Economist GMAT Reading Comprehension Challenge #12

Economist GMAT Reading Comprehension Challenge #12

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Article: America’s legal forays against foreign firms vex other countries

Link: https://www.economist.com/business/2019/01/19/americas-legal-forays-against-foreign-firms-vex-other-countries

Vancouver airport is an unlikely venue...death for drug- smuggling.

  • Meng was arrested in Canadian airport at the request of USA investigating business ties with Iran.
  • China has arrested Canadians in China in retaliation.

Ms. Meng is not accused of breaking...face decades in jail.

  • Meng didn’t break Canadian or Chinese law.
  • USA has ramped up prosecuting people outside of USA enforcing sanctions, reducing corruption, fighting money laundering, and terrorism financing.

America’s aims are often laudable…looking for ways to limit its reach.

  • USA aims often positive and good has come from this judicial reach.
  • Continued growth though has raised questions about fairness.
  • Critics call it USA’s “financial imperialism” and are looking to limit it.

Policymakers and business figures...good deal in trade talks with China.

  • European policymakers and business figures don’t want to follow USA laws.
  • They also consider USA motives at least partially designed to benefit USA economically.
  • Trump hasn’t helped improve the image.

It is America’s central role...prosecutions in criminal courts

  • USA central role gives it power to impose rules.
  • Some rules  only affect selling to USA others can trigger criminal proceedings.

Several elements tie together...subject to American law, lawyers say.

  • USA law starts with the idea that it is applied only in USA borders.
  • However, there is wide authority to interpret.
  • Interpretation has been expanding.

A banking transaction...can make it their business.

  • Any part of a transaction that touches something American might be considered in the realm of USA law.

The global banking system...keep doing business with them.

  • Banks have been hit hard with fines leading them to denounce corrupt clients.

Along with companies, some banks...dogging Ms Meng.

  • Some companies and banks have been required to have monitors observe their activities and report to USA.
  • A monitor blew the whistle on Meng.

It seems plain to foreign critics...two have fallen on American companies.

  • Critics claim that USA disproportionately targets foreign companies (¾ of fines levied on European banks)
  • Anti-corruption probes also fall more on foreign firms.

Proving America treads more lightly...snarks a European boss, who suspects geopolitical factors are at play

  • Proving USA is unfair is tricky.
  • The disproportionate fines/probes might be OK.
  • Euro banks seem to have been more corrupt and more often do business in tricky parts of the world.

The sanctions against Iran...“special purpose vehicle”, although progress is slow.

  • Iran sanctions angered euro companies.
  • Euro companies lost “coveted” opportunities.
  • Euro politicians (aligned with companies) worry that USA judicial reach, especially under Trump, will be used to aid USA companies.
  • France and Germany leading in “special purpose vehicle” to allow trade with Iran.

America’s activism is prompting other countries...If you can’t beat them, join them.

  • USA being active prompts other countries to clean up corruption.
  • Britain is joining USA in corruption busting.
  • Other countries also cooperating
  • With cooperation countries paid part of the fines.

Primary Purpose:

To discuss the implications of the US’s expanding judicial reach.

Main Idea:

America’s judicial reach has had significant positive effects although its expansion and some of its motives have come into question.

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