was the employer delegate and Mr. Lafont was the worker delegate. Mr. Mookeshwarsing Gopal, President of the MEF attended the first week of the Conference and established contacts with key ILO and IOE officials, besides attending the Annual General Assembly of the International Organisation of Employers. The Minister addressed the Conference and stated that "collaboration between the public and private sectors is sine qua non requirement for economic growth and sustainable livelihoods protection and development." He also referred to a number of measures to promote investment in all sectors and to facilitate the development of new sectors, self-employment and SME's. Mr Sajda, Deputy Minister of Labour and Social Affairs of the Czech Republic was elected President of the Conference. The following were elected Vice Presidents of the Conference in line with ILO's tripartite structure: Ms Abdel Hady Egypt Government Group Mr De Regil Mexico Employers' Group Mr Adyanthaya India Workers' Group The Conference had the privilege and honour to welcome two special guests, namely, Her Excellency, Ms Ellen Johnson Sirleaf, President of the Republic of Liberia and His Excellency, Mr. Oscar Aria Sanchez, President of the Republic of Costa Rica. Mr. Sanchez stated in his address that for small counties like Costa Rica with a population of 4.5 million inhabitants there was no option but to become fully integrated into the global economy. He said "only if we open up our economies we will be capable of attracting direct investment flows that will make up for our own chronically low domestic saving rate and from benefiting from the most advanced technology and know how that, in the end, will help our own employers. Only if we open up can we develop dynamic productive sectors, capable of competing internationally. But , above all, only if we open up will we create sufficient high quality employment for our youth." Ms Sirleaf referred to the civil war in Liberia that decimated its institutions and undermined its socio-economic fabric. She thanked the ILO for its support especially to develop an emergency employment programme in this period of rehabilitation and reconstruction. She also called upon the ILO for technical assistance to design and develop an employment creation programme together with a programme to strengthen the tripartite partners. THEMES OF THE CONFERENCE The Conference adopted a recommendation on Employment Relationship which was however not supported by employers. The text as adopted creates a presumption of employment relationship and includes criteria that could be misused to characterize many independent contractor relationships as employment relationships. Occupational Safety and Health Convention and Recommendation The Conference adopted a Convention and a Recommendation on a Promotional Framework for Occupational Safety and Health. The text calls upon Members, in consultation with the most representative organizations of employers and workers to, inter alia, promote continuous improvement of occupational safety and health by the development of a national OSH policy, system and programme; to take active steps towards achieving progressively a safe, healthy working environment by taking into account the principles set out in ILO instruments relevant to the promotional framework; and to consider what measures could be taken to ratify relevant OSH Conventions. The relevant levels and the basic principles of assessing risks or hazards and combating them at source are to be promoted. The Role of the ILO in Technical Cooperation. This is an important committee that reviews ILO's technical cooperation programme every five years to ensure its relevance and effectiveness. Like all Committees of the Conference the Chairperson comes from the Government side. Mr. B. Bitonio from Philippines was the Chairperson. I was the Vice Chairperson and employer spokesperson of the Committee and Ms H. Yacob from Singapore was the worker spokesperson. The conference adopted a set of conclusions that will serve as a blueprint for its technical assistance to countries and social partners for the next five years. The ILO technical cooperation programme is increasingly funded through extra-budgetary resources which by themselves are not adequate. The employer's view was that the private sector was contributing immensely to entrepreneurship development, skills development wealth creation, job creation and employment promotion. It was therefore important for the ILO to engage the private sector through public-private partnership not only to mobilize resources but also the much-needed expertise to help deliver technical cooperation activities in areas where the private sector has a business case for engagement. It was also essential for the ILO to support and build the capacity of strong, independent and representative employers' and workers' organizations and the Employers' and Workers' Bureaus of the ILO have a special role in this respect. The conclusion called upon the ILO to focus on areas in which it has developed strong comparative advantage such as enterprise development, SME development and productivity. The ILO needed to do more in implementing the ILO Global Employment Agenda at country level. In this regard, the ILO Training Centre in Turin should be supported to deliver relevant training programmes for the benefit of constituents. It was also important to use the research facilities of the ILO's International Institute for Labour Studies to enhance the knowledge base of the ILO in technical cooperation and to document good practices and lessons learnt. The International Organization of Employers General Council Meeting The MEF President and the Director attended the general council meeting of the IOE held on Tuesday 30th May 2006 in Geneva. The IOE is the voice of employers and the private sector in the world and has 136 national employer's organizations in its fold. It represents employers vis-à-vis the ILO and all international institutions like the United Nations, International Monetary Fund and the World Bank. The meeting was addressed by Mr. Pascal Lamy, Director General of the World Trade Organization. A new President was elected in the person of Mr. Abraham Katz from the International Council of Business of the United States replacing Mr. Francois Perigot, who came from MEDEF and was President for the past five years. Pan African Employers' Confederation General Assembly The PEC General Assembly was held on 08th June 2006 in Geneva. Mr. Samir Allam from the Federation of Egyptian Industries is the President and the MEF Director is the Secretary General. Other Employer Meetings Since most of the employers' organizations are present in Geneva during the ILO Conference, it provides an opportunity to organize a number of meetings for different sub-regions of Africa. The SADC Employer Group met Monday 05th June and took stock of developments taking place in SADC. The members of the East, Central and Southern African Employers' Organisations Conference met on Tuesday 06th June to prepare the annual conference which will be held in Botswana early next year. Overview of the Speech of Honorable Rama Sithanen Minister of Finance & Economic Development Business Lunch of 05th October 2006 at Le Sirius, Labourdonnais Hotel, Caudan. By Priya PURMESSUR "Opening up of the Mauritian Economy- Challenges for the Business Community" An inward looking development strategy no longer suits the economy of the day. The need to embrace an export oriented economy has been leveraged through the changes being operated in the economic environment worldwide. Mauritius has reached the end of its economic cycle. We had based our economic model on trade preferences. We have in fact been one of the few of the ACP countries to have enjoyed trade preferences and make the most of it. However we have been slow in adopting to the challenges of globalization. Our two main engines of economic growth, the textile industry and the sugar industry have both been affected by reduction of tariffs and erosion of trade preferences. The trade shock represents significant deterioration of our GDP from where the need for a rupture from the past economic model that has outlived its usefulness. The new economic direction being taken by the Government aims at attracting more Foreign Direct Investment to bring in much needed capital to kick the economy. Mauritius would need around 4 billion Euros in terms of investment in the coming 15 years. In this respect the biggest challenge the Business Community would have to face would be to be able to shift resources from sectors which have lost their competitiveness to sectors which are emerging. Local manufacturers need to adapt very quickly to the pressure and change coming over as there will be no protected market in a few years. They will also have to be more globally competitive, become more productive and efficient. This would need investment in trade and education; in re-tooling and training. Resistance to change can be foreseen and it would become essential to change the mentality and ways of doing business in order to move Mauritius into a higher gear economy. Corporate and social responsibility would also be very important issues to be taken care of by the Business Community and the country as a whole, especially during the transition period. Some industries will inevitably face decline from where the setting up of the Empowerment Programme can help take care of the vulnerable group. Gender issues also need to be addressed given that sectors which have been affected by the decline counts amongst its workforce a large percentage of women. Another important issue is for the Business Community to realize the importance of outsourcing non-co-activities. This would enable small enterprises to thrive and grow. The need to explore opportunities in the region in an attempt to join the global supply chain should also be considered. What is foremost needed however is to change our mentality of thinking on protecting the people and not the jobs. We need to see how we can equip and skill our people so that they can obtain the next job very easily. The notion of life-long employment is no longer viable. With the emergence of competition, worldwide employees and employers should invest in life-long learning skills and become global players. Upcoming News and Events Annual Thanksgiving Charity Event- Late November Letters to the Editor The editing team welcomes contributions from members on topics of interest to you. Feel free to contact us at info@americanchamber-mauritius.org. Membership Info Membership Dues for Year 2006 are: Corporate Member - RS 6,000. Individual Member - RS 1,500. This Newsletter is a production of the staff members of the American Chamber of Commerce - Mauritius as a service to all members. All articles included are the property of the authors themselves and/or their affiliates, unless otherwise stated. For further information, please contact:
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