On February 27, 2009, the international law firm Jones Day hosted a conference in Tokyo that took an in-depth look at the anticipated impact of the Obama presidency on U.S. policies toward Asian businesses and the global economy. Former United States Trade Representative Susan C. Schwab presented the keynote address, and experts from the private business sector, former high-ranking U.S. government officials, and Jones Day partners offered their respective views on what the policies of the nascent administration might mean for global businesses, particularly those based in Asia.
Stephen J. Brogan, Jones Day’s Managing Partner, began the day with brief introductory remarks that set the stage for the discussions that followed. He touched on the significance of the recent U.S. election, noting that the topic has justifiably received a great deal of analysis and explication. Consequently, he asked the audience to reflect on broader themes associated with the change in administration. Mr. Brogan said that it represented an understanding that despite the financial challenges facing the U.S. electorate, the election was an affirmation that the eventual solutions to the current crisis could be found only by taking a global perspective, recognizing the United States’ leadership role in the global economy, and taking both inward- and outward-focused actions. After concluding his remarks, Mr. Brogan introduced the first panel by noting that solutions would not be found only within the financial and banking sector. Rather, a variety of organizations and government authorities must come forward to accept and embrace a stewardship role ultimately guided by the rule of law, which will form the foundation of the solution.
Jones Day partner Jay Tambe led the panel that discussed the global financial crisis. Adding their insights and perspectives were Osamu Goto,general manager of the Overseas External Affairs Division of Toyota Motor Corporation; Douglas L. Peterson,chairman, representative director, president, and chief executive officer of Nikko Citi Holdings Inc.; and Lawrence R. Ricciardi,senior advisor to Jones Day, Lazard Frères, and IBM as well as a member of the board of directors of CitiGroup and Royal Dutch Shell and retired IBM senior vice president, general counsel, and chief financial officer. The panelists acknowledged that the problems in the financial markets are complex and multidimensional and, if not checked, will pose ongoing dangers to the stability of the financial industry as well as manufacturing sectors. Nevertheless, the panelists expressed some optimism, based on the resiliency of the markets and the cyclical nature of economic activity. Their greatest concern was whether governments can refrain from acting in ways that are counterproductive and fashioning “cures” that inhibit natural corrections.
Jere Thomson, a Jones Day M&A partner from New York, moderated the next panel, which dealt with cross-border transactions and capital flows. He was joined by Elias Mendoza,managing director of corporate development at IBM; Yasushi Hatakeyama,managing director of Lazard and president and chief executive officer of Lazard Frères K.K.; and Masaru Shibata,managing director and head of mergers and acquisitions for Japan, JPMorgan Securities Japan Co., Ltd. The panelists confirmed that M&A activity had diminished significantly in conjunction with the world’s financial woes and the inability of businesses to access capital and debt facilities. They also acknowledged that the downturn has caused businesses to exercise caution, even those in a strong position to make acquisitions. While the panelists agreed that merger activity would return when the financial picture brightened, they also wanted to see how the new administration will handle various regulatory matters, such as antitrust scrutiny, that could further dampen prospects for transactions. The panelists acknowledged that President Obama has the capacity to instill confidence through his demonstrated ability to stir audiences, and they were eager to see whether a coherent and business-friendly message or a potentially divisive one would be the result.
Ambassador Schwab delivered a provocative and thoughtful keynote address following the conference lunch. She discussed the roles that various individuals would play in setting and steering the new administration’s trade policies, and she also spoke of the challenges in moving from a campaign-oriented message to actually implementing policy. She also discussed her own role and experiences in negotiating trade agreements and fostering cross-border development during her tenure as the United States Trade Representative. Members of the audience quickly accepted Ambassador Schwab’s invitation to ask questions, and her candid, informative responses provided an “insider’s” perspective on perplexing trade issues.
Andrew Kramer, a Jones Day labor partner in the Washington Office, led the final panel, which addressed a range of regulatory issues. The panelists were the Honorable C.H. “Bud” Albright, Jr., immediate past Under Secretary of the U.S. Department of Energy; the Honorable Deborah Platt Majoras,vice president and general counsel at Procter & Gamble and former Chairman of the U.S. Federal Trade Commission; and Daniel V. Yager, chief policy officer and general counsel at HR Policy Association. These panelists focused on what can be expected from the Obama administration in terms of energy, labor, and antitrust policy and regulation. All three indicated that the campaign rhetoric portended greater regulation in each of these areas. Energy policy will have to balance environmental concerns and the need for energy independence with the reality of current energy usage, which relies heavily on carbon-based resources, and the strong environmental lobbies that have strangled development of nuclear energy sources. Labor policy will certainly be influenced by labor unions’ support of the President as well as the Democratic majority in Congress; one of the early issues will be proposed legislation that will make union organizing easier (the “card check” legislation) and could instill mandatory arbitration as the primary negotiator of union pacts. On the antitrust front, the administration has indicated that it expects to have a heavier enforcement role and may try to expand the reach of the antitrust laws into broader areas of fairness in business practices. The panelists provided varying views on the potential impact of these and other measures but were uniform in their concern that the regulatory environment could serve as a brake on the eventual recovery from the financial crisis and stifle cross-border investment.
The day ended with a reception that provided guests with the opportunity to share their reactions with the speakers and with each other. The mix of attendees and speakers and the discussion that the program provoked can best be summed up in Steve Brogan’s opening remarks:
Globalization is certainly in the practice of law, but generally, the most important development in the last 30 or 40 years is that it has transformed the world, and though it has had some bad consequences, it largely has taken a significant percentage of the 6 billion people that live in the world and given them an opportunity to live and to experience and have the hope and the education and the opportunities for their families than maybe a much smaller group of people had in the past. That’s a great development. That’s going to continue to go on. The most important aspect of that development in the future won’t be a movement of capital, which is what has driven it to this point in time. It has given the bankers the dominant role in creating this wealth around the world. That dominant role has to be restored, which is why the initiatives that are being taken by so many nations around the world are absolutely essential.
But something else will be needed and added to the financial aspect, and that is the “rule of law.” The “rule of law” should be at the very forefront of the process of global reorganization. Because if it’s done right and thoughtfully, it will help us get the right results out of globalization. It will give people faith in what’s trying to be accomplished. So it’s very important that we not look at this election as just a game of a change in power or a change in political direction or even a change in thought. There is a constancy in the law that is based on fairness and thoughtfulness and sensible dealings with one another, both on a national level and a personal level.