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.