02262018

International Chamber of Commerce: Brokering Peace in the Middle East

Often lost in the news coverage of Israel and Palestine is the fact that an estimated $20 billion in goods and services are traded between the two annually. Palestine is considered to be Israel’s second largest trading partner after the United States.

However, when business disputes arose, the two sides lacked a neutral method of recourse – until now.

An official arbitration center for business disputes, backed by the International Chamber of Commerce (ICC), will come into force at the end of this year.

The Jerusalem Arbitration Center (JAC) will follow the internationally recognized arbitration rules of the ICC. The JAC’s remit is to settle economic disputes between Israeli and Palestinian companies as an independent arbitration body.

Yet another example of how businesspeople can move things forward faster than politicians!

Trade between Israel and Palestine is expected to double as a result of the confidence that businesses are expected to have in the new arbitration process.

Economic ties means mutual dependence

After the First World War, businesspeople from all over the world came together to establish the ICC. They were convinced that the fastest and most effective way to mitigate and eventually reverse the destruction and suffering caused by the war was to promote free trade and cross-border investment. The more tightly knit the networks in the global economy, they reasoned, the faster poverty could be reduced or eliminated altogether. This would also help reduce the likelihood of future wars, or at least make them considerably more difficult to start. After all, economic ties create mutual interdependencies between nations based on a fair balancing of interests, something that the governments concerned could not simply ignore. And so the founders referred to themselves and to their organization, the ICC, as “Merchants of Peace.”

The ICC is a purely private legal entity whose current membership includes businesses of all sizes, as well as chambers of commerce, trade and professional associations, law firms and accounting companies in no less than 130 countries. Headquartered in Paris since its founding in 1919, the ICC does not accept public contracts or exercise executive authority, thus it remains independent of government. Despite this, or perhaps precisely because of it, the organization has become an important and respected interlocutor for the national governments of the states and international authorities who turn to it for counsel. The ICC does not represent the interests of individual nations or their enterprises. Rather, it does its work in the interests of the glo-bal economy and its global players i.e. mainly globally active businesses, be they small to medium-sized firms or multinational corporations.

True to its core values

The original values and goals of the ICC’s founders are still valid today: free trade and barrier-free investment. It is from this base the ICC consistently strives to strike a fair balance among the varied interests of commercial enterprises in their reciprocal dealings, especially when it comes to increasing or protecting competition. The guiding vision and mission of the ICC is best described by the model of the “reputable and honest merchant,” a businessperson who acknowledges the legitimate, competing interests of his international business partners and enters into a reasonable compromise on the basis of fair play.

Since its inception, the ICC has worked to develop rules and contractual models to facilitate international commerce. Among the best known and mostly widely used are the Incoterms® (terms of trade) and the UCP banking rules. Despite lacking actual statutory force, these regulations have harmonized forms of cross-border commercial contracts and payment transactions throughout the world.

The ICC sees the assertion of fair competition as one of its major tasks, both now and in the years to come. This emphasis also applies to other issues such as the green economy, sustainability, data exchange in the IT sector, and many more. Given that national regulations alone are no longer sufficient to ensure a level playing field in a globalized economy, the ICC works to exert its influence on individual governments.

Another key area of focus for the ICC is the harmful conduct which can distort or undermine competition such as corruption or the failure to protect intellectual property. Trademark counterfeiting and imitation products not only pose a potential safety hazard for consumers, but they also erode the economic basis for investment in innovative products.

Tackling corruption

In the mid-1970s, the ICC prepared and published its very first reports and policy papers on tackling corruption. These are updated on a regular basis. Similar policy documents are also drawn up and publicized covering areas such as marketing, sustainability in the business sector, accessibility to IT products, or the sharing and protection of data.

In line with its mission to promote free trade, the ICC not only supports the World Trade Organization (WTO) in its activities but also makes its voice heard on trade matters, such as in the run-up to G20 summits. In this context, the ICC has developed a “World Trade Agenda” which addresses, inter alia, the various matters to be resolved by the WTO’s ongoing trade negotiations (the so-called “Doha Round”) and is focused on expediting implementation of those items which have been fully or partly negotiated by the Doha Round.

One example is “trade facilitation” (essentially, cutting red tape in customs procedures). This could be introduced in a relatively short period, assuming it is green-lighted by the G20 leaders at their September 2013 summit in St. Petersburg and by the WTO Ministerial Conference in Bali in December 2013. According to reliable estimates, the successful conclusion of this final segment of the Doha Round alone could create additional, short-term growth of $ 960 billion for the global economy along with 21 million new jobs, 18 million of them in developing countries (Peterson Institute, 2013).

Bringing peace by solving one dispute at a time

In 1923, the ICC established the International Court of Arbitration (ICA) to offer rapid, inexpensive and low-key resolution of disputes between companies. The ICA has since expanded its remit to include resolving of disputes between companies and governments. To date, the ICC’s court of arbitration remains the largest, most international, and most prestigious of its kind in the world.

The ICA will soon expand to Israel and the Palestinian territories with a similar structure to those in 90 other countries across the world where ‘National Committees’ have been established. As the ‘extended arm’ of the ICC, the National Committees report the suggestions and wishes of their members to the Paris headquarters, while also participating in the ICC’s policy commissions and overseeing implementation of the ICC’s decisions and recommendations in their respective countries. The National Committees of Israel and of the Palestinian territories are the local organizations that have come together to form the JAC.

Free trade and fair competition

As our world grows ever more interdependent, the scope and complexity of the tasks confronting the ICC are also increasing. Yet the core principles of the organization’s founding fathers remain in place today: free trade on the basis of fair competition; freedom of movement and access for investors and recipients of capital alike; universal standards of ethical business conduct; freedom from undue interference from governments whose proper role is to ensure that the rules of fair play are safeguarded and upheld.

If these principles are followed, everyone benefits in the end, in particular the populations of poorer countries stand to gain. Developing economies are among the biggest beneficiaries of globalization in terms of the reduction in poverty made possible by free trade and investment and improved economic governance.

This was confirmed by a 2011 report issued by the Washington-based think-tank, the Brookings Institution: the global poverty rate, which up until 2005 was stuck at 25 percent, has been dropping by two percentage points per annum since then, thereby lifting some 70 million people out of poverty each year.

Dr. Manfred Gentz, former chief financial officer and member of the Board of Managment of DaimlerChrysler AG, is Chairman of ICC Deutschland e.V. (Germany) and Member of the ICC’s Executive Board in Paris

Photo Credit: ICC, Deutsche Börse

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