is the subject of my Trade Tripper column in this Friday-Saturday issue of BusinessWorld:
One misconception people have is that the rules
of international trade and public international law only have effects at
the state-to-state level. While this may be true to a certain extent,
considering that state actors are primarily the subjects of
international law, nevertheless, what goes on, for example, in other
countries or at the World Trade Organization will have repercussions not
only for the large multinational but even for small businesses as well.
And this should ram home a particular reality about today’s
law and business: that there are multiple norms layered or intertwining
at the multilateral, regional, bilateral, and even at the domestic
foreign jurisdiction level that all potentially affect Philippine
companies or citizens. And this is true whether we acknowledge that fact
or not.
Several notable cases illustrate this point. The first is that reported by DevelopTradeLaw.Net:
“Small businesses doing business internationally need to understand
their legal obligations so that they don’t become another ING, the bank
recently levied with $619 million in fines. The fines penalize ING for
its failure to abide by US trade laws. [ING, it was alleged] knowingly
or unknowingly repeatedly violated US trade sanctions. US trade
sanctions prohibit or place restrictions on individuals and companies
operating under US law from doing business with embargoed countries. The
countries may be embargoed because of US concerns about human rights
violations, terrorist or nuclear proliferation activities, or US
Government dislike of the government’s policies.”
However, it must be stated that this matter of foreign laws
having effect on acts committed outside the territory of a state is not
even a new development. This is actually a decades-old thing, the most
significant one being that of the Helms-Burton Law that was applied for
purposes of sanctioning Fidel Castro’s Cuba. The law has been revised
through time but as present regulations stand, “all US citizens and
permanent residents wherever they are located, all people and
organizations physically in the United states, and all branches and
subsidiaries of US organizations throughout the world” are prohibited
from bringing in “goods of Cuban origin, other than information or
informational materials”.
Then there is the US Foreign Corrupt Practices Act. This law
prohibits “issuers, domestic concerns, and any person from making use of
interstate commerce corruptly, in furtherance of an offer or payment of
anything of value to a foreign official, foreign political party, or
candidate for political office, for the purpose of influencing any act
of that foreign official in violation of the duty of that official, or
to secure any improper advantage in order to obtain or retain business.”
The US, however, is not alone in exercising jurisdiction over
acts that occur outside its borders. On corruption, the United Kingdom
has its own version of the Foreign Corrupt Practices Act, which has been
described as a more muscular version of the FCPA. China, for its part,
has also released its own legislation on foreign corruption. A report by
the law firm White & Case pointed out two instances illustrative of
the reach of the new legislations: Avon Products, Inc.’s troubles last
year over allegations of bribery of Chinese officials, which later led
to findings of discrepancies in India, Japan, Argentina, Brazil, and
Mexico. There was also Citigroup’s problem regarding alleged
embezzlements in Indonesia.
The above rules are likely defended under the “effects” doctrine
of criminal jurisdiction. The doctrine is to be distinguished from the
“protective” doctrine, which the Philippine’s itself has had occasion to
employ (the Philippines primarily relies on “territoriality” as the
basis for its criminal jurisdiction). However, as can be gleaned from
the foregoing, the effects doctrine is particularly distasteful for a
number of states, considering its extraterritorial reach and -- most
disconcertingly -- the acquisition of jurisdiction over non-nationals.
Having said that, the Philippines may want to explore the use of
the “effects” doctrine for purposes of punishing foreigners, either
through imprisonment if they travel to the Philippines or confiscation
of their local Philippine assets, who have harmed or abused our workers
abroad.
A further problem for small businesses is when the export market
suddenly decides to ban their product, as California (and before it,
Chicago) did in the case of foie gras. The ban was justified with the
allegation that the production of foie gras is a cruel practice, what
with the enlarging of duck’s livers through force feeding.
One may laugh at this sort of moralizing by the Californians but
their logic could very well lead to “balut” or “bagoong” being banned
for very arbitrary reasons. So we should welcome any action on the foie
gras ban that may be taken by the French, Bulgarian, and Hungarian
governments at the WTO for possible violation of trade law.
So the lesson is: while Philippine politics seem to have
depreciated to a system of irrationality and the mere sucking up to the
powers that be, international law is standing fast with that time-tested
dictum -- knowledge is power.
