All GLG News Analyses Filed Under: Government, Legislation & Politics

Have Russia, Kazakhstan and Belarus Decided WTO is Passé?

June 9, 2009

Analysis by: GLG Expert Contributor

Analysis of:Russia Changes Its WTO Strategy | online.wsj.com

Since 1947, many nations have agreed that more or less uniform global trade rules are in the best interests of the global economy.  The General Agreement on Tariffs and Trade (GATT) and its successor organization the World Trade Organization (WTO) reflect this consensus. A major benefit of this system is that companies seeking to do business across borders can receive some assurance that their goods and services will be protected from discriminatory tariff and non-tariff treatment, and receive the same treatment as their competitors in the target market or from third countries. However, at this time and depending on how one counts, dozens if not hundreds of "extra-WTO" bilateral and regional trade agreements have been negotiated worldwide.  By their nature, these agreements provide benefits to signatory nations that are not available to non-signatory nations.  This presents the question of whether these agreements will eventually undermine the WTO and the world economy.

Cuban Oil and the Embargo

June 9, 2009

Analysis by: GLG Expert Contributor

Analysis of:Cuba could become U.S. oil supplier at embargo's end | www.mcclatchydc.com

The U. S. Geological Service estimates that the Exclusive Economic Zone contains 4.6 billion barrels of oil and 9.8 billion cubic feet of natural gas.  Cuba which estimates reserves at 20 billion barrels, began to sell concessions for exploration and development in the 70,000 square mile zone in 2001. The problem for the Cuban's now is that the primary partner in exploration, development and refining capacity upgrades is Petroleos de Venezuela (PDVSA), which has suffered from a serious reduction in oil revenues, as well as adverse effects from operational difficulties and government liquidity problems. So the real question is how does the embargo affect that development and who is poised to take immediate advantage?

Ending Cuba Embargo - Will It Happen Soon Enough For U.S. Energy Interests?

June 8, 2009

Analysis by: GLG Expert Contributor

Analysis of:Cuba could become U.S. oil supplier at embargo's end | www.mcclatchydc.com

Various commentators have stated that significant quantities of crude oil exist off of Cuba's coastline.  The question thus becomes: who will provide the investment necessary to extract and refine this crude for consumption? At present, U.S. law prevents U.S. firms from participating in contracts to extract and refine Cuban crude. While that same U.S. law may penalize non-U.S. firms engaging in such extraction by limiting their access to U.S. markets, it would not ban such business in third markets. For many years, large majorities in Congress have signaled their support for loosening or ending the embargo against Cuba.  But embargo supporters' adept use of parliamentary processes has enabled retention of the embargo to this day.  it is by no means clear that the U.S. government will assign priority to changing this policy in the near future.

Michael LynchConsultantMichael E. Lynch

Financial crisis will create new winners, new losers

June 4, 2009

Analysis of:Rising Interest on Nations’ Debts May Sap World Growth | www.nytimes.com

Nelson D. Schwartz reported in the June 4 issue of the New York Times that governments worldwide are paying higher interest rates on funds borrowed to escape the several recessions that afflict various nations to different degrees. For example, a single percentage point rise could cost the U.S. Treasury an additional $50 billion annually. Social and military spending comes under pressure. Since the end of 2008, interest rates on American, British and German government debt has risen significantly. This concern caused Federal Reserve’s Bernanke to comment on it in testimony before Congress on Wednesday. In 2009 and 2010, the U.S. Treasury will sell more than $5 trillion in new debt. Under the proposed 2010 federal budget, total interest payments could rise to $806 billion in 2019. Kenneth Rogoff (Harvard) is putting out a book titled: This Time is Different: Eight Centuries of Financial Folly. The U.S. becomes vulnerable to interest rates beyond control according to the book.

Surprise! Sotomayor's Record is More Pro-Business Than You Might Think

June 1, 2009

Analysis by: GLG Expert Contributor

Analysis of:News Analysis - Nominee's Rulings Are Exhaustive but Often Narrow - NYTimes.com | www.nytimes.com

While much has been written about Judge Sotomayor's statements on empathy and race, surprisingly little attention has been paid to her record on issues that directly affect business. On issues including class certification, intellectual property, and preemption. the judge's rulings suggest that business may have a potential ally.

U.S. Cuba Policy Hurts U.S. Foreign Policy and Economic Interests

June 1, 2009

Analysis by: GLG Expert Contributor

Analysis of:Obama's efforts to engage Cuba facing big test | news.yahoo.com

Like many other news reports, this article implies that it is primarily U.S. executive branch action and discretion that can be used to shape future U.S. policy toward Cuba.  That implication is false. The fact is that the "LIBERTAD" Act (Public Law No: 104-114) ties the executive branch's hands in many ways besides establishing removal of Cuba's current leadership as a precondition for normalization. This inflexibility is compounded by the fact that not only do other nations NOT maintain comparable sanctions against but some also maintain "blocking statutes" that penalize their nationals for compliance with U.S. laws!

Michael LynchConsultantMichael E. Lynch

Can a California banana republic lead the nation into the abyss?

May 27, 2009

Analysis of:State of Paralysis | www.nytimes.com

Paul Krugman editorialized in the New York Times issue of May 25 that California is said to be where the future first appears. The recession has deeply affected the state. In particular, their housing bubble was larger than anywhere else in the nation. Unemployment is running at 11%. This has impacted state revenue. The alarming observation is that the political system is dysfunctional. With the resources available no reason exists for California’s debt burden. Does the state of California indicate what will soon be coming to the nation as a whole? California’s tax system is inequitable and unstable. Taxes are almost impossible to raise except on personal incomes which plummet with unemployment. The political tide has turned against Republicans, yet enough remain in office to block needed legislation. Professor Krugman asks if the rest of the nation will follow California. Will California soon become a banana republic? California’s problems exist at the national level too.

Californians Are In Denial About The State Budget

May 27, 2009

Analysis by: GLG Expert Contributor

Analysis of:State of Paralysis | www.nytimes.com

Yes, California is in a state of paralysis. Neither its politicians nor its people have any idea what to do. But differences between California and federal government caution against concluding that the federal government is ungovernable.

Duncan MacDonaldConsultantDuncan McDonald

Obama's Nominee to the High Court is Pro Class Action, Pro Trial Bar

May 27, 2009

Analysis of:News Analysis - Nominee's Rulings Are Exhaustive but Often Narrow - NYTimes.com | www.nytimes.com

Sonia Motomayor authored the most radical class action certification decision in US history in 2001.  In an antitrust lawsuit by Wal-Mart and other retailers against Visa and MasterCard, she upheld a lower court decision that created the first class action ever between two industroies crucial to the US economy -- 6 million retailers vs. 10,000 bank issues of credit cards.  In doing so, she also radically lowered the standards plaintiffs must meet to obtain a certification of a class.  Oddly, she based her decision on a class standard for discrimination cases.  Her decision was so radical that her court, the 2nd Circuit Court of Appeals in New York, several years later totally repudiated her decision.  Sotomayer's decision made the 2nd Circuit the easiest in the US to get a certification.  The decision that reversed hers was so sharp that it made the 2nd Circuit the hardest for certifications.

Foreign "bribery" - reconciling practicality and politics

May 26, 2009

Analysis by: GLG Expert Contributor

Analysis of:U.S. Cracks Down on Corporate Bribes | online.wsj.com

Efforts to revise the 1977 Foreign Corrupt Practices Act began in the early 1980s and eventually led to some changes in the law.  However, it remains less than clear what constitutes permissible vs. impermissible payments. Despite various international agreements intended to combat corruption, the fact remains that other countries do NOT view these issues through such strict legal lenses.  The result that U.S. commercial interests (and other persons subject to this extraterritorially applied US law) remain at a competitive disadvantage relative to European and Asian competitors. The U.S. Justice Department's criminal division provides guidance that is intended to assist entities subject to the FCPA undertake due diligence with respect to compliance.  But such diligence is no guarantee that entities will not face costly investigation and prosecution.  Congress is aware of these dilemmas but heightened focus on corporate ethics since Enron etc has minimized the likelihood of real reform.

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