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US Business Summit focuses on trade, travel and taxes

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US businesses have positioned trade, travel and taxes as central to their efforts in promoting business and creating opportunities in Asia as the US strengthens its focus on the region’s fast-growing markets.

The priorities were set out by  Steven Okun, Director of Public Affairs at KKR and the Chairman of the Asia-Pacific Council of American Chambers of Commerce,
the umbrella organisation of AmChams from across the region in Asia, during the opening address at the Spring Summit in Manila on March 20.

“These ‘three Ts’ represent areas where governments can break down barriers and create a level playing field for businesses in the region,” said Okun. “President Obama’s rebalance of US interests to focus more of Asia has three key components – military, political and economic. The third leg of the stool, the economic one, is where US business must partner with the US government.”

Okun said that the US focus on Asia “will create new economic channels and give businesses exposure to high-growth industries such as energy and infrastructure, logistics, healthcare and retail, which all benefit from Asian counties’ favorable demographics”. “Inversely, developing markets can also benefit from the best-practices introduced by international companies,” he added.

Okun also noted that Manila was the perfect place to host this year’s APCAC. “Foreign investors often focus on the BRICS (Brazil, Russia, India, China, South Africa) when it comes to investment opportunities. In Asia, our focus is on the VIP countries, Vietnam, Indonesia and the Philippines. These markets, and others in SE Asia, offer businesses great opportunity for growth given their growing middle class and movement to domestic-consumption drive economies,” he said.

Of the three Ts, the work on trade focuses on the discussions surrounding the Trans-Pacific Partnership (TPP). In addition to addressing regulation on imports, exports, customs and duties across partner markets, the TPP would enforce transparency standards and set parameters around fractious issues such as intellectual property and labour rights.

Even as negotiations continue on the TPP, APCAC says its impact is already being felt in a positive way across the region. One example cited is Taiwan, where Taiwanese officials are keen to join the TPP, agencies have reached out to AmCham to find how it can liberalise and reform so that it can be in a position to meet the standards of the TPP.

Okun noted how the AmCham Taiwan private equity committee, which aims to solidify regulations to promote private equity investment – has been informed that its requests for greater transparency will be met as part of the necessary steps to qualify for the TPP.

“The AmCham Taiwan PE committee has been meeting with government officials in Taipei for more than two years to show how transparency with regard to investment review is a prerequisite to promoting activity. ‘The rules do not matter, so long as we know the rules up-front and how they will be applied’ is a maxim for investors,” said Okun. “It is only when Taiwan showed its great interest in the TPP that real progress has been made on this point.”

Tax treatment

He added that unequal tax treatment can also hinder American businesses abroad. APCAC has cited several studies that have shown a direct correlation between US citizens working overseas and US exports. However, US tax law puts American citizens at a disadvantage, taxing them on worldwide income while other nations do not tax expatriates, APCAC noted.

“US citizens living and working in Asia are the best ambassadors that the US has in Asia,” said Okun. “This is why the US needs have a level playing field when it comes to taxes for both US citizens and US corporations.”

Adopting a territorial tax system in line with the rest of the world is one of the key APCAC tenets as this will level the playing field, promote exports and create more investment and jobs for US companies and US citizens.

Likewise, the ability for American businessmen and women to freely travel across markets will maximize the US’ commercial opportunities, the trade group said.

The US’ granting of the Asia Pacific Economic Cooperation (APEC) Business Travel Card (ABTC)  – a document issued to business travelers which waives the need to wait in immigration queues in APEC markets – is among the steps regulators can take to improve the landscape.

In November 2011, President Obama signed bipartisan legislation that would allow US citizens to apply for the APEC card, yet the approval has been stalled in the regulatory process. The rules were sent to the Office of Management and Budget at the White House for review in September 2013, and remain there.

“The members of APCAC understand that the issuance of the ABTC will not get visa free travel within APEC for US citizens, but it will permit us to use the ABTC lane at airports, which in and of itself will bring great business to US citizens,” Okun said.

“US businesses will continue to focus on the three Ts in 2014 and beyond,” concluded Okun.  “We have seen progress already in doing so, and look forward to soon being able to celebrate great successes with the signing of the TPP and the issuance of the ABTC.”

APCAC comprises 27 member AmChams in 19 economies across the Asia-Pacific region. Our members represent the growing interests of over 10,000 businesses and 50,000 overseas American workers in the Asia-Pacific region, who manage trade volumes in excess of $400 billion and direct investments of nearly $300 billion.

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