Additional Details on the President’s Export Council Recommendations on IPR, Taxes, Etc.

(See ITT’s Online Archives or 12/16/10 news, 10121626, for previous BP summary based on the live webcast of the PEC meeting.)

During the December 9, 2010 meeting, PEC considered and approved letters (sets) of recommendations to the President on the following:

• Russia’s Accession to the World Trade Organization
• Intellectual Property Rights
• Tax Reform
• Services Data
• Benchmarking

Highlights of PEC Letters of Recommendations

Recently, the PEC’s letters of recommendation to the President on expanding U.S. exports were posted to the PEC Web site. Highlights of the letters of recommendation for Russia’s WTO accession, intellectual property rights, and tax reform include:

Russia’s WTO Accession

Given the breadth of opportunity presented by Russia’s WTO accession, the PEC states that the business community wants to ensure that Russia continues to receive the proper attention and focus in the Administration’s trade agenda for 2011.² Once a commercially meaningful WTO agreement is reached, the PEC encourages the Administration to move quickly to seek successful Congressional repeal of Jackson-Vanik and passage of Permanent Normal Trade Relations (PNTR) for Russia, as it is necessary for U.S. businesses and agricultural interests to take full advantage of Russia’s WTO entry.

(According to the Coalition for U.S.-Russia Trade, once Russia is a WTO member, if the U.S. does not graduate Russia from the Jackson-Vanik amendment and grant Russia PNTR, the U.S. will not have the legal right to access the terms of Russia’s WTO accession (such as tariff reductions and other market liberalization measures).

In the past, when a country that the U.S. has not granted PNTR to accedes to the WTO, the U.S. has invoked the non-application clause of the WTO Agreement and, until PNTR was granted, the WTO Agreements and the terms of the new country’s accession were not formally applied between the U.S. and that country.)

Intellectual Property Rights Protection

Empower IPEC, ensure adequate resources. The PEC recommends that the Administration continue to empower the Intellectual Property Enforcement Coordinator (IPEC) and work with Congress to ensure that she has the adequate resources and authority to effectively coordinate the government’s IP enforcement efforts.

Strong protection, enforcement in international trade agreements. The PEC recommends that the U.S. government continue to negotiate and implement bilateral and multilateral trade agreements with strong IP provisions that build upon and do not diminish existing U.S. trade agreements, protect U.S. creations and innovations, and benefit all U.S. industry sectors. Specifically, PEC encourages the Administration to press for a higher priority for intellectual property protection and enforcement issues in all relevant multilateral organizations in which the U.S. participates.

Shut down overseas web sites that sell counterfeit goods. The PEC recommends that the government work to shut down overseas Web sites that sell counterfeit goods and facilitate digital theft. The U.S. government must make it a priority to work with foreign governments to ensure reasonable methods and effective tools are used to prevent the distribution of illicit content not only in traditional market places but over the Internet as well.

Ensure embassy attaché programs are robust, coordinated, and expanded. The U.S. government should ensure that intellectual property attaché programs within executive agencies are robust and coordinated, and work with Congress to expand these programs into additional countries abroad. PEC notes that IP attaches, stationed at U.S. embassies in selected countries, play a valuable role by working with U.S. businesses, as well as local officials and law enforcement, to address IP protection and enforcement issues in various countries.

Tax Reform

Reduce corporate tax rate. Reduce the combined (federal and state) corporate tax rate to the OECD average or less. The PEC notes that in 2010, the average corporate OECD tax rate (excluding the U.S.) was 25.5% as compared with 39.2% for the U.S. The PEC also recommends the creation of an international tax system in which U.S. corporations can compete well with those in other OECD nations.

Enact permanent R&D credit. PEC recommends enactment of a permanent research and development credit that is competitive with other OECD incentives. PEC also notes that in order to encourage incremental investment in intellectual property development and ownership, many countries have recently enacted regimes providing advantaged treatment for intellectual property and the U.S. should consider a similar regime.

(See ITT’s Online Archives or 12/22/10 news, 10122228, for BP summary of the enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which included a two-year reinstatement of the R&D tax credit.)

Create additional temporary tax incentives to invest in capital equipment. PEC notes that five of the last eight years, Congress has extended tax incentives to enhance first year depreciation on capital expenditures for small and large companies and these investment incentives should be extended until the U.S. economy more fully recovers or the corporate tax rate can be reduced.

¹The PEC was first established in 1973 to advise the President on matters relating to U.S. export trade and report to the President on its activities and on recommendations for expanding U.S. exports. The PEC was most recently renewed on September 29, 2009 for a two year period, and is comprised of private-sector, Congressional, and Administration members.

²In November 2010, Xinhuanet.com reported that Russian presidential aide Arkadi Dvorkovich stated that the country has more than a 50% chance to join the WTO in 2011. See ITT’s Online Archives or 11/01/10 news, 10110105, for BP summary.

(See PEC Web site for details on the recommendations for benchmarking and services data.)

PEC letters of recommendation available here.