Sir, When the US government accuses the European Commission of “supranational taxation” (August 25), it knows whereof it speaks. One of the greatest sovereign risks facing any company anywhere in the world today is extraterritorial enforcement of US law and regulation, by any of a multitude of American enforcement bodies — the Department of Justice, the Securities and Exchange Commission, the Food and Drug Administration and even state entities such as New York’s so-called Department for Financial Stability. Between them, these bodies have levied fines totalling hundreds of billions of dollars on US and international companies in the past decade.
Many of the alleged breaches or offences were committed by non-US companies in faraway countries, and none is ever examined in a court of law — the companies submit to a combination of US legal threat and advice from US law firms (often boasting their government connections through partners recently recruited via the revolving door from Washington) and pay up.
It is the new global taxation, levied on anyone who wishes to do business in the US or to use the US dollar, and it is huge. I am sure the commission’s pursuit of what in Brussels they call “GAFA” — Google, Amazon, Facebook and Apple — is motivated as much by revenge and anti-Americanism as by care for the global consumer. But in this, as in so much else, where the US goes, others follow — first Europe and now China. In turning its regulators into profit centres, America has kicked off a global and escalating regulatory war that will damage its own companies, alienate its allies and greatly increase international appetite for a global trading currency other than the US dollar. That’s a gift Washington may come to regret handing to Beijing.
London SW7, UK
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