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Global Policy Watch

Key Public Policy Developments Around the World From Covington & Burling LLP

This Week in Congress – April 27, 2105

Posted in Congressional Action

This week the U.S. House of Representatives aims to work through the first two appropriations bills of the Fiscal Year (FY) 2016 process before adjourning for a one-week recess, while the U.S. Senate will consider legislation related to the Administration’s international agreement on Iran’s nuclear program.

The Senate returns on Monday afternoon, with a vote expected at 5:30 p.m. on the nomination of Dava J. Newman to be Deputy Administrator of the National Aeronautics and Space Administration (NASA).  Following this vote, Senators will resume consideration of the Iran Nuclear Review Act.  Ensuring that Congress will play a role in any international agreement made with Iran regarding its nuclear program, the legislation would require the president to submit any such agreement to Congress within five days of its conclusion and would prohibit the Administration from lifting any sanctions on Iran for a set amount of time while Members review the agreement.  During this period, Congress could approve, disapprove or take no action on the agreement.  Passage of a joint resolution of disapproval (which would be subject to a presidential veto) within the review period would block the President from implementing relief from U.S. sanctions.  Language in the initial draft of the bill had allowed Congress to reject the Iran deal entirely, not just to reject the lifting of sanctions.  The modified language was unanimously supported in the Senate Foreign Relations Committee on April 14, and the White House signaled its intent to sign the bill, so long as there are no major changes made.  Contentious debate is expected during floor consideration this week, as several Republicans Senators have announced their intent to toughen up the bill by offering amendments, such as language requiring the nuclear agreement to be considered a treaty, needing the support of 67 senators, or requiring Obama to certify that Iran is not supporting terrorism anywhere in the world.  The amendment process could put the bipartisan, veto-proof margin of support in jeopardy: Democratic co-sponsors and supporters of the bill have pledged to withdraw their support should the language become overly partisan.  It is unclear at this point how many amendments will be voted on during Senate consideration.

On the other side of the Capitol, the House of Representatives is scheduled to return on Tuesday.  It will start the week with four bills to name post offices and other federal buildings and three bills reported by the Natural Resources Committee.  On Wednesday, the House will begin floor deliberations on the first two of the 12 annual appropriations bills: the Energy and Water and the Military Construction and Veterans Affairs spending bills.

The House may also consider the joint budget resolution being conferenced between the House and Senate, according to Majority Leader Kevin McCarthy.  House Budget Committee Chairman Tom Price (R-GA) and Senate Budget Committee Chairman Mike Enzi (R-WY) have been negotiating the differences between their chambers’ two budget resolutions, which will set the budget rules and the spending limits for the Appropriations Committees to follow in funding federal agencies for FY 2016, which begins on October 1.  Also listed for potential floor consideration is H.R. 1732, the Regulatory Integrity Protection Act, a bill to prevent implementation of the so-called “Waters of the United States” regulation that would bring within the jurisdiction of the Army Corps of Engineers a much wider array of property than under current regulation.

Until a joint budget resolution is passed, the House Appropriations Committee has been using the framework passed by the full House to move forward on its FY2016 spending measures, which allocates $493.5 billion in discretionary non-defense spending for the coming year, and $523 billion for defense spending.

The Energy and Water bill would provide $35.4 billion in funding for the activities of the Department of Energy, the Army Corps of Engineers, the Department of the Interior’s Bureau of Reclamation, and other agency functions in FY 2016, which is a $1.2 billion increase over current funding levels, but still less than the amount requested by the Obama Administration in its FY 2016 budget request.  The White House criticized the funding measure for what it called “misplaced priorities” in a letter to the committee from Office of Management and Budget Director Shaun Donovan but stopped short of issuing a veto threat over the legislation.  House Republicans included small increases in fossil fuel and nuclear programs, while reducing amounts provided for renewable energy research and energy efficiency programs, which are priorities for President Obama.  The funding bill  also contains partisan policy riders, including language barring changes to the definition of “fill material”, a provision to block President Obama’s National Ocean Policy, a provision to block a proposal to define the scope of the Clean Water Act, and a provision that would allow guns on Army Corps of Engineer lands.

The Military Construction and Veterans Affairs bill provides $76.6 billion in discretionary funding  for FY 2016, which is $4.6 billion greater than the amount provided in FY 2015, but is still less than the amount requested by the Obama Administration in its FY 2016 budget request.  More than $7 billion is provided for military construction and family housing programs, Base Realignment and Closure (BRAC), and the NATO Security Investment Program.  An additional $48.6 billion is allocated to VA medical care and $286 million for electronic health records systems.  Like the Energy and Water appropriations bill, Democrats on the Appropriations Committee and the Obama Administration have criticized the bill, saying that the funding does not go far enough.  Objections have also been raised to provisions of the bill related to the detention facility at Guantanamo Bay, Cuba, which prohibit the use of funds to “construct, renovate or expand” prisons in the United States or its territories, and language that prevents the transfer of prisoners from the Guantanamo facility to U.S. mainland prisons.

Both chambers will continue working through the 2016 National Defense Authorization Act this week.  The House Armed Services Committee has scheduled a full committee markup on Wednesday after its subcommittees marked up their respective portions last week.  The Senate Armed Services subcommittees will be holding public deliberations throughout the week, though the full committee voted 17-9 last Thursday to keep its eventual markup behind closed doors, as has been customary over the last several years.

Also of note this week, the House Judiciary Committee is expected to mark up legislation on Thursday to reform and extend the expiring provisions of the FISA Amendments Act; legislation must be enacted before both chambers break for Memorial Day because the current authorities, which came to widespread public attention through the Snowden leaks, expire on June 1.  House Judiciary will also hold a full committee hearing on U.S. copyright law on Wednesday morning, while its Subcommittee on Immigration and Border Security will review immigration policy and birthright citizenship in a hearing later Wednesday afternoon.

The House Oversight and Government Reform Committee will review airspace security in Washington, D.C., following last week’s incident in which a Florida man was arrested after flying into the District’s restricted airspace, landing his gyrocopter on the west front of the U.S. Capitol Building.  The U.S. military failed to intercept the aircraft and press reports indicate that the U.S. Northern Command and North American Aerospace Defense Command (NORAD), which protect the airspace around the nation’s capital, never detected the gyrocopter.  The event has raised questions among members of Congress about the security of the Capitol building and Washington D.C.

A joint hearing of the House Financial Services Subcommittee on Monetary Policy and Trade and the Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules will focus on the Export-Import Bank on Thursday.  The charter for the federal export credit agency is set to expire in June unless renewed by affirmative congressional action.

A detailed schedule of congressional hearings for the week is included below:

Tuesday, April 28, 2015 

Senate Committees

U.S. Security Policy in Europe
Senate Armed Services
Full Committee Hearing
9:30 a.m., G-50 Dirksen Bldg.

The State of the Insurance Industry and Insurance Regulation
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
10 a.m., 538 Dirksen Bldg.

U.S. Coast Guard Resource Priorities
Senate Commerce, Science and Transportation – Subcommittee on Oceans, Atmosphere, Fisheries and Coast Guard
Subcommittee Hearing
10 a.m., 253 Russell Bldg.

Quadrennial Energy Review
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., 366 Dirksen Bldg.

Medicare Audit and Appeals Issues
Senate Finance
Full Committee Hearing
10 a.m., 215 Dirksen Bldg.

Medical Innovation for Patients
Senate Health, Education, Labor and Pensions
Full Committee Hearing
10 a.m., 430 Dirksen Bldg.

Judicial Review in Federal Regulatory Process
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., 342 Dirksen Bldg.

Homeland Security Oversight
Senate Judiciary
Full Committee Hearing
10 a.m., 226 Dirksen Bldg.

FAA Reauthorization: Safety Issues
Senate Commerce, Science and Transportation – Subcommittee on Aviation Operations, Safety and Security
Subcommittee Hearing
|2:30 p.m., 253 Russell Bldg.

Biometric Use at Ports of Entry
Senate Homeland Security and Governmental Affairs
Full Committee Panel Discussion
2:30 p.m., 342 Dirksen Bldg.

Wednesday, April 29, 2015

House Committees

Public and Outside Witness Hearing
House Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
8:30 a.m., 2358-C Rayburn Bldg.

Fiscal 2016 Appropriations: Transportation-HUD
House Appropriations – Subcommittee on Transportation, Housing and Urban Development, and Related Agencies
Subcommittee Markup
9:30 a.m., 2358A Rayburn Bldg.

Fiscal 2016 Defense Authorization Markup
House Armed Services
Full Committee Markup
10 a.m., 2118 Rayburn Bldg.

The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers
House Financial Services – Subcommittee on Housing and Insurance
Subcommittee Hearing
10 a.m., HVC-210 Capitol Visitor Center

Copyright Review Issues
House Judiciary
Full Committee Hearing
10 a.m., 2141 Rayburn Bldg.

D.C. Airspace Security
House Oversight and Government Reform
Full Committee Hearing
10 a.m., 2154 Rayburn Bldg.

National Forests and Forest Management Issues
House Agriculture – Subcommittee on Conservation and Forestry
Subcommittee Hearing
1:30 p.m., 1300 Longworth Bldg.

Multi-Employer Pension System Revisions
House Education and the Workforce – Subcommittee on Health, Employment, Labor and Pensions
Subcommittee Hearing
1 p.m., 2175 Rayburn Bldg.

Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens
House Financial Services – Subcommittee on Capital Markets and Government Sponsored Enterprises
Subcommittee Hearing
2 p.m., HVC-210 Capitol Visitor Center

ISIS Assessment
House Foreign Affairs – Subcommittee on Terrorism, Nonproliferation, and Trade
Subcommittee Hearing
2 p.m., 2172 Rayburn Bldg.

Western Balkans Development
House Foreign Affairs – Subcommittee on Europe, Eurasia and Emerging Threats
Subcommittee Hearing
2 p.m., 2200 Rayburn Bldg.

The Global Magnitsky Human Rights Accountability Act
House Foreign Affairs – Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations
Subcommittee Hearing
2 p.m., 2255 Rayburn Bldg.

U.S. Citizenship Issues – Birthright Citizenship: Is it the Right Policy for America?
House Judiciary – Subcommittee on Immigration and Border Security
Subcommittee Hearing
1 p.m., 2237 Rayburn Bldg.

H.R. 1927, the Fairness in Class Action Litigation Act of 2015
House Judiciary – Subcommittee on the Constitution and Civil Justice
Subcommittee Hearing
3 p.m., 2141 Rayburn Bldg.

Oversight Hearing on “Zero Accountability: The Consequences of Politically Driven Science”
House Natural Resources – Subcommittee on Oversight & Investigations
Subcommittee Oversight Hearing
2 p.m., 1334 Longworth Bldg.

Tracking Aid to Afghanistan
House Oversight and Government Reform – Subcommittee on National Security
Subcommittee Hearing
2 p.m., 2247 Rayburn Bldg.

Encryption Technology Policy Issues
House Oversight and Government Reform – Subcommittee on Information Technology
Subcommittee Hearing
2 p.m., 2154 Rayburn Bldg.

EPA Ozone Standards Proposal
House Science, Space and Technology – Subcommittee on Environment
Subcommittee Hearing
2 p.m., 2318 Rayburn Bldg.

Commercial Motor Vehicle Safety Outlook
House Transportation and Infrastructure – Subcommittee on Highways and Transit
Subcommittee Hearing
2 p.m., 2167 Rayburn Bldg.

Senate Committees

Fiscal 2016 Appropriations: Defense
Senate Appropriations – Subcommittee on Defense
Subcommittee Hearing
9 a.m., 192 Dirksen Bldg.

Exploring Opportunities for Private Investment in Public Infrastructure
Senate Banking, Housing and Urban Affairs – Subcommittee on Housing, Transportation, and Community Development
Subcommittee Hearing
9:30 a.m., 538 Dirksen Bldg.

Offshore Drilling Challenges
Senate Commerce, Science and Transportation
Full Committee Hearing
9:30 a.m., 253 Russell Bldg.

Homeland Security Fiscal 2016 Budget
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
9 a.m., 342 Dirksen Bldg.

King vs. Burwell Supreme Court Case
Senate Small Business and Entrepreneurship
Full Committee Hearing
9:30 a.m., 428A Russell Bldg.

Fiscal 2016 Defense Authorization: Military Space Programs
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
2:30 p.m., 222 Russell Bldg.

Tribal Labor Sovereignty Act of 2015
Senate Indian Affairs
Full Committee Hearing
2:30 p.m., 628 Dirksen Bldg.

Veterans Health Administration
Senate Veterans’ Affairs
Full Committee Hearing
2:30 p.m., 418 Russell Bldg.

Thursday, April 30, 2015

House Committees

Improving College Access and Completion for Low-Income and First-Generation Students
House Education and the Workforce – Subcommittee on Higher Education and Workforce Training
Subcommittee Hearing
10 a.m., 2175 Rayburn Bldg.

21st Century Cures Bill
House Energy and Commerce – Subcommittee on Health
Subcommittee Hearing
10 a.m., 2123 Rayburn Bldg.

Strategic Petroleum Reserve Review
House Energy and Commerce – Subcommittee on Energy and Power
Subcommittee Hearing
10:15 a.m., 2322 Rayburn Bldg.

Bangladesh Political and Religious Issues
House Foreign Affairs – Subcommittee on Africa, Global Health, Global Human Rights and International Organizations
Subcommittee Hearing
2 p.m., 2255 Rayburn Bldg.

Aid to Central America
House Foreign Affairs – Subcommittee on the Western Hemisphere
Subcommittee Hearing
2 p.m., 2172 Rayburn Bldg.

Women Veteran Health Care Issues
House Veterans’ Affairs
Full Committee Hearing
10:30 a.m., 334 Cannon Bldg.

FCC Reauthorization: Improving Commission Transparency
House Energy and Commerce – Subcommittee on Communications and Technology
Subcommittee Hearing
2 p.m., 2322 Rayburn Bldg.

Regional Impact of U.S. Policy Towards Iraq and Syria
House Foreign Affairs – Subcommittee on the Middle East and North Africa
Subcommittee Hearing
2 p.m., 2172 Rayburn Bldg.

Airport Access Control Measures
House Homeland Security – Subcommittee on Transportation Security
Subcommittee Hearing
2 p.m., 311 Cannon Bldg.

Examining the Export-Import Bank’s Mandates
House Financial Services Subcommittee on Monetary Policy and Trade and House Oversight and Government Reform Subcommittee on Health Care, Benefits and Administrative Rules
Joint Committees Hearing
1 p.m., 2154 Rayburn Bldg.

Next Steps for Welfare Reform: Ideas to Improve Temporary Assistance for Needy Families to Help More Families Find Work and Escape Poverty
House Ways and Means – Human Resources Subcommittee
Subcommittee Hearing
3 p.m., 1100 Longworth Bldg.

Senate Committees

Fiscal 2016 Defense Authorization: European Command
Senate Armed Services
Full Committee Hearing
9:30 a.m., G50 Dirksen Bldg.

Energy Efficiency Legislation
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., 366 Dirksen Bldg.

Hydraulic Fracturing Rule
Senate Energy and Natural Resources – Subcommittee on Public Lands, Forests and Mining
Subcommittee Hearing
2:30 p.m., 366 Dirksen Bldg.

Friday, May 1, 2015

House Committees

Railroad Retirement Board Management Issues
House Oversight and Government Reform – Subcommittee on Government Operations
Subcommittee Hearing
9:30 a.m., 2154 Rayburn Bldg.

A Renewed Push Coming for Disclosure of Political Intelligence Gathering?

Posted in Congressional Action

According to a key advocate, Senate Judiciary Committee Chairman Charles Grassley (R-IA)  is preparing to renew his push for legislation aimed at expanding disclosure of political intelligence gathering.  Speaking with BNA, Craig Holman of Public Citizen said yesterday (subscription required) that bipartisan legislation will soon be introduced in both the House and Senate that would require political intelligence consultants to register and disclose their activities on behalf of their clients.

Broadly defined, political intelligence gathering includes efforts to obtain political information to assist in devising investment strategies.  Although far from a new phenomenon, the link between political intelligence and finance rose to prominence following a series of academic and media reports culminating with a 60 Minutes exposé of alleged insider trading by members of Congress in November 2011.  Chairman Grassley has vocally supported lobbyist-style disclosure of political intelligence gathering since soon after that piece aired.

Most notably, during Congressional deliberations regarding the Stop Trading on Congressional Knowledge (STOCK) Act, Sen. Grassley and Rep. Louise Slaughter (D-NY) successfully pushed for the inclusion of disclosure provisions in the original bill approved over a filibuster by the Senate.  As we discussed in our assessment of the Senate bill, the broad registration and reporting requirements included in this initial proposal could have significant effects in both the financial services sector and beyond.  The provision ultimately was removed during conference negotiations and replaced with language requiring the Government Accountability Office (GAO) to study a variety of issues related to regulation of political intelligence gathering.  Read Covington’s client alert on the final STOCK Act’s political intelligence and insider trading provisions here.

GOA released its final report in April 2013.  While emphasizing the inherent difficulty in assessing the extent to which political intelligence influences investment decisions, the report made no recommendations for further legislative action.  Read our assessment of the GAO report here.

Nonetheless, Rep. Slaughter introduced stand-alone legislation late last Congress that would have revived the discarded STOCK Act language.  The Political Intelligence Transparency Act would have required individuals and firms engaged in political intelligence activities to register under the Lobbying Disclosure Act.  Registrable activities would include contacts on behalf of a client with any covered executive branch or Congressional official to derive information for use in analyzing financial markets or informing investment decisions.  Such information could include details regarding proposed legislation and administrative action, as well as the nomination or confirmation of prospective executive branch officials.

With Grassley now Chairman of the committee of jurisdiction, he is in a position to advance reintroduced disclosure legislation to the floor quickly.  While the details of any future Grassley-Slaughter proposal remain uncertain, any new legislation likely will hew closely to the bill introduced last Congress.  In the near-term, political intelligence consultants should begin to consider the implications of any proposed disclosure regime — and associated compliance requirements — on their work.

Congress: Don’t dismiss neutral dispute settlement for US investors

Posted in Congressional Action

Recent calls by anti-trade groups to abandon investor-state arbitration (often referred to as “investor-state dispute settlement,” or ISDS) ignore the modern reality of the global economy and conjure images of Chicken Little’s warnings that the sky is falling. Investment flows exceeded $1.45 trillion globally in 2013. Of the billions of dollars in cross-border investments in place today, only a few hundred investment disputes have been filed based on treaties that allow investors to bring claims against states, for, among other things, monetary damages when their property has been taken by a foreign government without compensation. Rather than leaving wronged Americans to rely solely on the U.S. State Department or foreign courts, the U.S. should stand behind its 21st Century investor-state dispute settlement regime. Why? It depoliticizes disputes, is increasingly transparent and provides foreign investors — and states — with a fair system for adjudicating disputes when they arise.

The U.S. government has long recognized the importance of ensuring that investors are protected against discrimination, arbitrary treatment, and expropriation. These protections are largely symbolic, however, unless investors can present their claims – should any arise – to a neutral tribunal. The courts of a government that has (perhaps) just taken that investor’s property may not be neutral, and an investor, understandably, may be wary about presenting a claim in local courts. That is particularly true where rule of law is questionable, but politicized disputes deserve a neutral forum even where domestic courts are generally viewed as independent. For these reasons, U.S. investment treaties (and free trade agreements) have traditionally included investor-state dispute settlement provisions.

Investor-state dispute settlement is not new. It has been a fundamental part of international trade and investment agreements for more than half a century, and there are more than 3,000 agreements that include investor provisions. Investor-state dispute settlement has promoted adherence to the rule of law, expedited the resolution of disputes, and prevented diplomatic feuds over the poor treatment of individual U.S. investors. In an increasingly competitive world economy for American companies, particularly in areas such as intellectual property, telecommunications, and financial services, investment protections are important, and a neutral forum to arbitrate disputes equally so.

Rejecting this crucial way to settle international disputes in TPA and TPP would put U.S. investors at a potential disadvantage in overseas markets. As a foreign state hosting a U.S. investment, there is discipline in knowing that if the state expropriates property or violates fundamental principles of fair and equitable treatment, that it can be held accountable. Investor-state dispute settlement also saves the U.S. government and taxpayers from having to bring a state-to-state action to enforce every violation of international investment law that harms U.S. interests.

TPA and TPP also present an opportunity to lead and set global standards for investment protections and ISDS alike. The U.S. has been a leader in the effort to modernize the international regime for cross-border investment, including dispute settlement, so that it responds to 21st century needs, such as preserving a government’s ability to regulate and facilitating transparent and inclusive dispute settlement proceedings. Opponents have seized upon the “right to regulate,” as if it is under attack by TPA and TPP investment provisions. Yet there is no evidence to support this claim. In the first instance, no investment treaty can “prevent” a government from taking whatever actions it chooses, including confiscating private property, as long as compensation is paid. Just as the U.S. government can take a U.S. farm to build a highway if the owner of the farm is compensated for his property, so, too, can foreign governments seize U.S. investments so long as compensation is paid. It is a bedrock principle of both U.S. constitutional and international law that the government must pay those whose private property is taken. U.S. investors abroad are entitled to have that compensation determined by a neutral panel of arbitrators, rather than subject themselves to the judgments of local courts.

The dispute settlement procedures themselves under the U.S. model are designed to promote fairness and transparency. The investor appoints one arbitrator, the respondent state appoints an arbitrator, and a neutral chair is either agreed or appointed by an independent institution. Those frequently chosen as arbitrators include former government officials as well as international human rights scholars. Third parties, including NGOs, may participate in ISDS proceedings as amicus, just as third parties can participate in U.S. court proceedings. And briefs and other filings from proceedings, as well as the arbitrators’ ultimate decisions, are generally available to the public. Those who want to participate in, or even just follow, dispute settlement proceedings are able to do so with ease.

Yes, investors have sued foreign states under these provisions. Whenever legal rights are granted, the scope and application of those rights will at times be disputed. Generally, meritorious claims will succeed, while unfounded claims will fail. Surely, we ought not discard legal protections simply because parties sometimes seek their enforcement. The question then becomes whether the triggers for litigation are set in such a way that litigation is excessive or frivolous. Neither seems to be the case, and in any case the U.S. has supported new provisions to facilitate the quick dismissal of frivolous suits.

On the merits, governments win more than investors. The U.S. government has never lost a case. The Center for Strategic and International Studies reports that about a third of cases settle — meaning the enforcement mechanism leads to a win-win result. Of the cases that are litigated, states win ISDS claims about twice as often as investors. And when investors do prevail, awards average a mere 10 cents on the dollar for the amounts sought.

In short, investor-state dispute settlement does not undermine a country’s ability to protect public welfare through regulations. To the contrary, ISDS simply protects investors from abuse at the hands of a foreign government. Indeed, a modern, global system of investment, and support for U.S. businesses abroad, demands a robust way to settle investor-state disputes. We have that system in place. To get rid of it would be a mistake. Investment protections are not worth the paper they are written on if they lack meaningful enforcement mechanisms. The U.S. should continue to lead and include investor-state dispute settlement in any agreement aimed at providing protections for U.S. investors abroad.

G20 Mildly Optimistic about Growth, Worried About Greece, Annoyed at the US

Posted in Bank Regulation, International Strategy

The G20 Finance Ministers and Central Bank Governors met last weekend in DC during World Bank/IMF meetings to discuss global economic conditions.  OECD Secretary General Gurria and UN Secretary General Ban Ki Moon also attended as did IMF Managing Director LaGarde and World Bank President Kim.

The US came in for heavy criticism for failing to fund and support IMF reform, although many US-led/supported reform issues — financial sector assessment and strengthening, structural economic reforms, public-private partnerships on infrastructure — remain at the center of the G-20 agenda.  There is a clear sense that the G20 will push past the U.S., the IMF’s largest shareholder, to expand its capital and the role of developing countries to ensure that the IMF is equipped to support global growth and mitigate economic fragility.

Greece was not mentioned in the G20 Communique [1] but concern about whether Athens can agree on new bailout terms with its European Union and IMF lenders in time to avoid defaulting on big upcoming debt payments cast a cloud over the gathering. There was much hand-wringing about the potential impact of Greece on the Euro zone’s fragile growth. At the same time, the G20 Finance Ministers and Central Bank heads were mildly optimistic regarding global growth, especially in developed economies.  G20 officials cite recovery in the Euro zone and Japan, solid US and UK growth, trade expansion and economic reform and low oil prices.

G20 officials, representing 80 percent of global GDP, are clearly aware of enormous risks and uncertainties. They referred to the challenges of exchange rate volatility (and many still fear a sharp increase in US interest rates and instability in emerging markets), geopolitical instability, high public debt and economic imbalances. While referencing relatively high growth in India and Brazil, they alluded to structural weaknesses in emerging markets.  They didn’t mention underlying weakness in China’s financial markets (where the real estate bubble has collapsed but an equity market bubble is forming as easy money continues) and serious economic challenges in Turkey, the current G20 chair, for example. IMF LaGarde lauded Turkey’s reforms, none recent, in an apparent effort to encourage liberalization after upcoming elections.

The G20 and IMF LaGarde do not think it is a good time for further austerity but at the same time they are warning that labor market and education reforms, regulatory efficiency and openness to trade and investment, as well as the health of banking systems must be a priority in order to avoid negative outcomes of continued monetary easing.

To help spur global growth and job creation, the G20 have prioritized infrastructure activities and investment. Major efforts are underway, including country-specific investment strategies to strengthen capacity building, expand public-private partnerships and to make good use of multilateral and national development bank resources.  At the same time, they would like to facilitate development of appropriate financial vehicles and asset-based financing structures.  Initial results are expected before their November Antalya Summit.

The G20 also continue to work to strengthen banking system and insurance sectors and make them more resilient in the face of fragile global conditions.  This includes work on the common international standard on total loss absorbing capacity for global systemically important banks,  and to ensure that the International Association of Insurance Supervisors finalize higher loss absorbency requirements for global systemically important insurers. The G20 officials also referenced the need for progress on transparent, harmonized securitization standards and lauded the work of the Financial Stability Board (FSB) to assess financial stability risks in asset management activities, and the OECD’s work on modernizing international tax systems, and to address them through cross-border cooperation.

The Communique also expresses its disappointment with the United States’ failures to help implement IMF reforms agreed in 2010 by urging them to do so quickly while making clear that the G20 will implement “interim” approaches.  Many interpret this as a loss of US influence. However, few other countries draw such attention and have such a strong overall influence on the G20 agenda, which is focused on cooperation and concrete reduction of global economic risk.

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1/ https://g20.org/wp-content/uploads/2015/04/April-G20-FMCBG-Communique-Final.pdf

Competing smarter: Assessing the report from the President’s Advisory Council on Doing Business in Africa

Posted in Africa

One positive outcome of last year’s U.S.-African Leaders Summit was the creation of the President’s Advisory Council on Doing Business in Africa (DBIA), whose purpose is to make recommendations on how to strengthen U.S. commercial engagement on the continent. The council, a group of 15 seasoned business leaders with a genuine understanding of Africa’s business environment, recently issued its first report and set of recommendations.

Important proposals are put forward, such as strengthening healthcare infrastructure as well as the perishable supply chain in order to reduce post-harvest food losses. Another critical recommendation is for strong advocacy for African governments to seize global leadership in bringing the World Trade Organization’s (WTO) Trade Facilitation Agreement into force prior to the December 2015 WTO ministerial in Kenya, the first such session to be held in Africa.

The entire report deserves careful consideration and is a welcome addition to the increasingly useful policy debate on how to increase economic ties between the U.S. and Africa. However, several key aspects of the U.S.-African commercial equation were neglected within the report and should be essential parts of any conversation about how to make American companies more competitive across the continent.

Lingering questions and important omissions

Notably, there is only one reference to the African Growth and Opportunity Act (AGOA), the cornerstone of the U.S. commercial relationship with Africa, and it is an easily missed expression of “trust” that Congress will renew the legislation this year.

A full-throated endorsement by the council of AGOA’s renewal for 15 years, as the Obama administration has called for, would have been important not only as a strong signal of support from these respected business leaders and companies, but also in setting a clear context for the group’s recommendations. In fact, this omission, as well as the report’s equally passive call for Congress to fund the Export-Import Bank, reflects a more fundamental dilemma of the document: Is this a Commerce Department report or a document whose recommendations aim to strengthen a “whole of government” approach to doing business in Africa, inclusive of the nearly 12 federal agencies involved in the DBIA campaign? On this, the lines are blurry.

A key recommendation of the council is the creation of a “forward-deployed” and “business-driven” U.S.-Africa Infrastructure Center. The purpose of the center would be to “align business resources with government resources to identify, vet, prioritize, and develop a unified approach to compete for critical projects.” This is a timely and creative proposal. Given the caution of U.S. companies, the complexity of Africa’s investment environment, and China’s dominance in this sector, there is a compelling need for coordinated support from all relevant U.S. agencies to help American companies win African infrastructure projects.

What is not clear is who would “own” the U.S.-Africa Infrastructure Center. Would it be State, Commerce, USAID, the private sector, or a hybrid of agencies? Moreover, how would this center align with the efforts of the administration’s new Trade and Investment Hubs whose mission was also recast at last year’s summit to help U.S. companies capture market share on the continent?

The report addresses the critical issue of access to “reliable” capital and makes the important recommendation that the Commerce Department develop a public-private partnership with institutional investors in an effort to reduce risk and increase investor confidence. It would have been helpful to have mentioned the Overseas Private Investment Corporation (OPIC) in this context given the influential role the agency plays in risk-mitigation across the continent. Despite its successes and indeed the net revenue it generates for the U.S. Treasury, OPIC remains understaffed and subject to key regulatory constraints.

There is also useful discussion of an “Investor Toolkit” in the report, building on the knowledge of the U.S. Foreign Commercial Service (FCS), to help U.S. companies identify and vet local partners and gain local market intelligence. The FCS, under Secretary Prizker’s leadership, has only recently increased its presence in Africa after more than a decade of downsizing. Partnerships with dynamic local organizations such as the Kenya Private Sector Alliance in Nairobi, the American Chamber of Commerce in Johannesburg, and LCF Advogados in Luanda would add significant value to the development and maintenance of these FCS-led toolkits.

Going further to reinforce U.S. government coordination

Perhaps the most salient recommendation that the council makes is to encourage the administration to establish an interagency committee to coordinate U.S. trade facilitation and to engage recommendations from private sector organizations. This is consistent with bipartisan legislation, first introduced in 2013 and again in February 2015, that calls for a special coordinator in the White House to “ensure government agencies are working in tandem,” maximize support for U.S. businesses entering African markets, and increase U.S. exports to Africa.

A special coordinator could also help to guide the “Steering Group on Africa Trade and Investment Capacity Building,” which was established at last year’s summit and tasked with making recommendations on a “comprehensive approach” to expanding the region’s capacity for trade and investment. The Steering Group was supposed to have issued its report to the president through National Security Advisor Susan Rice in January; however, the group has yet to impact the dialogue on these issues.

With the administration preparing for President Obama’s participation in the Global Entrepreneurship Summit in Kenya in July, it is essential for the White House to clarify who in the administration is in charge of the U.S. commercial engagement in Africa. Clearly, there is growing recognition that the White House needs to enhance its leadership in this area.

Finally, the report acknowledges the Commerce Department’s role in leading the U.S.-East African Community (EAC) Commercial Dialogue, which is the “central platform” for public-private sector engagement under the Trade Africa initiative.

This is true.

What is not mentioned is that the U.S. also has a U.S.-EAC Trade and Investment Framework Agreement (TIFA) led by the U.S. Trade Representative that has as the goal, “to strengthen the United States-EAC trade and investment relationship.” The optimal recommendation would be to integrate the Commercial Dialogue and the TIFA, to be co-chaired by the Secretary of Commerce and the U.S. Trade Representative, and joined by a robust private sector delegation. In short, there is a compelling need for a genuine Team USA approach that lessens the time and resource demands on all sides while enhancing the priority and urgency of deepening trade relations with Africa.

As far as advisory council reports on Africa are concerned, it is one of the most relevant and thoughtful reports ever released—and in a relatively short period of time. However, the report is also notable for what it omits, and significant work remains to be done to fully realize the potential of a robust U.S.-African commercial relationship.

Note: This piece originally appeared on the Brookings Africa Growth Initiative’s blog Africa in Focus.

European Parliament Divided on Conflict Minerals Regime

Posted in EU Law and Regulatory

Background

On April 14, 2015, the Committee on International Trade (INTA) of the European Parliament adopted amendments (by 22 votes to 16, and 2 abstentions) on the European Commission’s proposal for an EU conflict minerals regime published in March 2014. The INTA vote followed a compromise reached among three of the main political groups of the Parliament, namely the center-right (EPP), the Liberals (ALDE) and the ECR led by the UK Conservatives. See our previous blog post for further information on the context and on the Commission’s proposal.

Outcome of the vote

The main highlights of the INTA vote are as follows (as the consolidated report is not yet available, the information provided below could be subject to change):

  • The INTA Committee decided to beef up the Commission’s proposal by making it compulsory for EU-based smelters and refiners to be EU-certified as responsible importers. However, the INTA members decided to keep a voluntary approach for the rest of the supply chain. At the same time, members adopted a proposal for a “European Responsible Supply Chain Label” for companies willing to exercise due diligence.
  • In addition, INTA members maintained the focus on tin, tungsten, tantalum, and gold as proposed by the European Commission by rejecting amendments that aimed to include additional minerals.
  • They also agreed on the geographic scope of “conflict-affected and high-risk areas” as in the Commission’s proposal although MEPs reportedly did not provide guidance on how to determine which countries/regions will fall under the scope of the EU regime.
  • The INTA Committee excluded recycled/reclaimed materials.
  • Finally, the amendments adopted by the INTA Committee also include a two-year review clause.

Next steps

However, the Socialists and the Greens vehemently criticized the outcome of the INTA vote as they are determined to make the EU’s due diligence self-certification system compulsory for the whole supply chain including all downstream operators, rather than only for smelters and refiners. Left-wing MEPs are expected to mobilize forces in favor of a mandatory approach ahead of the adoption of the European Parliament’s position in the next plenary (i.e., by the full Assembly) on May 18-21. No doubt that a number of NGOs will join forces with the same aim in mind. The EP’s “first-reading” position will then serve as the basis for discussions with the Council, which is likely to favor a voluntary approach as proposed by the Commission.

At this stage, the discussion in the Council only took place at the expert level in several sub working groups; one to address the customs issue, the other to try to find a definition for “conflict affected high-risk area”. At a higher level, the working group for trade matters prefers to wait for the result of the debate in the EP before addressing the mandatory/voluntary issue.

Member States are, as the EP, under strong pressure from NGOs asking for mandatory reporting obligations from the end-users but they are also sensitive to the Commission’s arguments about the negative effects that an “EU Dodd Frank regime” would have on the local population, i.e., to completely stop the legitimate mining in Eastern Congo.

Patent Legislation Goes Mainstream

Posted in Intellectual Property Protection

When John Oliver talks, the Internet starts buzzing.  This week, on HBO’s show “Last Week Tonight,” Oliver highlighted patent litigation reform.  Patent issues rarely hit the mainstream media, and even more rarely do they become fodder for pop culture.  But Oliver’s satirical segment has broken that barrier.

The segment contains lessons for both those who support and oppose legislation, such as the Innovation Act, designed to curtail abusive litigation.

  • For supporters, the segment is important because it highlights their narrative that patent claims are too broadly drafted, making it too easy for patent owners to misuse them by alleging infringement to extort settlements. The reach of Oliver’s show will also give the effort an additional boost by speaking to an audience beyond those typically interested in the subject.
  • For opponents of the pending legislation, the segment is equally important because it provides a well-told example of the perspective that Congress and others are hearing. It is vital to understand the other side’s views, both in an effort to find common ground and to understand the extent of the passion the other side of the debate. Oliver’s segment clearly provides that element.

The segment is also emblematic of how those who misuse patents—combined with the tenor of the current legislative debate—have harmed the reputation of the patent system.  That result comes at a cost to everyone who invents and innovates.

Of course, it is important to remember that “Last Week Tonight” is satire.  Its segments are not intended to tell both sides of the story.  Bad actors can make any system preposterous when it’s the only aspect of the narrative that is told.  A similar, and equally compelling story could be told about the foundational truth cited by the “Shark Tank” critics:  that patents—the innovation they represent and the enforceable rights they provide—are essential to the ability of many small business to attract the investment necessary to bring breakthrough technologies to market, to create jobs, and to grow.

There is something to learn on all sides.

This Week in Congress – April 20, 2015

Posted in Congressional Action

The House of Representatives is scheduled to return on Tuesday to begin the second week of this three-week work period.  The House will start its week with two bills from the Energy and Commerce Committee under suspension of the rules, including the Senate-passed Energy Efficiency Improvement Act, which will be cleared for the President’s signature upon House passage.  The House will then take up H.R. 1195, the Bureau of Consumer Financial Protection Advisory Boards Act. The bill would create a small business advisory board to advise the Consumer Financial Protection Bureau (CFPB) on matters of concern to small business.  The focus of the week will be consideration of two cybersecurity bills:  H.R. 1560, the Protecting Cyber Networks Act, and H.R. 1731, the National Cybersecurity Protection Advancement Act of 2015.  The legislation would increase information sharing on cyber threats between government and the private sector and seek to protect privacy and civil liberty interests.

The Senate is due to return on Monday.  Press reports indicate that Senate leadership has been engaged in negotiations to find a path forward on S. 178, the human trafficking bill that has been stalled on the Senate floor for  weeks due to a Democratic filibuster over the inclusion of an anti-abortion-funding provision.  The filibuster has also held up a confirmation vote on the President’s nominee for Attorney General, Loretta Lynch.  Majority Leader Mitch McConnell has not been willing to allow a vote on the Lynch nomination until the trafficking bill is completed.

The Senate is also likely to turn to S. 615, the Iran Nuclear Review Act, which was reported out of the Foreign Relations Committee unanimously on April 14.  This legislation would require the president to submit any Iran nuclear agreement to Congress within five days of its conclusion.  Further, the bill would prohibit the Administration from lifting any sanctions on Iran for a set amount of time after submitting the nuclear agreement to Congress.  During this period, Congress could approve, disapprove or take no action on the agreement.  Passage of a joint resolution of disapproval (which would be subject to a presidential veto) within the review period would block the President from implementing relief from U.S. sanctions.  Language in the initial draft of the bill had allowed Congress to reject the Iran deal entirely, not just to reject the lifting of sanctions.  When taken up by the full Senate for consideration, there may be an effort by some Republicans to restore the original language, which the President had promised to veto.  If Republicans succeed at restoring the original bill text, they would likely put the bipartisan, veto-proof margin of support at risk.  On the other side of the Capitol this week, the House Foreign Affairs Committee is scheduled to hold a hearing on the ability to verify any ultimate nuclear agreement with Iran.

Also available for the Senate’s consideration is the proposal to override the President’s veto of S.J. Res. 8, a resolution to undo the National Labor Relations Board’s so-called “ambush elections” rule that is meant to make it easier for unions to win representation elections.  While the Senate passed the resolution by a vote of 53-46, and the House 232-186, these margins are short of the two-thirds majority needed for a veto override. The override vote is largely a symbolic gesture of disapproval for the Administration’s support of the election rule.  The President’s veto of S.J. Res. 8 is the second veto issued this year, and only the fourth of his presidency.  We may see a sharp increase in veto activity under this Republican-led Congress, as the President has issued veto threats for 17 other legislative proposals working their way through the House and Senate.

Last week, the Senate Health, Education, Labor and Pensions Committee held a successful mark-up of a bipartisan overhaul of the nation’s education laws. The Every Child Achieves Act of 2015 was unanimously approved by the committee, 22-0, setting it up for consideration by the full Senate sometime over the next five weeks.  Among other things, the Every Child Achieves Act of 2015 would ensure that decisions related to academic standards, teacher evaluations, and performance would be left largely to states and local school districts.  While Majority Leader McConnell has not yet indicated when the bill will be taken up, the movement of a bipartisan bill out of committee is a huge step forward for Congress, which has been trying to rewrite No Child Left Behind since 2007 without success.  House passage of an authorization bill is still unclear.  In March, the House considered more than 40 amendments to H.R. 5, the Student Success Act, before House leadership postponed a vote on final passage.  It was reported that there were not enough votes in support of the bill, due to opposition from conservatives who believe the provisions do not go far enough in curbing the federal role in education.

On Thursday the Senate Finance Committee will mark up legislation related to trade, including the much-anticipated Trade Promotion Authority legislation.  Last week, Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) and House Ways and Means Chairman Paul Ryan (R-WI) announced they had reached a bipartisan agreement on the procedural legislation, which allows for trade deals negotiated by the Administration to be submitted to Congress for a straight up-or-down vote within a limited period of time.  Senate Finance Committee consideration of the TPA bill on Thursday is likely to be paired with other trade-related measures, such as renewal of the Generalized System of Preferences, the Africa Growth and Opportunity Act, and the more controversial Trade Adjustment Assistance program (TAA), which provides assistance to U.S. workers whose jobs are affected by international trade.  The House Ways & Means Committee, meanwhile, will hold a hearing on international trade issues on Wednesday afternoon.  Both chambers are expected to move quickly on the TPA bill.

The House and Senate Armed Services Committees will kick off the annual National Defense Authorization Act (NDAA) process with eight subcommittee hearings scheduled throughout the week.

Looking towards the following week, there is potential for legislative action on reauthorizing provisions of the USA PATRIOT and FISA Amendments Acts, whose authorities end on June 1.  Reports have surfaced of bicameral, bipartisan negotiations over the last few weeks, and indications are that both chambers are getting ready to roll out compromise legislation that is expected to be considered and adopted prior to the Memorial Day break for both chambers.  A May 31 deadline is also looming for the current surface transportation reauthorization.  The Senate Banking Committee has scheduled two hearings this week on the subject.  The hard-to-solve question remains how to pay for the programs.  Some members favor increasing the gas tax; others support a repatriation proposal, but the chairmen of the tax-writing committees do not support that approach, which also creates problems because the Congressional Budget Office is likely to score it as a revenue-loser.  Tough decisions will have to be made in the next few weeks.

Keeping an eye on the Third Branch of the federal government, the Court of Appeals for the Fifth Circuit heard oral argument on Friday last week on the Administration’s appeal of a federal district judge’s injunction against implementation of the President’s deferred action plan for immigrants in the country illegally and attendant benefits.  Immigration-related issues in Congress have been quiet since the stare-down over funding of the Department of Homeland Security.  If the Court of Appeals vacates the injunction, a resumption of immigration policy debates in Congress is highly likely, especially as appropriations season is soon to be upon us.

A schedule of Congressional hearings this week is detailed below:

Monday, April 20, 2015

Senate Committees

Census Survey Overhaul
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
3 p.m., 342 Dirksen Bldg. 

Conference Committees 

Fiscal 2016 Budget
Conference Committee
Full Committee Business Meeting
3 p.m., 106 Dirksen Bldg. 

Tuesday April 21, 2015 

House Committees 

D.C. Reproductive Health Bill Disapproval Resolution
House Oversight and Government Reform
Full Committee Markup
April 21, 5 p.m., 2154 Rayburn Bldg.

Veterans’ Affairs Oversight Legislation
House Veterans’ Affairs – Subcommittee on Oversight and Investigations
Subcommittee Markup
4 p.m., 334 Cannon Bldg. 

Senate Committees

Defense Department Nomination – Mr. Peter K. Levine, To Be Deputy Chief Management Officer, Department Of Defense
Senate Armed Services
Full Committee Hearing
9:30 a.m., 216 Hart Bldg. 

Agriculture Trade with Cuba
Senate Agriculture, Nutrition and Forestry
Full Committee Hearing
10 a.m., 328A Russell Bldg. 

Surface Transportation Reauthorization
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
April 21, 10 a.m., 538 Dirksen Bldg.

Telehealth Expansion
Senate Commerce, Science and Transportation – Subcommittee on Communications, Technology, Innovation and the Internet
Subcommittee Hearing
10 a.m., 253 Russell Bldg. 

State Department Efficiency
Senate Foreign Relations – Subcommittee on State Department and USAID Management, International Operations, and Bilateral International Development
Subcommittee Hearing
10 a.m., 419 Dirksen Bldg. 

Juvenile Justice Grants Oversight
Senate Judiciary
Full Committee Hearing
10 a.m., 226 Dirksen Bldg. 

Fiscal Year 2016 and Fiscal Year 2017 Funding Request and Budget Justification for the U.S. Department of Veterans Affairs
Senate Appropriations – Subcommittee on Military Construction and Veterans Affairs
Subcommittee Hearing
2:30 p.m., 124 Dirksen Bldg. 

DoD Counter-Terrorism Policy
Senate Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Hearing
2:30 p.m., 222 Russell Bldg.

FAA Regulatory Certification Process
Senate Commerce, Science and Transportation – Subcommittee on Aviation Operations, Safety and Security
Subcommittee Hearing
2:30 p.m., 253 Russell Bldg. 

Women Veteran Issues
Senate Veterans’ Affairs
Full Committee Hearing
2:30 p.m., 418 Russell Bldg.  

Wednesday, April 22, 2015 

House Committees

U.S. Grain Standards Act Reauthorization
House Agriculture – Subcommittee on General Farm Commodities and Risk Management
Subcommittee Hearing
10 a.m., 1300 Longworth Bldg.

Native American Schools
House Education and the Workforce – Subcommittee on Early Childhood, Elementary and Secondary Education
Subcommittee Hearing
10 a.m., 2175 Rayburn Bldg.

Global Terrorism and Terrorist Financing
House Financial Services
Full Committee Hearing
10 a.m., HVC-210 Capitol Visitor Center 

Iran Nuclear Agreement Issues
House Foreign Affairs
Full Committee Hearing
10 a.m., 2172 Rayburn Bldg.

Bioterrorism Threat Issues
House Homeland Security – Subcommittee on Emergency Preparedness, Response and Communications
Subcommittee Hearing
10 a.m., 311 Cannon Bldg. 

Oil Spill Safety Improvements
House Natural Resources
Full Committee Oversight Hearing
9:30 a.m., 1324 Longworth Bldg.

Examining the Dept. of Energy’s Excess Uranium Management Plan
House Oversight – Subcommittee on the Interior
Subcommittee Hearing
10 a.m., Rayburn Bldg.

America COMPETES Reauthorization Act
House Science, Space and Technology
Full Committee Markup
10:15 a.m., 2318 Rayburn Bldg. 

Cybersecurity and Small Business
House Small Business
Full Committee Hearing
11 a.m., 2360 Rayburn Bldg. 

Army Corps of Engineers, TVA Fiscal 2016 Budget
House Transportation and Infrastructure – Subcommittee on Water Resources and Environment
Subcommittee Hearing
10 a.m., 2167 Rayburn Bldg. 

IRS and Tax Filing Issues
House Ways and Means – Subcommittee on Oversight
Subcommittee Hearing
10 a.m., 1100 Longworth Bldg. 

Philadelphia and Oakland Regional Office Management Issues
House Veterans’ Affairs
Full Committee Hearing
10:30 a.m., 334 Cannon Bldg. 

Livestock Mandatory Reporting Act Reauthorization
House Agriculture – Subcommittee on Livestock and Foreign Agriculture
Subcommittee Hearing
1:30 p.m., 1300 Longworth Bldg.

Fiscal 2016 Defense Authorization: Emerging Threats and Capabilities
House Armed Services – Subcommittee on Emerging Threats and Capabilities
Subcommittee Markup
2:30 p.m., 2118 Rayburn Bldg. 

Fiscal 2016 Defense Authorization: Readiness
House Armed Services – Subcommittee on Readiness
Subcommittee Markup
4 p.m., 2212 Rayburn Bldg. 

Human Trafficking Issues
House Foreign Affairs – Subcommittee on Africa, Global Health, Global Human Rights and International Organizations
Subcommittee Hearing
1:30 p.m., 2200 Rayburn Bldg. 

Poaching National Security Issues
House Foreign Affairs – Subcommittee on Terrorism, Nonproliferation, and Trade
Subcommittee Hearing
3 p.m., 2172 Rayburn Bldg. 

DHS Acquisition Oversight
House Homeland Security – Subcommittee on Oversight and Management Efficiency
Subcommittee Hearing
2 p.m., 311 Cannon Bldg.

Interior Tribal Recognition Process Issues
House Natural Resources – Subcommittee on Indian, Insular and Alaska Native Affairs
Subcommittee Hearing
4 p.m., 1324 Longworth Bldg. 

Enhancing Cybersecurity of Third-Party Contractors and Vendors
House Oversight
Full Committee Hearing
2 p.m., 2154 Rayburn Bldg.

USDI Fiscal 2016 Budget
House Select Intelligence – Department of Defense Intelligence and Overhead Architecture Subcommittee
Subcommittee Hearing
2 p.m., HVC-304 Capitol Visitor Center 

Expanding American Trade with Accountability and Transparency
House Ways and Means
Full Committee Hearing
3 p.m., 1100 Longworth Bldg. 

Senate Committees 

Fiscal Year 2016 Budget Request and Funding Justification for Defense Innovation and Research
Senate Appropriations – Subcommittee on Defense
Subcommittee Hearing
10:30 a.m., 192 Dirksen Bldg. 

Fiscal Year 2016 Funding Request and Budget Justification for the U.S. Department of Transportation
Senate Appropriations – Subcommittee on Transportation, Housing and Urban Development
Subcommittee Hearing
10 a.m., 138 Dirksen Bldg. 

Weather Impact on Commerce and Safety
Senate Commerce, Science and Transportation
Full Committee Hearing
10 a.m., 253 Russell Bldg. 

Land and Water Conservation Fund
Senate Energy and Natural Resources
Full Committee Hearing
10 a.m., 366 Dirksen Bldg. 

Chemical Safety and Hazard Investigation Board Nomination
Senate Environment and Public Works
Full Committee Hearing
9:30 a.m., 406 Dirksen Bldg. 

State Department Reauthorization
Senate Foreign Relations
Full Committee Hearing
9:30 a.m., 419 Dirksen Bldg. 

Northern Border Threats and Strategies
Senate Homeland Security and Governmental Affairs
Full Committee Hearing
10 a.m., 342 Dirksen Bldg. 

Fiscal Year 2016 Funding Request and Budget Justification for the Federal Emergency Management Agency
Senate Appropriations – Subcommittee on Homeland Security
Subcommittee Hearing
2 p.m., 138 Dirksen Bldg. 

“The United States without Nuclear Power”
Senate Appropriations – Subcommittee on Energy & Water Development
Subcommittee Hearing
3 p.m., 192 Dirksen Bldg. 

Fiscal 2016 Defense Authorization: Air Force, Navy Nuclear Programs
Senate Armed Services – Subcommittee on Strategic Forces
Subcommittee Hearing
2:30 p.m., 222 Russell Bldg.

Fiscal 2016 Defense Authorization: Defense Acquisition System
Senate Armed Services – Subcommittee on Readiness and Management Support
Subcommittee Hearing
2:30 p.m., 232-A Russell Bldg. 

Transportation and Indian Issues
Senate Indian Affairs
Full Committee Oversight Hearing
2:30 p.m., 628 Dirksen Bldg. 

Thursday, April 23, 2015 

House Committees

Fiscal 2016 Appropriations: U.S. Customs and Border Protection
House Appropriations – Subcommittee on Homeland Security
Subcommittee Hearing
8 a.m., B-308 Rayburn Bldg. 

Fiscal 2016 Appropriations: FEMA
House Appropriations – Subcommittee on Homeland Security
Subcommittee Hearing
10 a.m., B-308 Rayburn Bldg.

Budget Hearing – Panel on Programs Supporting Native Americans
House Appropriations – Subcommittee on Labor, Health and Human Services, and Education
Subcommittee Hearing
10 a.m., 2358-C Rayburn Bldg. 

Fiscal 2016 Defense Authorization: Tactical Air and Land Forces
House Armed Services – Subcommittee on Tactical Air and Land Forces
Subcommittee Markup
9 a.m., 2118 Rayburn Bldg. 

Fiscal 2016 Defense Authorization: Military Personnel
House Armed Services – Subcommittee on Military Personnel
Subcommittee Markup
April 23, 9:30 a.m., 2212 Rayburn Bldg.

Fiscal 2016 Defense Authorization: Seapower and Projection Forces
House Armed Services – Subcommittee on Seapower and Projection Forces
Subcommittee Markup
10:30 a.m., 2118 Rayburn Bldg. 

Fiscal 2016 Defense Authorization: Strategic Forces
House Armed Services – Subcommittee on Strategic Forces
Subcommittee Markup
Noon, 2212 Rayburn Bldg. 

21st Century Workforce
House Energy and Commerce – Subcommittee on Energy and Power
Subcommittee Hearing
10 a.m., 2123 Rayburn Bldg. 

Drug Abuse Issues
House Energy and Commerce – Subcommittee on Oversight and Investigations
Subcommittee Hearing
10:15 a.m., 2322 Rayburn Bldg. 

Financial Regulatory Issues
House Financial Services – Subcommittee on Financial Institutions and Consumer Credit
Subcommittee Hearing
9:15 a.m., HVC-210 Capitol Visitor Center 

Foreign Affairs Legislation
House Foreign Affairs
Full Committee Markup
10 a.m., 2172 Rayburn Bldg. 

Victims’ Rights Amendment
House Judiciary – Subcommittee on the Constitution and Civil Justice
Subcommittee Hearing
9:30 a.m., 2237 Rayburn Bldg. 

Forest Fire Management Issues
House Natural Resources – Subcommittee on Federal Lands
Subcommittee Hearing
9 a.m., 1324 Longworth Bldg. 

Hydraulic Fracturing Issues
House Science, Space and Technology
Full Committee Hearing
9 a.m., 2318 Rayburn Bldg. 

ODNI, NCTC, NCPC Fiscal 2016 Budget
House Select Intelligence – Emerging Threats Subcommittee
Subcommittee Hearing
9 a.m., HVC-304 Capitol Visitor Center 

Veterans Health and Safety Legislation
House Veterans’ Affairs – Subcommittee on Health
Subcommittee Hearing
10 a.m., 334 Cannon Bldg. 

East Asia Fiscal 2016 Budget Priorities
House Foreign Affairs – Subcommittee on Asia and the Pacific
Subcommittee Hearing
1 p.m., 2172 Rayburn Bldg. 

Senate Committees 

Fiscal Year 2016 Funding Request and Budget Justification for the U.S. Department of Health and Human Services
Senate Appropriations – Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
10 a.m., 124 Dirksen Bldg. 

Fiscal Year 2016 Department of Defense Budget Request for Military Construction and Military Family Housing Programs
Senate Appropriations – Subcommittee on Military Construction and Veterans Affairs
Subcommittee Hearing
10:30 a.m., 138 Dirksen Bldg. 

Surface Transportation Reauthorization
Senate Banking, Housing and Urban Affairs
Full Committee Hearing
April 23, 10 a.m., 538 Dirksen Bldg. 

Airport Issues
Senate Commerce, Science and Transportation – Subcommittee on Aviation Operations, Safety and Security
Subcommittee Hearing
10 a.m., 253 Russell Bldg. 

Medical Device Tax Impact
Senate Finance – Subcommittee on Health Care
Subcommittee Hearing
10 a.m., 215 Dirksen Bldg.

Africa Growth and Opportunity Act
Senate Foreign Relations – Subcommittee on Africa and Global Health Policy
Subcommittee Hearing
10 a.m., 419 Dirksen Bldg.

Small Business Legislation
Senate Small Business and Entrepreneurship
Full Committee Markup
10 a.m., 428A Russell Bldg.

Finance Nominations: Sally Quillian Yates, to be Deputy Attorney General; Kara Stoll, to be a United States Circuit Judge for the Federal Circuit; Roseann A. Ketchmark, to be a United States District Judge for the Western District of Missouri

Senate Finance

Full Committee Confirmation Hearing
2 p.m., 215 Dirksen Bldg.
Central American Immigration Issues
Senate Judiciary – Subcommittee on Immigration and the National Interest
Subcommittee Hearing
2:30 p.m., 226 Dirksen Bldg. 

Friday, April 24, 2015

Senate Committees

Colorado VA Hospital
Senate Veterans’ Affairs
Full Committee Field Hearing
1:30 p.m., City Council Chambers, Aurora Municipal Center, 15151 E Alameda Pkwy, Aurora, Colo. 

Prospects for Iran Sanctions Under the April 2 Nuclear Framework

Posted in Asia, International Strategy

There are no changes in the application of US sanctions against Iran as a result of the framework parameters regarding Tehran’s nuclear program announced on April 2.  Additional sanctions relief will come only if there is a final agreement concluded among Iran, the United States, the United Kingdom, France, Russia, China, Germany, and the European Union.  The parties are aiming to reach such a final agreement by June 30.

Even if a final agreement is reached, there are several important issues with respect to the application of US sanctions that are not spelled out in the parameters circulated on April 2 by the US government and that will need to be addressed in any final agreement.

First — the timing of any sanctions relief.  The parameters circulated by the US government state that sanctions will be suspended “after the IAEA has verified that Iran has taken all of its key nuclear-related steps.”  Secretary of State John Kerry has stated publicly that it could take Iran as long as a year after the signing of a final agreement before it will be able to begin to comply with the key nuclear-related steps that would allow for sanctions relief.  While the Joint Statement issued April 2 by the EU High Representative and the Iranian Foreign Minister also tied sanctions relief to “IAEA-verified implementation by Iran of its key nuclear commitments,” the statement noted that such relief would come “simultaneously” with such IAEA verification, not “after.”  Moreover, subsequent to the announcement of the framework, some Iranian officials, including the supreme leader Ayatollah Khamenei, have suggested that sanctions relief must be comprehensive and immediate upon the execution of a final agreement.  However, Obama Administration officials have emphasized that any additional sanctions relief for Iran will be “phased.”  Accordingly, it seems unlikely, at least from the US side, that there will be any significant sanctions relief upon signing of a final agreement beyond that already agreed and implemented as part of the 2013 interim agreement, which, absent an extension, will expire June 30.

Second, whether sanctions will be terminated or, instead, suspended with the ability to snap back into place if Iran fails to meet its commitments.  While the US parameters document states that U.S. and EU nuclear-related sanctions will be suspended with the ability for them to snap back, the Joint Statement by the EU High Representative and the Iranian Foreign Minister stated that the EU nuclear-related sanctions would be “terminated” and the US would “cease the application” of its nuclear related sanctions.

Third, whether Congress will impose new limitations on the President’s ability to ease U.S. sanctions targeting Iran.  Today, the Senate Foreign Relations Committee is marking up legislation―the Iran Nuclear Agreement Review Act― that, as currently drafted, would prohibit the President for 60 days following the conclusion of a final nuclear agreement with Iran from waiving, suspending, reducing, providing relief from, or otherwise limiting the application of statutory sanctions targeting Iran (other than those already eased as part of the 2013 interim agreement).  The legislation under consideration also would prohibit the President from taking any action to ease statutory sanctions even after this initial 60-day period if a joint resolution disapproving any final nuclear agreement with Iran is enacted during the initial 60-day period.  To take effect, such a joint resolution likely would require a Congressional super-majority to override a presidential veto.

Fourth, what specific US sanctions will be suspended if there is a final agreement.  The US parameters document makes clear that only the US nuclear-related sanctions would be suspended; the US sanctions against Iran relating to Iran’s terrorism, human rights abuses, and ballistic missiles will remain in place.

The US parameters document does not spell out which sanctions the United States government believes relate to terrorism and which relate to Iran’s nuclear program.  Importantly, however, it does not appear that any nuclear-related agreement with Iran would remove the restrictions that prohibit US persons and their owned or controlled non-US affiliates from engaging in virtually all unlicensed dealings with or involving Iran.  The restrictions on US persons doing business with Iran, which date back to the mid-1990s, were adopted as a result of Iran’s support for terrorism activities, not specifically in connection with Iran’s nuclear program.  And although the expansion of these restrictions to reach activities of non-US companies owned or controlled by US persons occurred only in 2012, it is far from clear that this expansion would be treated as a “nuclear-related” sanction.

The Joint Statement of the EU High Representative and the Iranian Foreign Minister supports the view that the direct US sanctions that prohibit US persons and their owned or controlled non-US affiliates from doing business with Iran will not be suspended by any final nuclear-related agreement.  Specifically, the Joint Statement said that the United States would cease the application of its “nuclear related secondary economic and financial sanctions.”

“Secondary sanctions” is the term that is generally used to refer to those retaliatory measures that the United States imposes against non-US persons that engage in certain activities involving Iran.  These sanctions, which have been significantly expanded since 2010 in various statutes and executive orders, have primarily targeted Iran’s energy, shipping, and financial sectors.  If the United States ceases to implement these secondary sanctions, then non-US persons that are not owned or controlled by US persons would not risk losing their access to US markets if they engage in activities currently targeted for such secondary sanctions.  This might include, for example, the ability to:

  • purchase petroleum and petroleum and petrochemical products from Iran
  • supply goods and services to Iran’s energy, shipping, shipbuilding, and automotive sectors
  • supply Iran with precious metals and other materials such as aluminum and steel, and
  • provide insurance and underwriting services for various Iran-related activities.

If there is a final agreement, non-US financial institutions also would be expected to be able to support activities involving Iran that are no longer targeted for secondary sanctions and to re-engage with many Iranian financial institutions―though not those designated on the US List of Specially Designated Nationals and Blocked Persons as a result of their involvement in Iran’s terrorism activities.

Not all secondary sanctions may be considered nuclear-related, however.  For example, the secondary sanctions that target investments above certain monetary thresholds in the development of Iran’s petroleum resources have been in place since the enactment of the Iran Sanctions Act of 1996 (ISA).  The Findings to the ISA make clear that it was adopted in response to terrorism and weapons proliferation concerns.  As enacted in 1996, the ISA targeted investments in Iran’s development of its “petroleum resources,” a term it defined as including only petroleum and natural gas.  Pursuant to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, however, the term “petroleum resources” was expanded to cover not only petroleum and natural gas, but also oil or liquefied natural gas, oil or LNG tankers, products used to construct or maintain pipelines used to transport oil or LNG, and refined petroleum products, including gasoline.  In addition, many of the secondary sanctions that have been adopted since 2010 have been enacted as amendments to the ISA.  So it is unclear which, if any, of these secondary sanctions will be suspended.

Even if the ISA secondary sanctions are suspended, there is a risk that previously sanctionable investments could again be targeted for sanctions if Iran violates its commitments and the secondary sanctions “snap back”.  The United States does not usually grandfather existing projects when it imposes sanctions, and often provides for only limited wind-down periods.

In conclusion, even if there is a final agreement addressing Iran’s nuclear program by June 30, we will have to await further clarification from the US government as to which US sanctions will be suspended and the timing of any such suspension.  However, it appears to be unlikely that any such agreement will ease the prohibitions on US persons and their owned or controlled non-US affiliates doing business with or involving Iran.

 

President’s Advisory Council Focuses On Capital, Supply Chains and Infrastructure

Posted in Africa

One of the major initiatives announced during last summer’s U.S.-Africa Leaders Summit was the establishment of the President’s Advisory Council on Doing Business in Africa, a private sector-led body tasked with assisting the President in the development and dissemination of U.S. private sector strategies for taking advantage of trade and investment opportunities on the continent.  This week, the Advisory Council, which consists of 15 private sector corporate members representing a range of industries, met with Commerce Secretary Pritzker and other government officials to present its recommendations report.  The recommendations focus on three key areas: capital; supply chain efficiency; and infrastructure.

  • Increase support for capacity building activities for “African financial regulators, exchanges, and financial market participants.” By drawing investment and increasing access to capital, strong capital markets will play a critical role in ensuring robust and sustainable development on the continent.  Africa’s capital markets have undergone “slow but steady” progress over the past few years and performed particularly well in 2014.  African sovereigns “went to market with around $15 [billion] worth of bonds.”  Equity capital market activity “increased by 40%” in terms of transactions volume and doubled in terms of raised capital.  Initial public offerings by African domiciled companies accounted for approximately 20% of the equity capital raised.  The Advisory Council has proposed that support of these efforts “could be enhanced through funding of the existing [Technical Assistance Program of the U.S. Securities and Exchange Commission].”
  • Equip institutional investors with tools to overcome real and perceived barriers to investment.  2014 was an active year for private investment in Africa. “Driven by several large deals with ties to U.S. investors,” the $8.1 billion in private equity investments was the second highest total ever.  However, the Advisory Council has expressed concern that “perceptions and knowledge gaps,” governance risks, insufficient capital to fund large-scale infrastructure projects, and inadequate infrastructure to support economic activity continue to exert an adverse impact on access to capital.  The Advisory Council has called for toolkits, outreach events and other assistance in identifying opportunities and navigating challenges.
  • Improve regional integration.  The Advisory Council is joining a chorus of key stakeholders — the U.S. government, the African Development Bank and the United Nations Economic Commission for Africa — who recognize that improving regional integration in Africa is a high priority.  The Council commended the Obama Administration for the U.S.-EAC Cooperation Agreement and has identified the World Trade Organization Trade Facilitation Agreement (“TFA”) as another key instrument for advancing this issue.  Although only four WTO members have secured domestic acceptance of the TFA, one of those countries is Mauritius.  Furthermore, at the end of this year, Kenya will host the WTO Ministerial Conference, marking the first time that the event is being held on the continent.  Believing that these developments present a chance for Africa “to show global leadership on trade facilitation,” the Advisory Council has recommended that the U.S. government “foster support and adoption” for the TFA across the region.
  • Focus on obstacles to trade in the agricultural, manufacturing and services sectors. The Advisory Council also has expressed specific concern about the significant post-harvest losses experienced by the African agricultural sector.  It has called on the Department of Commerce’s Commercial Law and Development Program, the Department of Agriculture, the Trade and Development Agency, and other agencies to remove supply chain inefficiencies and introduce cold chain best practices and standards.  In addition, the Advisory Council has recommended “government-to-government dialogues, including with Regional Economic Communities to address localization barriers” that inhibit market access in the manufacturing and service sectors and industrialization more generally.
  • Seize the “enormous opportunity” that Africa’s infrastructure gap presents for partnership between U.S. and African public and private sectors.  Although “closing the infrastructure gap is vital for Africa’s economic prosperity and sustainable development,” the costs of achieving this goal are estimated to be in the trillions.  Recognizing the opportunity for the U.S. private and public sectors to work with their African counterparts to address this sizeable deficit, the Advisory Council believes that it is “critical” that the government support “a focused mechanism for driving action and ensuring broad U.S. company participation.”  Chief amongst its recommendations in this regard is the creation of a U.S.-Africa Infrastructure Center that brings together public and private sector resources “to identify, vet, prioritize, and develop a unified approach to compete for critical projects.”  Such a body has the potential to vastly increase the competitiveness of U.S. companies pursuing infrastructure project opportunities in the region.  The Advisory Council has identified healthcare infrastructure as “a key area with significant opportunities.”

Throughout the report, the Advisory Council stresses that increasing U.S. commercial engagement with Africa will require not only interagency coordination but also ongoing collaboration with the private sector.  From Secretary Pritzker’s highly positive reaction to the recommendations, it is clear that U.S. companies will play a central role in what President Obama has called “a new chapter in U.S.-African relations.”

 

This post can also be found on Cov Africa, the firm’s blog on legal, regulatory, political and economic developments in Africa.