Internet Exercises


1			The Sarbanes-Oxley Act of 2002 continues to irk foreign companies doing business in the U.S. The Act is aimed at protecting investors from corruption by requiring the chief executive officers and chief financial officers of foreign companies to accept criminal liability in the U.S. for the validity of their accounts. Many foreign companies have protested vigorously, and it seems that their protests might be making an impact with the Securities and Exchange Commission (SEC), which recently announced several modifications of the law. Still, for some companies, the legislation continues to be an important issue. Porsche AG for example, has indicated that it is no longer considering a listing on the New York Stock Exchange. According to the company, it is not reasonable to expect a CEO to swear to the accuracy of figures that have been compiled by hundreds or thousands of employees. Other companies have complained that the costs of complying with the new law are exorbitant, and simply not worth it. Do you feel that Porsche is justified in its claims of unfair treatment by the U.S.? Are American companies required to take the same oaths? In your opinion, are the actions of Porsche just the start of a major exodus of foreign companies from the U.S.? Go to www.aicpa.org/info/sarbanes_oxley_summary.htm and learn more about the original legislation and the recent changes in the law. One analyst has noted that in general, the feeling among foreign corporations is that the U.S. is trying to dictate corporate governance standards—an action that is greatly resented. In your opinion, is the Act really an effort to protect investors, or is it simply another means of making it more difficult for foreign companies to do business in the U.S.? Source: "New Law Irks Some Foreign Firms," The Wall Street Journal, 1/13/03, p. C16.




2			When the World Trade Organization (WTO) was established, its goal was to advocate and facilitate trade deals—in particular multilateral trade deals. However, the new head of the WTO, Supachai Panitchpakdi, has found that convincing countries of the value of multilateral trade deals is difficult. It seems that many countries prefer bilateral deals. Supachai argues though, that the only real way to bring down trade barriers is via multi-country agreements. To that end, he is actively negotiating with countries to try to get the Doha Round of trade agreements achieved. The current talks revolve around four key issues: the provision of cheap medicines for poor countries; agricultural reform; development issues; and dispute settlement. Why do countries prefer bilateral agreements to multilateral agreements? What are the implications of country-to-country pacts versus multi-country agreements for companies? Go to the WTO’s web site (www.wto.org) and assess the current status of the Doha Round. Which countries appear to be benefiting the most from the talks to date? Why? The U.S. was the sole holdout for Supachai when he worked to provide medicines for countries that were fighting deadly illnesses. The U.S. claimed that the agreement would weaken incentives to develop new drugs. In your opinion, was the U.S. right to stand in the way of his efforts? Why or why not? The European Union (EU) may prove to be the stumbling block in agricultural reform. Go to the EU’s web site (http://europa.eu.int/index_en.htm) and explore the bloc’s agricultural policy. Why is the EU so reluctant to make concessions in its agricultural policy? What are the long-term implications of this stance? Supachai is promoting the notion of informal mediation as a means of settling trade disputes. If he is successful in his effort, how could this affect future trade talks? Source: "WTO Chief Pushes Group Think," The Wall Street Journal, 2/3/03, p. A12.

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