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U.S. – EUROPE COMMERCE NEWS

A weekly service provided to the American Chambers of Commerce in Europe

US & EU ECONOMIC STATS

U.S. PRODUCER, EXPORT AND IMPORT PRICES RISE IN SEPTEMBER

According to a report released on October 10, the U.S. Department of Labor’s Import and Export Price Indexes, which contain data on changes in the prices of nonmilitary goods and services traded between the U.S. and the rest of the world, both rose in September. The U.S. Import Price Index increased by 0.7 percent in September, representing the sixth monthly gain in the past seven months. Petroleum prices were up by 6.0 percent in September, and they have increased by 61.1 percent since December 2001. The U.S. Export Price Index rose by 0.2 percent for the second consecutive month, led by the continued rise in agricultural export prices. The Department of Labor also reported on October 11 that the Producer Price Index for Finished Goods (PPI), which measures the average change over time in the selling prices received by domestic producers for their output, rose by 0.1 percent in September. The PPI did not change in August and fell by 0.2 percent in July. The crude goods index also rose in September by 0.6 percent, after rising by 1.6 percent in August.

U.S. ESTIMATES FOR SEPTEMBER RETAIL AND FOOD SERVICES SALES DOWN

The U.S. Census Bureau and the Department of Commerce announced on October 11 that advance estimates of U.S. retail and food services sales for September were $302.5 billion, a decrease of 1.2 percent from August, but still up by 5.8 percent from September 2001. Total sales between July and September 2002 were up by 5.3 percent from the same period a year ago. Building material, garden equipment, and supplies dealers and health and personal care stores had both significantly increased from September 2001, by 11.3 percent and 11.1 percent respectively.

U.S. HOUSE APPROVES EXPANDED TRADE BENEFITS TO TURKEY, YUGOSLAVIA

The U.S. House of Representatives approved legislation on October 7, which would expand trade benefits for certain imports from Turkey and restore most-favored-nation status to Yugoslavia. Both provisions were supported by the U.S. Chamber and are part of a larger bill that includes more than 300 uncontroversial provisions for tariff suspensions on imports of goods produced abroad and traded in small volume. The Turkey provision was passed after the House Committee on Ways and Means received a State Department letter affirming that the Bush administration is urging Turkey to lift its blockade of Armenia. The new provision would amend existing law implementing the U.S.-Israel Free Trade Agreement to create “qualified industrial zones,” where various goods produced jointly by Turkish and Israeli manufacturers could enter the U.S. market duty free. The provision to restore normal trade relations with Yugoslavia was passed after House members dropped an amendment requiring the President to verify that the Yugoslavian government is complying with the International War Crimes Tribunal at The Hague and with the Dayton Peace Accords.

U.S. TREASURY DEP. SECRETARY DAM SPEAKS ON NEW U.S. EXPORT TAX LEGISLATION

U.S. Treasury Deputy Secretary Kenneth Dam stated that the U.S. government will comply with the recent WTO rulings in the FSC/ETI dispute between the U.S. and the EU, but that Congress will probably not pass new WTO-compliant legislation before its current session adjourns. Dam said the Bush administration is working towards a solution with Representative Bill Thomas, Chairman of the House Ways and Means Committee, and Senator Max Baucus, Chairman of the Senate Finance Committee. Dam criticized the current U.S. international tax regime as being obsolete, harmful to U.S. business competitiveness, and counter to U.S. national interests. According to Dam, “the chances of going back to an FSC look-alike are nil.”

U.S. AND EU NEGOTIATING CONFLICT OVER BILATERLAL INVESTMENT TREATIES

On September 27, the European Commission submitted a list to U.S. officials of potential conflicts between the U.S. Bilateral Investment Treaties (BITs) negotiated with EU candidate countries and EU laws and regulations. At issue are provisions in the BITs that prohibit local content requirements, guarantee protections for capital transfers, and protect investments in certain service sectors not covered by EU investor protections. The EU Commission informed candidate countries earlier this year that their BITs with the U.S. must be modified or terminated before they are granted permission to join the EU. The U.S. reiterated its position that the BITs should stand and the candidate countries should not be pressured to break their obligations with the U.S.

NON-U.S. BANKS MAY WIN CONCESSION IN SARBANES-OXLEY LEGISLATION

While the new Sarbanes-Oxley Act on corporate governance and accounting exempts U.S. banks from its prohibition on companies providing loans to directors, it does not provide and exemption for non-U.S. banks. In response to concerns primarily from European business people, the U.S. Securities and Exchange Commission (SEC) said on October 9 that it would review the matter. Director of the SEC Corporation Finance Division Alan Beller said, “this is one of the rare provisions of Sarbanes-Oxley where in fact foreign entities are being treated in a somewhat worse fashion than their U.S. counterparts. We will be mindful of that.” In Brussels, SEC Chairman Harvey Pitt and European Commissioner for Financial Services Frits Bolkestein indicated that they had made progress towards a possible exemption from the legislation for European accounting firms.

U.S. CHAMBER PRAISES PRESIDENT BUSH’S ACTION ON WEST COAST PORT SHUTDOWN

On October 7, President Bush invoked his authority under the Taft-Harley Labor-Management Relations Act of 1947 and instructed Attorney General John Ashcroft to seek a temporary injunction in federal court in San Francisco to reopen U.S. West Coast ports and force the Pacific Maritime Association and Long Shore and Warehouse Union to return to negotiations. The injunction ended the nine-day closure of 29 West Coast ports that was costing $1-2 billion a day. It is expected to take more than a month before the ports return to normal. Judge William Alsup set an October 11 hearing to decide whether to issue a permanent injunction under the Taft-Hartley Act that mandates an 80-day cooling-off period in the dispute. The U.S. Chamber and other business groups are praising President Bush's rapid action to reopen the West Coast ports and prevent further economic damage. The West Coast ports now handle 65% of all containerized food exports and imports including a quarter of all U.S. grain exports. This dispute has also tied up 300,000 containers on nearly 200 ships waiting to dock.

CHRISTOPHER PADILLA NAMED ASSISTANT U.S. TRADE REPRESENTATIVE

On October 9, United States Trade Representative Robert B. Zoellick announced the appointment of Christopher A. Padilla as Assistant U.S. Trade Representative for Intergovernmental Affairs and Public Liaison. Over the past twelve years, Mr. Padilla has held various senior international trade positions at Eastman Kodak Company, Lucent Technologies, and AT&T. He has also served on the U.S. Chamber’s International Policy Committee and several USTR trade advisory committees.

U.S. DEPARTMENT OF STATE INCREASES NONIMMIGRANT VISA APPLICATION FEE

Effective November 1, 2002, the U.S. Department of State will increase the application processing fee charged for all nonimmigrant visa and border crossing card applications from $65 to $100. According to an October 9 State Department note, added security screening procedures, restrictions on the role of support staff, and further increases in management oversight are the primary factors in the increased fee.