Regulatory Encounters: Multinational Corporations and American Adversarial Legalism (California Series in Law, Politics, and Society)

447 Pages·2000·2.2 MB·English

by  Robert A. Kagan

Regulatory Encounters
THE CALIFORNIA SERIES IN LAW, POLITICS, AND SOCIETY
RobertA.KaganandMalcolmFreeley,GeneralEditors
1.RegulatoryEncounters:MultinationalCorporationsandAmericanAdversarial
Legalism,(cid:101)(cid:100)(cid:105)(cid:116)(cid:101)(cid:100)(cid:98)(cid:121)(cid:82)(cid:111)(cid:98)(cid:101)(cid:114)(cid:116)(cid:65)(cid:46)(cid:75)(cid:97)(cid:103)(cid:97)(cid:110)(cid:97)(cid:110)(cid:100)(cid:76)(cid:101)(cid:101)(cid:65)(cid:120)(cid:101)(cid:108)(cid:114)(cid:97)(cid:100)
Regulatory
Encounters
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(cid:97)(cid:110)(cid:100) (cid:65)(cid:109)(cid:101)(cid:114)(cid:105)(cid:99)(cid:97)(cid:110) (cid:65)(cid:100)(cid:118)(cid:101)(cid:114)(cid:115)(cid:97)(cid:114)(cid:105)(cid:97)(cid:108) (cid:76)(cid:101)(cid:103)(cid:97)(cid:108)(cid:105)(cid:115)(cid:109)
EDITED BY
Robert A. Kagan and Lee Axelrad
UNIVERSITY OF CALIFORNIA PRESS
Berkeley LosAngeles London
UniversityofCaliforniaPress
BerkeleyandLosAngeles,California
UniversityofCaliforniaPress,Ltd.
London,England
q2000bytheRegentsoftheUniversityofCalifornia
LibraryofCongressCataloging-in-PublicationData
Regulatoryencounters:multinationalcorporationsandAmericanadversariallegalism/
editedbyRobertAllenKaganandLeeAxelrad
p. cm.—(TheCaliforniaseriesinlaw,politics,andsociety;no.1)
Includesbibliographicalreferencesandindex.
ISBN0-520-22287-3(alk.paper).—ISBN0-520-22288-1(pbk.:alkpaper)
1.Internationalbusinessenterprises—Lawandlegislation—UnitedStates. 2.International
businessenterprises—Lawandlegislation. 3.Adversarialsystem(Law)I.Axelrad,Lee,
1963– II.Kagan,RobertAllen,1938– III.Series.
KF1419.R44 2000
346.73'066—dc21 99-057669
ManufacturedintheUnitedStatesofAmerica
09 08 07 06 05 04 03 02 01 00
10 9 8 7 6 5 4 3 2 1
Thepaperusedinthispublicationisbothacid-freeandtotallychlorine-free.Itmeetsthe
minimumrequirementsofANSI/NISOZ39.48–1992(R1997)((cid:80)(cid:101)(cid:114)(cid:109)(cid:97)(cid:110)(cid:101)(cid:110)(cid:99)(cid:101)(cid:111)(cid:102)(cid:80)(cid:97)(cid:112)(cid:101)(cid:114)).
CONTENTS
(cid:97)(cid:99)(cid:107)(cid:110)(cid:111)(cid:119)(cid:108)(cid:101)(cid:100)(cid:103)(cid:109)(cid:101)(cid:110)(cid:116)(cid:115)
/ (cid:118)(cid:105)(cid:105)
1. HowMuchDoNationalStylesofLawMatter?
(cid:82)(cid:111)(cid:98)(cid:101)(cid:114)(cid:116)(cid:65)(cid:46)(cid:75)(cid:97)(cid:103)(cid:97)(cid:110) / (cid:49)
PART IzENVIRONMENTAL REGULATION
2. PolesApart:IndustrialWasteManagementRegulationand
EnforcementintheUnitedStatesandJapan
(cid:75)(cid:97)(cid:122)(cid:117)(cid:109)(cid:97)(cid:115)(cid:117)(cid:65)(cid:111)(cid:107)(cid:105)(cid:97)(cid:110)(cid:100)(cid:74)(cid:111)(cid:104)(cid:110)(cid:87)(cid:46)(cid:67)(cid:105)(cid:111)(cid:102)(cid:174) / (cid:51)(cid:51)
3. IndustrialEffluentControlintheUnitedStatesandJapan
(cid:75)(cid:97)(cid:122)(cid:117)(cid:109)(cid:97)(cid:115)(cid:117)(cid:65)(cid:111)(cid:107)(cid:105)(cid:44)(cid:76)(cid:101)(cid:101)(cid:65)(cid:120)(cid:101)(cid:108)(cid:114)(cid:97)(cid:100)(cid:44)(cid:97)(cid:110)(cid:100)(cid:82)(cid:111)(cid:98)(cid:101)(cid:114)(cid:116)(cid:65)(cid:46)(cid:75)(cid:97)(cid:103)(cid:97)(cid:110) / (cid:54)(cid:52)
4. InvestigationandRemediationofContaminatedManufacturingSites
intheUnitedStates,theUnitedKingdom,andtheNetherlands
(cid:76)(cid:101)(cid:101)(cid:65)(cid:120)(cid:101)(cid:108)(cid:114)(cid:97)(cid:100) / (cid:57)(cid:54)
5. SitingSolidWasteLandfills:ThePermitProcessinCalifornia,
Pennsylvania,theUnitedKingdom,andtheNetherlands
(cid:72)(cid:111)(cid:108)(cid:108)(cid:121)(cid:87)(cid:101)(cid:108)(cid:108)(cid:101)(cid:115)(cid:97)(cid:110)(cid:100)(cid:75)(cid:105)(cid:114)(cid:115)(cid:116)(cid:101)(cid:110)(cid:69)(cid:110)(cid:103)(cid:101)(cid:108) / (cid:49)(cid:50)(cid:50)
6. TheAirPollutionPermitProcessforU.S.andGerman
AutomobileAssemblyPlants
(cid:74)(cid:111)(cid:104)(cid:110)(cid:80)(cid:46)(cid:68)(cid:119)(cid:121)(cid:101)(cid:114)(cid:44)(cid:82)(cid:105)(cid:99)(cid:104)(cid:97)(cid:114)(cid:100)(cid:87)(cid:46)(cid:66)(cid:114)(cid:111)(cid:111)(cid:107)(cid:115)(cid:46)(cid:97)(cid:110)(cid:100)(cid:65)(cid:108)(cid:97)(cid:110)(cid:67)(cid:46)(cid:77)(cid:97)(cid:114)(cid:99)(cid:111) / (cid:49)(cid:55)(cid:51)
PART IIzLEGAL RIGHTS AND LITIGATION
7. EmployeeTerminationPracticesintheUnitedStatesandCanada
(cid:76)(cid:97)(cid:117)(cid:114)(cid:97)(cid:66)(cid:101)(cid:116)(cid:104)(cid:78)(cid:105)(cid:101)(cid:108)(cid:115)(cid:101)(cid:110) / (cid:50)(cid:50)(cid:53)
(cid:118)(cid:105) CONTENTS
8. CreditCardDebtCollectionandtheLaw:
GermanyandtheUnitedStates
(cid:67)(cid:104)(cid:97)(cid:114)(cid:108)(cid:101)(cid:115)(cid:82)(cid:117)(cid:104)(cid:108)(cid:105)(cid:110) / (cid:50)(cid:53)(cid:53)
9. ObtainingandProtectingPatentsintheUnitedStates,
Europe,andJapan
(cid:68)(cid:101)(cid:101)(cid:112)(cid:97)(cid:107)(cid:83)(cid:111)(cid:109)(cid:97)(cid:121)(cid:97) / (cid:50)(cid:55)(cid:53)
PART IIIzREGULATING PRODUCT SAFETY
10. LicensingBiologicsinEuropeandtheUnitedStates
(cid:77)(cid:97)(cid:114)(cid:116)(cid:105)(cid:110)(cid:101)(cid:75)(cid:114)(cid:97)(cid:117)(cid:115) / (cid:51)(cid:49)(cid:51)
11. NewChemicalNotificationLawsinJapan,theUnitedStates,
andtheEuropeanUnion
(cid:76)(cid:111)(cid:114)(cid:105)(cid:65)(cid:46)(cid:74)(cid:111)(cid:104)(cid:110)(cid:115)(cid:111)(cid:110)(cid:44)(cid:84)(cid:97)(cid:116)(cid:115)(cid:117)(cid:121)(cid:97)(cid:70)(cid:117)(cid:106)(cid:105)(cid:101)(cid:44)(cid:97)(cid:110)(cid:100)(cid:77)(cid:97)(cid:114)(cid:105)(cid:117)(cid:115)(cid:65)(cid:97)(cid:108)(cid:100)(cid:101)(cid:114)(cid:115) / (cid:51)(cid:52)(cid:49)
12. TheConsequencesofAdversarialLegalism
(cid:82)(cid:111)(cid:98)(cid:101)(cid:114)(cid:116)(cid:65)(cid:46)(cid:75)(cid:97)(cid:103)(cid:97)(cid:110) / (cid:51)(cid:55)(cid:50)
(cid:108)(cid:105)(cid:115)(cid:116) (cid:111)(cid:102) (cid:99)(cid:111)(cid:110)(cid:116)(cid:114)(cid:105)(cid:98)(cid:117)(cid:116)(cid:111)(cid:114)(cid:115)
/ (cid:52)(cid:49)(cid:53)
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/ (cid:52)(cid:49)(cid:55)
ACKNOWLEDGMENTS
Thisisamany-authoredbook,andtherearemanymorecontributorswhose
names are not included in the table of contents. Most important are the
corporate officials who gave generously of their time to describe and doc-
ument their interactions with regulatory and legal systems in the United
States and other countries. These officials—regulatory affairs officers, en-
vironmentalmanagers,attorneys,riskmanagers,humanrelationsofficers,
plantmanagers,andothers—arevitalcogsintheregulatoryprocess,work-
ing regulatory and legal norms into the everyday activities of business en-
terprises;drawingontheirexperience,theyprovidedspecificinsightsinto
the distinctive qualities and effectiveness of national regulatory and legal
systems. We were consistently impressed by their candor and by the seri-
ousnesswithwhichtheytooktheirresponsibilities.
We are also grateful to the many corporate and trade association offi-
cials, lawyers, regulatory officials, business consultants, and academic col-
leagues—too numerous to catalog here—who granted us exploratory in-
terviews, guided us to cooperating companies, and provided additional
perspectiveontheissuesandfindingsineachcasestudyinthisbook.The
premise for the informal conversations and formal interviews that led to
thisvolumewasapledgeofconfidentialitythatnowconstrainsus,andthe
authors of the chapters, from adequately naming many of the subjects of
ourgratitude.
WeextendspecialthankstoEdwardRubin,MarcGalanter,andErhard
Blankenburg,whoprovidedencouragementandadviceintheformulation
of the research project as a whole; to the colleagues, lawyers, consultants,
andcorporateofficialswhoparticipatedinanexploratoryworkshopatthe
UniversityofCalifornia,Berkeley,inMay1994;andtothecolleagueswho
offeredusefulcommentsduringthepresentationofparticularchaptersat
(cid:118)(cid:105)(cid:105)
(cid:118)(cid:105)(cid:105)(cid:105) ACKNOWLEDGMENTS
the Brookings Institution, the University of Wisconsin, Madison, annual
meetings of the Law and Society Association, and at Center for the Study
ofLawandSociety,theDepartmentofPoliticalScience,andtheSchoolof
Law,UniversityofCalifornia,Berkeley.
Valuableinsightsandsuggestionswereprovidedbycolleagueswhoread
and commented on all or part of the manuscript, including Eugene Bar-
dach, Bridget Hutter, R. Shep Melnick, Pietro Nivola, Roger Noll, Robert
Post,DavidVogel,andnumerousothers. Nobu Kitamura provided expert
adviceandperspectivewithrespecttoregulatoryenforcementinJapan.
Institutional support for the Comparative Legal Systems Project was
steadfastlyprovidedbyRodWatanabeandMargoRodriguezofUCBerke-
ley’s Center for the Study of Law and Society, an ideal setting for collabo-
ration across disciplinary and national boundaries. Finally, the editors of
this volume count themselves fortunate to have had the opportunity to
work with a remarkably energetic, cooperative, congenial, and dedicated
group of authors, and even more fortunate to have had, throughout the
longdaysandeveningsofthisproject,theloveandsupportoftheirspouses,
BetsyKaganandJackieHausman.
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CHAPTER ONE
How Much Do National Styles
of Law Matter?
(cid:82)(cid:111)(cid:98)(cid:101)(cid:114)(cid:116) (cid:65)(cid:46) (cid:75)(cid:97)(cid:103)(cid:97)(cid:110)
Thisisabookaboutdifferencesinnationallegalandregulatorysystems—
not merely differences in the law on books but differences in the law in
action—and about how much those differences really matter. It focuses
particularlyonthepracticalconsequencesof‘‘adversariallegalism,’’astyle
ofpolicyimplementationanddisputeresolutionthatisespeciallyprevalent
in the United States. To highlight the impact of American adversarial le-
galism, the book presents ten case studies. Each uses a multinational en-
terprise as a ‘‘research site.’’ Each enterprise engages in similar business
activities in the United States and in at least one other economically ad-
vanced democracy, encountering parallel regulatory regimes and legal in-
stitutions. Comparing the company’s ‘‘regulatory encounters’’ in the
UnitedStatesandinothercountriesrevealshownationalmethodsofreg-
ulation differ in practice and how the companies are compelled to adapt.
With some exceptions, the research indicates that adversarial legalism im-
poses much higher costs and delays on the American operations of multi-
national corporations. More tentatively, and again with some exceptions,
these case studies suggest that American adversarial legalism, despite its
more threatening character, often does not generate higher levels of pro-
tectionforthepublicthandothelesslegalisticregulatoryregimesofother
developed countries—at least in the sector of the economy occupied by
largecorporations.
I. THE ISSUES IN BRIEF
In a global economy, in which businesses can more easily choose which
country to invest or expand in, the costs of doing business imposed by a
nation’s domestic legal system—its tax law, labor law, environmental law,
(cid:49)
(cid:50) HOW MUCH DO NATIONAL STYLES MATTER?
and so on—take on greater economic significance.(cid:49) In European welfare
states, policy analysts argue that generous worker-protection laws are re-
sponsible for high unemployment and sluggish economic growth.(cid:50) In Ja-
pan,agovernmentreportexpressedconcernthatlegalrestrictionsonland
use, contrasted to those in Germany and the United States, are ‘‘holding
backJapan’sfuturedevelopmentandprogress.’’(cid:51)Thesestatementsarepart
of a domestic political struggle about law and regulation that recurs in all
tradingnations.Inonecampareproponentsofsecurity,socialjustice,and
environmentalprotection;theydemandlegalrightsandgovernmentalreg-
ulationstopreventoroffsettheeconomiclossesandsocialdisruptions,the
chemical hazards and environmental degradation that flow from what Jo-
seph Schumpeter called the ‘‘creative destruction’’ of capitalism. In the
opposing camp are advocates of laws, legal institutions, and regulatory re-
gimes that above all promote competition and economic efficiency, that
limittaxesandrestrictionsonentrepreneurialactivity.
It is risky, of course, to make sweeping generalizations about entire na-
tional legal systems, with all their internal complexity and variation. Still,
it is probably true that in comparison with most other economically ad-
vanceddemocracies,thelegalorderoftheUnitedStatesgenerallyhasbeen
more supportive of the ‘‘economic efficiency’’ camp. Most European
nations levy heavier taxes. Their laws and regulations impose tighter re-
strictionsonbusinessactivitiessuchasdismissingunneededorundesirable
workers, starting certain ventures (such as large discount stores), and ac-
quiringanddevelopingproperty.Americancorporationlaw,antitrustlaw,
securities law, and banking regulations all have contributed to a uniquely
fluidandcompetitivesystemofcorporatefinanceandgovernance,ahigh
rate of new business formation, and a flexible and mobile labor market.
But,again,generalizationsarerisky.ItisnotdifficulttopointoutAmerican
lawsthatmandateeconomicallyinefficientandwastefulmethodsofachiev-
ingregulatorygoals,suchasthefederalrulesforpromotingmotorvehicle
fueleconomyorthe‘‘Superfund’’programforcleaningupcontaminated
wastedisposalsites.(cid:52)
Generalizationsalsoareriskybecausenationallegalsystems,spurredby
sensitivitytothemobilityofgoods,jobs,andcapitalinamorecompetitive
global economy, are constantly changing. Both in the United States and
abroad,domesticeconomicandpoliticalforceshammerawayatobviously
inefficient laws and regulations.(cid:53) Moreover, the European Union and a
growingarrayofworldwidetreatiesdemandcross-national(cid:104)(cid:97)(cid:114)(cid:109)(cid:111)(cid:110)(cid:105)(cid:122)(cid:97)(cid:116)(cid:105)(cid:111)(cid:110)of
domestic laws on a variety of subjects, from pollution control and protec-
tion of intellectual property to the testing and licensing of new pharma-
ceuticaldrugs.Inconsequence,someobserversspeakofarelentlesstrend
towardconvergenceofnationallegalsystems.(cid:54)
Boththerateofconvergenceandtheultimatevalidityofthis‘‘compet-