MR ICE: Thank you and good morning, everyone. Thank you for dialing in this morning. We’re very glad to have with us today Senior Bureau Official for the State Department’s Bureau of Economic and Business Affairs Matt Murray. Mr. Murray is going to discuss the G20 Leaders’ Summit, the path forward on international economic cooperation on supply chains, and also cover the significant progress that’s been made toward a more stable and fair international tax system. Following his remarks, he is going to take a few of your questions. Now I’d like to take the opportunity just to remind everyone that this briefing is on the record, but the contents will be embargoed until the conclusion of the call.
Senior Bureau Official Murray, thank you so much for joining us today. At this point I’m going to turn it over to you for some opening remarks.
MR MURRAY: Yeah, thank you, JT, and good morning, everyone. It’s a pleasure to be with you today to talk about the G20 summit in Rome, which, as you know, took place on October 30th and 31st. And as you also are aware, the G20 is a meeting of the world’s largest economies, representing approximately 80 percent of world GDP and 75 percent of global trade, working together to make progress towards tackling some of our most pressing global challenges.
At the G20 summit, President Biden coordinated with fellow leaders in advancing shared interests, including on the climate crisis, global health and pandemic preparedness, and the global economic recovery, using the power of diplomacy to address key issues that matter to the American people.
It’s important from the outset to stress that the G20 is just one more example – an important one, to be sure – of the U.S. commitment to high-level engagement with our allies and partners. Several of the extraordinary achievements at the summit – such as the global minimum tax agreement – built on months of intensive face-to-face diplomacy that took place in the run-up to the G20 Leaders’ Summit.
So at its core, the G20 summit is another key instance of ongoing American diplomatic leadership with our allies on issues that will have a positive impact on the lives of Americans and people around the globe. As President Biden said, we made dramatic progress at this historic summit, and I’d like to focus today on two of those achievements which the Bureau of Economic and Business Affairs here at State have been deeply engaged and which will help underpin a strong and sustainable economic recovery.
First, at the G20, leaders endorsed the establishment of a historic global minimum tax of 15 percent. This represents a once-in-a-generation accomplishment for economic diplomacy that will lead to increased prosperity in America and around the world, and as you’ve heard Secretary Blinken say, end the race to the bottom on corporate taxation. It’s a win for families, which will benefit from the revenues this deal raises for investment in their communities; it’s a win for American businesses, who will no longer have to compete on an international playing field tilted against them; and it’s a win for the international business community, which will enjoy a more stable and certain investment environment with fewer tax and trade disputes.
Again, I’d like to stress that this historic agreement was the work of ongoing diplomatic engagement by the administration. In June, the President rallied G7 leaders to endorse a strong global minimum tax. In early October, more than 130 countries joined consensus on the heels of Secretary Blinken’s hosting of the OECD ministerial in Paris. And now, leaders of countries representing more than 80 percent of the world’s GDP have formally endorsed the deal.
A second important milestone on the margins of the G20 summit that will strengthen our economic recovery was fostering greater international cooperation on supply chain resiliency. This effort is intended to both tackle the immediate supply chain challenges that arose during the pandemic and build long-term supply chain resilience for the future.
As President Biden rightly noted, many of our supply chains are almost entirely owned and operated by the private sector. But government can play a key role identifying supply chain risks and bringing different actors together to address vulnerabilities.
At the G20 summit, the President convened leaders from around the globe in a summit on global supply chain resilience to chart a course for strengthening and diversifying the entire supply chain ecosystem – from raw materials to manufacturing to shipping and distribution.
This meeting built upon previous U.S. Government efforts to promote international engagement in this key area, including via the U.S.-EU Trade and Technology Council and the Quad’s Critical and Emerging Technology Working Group. Through these mechanisms, we have collaborated with our partners on market transparency and capacity mapping to better understand complex supply chains. We also sought to coordinate on incentives in research and development, and to cooperate on standardization and certification.
Recognizing the importance of engaging all stakeholders in a supply chain ecosystem, President Biden also announced at the G20 summit a future multi-stakeholder forum that Secretary of State Blinken and Secretary of Commerce Raimondo will host next year with their foreign counterparts. This future engagement will be another key opportunity to engage with governments, private companies, worker and labor organizations, indigenous communities, and academic institutions to better strengthen supply chain resiliency and prepare ourselves for any future shocks or disruptions.
The State Department, including the Bureau of Economic and Business Affairs, as well as our economic officers in posts around the world, are proud to have played a significant role in these efforts as we continue to seek to utilize diplomacy to advance U.S. economic prosperity and recovery and to deliver positive outcomes for the American people through like-minded engagement with partners and allies.
So thank you, and now I’m happy to take your questions.
MR ICE: Thank you, Senior Bureau Official Murray. Operator, if you would please, would you give people the instructions for getting into the question queue?
OPERATOR: Certainly, thank you. And ladies and gentlemen, if you do wish to ask a question, please press 1 and then 0 on your telephone keypad. You can withdraw that question at any time by repeating that 1, 0 command. And if using a speaker phone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press 1, 0 at this time. One moment.
MR ICE: Okay. We’ll stand by just a moment and allow people to get into the question queue.
OPERATOR: And again, it’s 1, 0.
MR ICE: Okay. Let’s go to the line of Pearl Matibe.
QUESTION: Good morning and thank you so much for your availability on this. I wonder if you can speak to – what does this mean to the ordinary people in, say, Sub-Saharan Africa, South Africa, Mozambique, and that? What does that mean in layman’s terms to them, the beneficiaries? Thank you.
MR MURRAY: Thank you for the question. I’ll speak first on the global minimum tax and then I’ll turn to the supply chain resilience issue.
A global minimum tax, as Secretary Yellen at the Treasury Department has pointed out, this deal will remake the global economy into a more prosperous place for American businesses and workers, and then rather than competing on our ability to offer lower rates, America will now compete on the skills of our people, our ideas, and our capacity to innovate. And I – that’s true of any countries, including those countries in Sub-Saharan Africa, that as Secretary Blinken has said, we don’t want to engage in a race to the bottom on tax, but we want to create a level playing field to attract investment.
So like a lot of countries around the world, when we think about the global minimum tax agreement, this is an area where it provides all countries a more equal footing to attract investment. And in the Sub-Saharan Africa context, that’s an opportunity that countries in the region can take advantage of. It also ensures that large corporations will pay their fair share no matter where they’re headquartered, instead of basically having tax havens in specific countries overseas.
On the supply chain resilience piece, we certainly see this as something that affects all countries. And at the summit, the President talked about four key pillars. The first pillar being transparency, the second pillar being diversity of supply, the third pillar being supply chain security, and the fourth being sustainability. When we look at governments, private sectors, and consumers in Sub-Saharan Africa, all of these issues are critically important as we look to having resilient and secure supply chains moving forward so that companies and consumers can have access to the goods that they need.
And the – under the President’s leadership, we launched an executive order – or he launched an executive order in February where we also covered four specific key sectors – semi-conductors, pharmaceutical APIs, critical minerals, and also EV batteries – and these are supply chains in which many countries in Africa are involved.
And I would add importantly as well to your question that joining the President at the summit were leaders and representatives from a number of countries, including the Democratic Republic of the Congo as an African representative. Thanks.
MR ICE: Let’s go to the line of Michael Martina.
QUESTION: Hi, Matt. Thanks for doing this. You mentioned supply chain security. I’m just curious if there are any ongoing efforts with other G20 countries to wean reliance on China and Xinjiang for solar material supplies, given the rights abuses that are going on there. We’ve seen the U.S. Government Customs and Border Protection put some withhold release orders on certain companies, but so far the U.S. Government hasn’t moved forward on a much broader plan – much broader ban, that is. So I’m curious, can you speak to any sort of tangible efforts being made with partners around the world to advance that? Thank you.
MR MURRAY: Sure. Thanks, Michael. So as part of the executive order that I referenced, the President emphasized the important of international engagement with partners and allies on supply chain resiliency and supply chain security, and the summit meeting that he held on the margins of the G20 on Sunday was one of the recommendations that was included in the executive order’s 100-day report that was released in June about pulling together leaders from around the world to talk about these issues. And again, one of the outcomes of Sunday’s summit is that we’re going to continue with a ministerial next year that will be multi-stakeholder and will involve a lot of our partners and allies.
I think a couple of aspects of this touch on the questions you raised. One is a key goal of our supply chain engagement through the G20 but also through the U.S.-EU Trade and Technology Council, through the Quad, and through a number of bilateral discussions with partners and allies is that we believe open global markets are fundamental in supporting resilient supply chains. And so we do want to make sure that we have diversity of supply in order to guard against acute economic vulnerabilities arising from concentrated control of a single source, and so I think that’s foundational to your question.
On the security side, also countries that we’ve been discussing both at the G20 and other mechanisms, we’ve discussed that security needs to be recognized as a high priority for all players within supply chains, especially in technology supply chains and critical infrastructure nodes and other points within the supply chain that can’t afford to fail. So it’s important that governments work with industry to better understand and manage security risks to supply chains, and this includes a number of sectors, including in the solar sector that you referenced.
MR ICE: And let’s go to the line of Nick Wadhams.
OPERATOR: Nick, your line is open.
QUESTION: Thank you. Matt, can you give us the State Department’s and your bureau’s assessment right now on the current supply chain crunch? There’s some indication car makers are saying on some of their earnings calls recently that the chip shortage they anticipate will be easing. So setting aside the department and the administration’s efforts to work on these broader supply chain issues, do you have an assessment right now about the current state of the supply chain crunch and when that might ease? Thanks.
MR MURRAY: Thanks for the question. There’s a bit of static on the line. I don’t – it’s a little bit hard to hear. But you – hello? Okay. All right. Thanks. So I think that from the – our perspective we have to look at the supply chain issue both in the short term as well as over the longer term. So on the – the longer term was a big part of the focus of the G20 discussions on Sunday, and looking at how each of these countries can look at paths to long-term resilience. But at the same point, we are looking very much at the near-term supply chain disruptions.
And one of the things that we’ve been working with in terms of the – our approach to addressing the short-term shortages is particularly in the semiconductor sector. The White House launched a new interagency early alert system for COVID-related shutdowns to semiconductor manufacturing facilities with a particular focus on Southeast Asia. And so through this system, we want to have a whole-of-government approach to detect potential disruptions early, coordinate with our trading partners in the private sector, and mitigate the impact on our vital sectors. And our embassies in Southeast Asia in particular are playing a key role in this effort, and we’re in regular contact with our embassies, particularly in Kuala Lumpur, and Hanoi, and Jakarta, and Bangkok, and some of these areas where we’ve seen some disruptions.
At the same time, as you may be aware, the Commerce Department also launched a request for information soliciting all parts of the supply chain in semiconductors – the producers, consumers, and intermediaries – to voluntarily share information that will help us identify and address bottlenecks. Because longer-term solutions to the shortage are important, but improved transparency is critical to our ability to address them in the short term.
So we’re very much focused on addressing this situation across government and in collaboration with the private sector so that we can do whatever we can to ameliorate the shortages as quickly as possible.
MR ICE: And let’s go to the line of Pearl Matibe, who I believe has a follow-up.
QUESTION: Yes. Thank you for taking my follow-up question. And this stems just from what you were just talking about – in particular, the semiconductor industry and market. I know through Congress there was this new piece of legislation, the U.S. Innovation and Competition Act of 2021. Could you maybe speak to – I know you mentioned that you might be soliciting information from maybe U.S. businesses that are in the semiconductor industry, but they’re going to be facing tough competition probably not just from Asia, but from the European Union, from countries like Germany, for example, who has a concentration of semiconductor industry in the Dresden – around Dresden. So I wonder if you are – how are you communicating with U.S. businesses? Are you including them in any trade missions? And if they were reach out to you, how do they that? Like, how are you making that connection? And what types of maybe additional sources of funding opportunities – I’m trying to see how you connect to them. I understand the bigger picture of what’s coming out of the legislation and what came out of the White House, as you explained, but now how do you link that now to your businessmen in Maryland or Wisconsin or Virginia, for example?
MR MURRAY: Sure, thanks. So I would say that over the course of the last several months, this has been a top priority for us here at the State Department in the Bureau of Economic and Business Affairs, and as well in collaboration with a lot of our agency colleagues at Commerce and elsewhere. And I know that I’ve been on a number of calls and in meetings with various business associations and individual companies both here in the United States as well as in other countries, and importantly, those discussions have been with multiple sectors that are affected by this, because it’s not just obviously semiconductor producers that are affected, but it’s a lot of our manufacturing sectors here, as well as a lot of our high-tech sectors. And that’s not, obviously, just unique to the United States, but that’s true around the world.
And so we’ve definitely made a very conscious effort to engage with all of the various private sector entities that have been affected, many of which have reached out to us – large companies, small companies, some of them with representatives here in Washington, D.C.; some of them with representatives in other states, and again, other parts of the world.
We also have very much prioritized government-to-government exchanges and dialogues on the supply chain issue, including in the semiconductor space. And I would say, again, that I’ve been on calls and my team’s been on calls with probably more than a dozen different economies over the last several months in terms of discussing what we can do on international engagement to help ameliorate the short-term disruptions.
And it’s in that context, I think, that this summit on Sunday was incredibly important to have a discussion with world leaders about supply chain resilience and to hit these areas like transparency, diversity of supply, security, sustainability, all of which are very relevant to the challenges we’re currently facing in the semiconductor sector. And we want to continue to have those discussions and build out potential next steps as we go forward both in our collaboration with other governments and also with the private sector.
MR ICE: Okay. And with that, unfortunately we’re out of time. I’d like to go ahead and thank everyone for joining us today. And I’d especially like to thank our colleague, Senior Bureau Official Matt Murray, for joining us. With that, the embargo is lifted on this call and the call is concluded. Thank you.
MR MURRAY: Thank you.