Archive for October, 2017

Amazon Steps Up the Offensive

Friday, October 27th, 2017 by Chris Orange

In early September Amazon’s shrewd announcement to open up bids for its new ‘HQ2’ has seen a wave of free publicity for the company amidst a reported 238 proposals. The often public displays of courting have come from all but 7 American states, cities and regions across the country, allured by the prospects of 50,000 highly paid jobs that Amazon has promised for its new site. Amazon has not held back in its demands; 8 million square feet of office space, direct access to mass transit, an international airport within close proximity, and of course access to a top pool of talent- all within a metropolitan area of over 1 million people.

But whilst Amazon continues to enjoy hyper growth, its recent takeover of Whole Foods, and subsequent growing power over the retail market, has seen the company face growing skepticism and spotlight, Trump himself publically critical of the company’s tax practices, and even personally accusing CEO Jeff Bozos of using the Washington Post as his own mouthpiece. Both on the right and left of the house, criticism has been mounted around issues of antitrust, privacy and public disclosure. Amazon’s response to this growing pressure has seen the company wage a courting campaign of its own in the nation’s Capitol.

The company has cemented itself as one of the largest corporate lobbying outfits in the Capitol, The New York Times reporting an increase in lobbying staff from 60 to 83, and spending is well on its way to surpassing its previous peak. At $6.2 million in the first two quarters of this year, Amazon has reached 11th in the charts of company spending, going beyond other retail giants Walmart and Exxon. But beyond just raw spending, the company seems to increasingly pursue a strategy which has seen its web of influence in Washington continue to broaden. In 2016 Amazon gave over $10,000 each to a range of 66 think tanks, lobbying groups and political organizations, of these over a dozen were new relationships. The stepping up of government relation efforts was laid out even further last month, when the company donated $50 million to a White House plan to promote computer science in classrooms. As the power of tech continues to explode, Amazon is far from alone in its mounting efforts, as growth across the tech sector will not only continue to fuel the power of the tech giants, but so too an increased level of scrutiny across a much broader range of fronts.

Trump, NAFTA and the ‘Buy America’ Agenda

Friday, October 20th, 2017 by Chris Orange

A looming December deadline for NAFTA negotiations was pushed back to March 2018, as the fourth round of talks stalled earlier this week.  President Trump has made his views clear on the 1994 Trade deal, famously describing it as ‘the worst trade deal in history’ whilst speaking as a Republican Nominee in Pennsylvania. The President’s hardball approach has infuriated Canadian and Mexican officials, with the Canadian Foreign Minister Chrystia Freeland accusing the U.S. as bringing a ‘winner-take-all-mindset’ to negotiations.

NAFTA transformed trading relations between the U.S., Canada and Mexico, tripling the amount of trade between the three countries, and cementing Mexico’s reliance on its northern neighbor, now accounting for over 80% of its export custom. But last week Trump re-iterated the prospect of simply walking away from the deal if he fails to make the changes he believes are crucial for U.S. jobs and manufacturing. Unsurprisingly, both the implications of Trump’s desired changes, and the alternate prospect of an all-out ratification, has sparked a wave of business concern and lobbying efforts. The U.S. Chambers of Commerce was estimated to bring together more than 100 representatives of various interest groups, in what President and CEO Thomas Donohue described as ‘an army’. Whilst the Chambers of Commerce has broadly stated its desire to end ‘the roller coaster ride of uncertainty’, many of its varying interest groups have specific bones to pick surrounding the President’s direction of travel. But the Trump administration has expressed cynicism towards such vocal critics, U.S. Trade Representative Spokeswomen Emily Davis played down concerns, stating that changes will ‘of course be opposed by entrenched Washington Lobbyists and trade Associations’.

The auto industry has been among the most vocal of critics, mobilized by Trump’s desire to increase the rule of origin to 85%, and limiting it to just U.S. manufacturing products. The proposal has seen The Association of Global Automakers, representing over-seas carmakers, descend on Capitol Hill in an effort to dissuade the Trump Administration from pursuing its line. If Mexico and Canada were to accept such proposals, the affects could be profound for both Mexican and American manufactures. With Mexico holding a $74 billion automobile deficit with the U.S., Trump believes U.S. jobs and manufacturing have suffered too greatly, but if industry is to see a steep rise in production costs, many voices are foreseeing a shift to Germany and Japan, the former importing cheaper parts from Eastern Europe, and the latter from across Asia. With agreement looking unlikely, many in the industry are instead anticipating the challenges an all-out ratification could pose.

California, Transparency and the Super PACs

Thursday, October 12th, 2017 by Chris Orange

On Saturday last week California Gov. Gerry Brown signed the state’s new Disclosure Act (AB249) into law, which will come into play for the state’s 2018 gubernatorial/legislative elections and ballot measure campaigns.  The requirements of the new Act, reported by Covington, will see a host of new transparency laws introduced, going above and beyond federal requirements. Most significantly, the Act will require almost all campaign advertising to include visible disclosure of who funded the message. Crucially, the law will also be tightened on ballot measure ads and candidate ads funded by outside groups, because whilst a degree of disclosure requirements previously existed, it was permissible for the information to be hidden in ‘small print’. But now on TV and video campaign ads, the tightening of rules will see donors names appear in a black box on roughly 1/3 of the screen, for around 5 seconds.

Gov. Gerry Brown hailed the move, adding that he hoped it would encourage others to follow suit. And echoing those who had fought to get the bill through, Brown argued that the move will enhance democracy in California enabling voters to make ‘informed decisions, based on honest information about who the true funders of campaign ads are’.

Proponents of the new measures, who have cited concerns over an increase in campaign spending of over $1 billion between 2012 and 2016, believe the requirements are a vital curb against the growing influence and anonymity of ‘super PACs’.  The growth was seen to be fueled by the 2010 Supreme Court ruling during Citizens United vs. FEC, affirming the right for corporations to make independent contributions to political candidates. Beyond California, in Florida last week the City of St. Petersburg issued its intent to clamp down on ‘super PACSs’ even further, passing an ordinance which will seek a $5,000 limit on contributions to groups that raise money for independent expenditures or electioneering communications in its city elections. However the Supreme Court’s judgement of the Citizens United vs FEC case in 2010 casts significant doubt over the constitutional viability of such a plan. But nevertheless, it’s clear that Gov. Gerry Brown’s approval of California’s Disclosure Act will help further fuel debate as other states watch on with interest.

Converging on K Street

Friday, October 6th, 2017 by Chris Orange

Last week the release of Trump and the ‘Big 6’s plan to rewrite the U.S. tax code has seen a ready-steady-go convergence on K Street. The lobbying industry has not so much been gifted by what was in the nine page document, but more what remains left out. Unsurprisingly perhaps Trump’s plan to overhaul the tax code, stretching thousands of pages long, is far from fully spelt out in last week’s initial document. Former Republican congressmen turned lobbyist, Thomas M. Reynolds summarized the concerns of industry saying ‘you’re either going to be at the table, or you’re going to be on the table’. Whilst recent lobbying efforts surrounding Obamacare repeal were concentrated among a limited number of industries, almost every industry, special interest and consumer group has an interest in the tax code.

Whilst the document spelt out some core ambitions, to slash corporate tax rate from 35% to 20%, the creation of a new 25% tax rate for ‘pass through’ businesses, a lowering of the top individual tax rate from 35% to 39.9% and a raising of the bottom rate from 10% to 12%, other elements remain ambiguous. The New York Times highlighted this ambiguity on Page 8. The substance of the page refers to vague plans to repeal or roll back numerous exclusions and deductions, to ‘modernize’ tax rules affecting certain industries, and to ‘ensure that the tax code better reflects economic reality and that such rules provide little opportunity for tax avoidance’. With such language, Thomas M. Reynolds assertion that business will ‘not have to be encouraged to engage’ appears to hold weight; figures from the congressional lobbying disclosures show that from the beginning of the year to the end of last week companies and trade associations have submitted near-on 450 filings to lobby on tax issues, compare with fewer than 265 in all of 2016. Whilst for the optimist, the language from last week’s document could indicate a unique opportunity to go on the offensive, with bubbling pressure from deficit concerned Republicans to ‘foot the bill’, others may go into the forthcoming weeks cautiously focusing on a defensive campaign to maintain current interests.