offshoring, nearshoring, employment--Canada, employment--United State

Sisto, James E. P.

English

Case Western Reserve University School of Law

Canada-United States Law JournalVolume 31 | Issue Article 47January 2005Introduction Session 11: Canada and U.S.Approaches - Outsourcing, Offshoring,Nearshoring, Legal Aspects, Possible Conflicts,Economic Impact and Job EffectsJames E. P. SistoFollow this and additional works at: https://scholarlycommons.law.case.edu/cusljPart of the Transnational Law CommonsThis Speech is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law Scholarly Commons.It has been accepted for inclusion in Canada-United States Law Journal by an authorized administrator of Case Western Reserve University School ofLaw Scholarly Commons.Recommended CitationJames E. P. Sisto, Introduction Session 11: Canada and U.S. Approaches - Outsourcing, Offshoring, Nearshoring, Legal Aspects, PossibleConflicts, Economic Impact and Job Effects, 31 Can.-U.S. L.J. 335 (2005)Available at: https://scholarlycommons.law.case.edu/cuslj/vol31/iss/47SESSION 11: CANADA AND U.S. APPROACHES -OUTSOURCING, OFFSHORING, NEARSHORING. LEGALASPECTS, POSSIBLE CONFLICTS, ECONOMIC IMPACT ANDJOB EFFECTS.INTRODUCTIONJames E. P. SistoWe will stay on session, begin our next session, and hopefully, those outin the lobby will join us as their schedules allow.My name is James Sisto. I am an attorney with Squires, Sanders &Dempsey. My practice is in Columbus, and I have known Henry [King] formany years, and I thank him for including me in the conference and for an-nually bringing this conference to Case Western; on a very important topicwith our very important neighbor to the north.Canada and U.S. approaches to outsourcing, offshoring, nearshoring.Right away we know there are going to be some definitional issues, and I amgoing to let both of our speakers tackle those. Legal aspects, certainly; possi-ble conflicts, without a doubt; and economic impact and job effects I thinkare to be debated and discussed.Our speakers will be providing a good balance of the issues, both a mac-roeconomic and a policy view, as well as a view from the perspective of alegal practitioner. So we will have a very well balanced presentation. Al-though these issues have been debated in the public for many years, the fieldof play was certainly elevated about a year ago with our most recent presi-dential elections here in the United States. What did Bush say? Did he meanwhat he said? Who told him to say it? And then, of course, what did Kerrysay Bush said, and what did Bush mean when he said it? These were the is-sues from a year ago that faced us, and I have to apologize a little bit becausea high school mate of mine, Greg Mankiw, was at the heart of this because heis the governor - excuse me - the President's advisor. He is the Chairman ofEconomic Advisors, and he made a statement that, frankly, offshoring, oroffshore, is just a new way of doing international trade. More things are trad-able now than were tradable in the past, and that's a good thing.' And this1 The Economic Report of the President: Testimony Before the J. Economic Comm.,108th Cong. (2004) (statement of N. Gregory Mankiw, Chairman, Council of Economic Advi-sors).1Sisto: Introduction Session 11: Canada and U.S. Approaches - OutsourcingPublished by Case Western Reserve University School of Law Scholarly Commons, 2005CANADA-UNITED STATES LA WJOURNALwas included in the President's annual economic report last year, about a2year ago this time, about thirteen, fourteen months ago.Well, trade issues are easy fodder in political campaigns, and they presentchallenges for any candidate to their positions. Kerry blamed Bush for givingcompany incentives to offshore jobs.3 What exactly was he referring to, andwhat did he mean? What he probably meant to say was that the U.S. TaxCode, which is convoluted, complex, and is not something that PresidentBush or his Administration developed or implemented, includes foreign taxcredits and deferral of taxes until profits are repatriated to the United States.So, as a result of the U.S. Tax Code, indeed, there may be some, not incen-tive, but benefit, for offshore activity, in that you don't pay the U.S. 30%corporate tax-rate. That certainly isn't something that was created by theBush Administration, the Clinton Administration, the Ford - we can go backas far as you want, and they are still there.In the United States, the political reaction and minority response tooutsourcing, nearshoring, and offshoring, has been to propose legislation inan attemt to restrict this loss, or what has been termed in the press as "lossof jobs." There is both federal-level and state-level legislation that has beenproposed, and that is pending.6 Even Cleveland's own Senator George Voi-novich, generally considered a free trader, is the co-author of one of thesebills.7 I am not sure of the status of that bill, or where it has gone, but thatwas about a year ago. Most of these bills would seek to ban or restrict the useof foreign labor in government contracting - which is a favorite target oflegislators - primarily in cost centers where contractors would be restrictedfrom having operations outside the United States, or in the case of a state,outside of the state.8Anybody who, like myself, might have children in school and would beusing Sally Mae right now to finance some of that education will know you2 See Economic Report ofthe President, H.R. Doc. No. 108-145 (2004).3 See Andrew Martin, Kerry's Economic Stance Betrays U.S. Interest, KENTUCKYKERNEL, APR. 7, 2004.4 Nanette Bymes & Louis Lavelle, The Corporate Tax Game, Bus. WK. ONLINE, Mar, 31,2003, available at http://www.businessweek.com/magazine/content/03_1 3/b3826058.htm.5 Adam Mordecai, Anti-Offshoring Legislation: The New Wave of Protectionism, 5 RICH.J. GLOBAL & Bus. 85, 96 (2005).6 See id7 See Andrew Mollison, GOP Ban on "Offshoring" Federal Jobs Angers BusinessGroups, Cox NEWS SERVICE, Jan. 29, 2004.8 See U.S. Senate Roll Call Votes 10 8th Congress-1s' Session, Passage of H.R. 2673-TheAgriculture Appropriations for FY 2004 (Nov. 6, 2003), available athttp://www.senate.gov/legislative/LIS/rollcall-lists/roll-call-vote-cfin.cftn?congress=108&session-l&vote=00444; National Foundation for American Policy, A Section of H.R. 2673,http://www.nfap.net/researchactivities/globalsourcing/federalBills/AmendmentHR2989and2673.pdf (see section 647(e) limiting the use of foreign contractors) (last visited Nov. 13, 2005).[Vol. 31 ]2Canada-United States Law Journal, Vol. 31 [2005], Iss. , Art. 47https://scholarlycommons.law.case.edu/cuslj/vol31/iss/47James Sisto-Session 11: Outsourcing, Offshoring, Nearshoringcan get somebody on the phone at eleven o'clock at night. And that's a great,a great thing for me with a law practice, to be able to come home and be ableto resolve those issues outside of the eight o'clock to five o'clock time frame.But, I note the accent. And I have asked several times - and since I do travelto India, in particular, I said, "Where exactly are you located? Are you inChina, or are you in Bangalore?" "I'm sorry, we are not allowed to answerthat question." That is the usual answer. Now, Senator Kerry, in the cam-paign, wanted them to have to answer that question. That was part of hisplan, is that the consumer would, therefore, recognize that this company,whoever you were using, would have to identify where you were talking tothem,9 and this would somehow, I guess, chill the use of this offshoring.Well, our speakers will present, as I said, two different views of this, onefrom a macropolicy side, and one from a missioner side. We have GlenHodgson, Vice President and Chief Economist of the Conference Board ofCanada, which is Canada's leading economic think tank and consultancy,and he is responsible there for overseeing the Board's macroeconomic out-look products, tourism, and customized research, as opposed to customs, Ibelieve, which is something different. Prior to his position with the Confer-ence Board, Glen was with the export development - with Export Develop-ment Canada in several senior positions.Immediately following his presentation, Marcelo Halpern from Latham &Watkins will jump in to talk about the legal aspects of outsourcing, near-sourcing, farsourcing, and whatever it may be, and he has provided - comesto us very well prepared to do this, having provided legal advice across thefull spectrum of corporate America, from Fortune 100s down to small entre-preneurial startups. And particularly, he has been involved in internationalbusiness and outsourcing transactions during the course of his career. Withno further ado, I will turn this over to Glen.9 Jay Lyman, Lawmakers, Tech Leaders Debate Offshoring, TECHNEWSWORLD, Jan. 8,2004, available at http://www.technewsworld.com/story/32557.html.3Sisto: Introduction Session 11: Canada and U.S. Approaches - OutsourcingPublished by Case Western Reserve University School of Law Scholarly Commons, 20054Canada-United States Law Journal, Vol. 31 [2005], Iss. , Art. 47https://scholarlycommons.law.case.edu/cuslj/vol31/iss/47

Introduction Session 11: Canada and U.S. Approaches - Outsourcing, Offshoring, Nearshoring, Legal Aspects, Possible Conflicts, Economic Impact and Job Effects

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Introduction Session 11: Canada and U.S. Approaches - Outsourcing, Offshoring, Nearshoring, Legal Aspects, Possible Conflicts, Economic Impact and Job Effects

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