Rebalancing Act

As I noted Brazil is one of the most prospective economy in these days. Brazil, India, and China have a combined population of 2.5 billion-plus people, with younger and larger middle-class segments than their Western counterparts. Be aware of this markets and trends, and how Brazil, India, and China are weathering the global recession, the growth possibilities for American firms, and potential political barriers that may create obstacles for increased FDI and exports to these emerging market economies, and in specific about Brazil, is my mission now.

Enjoy this article October 6 Chicago Tribune at
http://www.chicagotribune.com/business/chi-tc-biz-cover2cp-1005-1006oct06,0,3469973.story

A rebalancing act U.S. firms sharpen focus on overseas consumers
WASHINGTON - -- With American consumers cutting back in response to the recession, many U.S. companies increasingly are looking outward, toward fast-developing countries like China, India and Brazil.But instead of seeing those countries primarily as cheap producers of goods, both American manufacturing firms and giant multinational corporations see them as potential customers for U.S. products and services. And it reflects what may be the beginning of a shift in the global economy, a rebalancing in which the world relies less on U.S. consumers and more on consumer spending in places such as China.The size of those potential markets dwarfs the domestic ones of most of the economically advanced nations. China, India and Brazil have a combined population of 2.5 billion-plus people, many of them young and increasingly affluent -- in contrast with the aging and far smaller populations of Western Europe, Japan and the United States.Some economists see Brazil's role as pivotal to helping Latin America out of the global recession. And Rio de Janeiro's winning bid for the 2016 Olympics should help in any recovery for the region. Much of the world is still extricating itself from the recession, but Brazil's economy is expected to grow by between 4 percent and 6 percent next year.What remains unclear is how large the benefit may turn out to be in terms of jobs and investments in the U.S. Many American companies are investing in production and other facilities near the new customers -- instead of shipping goods from U.S. facilities overseas. Almost no one doubts that Americans will reap some benefits. Stronger U.S. exports will boost the domestic economy, as they have over the last decade. Without their overseas customers, companies like Power Curbers Inc., a small construction-equipment maker in Salisbury, N.C., probably would have gone bankrupt in the recession."We're fortunate that infrastructure development is going on in other countries," said Dyke Messinger, Power Curbers' president. He said 75 percent of his sales this year are international, compared with 25 percent two years ago.Leaders of General Electric Co., believing the U. S. and other advanced economies face a prolonged period of slow growth, say they are banking more than ever on emerging economies. GE Chairman Jeffrey Immelt argued that the shift in the balance of consumption power -- from wealthy countries to the emerging giants -- calls for a different business model for companies like his to succeed.As populous nations such as China and India become a greater force in driving demand, the old way of developing products at home and distributing them worldwide won't cut it, Immelt wrote in the October issue of Harvard Business Review.Instead, he said, more of the products of the future need to be designed, built and marketed in those local markets, with decision-making power placed in local hands.Immelt does not address the implications of this for American employment, but the trend line may be apparent from the company's annual reports: In 2004, GE had 165,000 employees in the U.S. and 142,000 elsewhere. By the end of last year that was reversed: 152,000 in the U.S. and 171,000 outside.Such statistics underlie the rising overseas investment of U.S. corporations, and it's almost certain to rekindle politically sensitive issues of earlier years -- outsourcing, as well as U.S. tax and currency policies and other incentives that are tied to overseas investments and the repatriation of profits

Future Trend

• Brazil possesses 20% of all Worlds’ biodiversity and manufactures 60% of the South America economy’s industrial production. Brazil is member of various economic groups, such as MERCOSUR and G20. The country technological and scientific development combined with a dynamic and diversity industrial sector is attractive to foreign enterprises.
  Direct investment in Brazil in 2008 reached US $ 45 billion, twice the average compared US$ 20 billion year between 2003 and 2007, and astonished superior as the US$ 2 billion a year last decade.
  Brazil trades regularly with over 1,000 nations, with 74% of exports represented by manufactured or semi manufactured goods. (Brazil-EC=26%, Brazil-USA=24%, Brazil-MERCOSUR=21%, and Brazil-Asia=12%).
  Agribusiness is the most dynamic sector in trade and the industries on technology for submarines and aircrafts are prominent. Brazil’s investment on in deep oil research has been increasing, since 74% of its reserves are extracted from the sea.
  Sustainable Growth
  Brazil is rated the 10th position on the global economy rank and is a great player in trade and foreign affairs with consistent policies supporting its productive sector. Some of the country policies and strategies are to build a competitive, fair, and wealthy country, increase its exports, diversify its production, and global presence with businesses and trade. The goal is to reduce its vulnerability and grow internal wealth by increasing the national businesses enterprises abroad.
  Most of the World’s economies have adopted laws to increase usage of biofuels, which directly results in an increase of global demand of ethanol and an increase of the ethanol international trade flow between producers and consumers.
  Brazil is strategically well positioned to take advantage of this demand. The trend on biofuels helps Brazil’s competitiveness for trade in commodities, bioenergy, and its technology. Since Brazil is one of pioneers on the research and usage of biofuel, its technology and development rate is far superior compared to other economies. Therefore, biodiesel boost production and increase agribusiness and agro-energy.
  The Brazilian Trade offices abroad are strategic tools on this scenario and can help increase Brazil’s participation on foreign markets, facilitating and fostering Brazilian business to export, promoting Brazilian image and quality of its products, promoting networking and trade events abroad to increase investments by foreign enterprises in Brazil.
  Brazil has a growing participation in global trade reporting trade surplus since 2003 not only in raw and primary products, but also in manufactured goods.
  Brazil’s economy and market development prove to be sustainable for the future endeavors in diversifying its basis for exports and internal revenue. Brazil’s public policy in trade has been successful in global marketing new enterprises and capturing foreign investment in technology and scientific industrial sector as biomass and bio-energy.
  At this point, Brazilian Foreign Relations and Foreign Trade have crucial role in Brazil growth and wealth dealing with strategies to increase trade, helping the growth of Brazilian national enterprises and businesses abroad.
  You can oversee trade opportunities by market research, market trend, and economy reality using data, but one of the best targeted markets is without any doubt, Brazil.
  The facts as reasoning, let me point out a few:
  -The World’s 10th largest petroleum reserves
  -The World’s leading exporter of iron, coffee, soybeans, orange juice, beef, chicken, sugar, and ethanol
  -A global reference in the production of biofuels
  -The World’s 7th largest manufacturer of aircraft and top producer of model seating up 120 passengers
  -The World’s largest river basin, with hydroelectric power supplying 73% of energy needs.
  -One of a few Nations to recovery from the global economic turmoil, and the only country reaching higher rate for investment from MOODY’S in Sep, 2009.

• For further information how to do business in Brazil you can go to my website at:
• http://www.fonseca-andrade.com.br/inenglish.htm

Cross-border Business and Transactions

1. “transborder” laws – us FEDERAL laws: SECURITY LAWS, export controls, AND FOREIGN CORRUPT PRACTICE ACT.
The “effect doctrine” over the US law and the Organisation of Economic Co-operation and Development - OECD treaties combine a set of regulations that bind agents, distributors, officers and directors of US companies. There has been a lot more international coordination, enforcement, and discussion around foreign bribery cases than ever before.
The Anti-Fraud designed laws – Exchange Act of 1934, Sarbanes and Oxley (SOX of 2002) and Foreign Corrupt Practice Act (FCPA), have unprecedented growth since there is a global anti-bribery convention, which 35 nations have passed FCPA-style laws. Under the pact, the OECD supervising group has power to name and shame any nation that lets its law slide.
Compliance with US law and local laws are a required master point for business overseas. US Companies have to address representation, process, training and orientation worldwide to prevent violation of the FCPA law.
The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), in joint enforcement actions, have won the second-largest penalties – US$ 579 Million – for FCPA violation against Halliburton and KBR for the involvement in a 10-year scheme to bribe Nigerian government officials to obtain innumerous construction contracts. Besides penalties, these US Companies jointly agreed to pay US$177 Million in disgorgement of profit relating to those contracts. The terms of the plea agreement include 3 years contract with an independent compliance monitor to review and report the design and implementation of their compliance program to DOJ. . (S.E.C. v. Halliburton Co., No. 4:09-cv-00399 S.D. Texas).
Settlements announced by DOJ and SEC show us not only how misconduct and violation can be costly and harm a company’s reputation, but also show us how the globalization of anti-corruption efforts are increasingly more effective and aggressive recently.
The SEC’s 2008 annual report set out the agency’s expanding focus on global prosecution and growing list of information-sharing arrangements with securities regulators around the world. In 2008, the SEC made 594 requests to foreign regulators for assistance with investigations; in 2003 SEC requested only 309.
In fact the SEC and DOJ jointly are increasing investigations against both foreigners and non-US companies and linking them to a US market. In connection with US white-collar and securities law, the prosecutors involved Siemens A.G., a German company, for entangling foreign citizens and the companies’ agents, including joint venture partners and consultants – U.S. v. Siemens A.G., No. 1:08-cr-00367 (D.D.C.); U.S. v. Kellogg Brown & Root, No. 4:09-cr-00071 (S.D. Texas).
2. PROACTIVE COMPLIANCE PROGRAM, DUE DILIGENCE AND RISK ASSESSMENT
The use of a standardized process, record-keeping management and record retention schedules combined with ethics compliance does not guarantee compliance anymore. Additional focus is required on process knowledge and risk assessment for higher effectiveness. The foreigners are not familiar with the aggressiveness and effectiveness of a SEC investigation.
For its overseas compliance and ethics program to be effective, US Companies have to focus on relevant expertise of the laws abiding, knowledge of the market, business and culture of the region, general understanding of the local regulations, judicial system and processes. The General Counsel has to oversee the difference scenarios and coordinate with the enterprise risk management – overall e.g. SOX 404 assessment, organizational corporate social responsibility or reputation, impact on ethic and compliance issues.
US Companies doing business in Latin America have to coordinate this process by risk assessing not only globally, but also regionally; which is a task for lawyers with background in US, International, and Latin American Laws.
3. Project – Counsel
Life after moving to the US led me back to law school to specialize in US Business and International Transactions. Before that, while still in Brazil, I was at a private practice in the heart of Brazil’s largest finance district, doing banking, commercial transactions and litigation.
My legal practice focused on business and commercial transactions. I am familiar with project finance, including infrastructure acquisitions and financing, and through my studies developed an understanding of the nature of the UCC and US Corporate Law.
My education is an asset in advising corporations on cross-border deals, specifically when doing business in Brazil and Latin America, which I can proactively advice that transactions may need to be structured differently to accommodate the nuances among two or more legal systems. I can provide comparison, application, and parallels of those countries’ legislation, especially when liaising with US General Counsel for large entities and operations.
I look forward to assisting clients through their cross-border business endeavor. I sat in a law school classroom in the US and I attended all of the intangible benefits that any immersion experience brings – the opportunity to engage in law discussions on a daily basis with American law students and obtain a broadened perspective. It has made a huge difference by simply reading American Law and being admitted to the Illinois state bar. I have multiple jurisdiction education on regulatory framework, which became a valuable skill when it comes for advising US corporation arrangements.

Antitrust - Resale Price Maintenance

1. Leegin Case and its implication on Resale Price Maintenance (RPM) Agreements
The legal and business history of the use and treatment of RPM in the United States changed since the U.S. Supreme Court’s decision on Leegin Creative Leather Products, Inc. v. PSKS, Inc.
After this case, a resale pricing agreement should be evaluated under the rule of reason rather than under the per se rule, which means all triggered resolutions from RPM will be tested on a balancing between Procompetitive and Anticompetitive effects in context of each case.
It will not only increase the change of an agreement being deemed lawful, but it will also raise an array of discussions around the Section 1, of the Sherman Act, and Section 5, of the Federal Trade Control Act. Perhaps the Federal Trade Commission (FTC) will increase its enforcement towards on how to best distinguish between those uses of RPM that benefit consumers and those that do not.
2. Antitrust Enforcers Focus on RPM
The Department of Justice (DOJ) may also reinvigorate its stance toward retail price maintenance and vertical price restraints when looking at results in anticompetitive consequences.
FTC and DOJ will support initiatives on new legislation that overturn Leegin. During this year, Sen. Herbert Kohl introduced S. 148, a bill to restore the rule that agreements between manufacturers and retailers, distributors, or wholesalers, who set the minimum price below which the manufacturer's product or service cannot be sold violates the Sherman Act.
Until now Congress did not pass new law overruling Leegin, nor did any Supreme State Court adopt Leegin rule.
It is true that many States still have their own Antitrust Laws, and maybe Leegin can influence them.
Otherwise, many States would not be influenced, and raise an array of discussion. Important to note the case of Bell Atlantic Corp v. Twombly, from which Courts can apply a cause of action other than horizontal antitrust conspiracy.
3. National and International application
US Companies have a national distributorship program, which has to move with precaution, since many States have independent antitrust laws and Leegin may not have influenced their Courts.
Many companies have global distributorship programs, which have to be designed to comply with territorial laws of the place where it is enforced.
A cross-border transaction usually is enforced by a Foreign Jurisdiction and is analyzed under its own law.
Asides from the new rule set by Leegin, Companies should use a mixed test to evaluate its agreements, calculate the risk and cost of its decisions, and establish a plan to mitigate the possibility of costly litigation in the future.

Anti-Kickback Act

1. Anti-Kickback Act and United States Civil False Claim Act
The Anti-Kickback Statute makes it a felony to offer kickbacks or other payments in exchange for referring patients “for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(2)(A).
The False Claims Act is the primary law on which the federal government relies to recover losses caused by fraud. Avco Corp. v. Dept. of Justice, 884 F.2d 621, 622 (D.C. Cir. 1989).
The Act creates civil liability for making a false claim for payment by the government:
Any person who–
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; [or]
…
(3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;
…
is liable to the United States Government…
31 U.S.C. § 3729(a). The Act also permits private citizens to bring qui tam suits to enforce the Act. Id. § 3730(b).
2 Is The session of Witch Hunt open?
The U.S. Supreme Court on United States ex rel. McNutt v. Halleyville Medical Supplies, INC., 04-14458 (2005) – (McNutt) affirms the empirical theory of whether a violation of the Anti-Kickback Statute can form the basis for a “qui tam” action under the False Claims Act (FCA).
The FCA contains qui tam provisions that “supplement federal law enforcement resources by encouraging private citizens to uncover fraud on the government.” Rost, 507 F. 3d at 727. Under “qui tam” provisions whistleblowers bring certain fraud claims on behalf of the United States; in return, “[a] private relator is entitled to a portion of any proceeds from the suit, whether the United States intervenes as an active participant in the action or not.” Id. at 727.
The United States Attorney for the Northern District of Alabama, who opened parallel criminal and civil investigations against the defendants, brought the issue in 2002, which was decided by U.S. Supreme Court in 2005.
The U.S. Supreme court pointed out that when a violator of government regulations is ineligible to participate in a government program and that violator persists in presenting claims for payment that the violator knows the government does not owe, that violator is liable, under FCA, for its submission of those false claims, quoting United States ex rel. Clausen v. Laboratory Corp. of America, Inc., 290 F.3d 1301, 1311(11th Cir. 2002).
It is undisputed that a violator of the Anti-Kickback Statute is disqualified from participating in a Medicare program. The government can state a claim, under the False Claims Act, when the company allegedly submitted claims for Medicare reimbursement with knowledge that it was ineligible for that reimbursement.
The rationale of the validity claim against the violators is plain and simple: the violation of the regulations (ex vi, Anti-Kickback Act) and the corresponding submission of claims, for which payment is known by the claimant not to be owed, makes the claims false under sections 3729(a)(1) and (3) of the FCA.
In McNutt, the U.S. Supreme Court affirmed the Northern District Court of Alabama decision and set out that, medical service providers who submitted ineligible claims for reimbursement to Medicare, while also certifying that they complied with the Anti-Kickback Statute, violated the FCA.
More recent case decided by the 1st Circuit Court of the United States Court of Appeals, in United States, ex rel. Mark Eugene Duxbury and Dean McClellan v. Ortho Biotech Product, LP., 08-1409 (2009), confirms the cause of action brought by Duxbury on Anti-Kickback claims and the statutory scheme of the FCA “qui tam” provisions, and discuss the grounds of court’s subject matter jurisdiction over “qui tam” actions and its jurisdictional bars.
The first, known as the “public disclosure” bar, provides that a court does not have subject matter jurisdiction over any qui tam action that is “based upon the public disclosure of allegations or transactions” concerning the alleged fraud, unless, among other things, “the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A). A relator qualifies as an "original source" if (i) she has “direct and independent knowledge” of the information supporting her claims and (ii) she “provided the information to the Government before filing an action.” Id. § 3730(e)(4)(B).
The second, known as the “first-to-file” bar, provides that when a potential relator brings an FCA action, “no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.” Id. § 3730(b)(5).
3 The bottom line
For the medical devices and services providers, the implications of McNutt are alarming and its standard is too prissy or draconian, for whether accepting the government’s reimbursement and complying with all Heath Care Regulations and programs, or stay away from them.
For the time being, a number of cases brought under Anti-Kickback Act combined with FCA, raised a red flag for the health care industry to adopt a carefully calculated compliance program targeting the transactions, the process, and its disclosure of information to the government.