Editor: Would you each tell our readers about your background in government before joining Weil Gotshal.
Anderson: I was at the U.S. Commerce Department for a number of years, in particular as the Chief Counsel for International Trade. In that capacity I was responsible for all the international lawyers in the department, those involved in trade remedy proceedings, export controls, international negotiations, and intellectual property issues. I was also involved in a number of trade negotiations - for example, sectoral negotiations on steel - and was the U.S. negotiator of the Chapter 19 dispute settlement system in the U.S.-Canada Free Trade Agreement.
Roh: I had an even longer career in government: five years in the State Department, initially doing national security matters and then commercial trade matters. I was on the staff of the Senate Finance Committee. I spent 14 years at the U.S. Trade Representative's office, first as their lawyer in their mission to GATT (now WTO) arguing dispute settlement cases and then back in Washington as Assistant U.S. Trade Representative for North America from 1989 to 1994. I finished my career as head of the North America Division where I was Deputy Chief Negotiator of NAFTA for the U.S.
Editor: What attracted you to Weil Gotshal as a firm?
Anderson: Weil Gotshal is a firm with a global outlook and with clients with a global outlook where I believed I could apply my experience in government and elsewhere. Since I've been at the firm, we've developed the clientele in the international trade field to include a broader range of clients, including foreign governments and many foreign clients who have come to us because of our trade practice.
Roh : Another good reason for my coming to the firm was my colleague, Jean, whom I had worked with previously on the U.S.-Canada Free Trade Agreement. I saw Weil Gotshal as a firm that was growing, dynamic, clearly rising, and likely to go global, which, indeed, has happened. I think in small ways we have contributed to this.
Editor: You have vast experience in providing strategic and substantive advice in international trade matters. Please describe some of the high-profile clients, such as a number of foreign governments, that you have advised in regard to FTA and NAFTA.
Anderson: One of the clients we have done a great deal of work for is the Government of Canada; we advised Canada on the NAFTA negotiations, and have represented Canada in several binational panel proceedings under both the U.S.-Canada FTA and NAFTA. Our work for Canada has not been limited to these two agreements, however; we've also advised Canada in a number of WTO disputes, both with the United States and other countries. Weil Gotshal has also advised a number of governments about free trade negotiations - for example, we advised the Government of Chile on free trade negotiations with the U.S. and with Canada.
Roh: We advised Chile first on what was supposed to be its succession to NAFTA, but which instead became a bilateral free trade agreement with Canada. Eventually, we were happy to help them reach a free trade agreement with the U.S. We played a similar role with the Governments of Australia and El Salvador. These dealings represent a broad challenge in that you are dealing in so many topical areas as well as trying to help the government understand both the U.S. system they are negotiating with and what all the new rules will do.
Editor: Why did these foreign governments engage you to represent them in negotiations with the U.S.?
Roh: There are two reasons. They want to understand U.S. laws. It is also helpful for them to talk with people with negotiating experience on these issues; our own governmental experience as former trade negotiators helps us to understand and get into their frame of mind.
Editor: Would each of you speak about any international dispute settlement proceedings you have been involved in?
Anderson: That has become a very significant part of our work, particularly since binding dispute settlement in the World Trade Organization took effect with the Uruguay Round Agreements in 1995. We have been involved in a great many dispute settlement proceedings before panels of the WTO. Often those panel decisions are appealed to the WTO Appellate Body. The majority of cases have arisen out of anti-dumping and countervailing duty proceedings. And, as noted, we do NAFTA dispute settlement. We are involved before several NAFTA panels currently, some on behalf of the Government of Canada but also on behalf of the North American Millers' Association in a case regarding wheat trade. Representations in dispute settlement proceedings can take a variety of forms - sometimes involving industry clients, sometimes associations, sometimes governments.
Roh: We have also advised governments and companies on WTO disputes concerning other matters, such as autos, bananas, wheat and aircraft. In addition to the intergovernmental dispute settlement process that exists in the WTO, in many investment agreements and in many of the free trade agreements (including NAFTA) there is a process for investors of one country to bring their grievances against the government of the other country. These are arbitrated by three member tribunals, usually distinguished international lawyers, professors, and the like. The concept is to encourage investment by assuring investors they can have a neutral forum. We have represented both investors challenging foreign governments and foreign governments defending themselves from such challenges. The disputes are large in scale. We are currently defending the Government of Ecuador in two proceedings involving hundreds of millions of dollars.
Editor: Please give our readers some background about the softwood lumber controversy between Canada and the U.S.
Anderson: It has a long history. We are counsel to the Government of Canada and coordinate all the counsel for various other Canadian parties in the dispute, which involves some $6 billion worth of trade annually and, to date, over $4 billion in what the Canadian parties consider to be illegally collected duty deposits, currently in the hands of the U.S. Treasury. This is the largest trade dispute to date anywhere. It involves allegations by a U.S. coalition of lumber producers and timberland owners who claim that Canadian lumber companies are dumping their lumber in the U.S. market and that Canadian provinces subsidize softwood lumber production. The determinations by U.S. agencies of dumping, subsidization, and resulting U.S. injury have been appealed to NAFTA binational panels and in the WTO, with a series of important victories for Canada. And on August 10, 2005 we received a definitive decision from a NAFTA Extraordinary Challenge Committee which confirmed a negative threat of injury finding by the U.S. International Trade Commission. The result of this should have been revocation of the anti-dumping and countervailing duty orders and refund of the $4 billion in duty deposits. But the U.S. has taken the position that Canada's victory in the NAFTA process will make no difference to the claim to the duties. The U.S. is claiming that another decision by the International Trade Commission late last year can somehow be interposed to keep the anti-dumping and countervailing duty orders in place. This issue and other important issues of first impression are now in litigation in the Court of International Trade and will surely go to the Court of Appeals for the Federal Circuit over the next year or two. At the same time, the domestic lumber coalition has just filed a petition in the Court of Appeals for the D.C. Circuit challenging the constitutionality of the U.S. statute implementing the NAFTA Chapter 19 binational panel review process. So we have some very high-profile litigation still to go in this dispute.
Editor: You have both been counsel in many cases involving export controls, economic sanctions, anti-bribery, anti-boycott. Are your clients mainly multinationals, exporters or foreign companies?
Roh: Our clients include both U.S.-based and foreign-based companies. We've seen a dramatic increase in these regulatory issues - export controls, economic sanctions, Foreign Corrupt Practices Act, etc., - because our clients are more global, and because the U.S. is taking a more aggressive posture in the enforcement of these laws. To the extent the laws have been amended, such amendments have been in a more aggressive direction. This is an outgrowth of 9/11 and Congressional concerns about corporate malfeasance.
U.S. laws have what foreigners regard as an extraterritorial reach. The United States claims to control exports of U.S. products and technology by anybody anywhere. A German company can find itself surprised when it discovers that when it is shipping what it considers to be a German product to China, it needs a U.S. export license because it is exporting U.S. technology. For foreign countries which tend to limit their laws to their own territory, this long reach of U.S. law is a bit of a shock!
Anderson: Another aspect of these regulatory laws which is surprising to foreign companies is the Exon-Florio statute which permits the government to review foreign investments in the U.S. or acquisitions of assets of U.S. companies for national security purposes. Normally, this is a straightforward process that deals with issues such as defense contracts or aspects of a business that require a security clearance. On the other hand, when CNOOC, the large Chinese oil company, proposed to acquire Unocal, Congress intervened in a way that led CNOOC to give up its effort.
Editor: Chip, please discuss the changes that have occurred in the Foreign Corrupt Practices Act.
Roh: The FCPA prohibits bribing of foreign officials or members of political parties. The law defines bribery in a broad way to include, for example payments to an agent where the payer should have known it would be used as a bribe. While the law has been in place for more than 25 years, there was a significant change in 1998. The requirements enforced by the SEC for both transparency and for keeping good books and records were greatly beefed up, and as a result the SEC now takes the position that for anyone subject to its jurisdiction, (which includes many foreign companies,) there must be the kinds of good internal controls that should prevent unlawful payments.
The considerable increase in international deal-making, whether it's foreign companies buying in the United States or U.S. companies buying abroad, has led buyers to be much more careful in their due diligence, not wanting to deal with inherited bribery issues or other regulatory problems. In some instances, a belated discovery of bribery has delayed the deal or even killed it.
Editor: What do you regard as being the greatest obstacle to removing trade barriers?
Anderson: The biggest problem is for the world's populations to come to grips with how globalized the world is - both culturally and economically. A lot of uncertainty comes with globalization, leading, for example, to big concerns about job displacement resulting from outsourcing. Another example is the difficulty in reaching agreement to eliminate trade barriers in agriculture; even when most agricultural production may be by large agribusiness companies that generally favor free trade, there is a notion in Europe and the U.S. that we need to preserve the part of our culture that is represented by the family farm, and that makes lowering trade barriers more difficult.
Roh: Business or farm groups who benefit from a particular subsidy program or trade barrier will be very vocal, more so than the mass of consumers who pay for this protectionism. There has been a lot of progress over 50 years, but the barriers that are left are those supported by powerful interest groups.