FTS-COMMERCE-ITA-1

June 26, 2006

10:00 am EDT

Bill Marriott: Thanks very much everybody. Good morning, and we’re grateful to have you on the call today, and the meeting is called to order.

And it’s a real pleasure to welcome Lee (Styslinger) and Sean (Healey) to our group.

And we look forward to working with you.

Lee Styslinger: Thank you.

Sean Healey: Thank you.

Bill Marriott: Since our last meeting, the President and Secretary Gutierrez have been actively promoting our competitiveness both international and domestic. And as you know, the President has announced the American Competitiveness Initiative during his State of the Union address, which of course focuses on many of our Council issues.

I know that the Department of Commerce has been very active with many of our trade partners. Our new ones, emerging, like China, Brazil, and India. And we’re all of course interested in them.

As our trade agenda and American business expand our reaches (expecting) that we have a discussion about the other side of the coin, which is foreign direct investment in our country, and that’s the reason for today’s call.

And before we go into the letter of recommendation and talk about it, I’d like to call on the Under Secretary of Commerce and the Executive Director our Council, Frank Lavin.

Frank, let me hear what you - any thoughts you might have?

Frank Lavin: Thanks, Bill. Thank you, sir.

And thanks everybody on this phone.

First, just apologies from the Secretary who at the end of the day, Friday, was told by the White House he’s got to be over there today. And so he pulled away and sends his regrets.

I know we’re all getting together in a few weeks in any event, but we want to have this letter, I think fully aired and discussed before we sit down.

But I think, Bill, it sort of speaks for itself.

People had a chance to review it. But we’ve got to - in my mind, a potentially dangerous trend or at least an unwelcome trend economically, which is this economic isolationism.

And if the American public views foreign direct investment is only a negative or only a problem and not something for the economy, I think we run the risk of pushing our economy in the wrong direction.

So it is within that spirit that we welcome PEC’s crafting of this letter.

I think it’s very timely and it’s a good addition to the discussion that’s going on.

Bill Marriott: Okay, good. Warren Staley, you’re Vice Chairman of the Subcommittee on Trade Promotions and Negotiations, would you go ahead and give the report?

Warren Staley: Thank you, Bill.

Yes, I’m here today representing the subcommittee.

I think you all know we have submitted a letter on U.S. Foreign Investment Policy for PEC’s approval.

But the Committee also felt that the issue is now of sufficient importance, and timely enough that we have it send it to the President before the next full PEC meeting in July, and hence the reason for this conference call.

The principals of the subcommittee have all approved the letter - and I’m informed that it’s also being shared with staff representatives from all the PEC members throughout the drafting process.

I think this should be a straightforward and pretty short meeting.

So let me just go to several points about the letter.

The issue of foreign investment in the United States has received significant attention in the media and in Congress this year following the controversy over the Dubai Ports transactions, with Congress moving forward on legislations and reform the National Security Review Process of foreign investments by the Committee on Foreign Investment in the U.S., the PEC wishes to make several points related to the ongoing debate.

The letter on U.S. foreign investment policies encourages the review process that keeps both our national security and our national economy strong.

The U.S. must not discourage legitimate foreign investment as it contributes significantly to the U.S. economy accounting for over 5 million American jobs, and more than 21% of total exports.

The time when the U.S. is advocating that other countries liberalize their economies in order to open markets to U.S. goods and services, the United States cannot afford to fall off our own economy.

Legislative proposals that have the potential to hinder foreign investments by subjecting the review process to political calculations, and fair, objective criteria will ultimately harm the U.S. interest.

In the letter, we’ve repeated seven principles outlined by leading U.S. industry groups on how the foreign investment review process should operate.

I’m not going to go through those seven, unless you’d like to do it.

So, in summary, the PEC would like to encourage the administration to continue its engagement with Congress over the various legislative proposals that are affecting foreign investments and the review process.

Legislative reform of the process should not lose sight of the important contribution that foreign investments made to the U.S. economy and our national security.

Thank you, Mr. Chairman.

Bill Marriott: Thank you.

This letter has been sent to the council members and for members of the public and copies have been posted online.

I’d like to note, for the record, that Council member – Senator Mike Enzi has sent noticed he would like to abstain from consideration of the letter.

He says he serves as a member of the Senate Banking Committee, which has jurisdiction over CFIUS reform.

Any comments now by the Council on the letter?

Jim Dicke: This is Jim Dicke. I think it’s an excellent letter. Congratulations.

Bill Marriot: I agree with you. Anybody else?

Jim Morgan: This is Jim Morgan, and you know, as we’ve worked hard as a committee to try to be sure we have access and equal treatment around the world, and so it seems to me we have - it’s very critical that we have - a supportive position on this.

Bill Marriott: I agree. Anybody else have any comments?

Prakash Puram: Can you hear me?

Bill Marriott: Yes.

Prakash Puram: This is Prakash Puram.

I just want to underscore the importance of the letter…

Bill Marriott: Good.

Prakash Puram: …given that the government is not what - the best vehicle to pick winners and losers. And we know that from our Japanese counterparts, with 20 years of, you know, bad policies and decisions.

So this is very, very important and I am pleased with the quality of this letter.

Bill Marriott: Okay. Any other comments?

Any objections to the letter?

Okay, then the letter is approved.

Thank you, Warren. And thanks to the committee for their good work.

Any other comments or discussions?

Frank Lavin: Bill? It’s Frank Lavin here.

Bill Marriott: Hi, Frank.

Frank Lavin: Hi, with your permission, I just wanted to float one other topic which I think will be coming up in July, which is the National Export Strategy presentation.

Bill Marriott: Okay.

Frank Lavin: I don’t want to catch anybody cold in July, but we have an annual requirement that we promulgate a National Export Strategy.

This is not through the PEC. But the PEC is frequently - closely involved with this – as part of the export council.

And we’re looking at making the theme of this year’s National Export Strategy Public-Private Partnership, which is to say how can - how can the private sector companies that offer across border - the banks, the express delivery firms, the Web platforms help this export promotion activity?

And that’s where we really try to get in.

I might ask you would be very familiar with this, but others might not be so familiar with it. But we think that’s the big trend in export promotion over the last few years.

Bill Marriott: Okay good. Thank you.

Any other comments or discussion?

John Chen: Hey, Frank, this is John Chen.

Is there any background material that will be sent to us prior to the meeting?

Frank Lavin: Yes. What I want to do is at least get an executive. The whole document, by the way, my guess is - maybe 40 pages or 30 pages.

But let’s get out the executive summary to the members beforehand.

Thank you, (John), for that point.

Bill Marriott: Okay. Other comments - discussion items?

Okay, well, Lavin, any other parting shots?

Frank Lavin: No, I think it was well done. And I think the letter will be very well-received.

We’ve got all our concerns. My concern is we’re in an indirect fashion. We risk shaving the asset value off of any American company when we don’t, at least, allow, conceptually, for international equity to play a role in that company’s capitalization.

I mean, so why punish our capital markets by not allowing foreigners to play a role?

So my view is just for the future of our economy, we need to keep that cross border financial flow going.

Bill Marriott: I agree.

And I think all the members on the call agree with you.

So thank you all for participating. And unless there are any other comments,

I’ll adjourn the meeting.

END