Counsel to Counsel - September 2008 - (Page 13) “For example, many countries have laws that protect local distributors,” Singham explains. “Foreign suppliers can get their products to market, no problem, but they often find they can’t terminate their relationship with a local distributor. In order to get out, they may have to pay a termination indemnity of millions and millions of dollars. It’s also bad for consumers in those countries, because it drives prices up. It’s bad for everybody but the local distributors.” But how do you change the system? It can be a daunting proposition, one Singham says general counsel too often feel is beyond their grasp. Smaller companies in particular may feel that they lack the resources or wherewithal to affect meaningful change in trade policy. But that’s not always the case. “The more specific a problem—the more tailored it is to a company’s position—the more important it is for them to solve it,” Singham says. “It is a question of how significant the problem is to your bottom line. This is an area where the legal function for once is not a cost center. If you can act to increase market share, you become a profit center.” It’s essential for companies that choose to tackle trade barriers to use a multifaceted approach. Because of the time and expense involved, a concerted effort is likely to present the best results. “You work really at two levels,” says Singham. “One is the international, external level where you’re trying to get the U.S. government to pressure a particular foreign government. You’re also working domestically to try to get local agencies to help resolve the problem. If you just do one side, it’s usually not enough.” under which a case could be brought. With increasing international collaboration on policing corruption, this can be a swifter and more effective option than it was in the past. More sophisticated companies sometimes look to affect the ways the United States offers foreign aid to developing countries as a bargaining chit. Millennium Challenge Accounts in particular provide aid based on a country’s compliance with criteria in areas of entrepreneurship, enterprise and law. An ideal situation is to address your concerns as free trade agreements are being negotiated. The Dominican Republic-Central America-United States Free Trade Agreement is a good example. abroad, the better. Lehman says in-house counsel should also talk to congressional leaders, particularly those responsible for trade policy, so they can take into account their experience as they consider pending legislation. “I don’t think these resources are very well known at all,” he says. “We have a case right now involving a huge power company that is doing work in Kazakhstan. There is a WTO accession issue for Kazakhstan. One of the conditions of joining the WTO is having transparent and consistent laws on foreign investment and trade. Our belief is that our client is not getting transparent and consistent treatment, and we’ve made the Commerce Department aware of that. Our hope is that this will be taken into consideration as they decide whether this country has met the conditions of joining the WTO.” Portman notes, “In an increasingly interdependent world, U.S. companies should be trying to reach the 95 percent of global consumers who live outside our boundaries. As they do, they must be aware of the potential challenges and opportunities.” “It is a question of how significant the problem is to your bottom line. this is an area where the legal function for once is not a cost center. If you can act to increase market share, you become a profit center.” “The DR-CAFTA stipulated that Central American countries had to remove distributor protections,” Singham says. “It was a big win for companies doing business in Central America.” Share Your Troubles Much of a company’s success in lowering trade barriers is based on effective communication with the appropriate U.S. government and international authorities. “I think sometimes people are hesitant to engage senior officials,” says Robert D. Lehman, a Squire Sanders principal who previously served in a number of government agencies. “When I was chief of staff at USTR, we appreciated having general counsel come in and share their experience and, in particular, their data with us. We were hungry for information.” The Office of the U.S. Trade Representative maintains a network of industry groups and experts that policy makers can utilize during negotiations. The more information they have about U.S. companies’ problems Leverage Points There are a number of steps a company with a trade grievance can take to resolve its problems. One is to ask your government to initiate an action under the provisions of the ever-growing World Trade Organization (WTO). Dispute resolution is a central pillar of the WTO’s mission, but as with any large institution, it is not particularly speedy. “Unfortunately, the reality is that it can take years,” Portman says. “It often requires significant time and resources, and the remedy may not be directly beneficial.” Another tack is to see if there are any laws, such as the Foreign Corrupt Practices Act, Founded in 1890, Squire, Sanders & Dempsey L.L.P. has lawyers in 32 offices and 15 countries around the world. With one of the strongest integrated global platforms and its longstanding one-firm philosophy, Squire Sanders provides sophisticated seamless legal counsel worldwide. Article Participants: Robert D. Lehman Principal rlehman@ssd.com Rob Portman Of Counsel rportman@ssd.com Peer Review Rated Shanker Singham Partner ssingham@ssd.com www.martindale.com/c2c SEptEmbEr 2008 13 http://www.martindale.com/c2c
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