Ed Santos oversees HP's government affairs practice in Latin America and the Caribbean

Keeping up with regulatory changes is challenge in 'cut and paste' world

One of the biggest challenges multinational corporations face today is dealing with laws and regulations implemented rapidly thanks to access that governments have to examples found on the internet from around the world.

These “cut and paste” laws and regulations leave far less room for response, according to South Florida-based multinational executives who monitor regulatory changes throughout Latin America and the Caribbean attending a WorldCity Government Affairs Connections discussion on Thursday.

To track changes, it’s best to have eyes and ears on the ground, said Ed Santos, government affairs manager for Hewlett-Packard Latin America and the presenter during the discussion, which was sponsored by Chevron and international law firm Fowler Rodriguez Valdes Fauli.

HP prefers to work through local trade and government associations as well as through its local executives in countries where it has a presence.

“The hardest thing is finding out about a new law before it becomes a law,” Santos said. “The trip-wire is expensive to set up. Sometimes a country isn’t on your radar.”

That can be the case with some of the smaller countries, said Daniel Coriat, head of public affairs for Latin America for Novartis Pharmaceuticals. It’s important to keep an eye on regulatory changes in some of the smaller countries because, say, a new law passed in Ecuador, could set a precedent in the region and be rapidly copied by several other Latin countries.

When deciding whether or not to jump into the fray, internal pressure can be the most intense, Santos said. “To the guy on the ground, all issues are important” and deserve the company’s attention. “Taking a pass can be a difficult thing.”

Sometimes, being proactive can pay off. Several key changes that HP asked Ecuadorian trade regulators to consider recently were incorporated in new regulation — even though Santos only paid a visit to Ecuador at the 11th hour, just days before the country’s trade minister was expected to sign off on the new rule. “That was a dream scenario,” he said.

U.S. companies are careful about stepping directly into a fight, several executives said, since multinationals, particularly those from the United States, can be viewed by certain governments and sectors of the population as the bad guy.

For instance, in a recent case where laptops, netbooks, cell phones, televisions, video game consoles and virtually all other electronic devices were facing a hefty increase in value-added taxes unless manufactured in the Tierra Del Fuego region, Santos never set foot in Argentina even though HP as well as many other tech companies were opposed to it.

HP worked through local trade groups to reach key legislators to change the proposed law, originally positioned by the government as a surcharge on luxury items. The trade group and other opponents argued that the computers were productivity tools helping bridge the digital divide — something the Argentine government had previously described as an important goal. Subsequently, laptops and netbooks were excluded.

“That argument won the day,” Santos said. “The nature of the argument wasn’t about our product, but the product.”

Burson Marsteller’s Ramiro Prudencio spoke about a cell phone initiative

Because the new law would have a huge impact on Argentine consumers, Burson-Marsteller’s local office helped mount a grassroots campaign that included a website (www.micelularnoesunlujo.com), a blog and a Facebook page that collected some 35,000 signatures, said Ramiro Prudencio, Burson’s managing director for public affairs and corporate and financial communications in Miami.

“Things were happening way too fast,” Santos said, pointing out that by the time U.S. government trade officials began to focus on the problems this new tax law could create for companies selling their electronic products in Argentina, it was too late for their input to be effective. U.S. officials were asking for back-up data that would have taken months to gather or was confidential, he said.

Even so, it’s crucial for the U.S. Department of Commerce to continue to be aggressive on trade issues, a role that is increasingly falling to the U.S. Chamber of Commerce, a business group, said Joe Perez-Jones, vice president for government affairs for Seaboard Marine.

Marco Malfavon says Alcatel-Lucent works closely with the French government

Marco Malfavon, communications and public affairs director for Alcatel-Lucent, said as a French-owned company now — Lucent was a U.S. company before the merger — he’s finding a different atttitude. The French government “is adamant” about working with French companies on trade issues, he said.

French officials “will sit at the table with you and help you fight an issue. The U.S. government is painfully neutral,” Malfavon said.

Prudencio asked how HP and the other multinationals represented at the meeting prioritize which issues warrant their advocacy.

HP monitors Mexico and Brazil closely because it has large operations there, Santos said. It has government affairs staffers in both countries. Costa Rica is another key country for HP since it has a major call center based there. Smaller markets, all agreed, can be more difficult.

FedEx’s Don Johnson talked about how it and competitors rely on trade associations

FedEx often joins forces with other express shippers as well as works with shipping and maritime associations to help monitor regulatory issues, said Don Johnson, senior manager for Customs and regulatory affairs for the express carrier in Mexico, Central America and the Caribbean region.

Jose Sariego, senior vice president for business and legal affairs for HBO Latin America Group, asked his colleagues around the table if the transition from the Bush to the Obama administration had opened new doors for them in Latin America.

Santos doesn’t sense that Americans are more welcome just because of the change in Washington, D.C., but he has found that every single country is friendlier toward the political change in the U.S. administration.