Outsourcing Law & Business Journal™: June 2010
June 30, 2010 by Bierce & Kenerson, P.C.
OUTSOURCING LAW & BUSINESS JOURNAL (™) : Strategies and rules for adding value and improving legal and regulation compliance through business process management techniques in strategic alliances, joint ventures, shared services and cost-effective, durable and flexible sourcing of services. www.outsourcing-law.com. Visit our blog at http://blog.outsourcing-law.com for commentary on current events.
Insights by Bierce & Kenerson, P.C., Editors. www.biercekenerson.com
Vol. 10, No. 6 (June 2010)
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1. U.S. Discrimination against Foreign Call Centers: Sen. Schumer’s Personal Trade War.
2. Business Method Patents for Business Process Sourcing : Strategies for Hedging Your Bets when Strategies for Hedging Weather Futures are Unpatentable under U.S. Supreme Court’s Bilski Decision.
3. Humor.
4. Conferences.
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1. U.S. Discrimination against Foreign Call Centers: Sen. Schumer’s Personal Trade War. Call center operations can be conducted anywhere in the world without U.S. regulation, unless the activities involve regulated business services such as mortgage banking, consumer credit and lending, broker-dealer securities brokerage, life insurance sales and the regulated professions such as public accounting, the practice of law, engineering and architecture. The Democrats and the Obama Administration appear to want to control call center operations more than the mere directive in the TARP program, which forbids the use of any federal funds by TARP stimulus recipients for foreign call centers. Now comes Sen. Charles Schumer (D., N.Y.) with a proposal to tax all foreign call center calls at $0.25 per call, but exempt all U.S. call center calls from this tax. For the complete article, click here: http://www.outsourcing-law.com/2010/06/u-s-discrimination-against-foreign-call-centers/
2. Business Method Patents for Business Process Sourcing : Strategies for Hedging Your Bets when Strategies for Hedging Weather Futures are Unpatentable under U.S. Supreme Court’s Bilski Decision. Business process outsourcing (BPO) has led many entrepreneurs and their investor cousins (sometimes called “patent trolls”) to seek patent protection for their business methods. The long-awaited decision of the U.S. Supreme Court in Bilski v. Kappas, 561 U.S. ___ (June 28, 2010) was anticipated to lay down the groundwork for defining the parameters of patentable business methods. Its decision disappoints the more than 60 parties that filed briefs on both sides of the debate over what is patentable. Read more by clicking here: http://www.outsourcing-law.com/2010/06/business-method-patents-for-business-process-sourcing/
3. Humor.
Patent, n. (1) a legal monopoly until it is declared illegal, invalid, obvious or not useful; (2) bargaining chip for a standard agreement; (3) public declaration of what you do in private.
Patent troll, n. (1) non-operating owner of a business method that everyone uses; (2) sheriff deputized for highway robber.
4. Conferences.
July 14-16, 2010. IQPC Presents Shared Services for Finance and Accounting, Chicago, Illinois. The SSFA 2010 Summit brings together leading financial shared services experts to network, benchmark and learn through keynote presentations, interactive roundtables, case studies and discussion panels. This program will help you improve internal accounting processes, maximize your efficiency with less resources, make smarter sourcing decisions, and drive continuous value through your financial services. For more information, visit http://www.sharedservicesfa.com/Event.aspx?id=314126
September 13-15, 2010. 5th eDiscovery for Pharma, Biotech and Medical Device Industries, Philadelphia, Pennsylvania. Presented by IQPC, this event will bring together industry leaders from in-house eDiscovery teams, expert judges and outside counsel as they discuss:
- How the new Pension Committee decision will effect eDiscovery professionals in the life science industries
- The unique challenges biopharmaceutical and medical device companies face with respect to social media content
- Preparing and responding to FDA inquiries, patent issues, and other types of pharmaceutical litigation
- A progress report on the 7th circuit eDiscovery pilot program and its implications for Pharma and Biotech
- Reducing patient privacy risks and unnecessary disclosures due to indiscriminate document retention
- Discovering new technologies to reach your goal of gaining proactive control over all your data
To register and view the whole program, click here.
September 26-28, 2010. IQPC Shared Services Exchange™ Event, 2nd Annual, to be held in The Hague, Netherlands. Shared Service Centres have long been seen as the cost saving centre of HR, Finance & Accounting and IT processes, but with changing employment trends and global challenges facing organisations, how can SSC’s continually offer service value?
Unlike typical conferences, the Shared Services Exchange™, which will be co-located with the Corporate Finance Exchange™, focuses on networking, strategic conference sessions and one-on-one meetings with solution providers. The Exchange invites strategic decision makers to take a step back from their current operations, see what strategies and solutions others are adopting, develop new partnerships and make investment choices that deliver innovative solutions and benefits to their businesses.
To request your complimentary delegate invitation or for information on solution provider packages, please contact: exchangeinfo@iqpc.com, call +44 (0) 207 368 9709, or visit their website at http://www.sharedservicesexchange.co.uk/Event.aspx?id=263014
October 21-22, 2010, American Conference Institute’s 5th National Forum on Reducing Legal Costs, Philadelphia, Pennsylvania.
The essential cross-industry forum for corporate and outside counsel who are truly motivated to create value and reduce legal costs through innovative fee arrangements, enhanced relationships, and streamlined operations
Come join senior corporate counsel responsible for cost-reduction success stories, as well as leaders from law firms that have pioneered the use of alternative fee arrangements and other innovative cost-reduction initiatives, as they provide a roadmap for navigating the complexities of keeping legal department costs in check. Now in its fifth installment, this event offers unique networking opportunities with senior practitioners from around the nation, including in-house counsel from a wide range of companies and industries.
Reference discount code “outlaw” for the discounted rate of $1695! To get more information, visit www.americanconference.com/legalcosts
October 25-27, 2010, The 8th Annual HR Shared Services and Outsourcing Summit, Orlando, Florida. This will be a gathering for corporate HR & shared services executives from companies across North America to exchange ideas, develop new partnerships and discuss the latest tools, technologies and strategies being employed in the profession to enhance departmental efficiencies and propel corporate growth. The event will focus on the most current topics in the HR shared services industry including metrics, automation, outsourcing, globalization, compensation & rewards, benefits and an overall focus on the new strategic role of HR shared services. We will review how to tackle change management, analyze current and future projects and further develop the instrumental key areas within HR shared services. Outsourcing Law contacts can receive 20% off the standard all access price when they register with the code HRSS5. Register by calling 212-885-2738. View the program brochure for more details by clicking here.
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FEEDBACK: This newsletter addresses legal issues in sourcing of IT, HR, finance and accounting, procurement, logistics, manufacturing, customer relationship management including outsourcing, shared services, BOT and strategic acquisitions for sourcing. Send us your suggestions for article topics, or report a broken link at: wbierce@biercekenerson.com. The information provided herein does not necessarily constitute the opinion of Bierce & Kenerson, P.C. or any author or its clients. This newsletter is not legal advice and does not create an attorney-client relationship. Reproductions must include our copyright notice. For reprint permission, please contact: wbierce@biercekenerson.com . Edited by Bierce & Kenerson, P.C. Copyright (c) 2010, Outsourcing Law Global LLC. All rights reserved. Editor in Chief: William Bierce of Bierce & Kenerson, P.C. located at 420 Lexington Avenue, Suite 2920, New York, NY 10170, 212-840-0080.
U.S. Discrimination against Foreign Call Centers: Sen. Schumer’s Personal Trade War
June 30, 2010 by Bierce & Kenerson, P.C.
Call center operations can be conducted anywhere in the world without U.S. regulation, unless the activities involve regulated business services such as mortgage banking, consumer credit and lending, broker-dealer securities brokerage, life insurance sales and the regulated professions such as public accounting, the practice of law, engineering and architecture. The Democrats and the Obama Administration appear to want to control call center operations more than the mere directive in the TARP program, which forbids the use of any federal funds by TARP stimulus recipients for foreign call centers. Now comes Sen. Charles Schumer (D., N.Y.) with a proposal to tax all foreign call center calls at $0.25 per call, but exempt all U.S. call center calls from this tax.
Schumer’s Discriminatory Foreign Call Center Bill. By Press Release dated June 2, 2010, Sen. Schumer unveiled a “bill to rein in outsourcing of call center jobs to foreign countries” and to “maintain thousands of jobs in New York and the U.S.” and “provide incentive for jobs to return” home. The bill would have two key features:
o Disclosure of Foreign Call Center Activity. Call center agents at the other end of the line would have to disclose to the caller what country they are from, as well as in which countries the confidential customer data of American customers is kept. The disclosure requirement also forces companies to annually certify to the Federal Trade Commission (FTC) that they are complying with this requirement. Companies that fail to certify they are fully disclosing call transfers would be subject to civil penalties that the Federal Trade Commission (FTC) would prescribe.
o Taxation of Foreign Call Centers. Companies that transfer domestic calls to foreign countries would have to pay a per-call excise tax. US companies would be required to disclose quarterly, and in their annual reports, how many customer service calls they received, and how many are sent overseas.
“If we want to put a stop to the outsourcing of American jobs, than we need to provide incentives for American companies to keep American jobs here,” said Schumer. “This bill will not only serve to maintain call center jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back.” He noted that exported call center activity is most prevalent in India, Indonesia, Ireland, Canada, the Philippines, and South Africa.
“This bill will go a long way toward keeping American jobs right here at home,” continued Schumer. “If we want to stop the exporting of American jobs than we need to make it less beneficial for companies to layoff American workers and send jobs overseas and we can do that by providing disclosure as to where calls are being routed and less financially more beneficial to send them abroad.”
Sen. Schumer’s press release omitted any statistics of the number of jobs affected, the proportion of call center agents that handle foreign local customers, the turnover (attrition) rates for domestic vs. foreign call centers, or the types of services rendered by domestic vs. foreign call centers. According to the Associated Press (May 30, 2010), a 2007 Cornell study found that most call centers servicing American customers were located in the United States. The omission of any statistical analysis underscores how emotional this issue has become.
Smoot-Hawley and WTO. Sen. Schumer has taken a position that clearly violates American trade obligations. Indeed, House Financial Services Committee Chairman Barney Frank (D., Mass.) said as much of this proposal to prohibit TARP recipients from increasing their use of foreign call centers. Rep. Frank’s comments underscore that Sen. Schumer’s policies are not universally accepted, and that Congress should think twice.
But I do want to point out a difficulty that Members of this House should contemplate. We run the risk here that this may violate our obligations under the World Trade Organization. As someone who voted against joining, and I say that without any embarrassment, I would say to Members who will be joining, I believe, virtually every Member of this House in supporting the gentlewoman’s amendment that perhaps it should lead them to rethink to having so enthusiastically subscribed to the WTO agreement without some changes. It certainly seems to us that while we do know the government is directly involved, spending its own money, you can have a requirement for domesticity. It is unclear what the interpretation will be here. The interpretation [might] be not be purely an American one. It will be in the dispute resolution procedures of the WTO.
So as we go forward in this Congress and we are told about the advantages of a multilateral approach to trade, and I agree that, properly done, that is very advantageous, I hope Members who more enthusiastically than I embraced this principle will stop to think about it.
Some of us who were worried about the job impact of international economic relations have been derided as the reincarnation of Smoot and Hawley. Well, I guess Smoot and Hawley would have been with us on this one because it says companies who do business in America cannot go overseas for hiring. That’s not trade in the old way because they didn’t have the option of doing this in the old way with technology. But it is a restraint on international economic activity. It is the government’s saying to the market you may not do this because it will have a negative impact on our employment.
Now, I think that’s legitimate, especially here, since it will only apply to companies that are receiving this assistance. But understand the principle. Those who say it’s always a good thing to allow the market to totally run because it will enhance capacity are agreeing that in this case, because we have the hook on which to hang it, we can undercut that.
But the fact that we have the hook in the TARP doesn’t change what the economics would be. So I welcome what I think is a renewed recognition for some and a belated recognition for others that a regime in which none of these considerations of local employment can be considered is not necessarily in our best interest. SOURCE: Cong. Rec. p. H 408 (Jan. 21, 2009), on debate on Tarp Reform and Accountability Act Of 2009.
GATS. Senator Schumer appears not to have reviewed the policy of “national treatment” under Article XVII of the General Agreement on Trade in Services (GATS), a WTO agreement that is legally binding on the U.S. by reason of American ratification under President Bill Clinton. That text states:
“In sectors described in its schedule [of adhesion to the agreement], and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favorable than it accords to its own like services and suppliers.”
Clawback. Protectionist laws lead to counter-protectionist laws by trading partners. History has many examples of trade retaliation where the producers of apples suffer new foreign retaliatory tariffs because producers of oranges got a protectionist deal by having a $0.25 per unit excise tax advantage. Those of us American who sell services — such as professional services, consulting services, business advisory services, customer service, IT service, etc – and those who export goods or licensed technologies — will be exposed to retaliation by foreign countries who believe such an excise tax violates the US obligations under GATS. In other scenarios, U.S. producers of unrelated services and goods could be the subject of retaliatory and discriminatory foreign tariffs and taxes. This is old news (click here to read more on this subject).
Rule of Law. Sen. Schumer’s approach to legislation is an abuse of international public law. If Sen. Schumer wants to abrogate U.S. treaty obligations, he should say so and simply seek to abrogate the WTO agreements that give U.S. exporters national treatment in foreign markets. Such an idea may be permitted under U.S. constitutional provisions that allow a later law to abrogate a prior treaty.
Fair Trade. Hillary Clinton, as a Presidential candidate in 2008, actually had a more novel approach that explains why she is Secretary of State. She proposed “Fair Trade,” not “Free Trade.” She promoted a bilateral review of trade benefits (contrary to the multilateral approach of the WTO) and a renegotiation of U.S. trade obligations and termination for those countries that breached their WTO obligations of openness, transparency and national treatment. Sen. Schumer’s protectionist approach would not bother with such formalities, without mentioning the probability of foreign disrespect for American trade rights. Hillary Clinton was smarter about “fair trade” in her campaign. She at least understood existing law. Read more