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1AC

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Contention 1 is Inherency

The global economy faces the real impacts in 2015-impacts get worse in 2016

Daniel Mulcahyand Mark owe 15!Daniel Mulcahy is a senior counseland Mark Howe is a partner in the Washington ofce o Cadwalader,Wickersham & Tat LL! Mr! Howe is a mem"er o the #oard o $d%i sors orthe ournal! The authors wish to thank then colleagues ason 'chwart( andMat thew Watrous or their help in preparing this article! The authors may "ereached at daniel! mulcahy)cwt!com and mark!howe)cwt!com, respecti%ely,

anuary *, +*-, ./$TC$ in +*-01ow the /un 2eally #eginshttp344we"!"!e"scohost!com4ehost4pd%iewer4pd%iewer5sid6-e*d*7889:;7a9+-8dtrue>+-+=pro@le>+-8dehost>+-+=scope>+-8dsite>+-+=authtype>+-8dcrawler>+-+=Arnl>+-8d:+-+=$1>+-8d**-=--

entitled to the status pro%ided "y an $ and would need to register or change their registration with the2', and accept the terms o an // $greement to a%oid "ecoming a 1onparticipating //T,8:su"Aect towithholding!8;The status o mem"ers o the ?panded $fliated roup87o which such // is a mem"er

could also "e aJected! B.ue "iligence on ree(isting ntity Accounts hel" byprima facie ''Is ha" to be complete" by .ecember 1! 201/. $lthoughwith holding agents and //s generally ha%e until uly *, +*=, to com plete new due diligence procedureson ree?isting $ccounts opened "y entities Gincluding accounts opened "etween uly *, +*

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possi"le to remo%e such status!

2015% 'or e(ample! by +une 0!2016! ''Is must complete their "ue

"iligence an" "ocumentation of hol"ers of ree(ist ing Accounts or

such hol"ers will become *onparticipating ''Is or 8ecalcitrant

Account ol"ers sub9ect to reporting as if they were $%&% 8eportable

Accounts! an" potentially sub9ect to withhol"ing% 5Also in 2016!

''Is must report the gross amount cre"ite" or pai" in 2015 to $%&

8eportable Accounts! e(cept for certain gross procee"s with

respect to assets hel" in custo"ial accounts

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Contention 2 is 8elations

&cenario 1: .ollar eg

(tensie 'ATCA reuirements cause institutions to optout of the "ollar%#ruce W! 4ean an"$""ey L! 3right 15, roessor o Corporate andnternational Law at Michigan 'tate Eni%ersity College o Law and is Chair othe ?traterritorial urisdiction Committee o the $merican #ranch o thenternational Law $ssociation, !D!, magna cum laude, rom Michigan 'tateEni%ersity College o Law, .TH E!'! /N21 $CCNE1T T$O CNML$1C$CT3 $M2C$1 L$L M2$L'M5F L'$ ournal o nternational &Comparati%e Law, Pol! +*, ss! +, ''21, p! 8+9

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closer scrutiny does turn the pu"lic against the $merican role as the worldKs go%ernment0ifmountingdomestic o"ligations or a ma9or! traumatic eentor series o e%ents such as the

collapse of the "ollar or a terrorist attack e%en more deadly than those o 'eptem"er **

shoul" cause the $ nited & tates to "ecrease "ramatically the scope of

its international actiities the worl" woul" becomea messier, more

"angerous! an" less prosperousplace! $t "est, an American with"rawalwoul""ring with it some o the political an?iety typical during the Cold War and a measure o theeconomic uncertainty that characteri(ed the years "eore World War ! $t worst, the retreat o $merican

power could lea" toa repetition o the great global economic failure an"the

bloo"y international con@icts the world e?perienced in the *78s and *7

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issuing the worl"

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unilateral imposition is a complete "isregar" for the soereignty ofthe foreign nation an" thus a "isregar" for internationalrelations asa whole% n the past decade, the Enited 'tates has ound out the hard way that unilateralimposition on another nation

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'ATCAand $TC$ mo%ing orward! The T$' will champion or the 2' to ratiy more 9usti#ablean" legally amenable policiesto recoer lost cre"ibility amongst $&nonresi"ents! the me"ia! an" arious foreign entitie s! The T$'Ks main missionis to construe /$TC$ as a %oluntary compliance mechanism intended to "ene@t ta?payers andcounterparties! *+ The potential or the 'treamlined rogram to de%elop urther and "e promoted as aSe?i"le and attracti%e program or reporting is imminent and the T$' wants to capitali(e on that! Nne wayto impro%e the pu"lic discourse is "y reIuesting orum comments and pu"lishing rele%ant guidelines in the

ofcial ./ederal 2egisterF with re%isions that include recommendations rom the pu"lic!

Cre"ibility an" international in@uence soles a series ofimpacts%I=enberry et% al 1 ohn ken"erry, h! D in olitical 'cience romChicago, roessor o olitics and nternational $Jairs at the Woodrow Wilson'chool at rinceton Eni%ersity, 'enior /ellow at the #rookings nstitute, Co9Director o rincetonKs Center or nternational 'ecurity 'tudiesR WilliamWohlorth, h! D in olitical 'cience rom Uale, We"ster roessor oo%ernment at Dartmouth CollegeR 'tephen #rooks, h! D in olitical 'ciencerom Uale, $ssociate roessor o o%ernment at Dartmouth College, 'enior/ellow at the #eler Center or 'cience and nternational $Jairs at Har%ard

Eni%ersityR .DonKt Come Home, $merica3 The Case $gainst 2etrenchmentF,http344li%e!"elercenter!org4@les4'8:8X#rooks>+Wohlorth>+ken"erry!pd$ssessing the 'ecurity #ene@ts o Deep ngagement %en i deep engagementKs costs are ar less thanretrenchment ad%ocates claim, they are not worth "earing unless they yield greater "ene@ts! We ocushere on the strategyKs maAor security "ene@tsR in the ne?t section, we take up the wider payoJs o theEnited 'tatesK security role or its interests in other realms, nota"ly the glo"al economy0an interaction

relati%ely une?plored "y international relations scholars! A core premise of "eepengagement is that itpreents the emergence of a far more"angerous global security enironment! /or one thing, as noted a"o%e, the$nite" &tates< oerseas presence gies it the leerage to restrainpartners from ta=ing proocatie action%erhaps more important, its corealliance commitments also "eter states with aspirations to regionalhegemony from contemplating e(pansion an" ma=e its partners

more secure! re"ucing their incentie to a"opt solutions to theirsecurity problems that threaten others an" thus sto=e security"ilemmas! The contention that engage" $%&% power "ampens thebaleful eects of anarchy is consistent with in@uential ariants ofrealist theory! ndeed, argua"ly the scariest portrayal o the war-prone worl" thatwoul" emerge absent the ,American aci#er; is proi"e" in thewor=s of +ohn Mearsheimer! who forecasts "angerous multipolarregions replete with security competition! arms races! nuclearproliferation an" associate" preentie war temptations! regionalrialries ! an" een runs at regional hegemony an" full-scale greatpower war! :+ How do retrenchment ad%ocates, the "ulk o whom are realists, discount this "ene@t5

Their arguments are complicated, "ut two capture most o the %ariation3 G* E!'! security guarantees are

not necessary to pre%ent dangerous ri%alries and conSict in urasiaR or G+ pre%ention o ri%alry and conSictin urasia is not a E!'! interest! ach response is connected to a diJerent theory or set o theories, whichmakes sense gi%en that the whole de"ate hinges on a comple? uture counteractual Gwhat would happento urasiaKs security setting i the Enited 'tates truly disengaged5! $lthough a certain answer is

impossi"le, each of these responses is nonetheless a wea=er argumentfor retrenchment than a"ocates ac=nowle"ge% The @rst response Sows romdeensi%e realism as well as other international relations theories that discount the conSict9generatingpotential o anarchy under contemporary conditions! :8 Deensi%e realists maintain that the high e?pected costs o territorial conIuest, deense dominance, and an array o policies and practices that can "eused credi"ly to signal "enign intent, mean that urasiaKs maAor states could manage regionalmultipolarity peaceully without the $merican paci@er! 2etrenchment would "e a "et on this scholarship,

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particularly in regions where the kinds o sta"ili(ers that nonrealist theories point to0such as democratic

go%ernance or dense institutional linkages0are either a"sent or weakly present! There are threeother ma9or bo"ies of scholarship! howeer! that might gie "ecisionma=ers pause before ma=ing this bet! /irst is regional e?pertise! 1eedless to say,there is no consensus on the net security eJects o E!'! withdrawal! 2egarding each region, there areoptimists and pessimists! /ew e?perts e?pect a return o intense great power competition in a post9$merican urope, "ut many dou"t uropean go%ernments will pay the political costs o increased E

deense cooperation and the "udgetary costs o increasing military outlays! :< The result mightbe a urope that is incapable of securing itself from arious threatsthat coul" be "estabiliBing within the region an" beyon" Ge!g!, a regionalconSict akin to the *77s #alkan wars, lac=s capacity for global security missionsin which $%&% lea"ers might want uropean participation! an" isulnerable to the in@uence of outsi"e rising powers% What a"out the otherparts o urasia where the Enited 'tates has a su"stantial military presence5 8egar"ing theMi""le ast ! the balance begins to swing towar" pessimistsconcerne" that states currently bac=e" by 3ashington notablyIsrael! gypt! an" &au"i Arabiamight ta=e actions upon $%&%retrenchment that woul" intensify security "ilemmas! $nd concerning astAsia! pessimism regar"ing the region

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proliferation! an" the li=e! orbi"s for regional hegemony! which maybe beyon" the capacity of local great powers to contain >an" whichin any case woul" generate intensely competitie behaior! possiblyinclu"ing regional great power war?% Hence it is unsurprising that retrenchmentad%ocates are prone to ocus on the second argument noted a"o%e3 that a%oiding wars and securitydilemmas in the worldKs core regions is not a E!'! national interest! /ew dou"t that the Enited 'tates couldsur%i%e the return o insecurity and conSict among urasian powers, "ut at what cost5 Much o the work inthis area has ocused on the economic e?ternalities o a renewed threat o insecurity and war, which wediscuss "elow! /ocusing on the pure security rami@cations, there are two main reasons why decision

makers may "e rationally reluctant to run the retrenchment e?periment! /irst, oerall higherleels of con@ict ma=e the worl" a more "angerous place%3ereurasia to return to higher leels of interstate military competition!one woul" see oerall higher leels of military spen"ing an"innoation an" a higher li=elihoo" of competitie regional pro(ywars an" arming of client states all of which woul" be concerning!in part because it woul" promote a faster "iusion of military poweraway from the $nite" &tates% )reater regional insecurity coul" wellfee" proliferation casca"es !as states such as gypt! +apan! &outhEorea! Taiwan! an" &au"i Arabia all might choose to create nuclear

forces! :; t is unlikely that prolieration decisions "y any o these actors would "e the end o the game3they woul" li=ely generate pressure locally for more proliferation!/ollowing enneth Walt(, many retrenchment ad%ocates are prolieration optimists, assuming that nucleardeterrence sol%es the security pro"lem! :7 Esually carried out in dyadic terms, the de"ate o%er thesta"ility o prolieration changes as the num"ers go up! rolieration optimism rests on assumptions orationality and narrow security preerences! n social science, howe%er, such assumptions are ine%ita"lypro"a"ilistic! Nptimists assume that most states are led "y rational leaders, most will o%ercomeorgani(ational pro"lems and resist the temptation to preempt "eore eared neigh"ors nucleari(e, and

most pursue only security and are risk a%erse! Con#"ence in such probabilisticassumptions "eclines if the worl" were to moe from nine to twenty!thirty! or forty nuclear states%n addition, many of the other "angersnote" by analysts who are concerne" about the "estabiliBing eectsof nuclear proliferationinclu"ing the ris= of acci"ents an" theprospects that some new nuclear powers will not hae trulysuriable forcesseem prone to go up as the number of nuclearpowers grows%; Moreo%er, the ris= of ,unforeseen crisis "ynamics; thatcoul" spin out of control is also higher as the number of nuclearpowers increases! /inally, a"" to these concerns the enhance" "angerof nuclear lea=age! an" a worl" with oerall higher leels of securitycompetition becomes yet more worrisome% The argument that maintainingurasian peace is not a E!'! interest aces a second pro"lem! Nn widely accepted realist assumptions,acknowledging that E!'! engagement preser%es peace dramatically narrows the diJerence "etweenretrenchment and deep engagement! /or many supporters o retrenchment, the optimal strategy or apower such as the Enited 'tates, which has attained regional hegemony and is separated rom other greatpowers "y oceans, is oJshore "alancing3 stay o%er the hori(on and .pass the "uckF to local powers to dothe dangerous work o counter"alancing any local rising power! The Enited 'tates should commit toonshore "alancing only when local "alancing is likely to ail and a great power appears to "e a credi"lecontender or regional hegemony, as in the cases o ermany, apan, and the 'o%iet Enion in the

midtwentieth century! The pro"lem is that China

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interene there% The implication is to get out of Ira an"Afghanistan! re"uce the presence in urope! an" piot to Asia 9ustwhat the $nite" &tates is "oing%;8 n sum, the argument that $%&%security commitments are unnecessary for peace is countere" by alot of scholarship, including highly inSuential realist scholarship! n addition, the argumentthat urasian peace is unnecessary for $%&% security is wea=ene" by

the potential for a large number of nasty security conseuences aswell as the nee" to retain a latent onshore balancing capacity that"ramatically re"uces the saings retrenchment might bring! Moreo%er,switching between oshore an" onshore balancing coul" well be"iFcult% #ringing together the thrust o many o the arguments discussed so ar underlines thedegree to which the case or retrenchment misses the underlying logic o the deep engagement strategy!

4y supplying reassurance! "eterrence ! an" actie management! the$ nite" & tates lowers security competition in the worl"

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insecurity! the e(tensie set of $%&% military commitments an""eploymentshelps to protect the ,global economic commons%;Gne=ey way is by helping to =eep sea-lanes an" other shipping corri"orsfreely aailable for commerce! ;; A secon" =ey way is by helping toestablish an" protect propertyHsoereignty rights in the oceans!$lthough it is not the only glo"al actor rele%ant to protecting the glo"al economic commons, the

$ nite" & tates has by far the most important role gien itsmassienaal superiorityan" the lea"ership role it plays ininternationaleconomic institutions% If the $nite" &tates were to pull bac= fromthe worl"!protecting the global economic commons woul" li=ely bemuch har"er to accomplishfor a number of reasons:cooperatingwith other nations on these matters woul" be less li=ely to occur maintaining the releant institutional foun"ations for promoting thisgoal woul" be har"er an" presering access to bases throughoutthe worl"which is nee"e" to accomplish this missionwoul" li=elybe curtaile" to some "egree!

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Contention is con

3e hae three internal lin=s:

--1% 'ATCA "ecreases economic interactions between the$& an" institutions%'andra Eilhof 1/, reelance writer, Aournalist at World /inance, ormerreporter or 2etail #anker nternational, Cards nternational & lectronic

ayments nternational, . 'ATCA law ma=es #rms reluctant to tra"e

with Americans ,F ;9:, World /inance,

http344www!world@nance!com4strategy4atca9law9makes9@rms9reluctant9to9trade9with9americans, wang

The E' o%ernment9led crac="own on ta( easion is ma=ing it increasingly"iFcult for international #rms to cater to $& clients! 3ith 'ATCAregulations compoun"ing the situation! it

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relationships with ! /or 'wit(erland as a glo"al @nancial market the implementation o /$TC$ iscrucial and necessary, as it ensures market access to the most important @nancial market in the world!1on9participating @nancial ser%ice pro%iders will actually "e cut oJ rom the E' market,F said the 'wiss#anking $ssociationKs G'#$ Head o Communication, Daniela /lYckiger, in an e?clusi%e inter%iew withWorld /inance!BTo this end, /$TC$ has seen an increase in compliance during the @rst ew months o thisyear, most recently signing 'ingapore under the Model * $! This ollowed calls rom the E' authorities tospeci@cally target @nancial centres like 'ingapore, the Channel slands, and the #ahamas to "e more

transparent when it comes to their @nancial aJairsR the 'ingaporean authorities ha%e also launched theirown initiati%es to pre%ent illicit unds rom Sowing into the country as its status as one o the worldKsastest9growing wealth management centres grows!B /$TC$ has come at a time when rising glo"al wealthhas prompted increasing inSows into @nancial centres like 'wit(erland and Hong ong rom H1Ws!$ccording to the Capgemini and 2#C World Wealth 2eport, $sia is e?pected to "ecome the worldKs largestmarket "y %alue or people with in%esta"le assets o Q*m or a"o%e "y +*- Gsee /ig! *! redictionssuggest that 'ingapore will o%ertake 'wit(erland as the worldKs largest pri%ate "anking and wealthmanagement hu"!B 'ingaporeKs und management industry had 'D *!=8trn in assets in +*8 andspeculators ha%e e?plored whether the new ta? deal will impact the successul @nancial hu" in a negati%eway! $ccording to asset management @rm Le?ico $d%isory, the industry is unlikely to "e hit hard "y thenew agreement as E' citi(ens only account or one tenth o 'ingaporean wealth management clients ne%ertheless, implementation can pro%ide challenges!B ./inancial contracts in%ol%ing deri%ati%es, in%ol%ingnote holders rom diJerent countries you will ha%e difculty enorcing it! How do you ascertain, may"eout o a ew hundred indi%iduals, which ones are E' citi(ens or E'9related or what kind o entities are

these,F said ack Wang, a partner at Le?ico $d%isory in an inter%iew with Channel 1ews $sia!B .Therewill be a constant lac= of information! How much can you ask the client to pro%ide5$nd i they reuse, what does that mean or the o%erall tranche o notes5 ri%ate eIuity deals as well when you deal with multiple parties, you may not know whether they are E'9related, or all under theguidelines!FB DiJering dealsB n its eJorts to not "e e?cluded rom E' capital markets, 'ingapore signed aModel * ta? inormation9sharing agreement that allows 'ingaporean @rms to report E' account9holderinormation to their local ta? authority, orwarding it to the E' nternal 2e%enue 'er%ice! Howe%er, this isnot the only ta? deal a%aila"le, and curiously, se%eral key @nancial centres such as #ermuda, 'wit(erlandand apan ha%e opted in or the Model + $, which entails reporting directly to the 2' rather than througha local ta? authority!B When e?plaining why 'wit(erland opted in or the less popular model, /lYckiger said3.Model + and * are diJerent in many aspects! Nne o the main diJerences is that under Model +, data isnot e?changed automatically "ut only "y the means o a group reIuest rom the E' to 'wiss authorities!Ender Model *, data o E'4'wiss clients would "e e?changed automatically "etween the ta?administrations o the two countries! The core element o the ZModel +[ solution is that the necessarye?change o data will "e made directly with the E' ta? authorities and not, as in the implementationsolution or the @%e "ig uropean countries, "y means o centralised data gathering! This "etter takes intoaccount the particular characteristics o the 'wiss @nancial centre!FB Howe%er, 'wit(erland may not ha%e aModel + agreement or long, as the 'wiss authorities ha%e announced new negotiations with E' authorities

that may change their $ into a Model *, and crucially, impact 'wiss "anking practices ar more thananticipated! $s mentioned, Model + allows or a more persona"le reporting system, where the 'wiss@nancials can "etter take into account their uniIue pri%acy laws whenreporting! Model *, with itsautomated data transerence, could signi@cantly change that system and possi"ly lead to the end o 'wiss"anking pri%acy!B $nother pressing issue regarding the implementation o /$TC$ is the thousands o E'citi(ens let out in the cold! 'ince it was @rst announced in +*, @rms ha%e ought to a%oid the e?pensesassociated with the e?tensi%e ta? reporting "y eliminating E' clients rom their client roster! Deutsche#ank and H'#C "lankly reuse to ser%ice E' clients, while smaller @rms ha%e to reer loyal E' clients to"igger players that ha%e the compliance capacity to take on the /$TC$ reIuirements! .To this end, the '#$maintains that the "anks are not to "lame or lea%ing E' clients "ehind! The pro"lem lies largely in thecomple?ity and rigidity o E' ta? reportingF, says /lYckiger!B .With or without /$TC$ it is each "anksKresponsi"ility to determine its own "usiness policy! 1o customer group as a whole is discriminated! Uet, inindi%idual cases "anks can check whether an indi%idual client relationship entails risks or not, and can thusdecide whether to maintain the relationship or not! The reason or this decision lies not in a "ankKs "adaith "ut in the comple? E' regulation,F she argues!B $ ar more alarming conseIuence is the amount o$mericans who are renouncing their citi(enship in an attempt to rid themsel%es o a persona non gratastatus with the worldKs @nancial @rms! $t the moment, there are around si? to se%en million e?pat$mericans! Howe%er, according to /ederal 2egister data, *,*8* people ga%e up their E' passports in the@rst si? months o +*8 a stark surge compared to the *;7 E' nationalities renounced "y e?pats the year"eore!B 'econd9class citi(ensB WhatKs more, a .remarka"ly highF two9thirds o E' e?pats are currentlyconsidering renouncing their citi(enship due to /$TC$! The international law9@rm dePere roup asked

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to the onerous and costly impact o /$TC$, many non-$& #nancial institutions will

no longer wor= with Americans e%en i they ha%e "een clients or decades which

can ma=e life outsi"e the $& challenging< to say the least ,F reen addedin a statement at the time!B tKs worth noting that estimates of the a""itional reenue

raise" through 'ATCA seem to be heaily outweighe" by the cost of

implementing the legislation! The $ssociation o Certi@ed /inancial Crime 'pecialistsclaims /$TC$ is e?pected to raise re%enues o appro?imately Q;m per year or the E' Treasury, yet the

costs o implementation are more difcult to estimate, with #gures ranging fromhun"re"s of millions to oer J10bn! $s the costs will "e "orne "y oreign @nancialinstitutions, it is li=ely that this may create a strong incentie for foreign

#nancial institutions to "iest or refrain from inesting in $& assets !

resulting in capital @ight !

--2% It =ills $& cre"ibility an" competitieness%$nn C! Eossache 15, !D! candidate at eorge Mason Eni%ersity 'choolo Law, .WN2LDWD T$O$TN1 $1D /$TC$3 $ CN1'TTETN1$L

CN1E1D2EM N2 TH /1$L C N/ TH T$O P$'N1 E]]L5F Geor'e(ason )ni%ersit& Ci%il *i'hts +aw ,ournal, Pol! +-, ssue +, p! +

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$ccounta"ility Nfce cost4"ene@t study on /$TC$! $dministrati%e costs will "e %ery "urdensome and costlyor the 2', E!'! ta?payers and, most importantly, or @nancial institutions which despite a precarioussituation in glo"al @nancial markets, ha%e no option "ut to spend hundreds o millions o dollars on

compliance! The $%&% #nancial in"ustry is one of the nation

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more than +> largerBtoday than in *77 "ecause o the huge e?pansion in world /DB which has

con%eyed "etter technology, higher wages andBo%erall de%elopment!BIn 2012 ! global ).was $& J K0 trillion! global e(ports in goo"sBan" serices were $&J22 trillion ! the global stoc= of '.I wasBalso about $&J 22 trillion! an"global sales from '.I aFliatesBwere $&J 27 trillion!8B'.I aFliatesrepresent a slightly largerBcon"uit of international commerce than

worl" e(ports! #aldwinBargues in 'ection 8 that e?ports and /D are not alternati%es Brather, theyare constant companions in the new world o glo"alB%alue chains! M1Cs, the parents o /D, account orsome ;>Bo world e?ports, a"out hal o which is em"edded in glo"alB%alue chains!< $ century ago, thetypical multinational enterprise was "ased onBnatural resources! That was the inspiration or LeninKsamousBaphorism, .mperialism is the highest orm o capitalismF! $terBWorld War , manuacturing /Dcame to the ore! n the +s,Bser%ices took oJ! /rom +- to +:, /D Sows into naturalBresourcesaccounted or ;> o the total, while manuacturingBaccounted or and ser%ices or ->! #etween+; andB+**, a%erage /D Sows constituted *+> or natural resources,B in +**!B$n old, still important, Iuestion is what com"ination o orcesBe?plains the e?plosion oM1Cs on the world economy! TheBanswer is ound not in large @rmsK access to cheap @nance, "utBisinstead "ound up in the uniIue know9how o giant @rms aBcom"ination o copyrights, patents,trademarks, and mostBimportantly, the trade secrets o production and distri"ution on aBgrand scale! Thisskill set is costly to acIuire, and can easilyBrepresent hal Gor more o a @rmKs enterprise %alue!DeployingBthis skill set worldwide through /D "ene@ts the host country, asBthere is no need to rein%entthe wheel Gor the iod! /DBstimulates e?ports, makes money or the M1Cs while allowingBthem to

control their technology and spurs employment andBin%estment in the home country G"ecause the M1Cscan growBaster! n other words, the engine "ehind M1C e?pansion leadsBto the somewhat surprisingresult that /D growth is a win9winBproposition!B$pplying its skill set worldwide o"%iously has ad%antagesor theB@rm! t is a"le to spread costs o%er a much larger %olume oBproduction and can deri%e "ene@tsrom locational di%ersity! #utBit also has ad%antages or the host country! t is much easier orBChina toaccess the auto manuacturing know9how o MercedesBthan to acIuire this e?pertise rom scratch!Likewise, it is muchBeasier or a medium9si(ed country like Malaysia to tie into a sliceBo electronicsproduction Gsemiconductors than to "uild a @rmBthat would ri%al Te?as nstruments or Dell! /inally,outwardBin%estment is good or the home economy! Detailed e?aminationBo the E' e?perience showsthat @rms that go a"road e?pandBaster at home than those that stay at home Ao"s, in%estment,Bresearch and de%elopment G2&D all "ene@t!-BWith the world seemingly locked into a slow reco%ery andB

massi%e unemployment, creating 9obs has become the newBpolitical mantra%mployment growth associate" with '.I isBimpressie D some 21million people were employe" by foreignBaFliates of M*Cs in 1LL0!rising to 6L million in 2011!=BThe origin and destination o /D Sows ha%e changed

remarka"lyBin recent years! n the *7;s, /D mainly Sowed among NCDBcountries, principally theEnited 'tates and urope3 on a%erage,B7-> was rom the NCD and :8> was to the NCD! n theB*77s,/D disco%ered emerging economiesR during thisBdecade, 8+> o /D Sows were, on a%erage, directedoutside theBNCD!Bn the +s, the "ig news is /D rom emerging countries,Bwhich accounted or **>

o /D inSows to NCD countriesBGTa"le *! '.I out@ows from "eeloping an"transition economiesBaccounte" for appro(imately 10 of global '.Iout@ows in 2000!Brising to 2 in 2010 before rece"ing somewhatlast year >toB2K? as "eelope" countries increase" their share forthe #rstBtime since the turn of the millennium!:Blo"al /D inSows areBmoreconcentrated in de%eloping countries, which accounted orB o the total in +**, down rom in+*!; #ased on "are statistics, it might seem that all is well in the worldBo /D and trade! That would "ea mistake! Trade growth in +*+B supposedly a reco%ery year might not e?ceed +!->, which isBwell"elow the a%erage o "etween + and +*! /DBSows will "arely reach E'Q *!= trillion, well underthe E'Q +!+Btrillion @gure o +:! These disappointing @gures are not simplyBan atershock o the recentrecession! 2ather, they areBhar"ingers o a sputtering world economy, more cause thanBeJect! Theleading e?planation o slow growth can "e ound inBpolicy ailure "oth ofcial tolerance o creepingprotectionismBand ofcial neglect o resh li"erali(ation!Bt has "een argued that international trade andin%estment ha%eBreached their natural limits, that rapid growth since World War Bhas e?hausted nearlyall the scope or raising the ratio o trade orB/D stock to glo"al D! This argument is unounded or twoBreasons! /irst, "arriers at the "order Gand especially "ehind theB"order remain high on a%erage, e%enthough in some instancesBcountries go out o their way to welcome oreign in%estors!B'econd, the densityo in%estment and trade within largeBcountries such as the Enited 'tates, the E or China is muchBlarger than that across national "orders, conser%ati%ely "y aBactor o three or trade and perhaps @%e orin%estment!* n act,Bthere is e%idence to suggest that \glo"al connectednessK hasBdeclined since +:in the wake o the glo"al @nancial crisis! TheBDHL lo"al Connectedness nde? also de"unks the notionthatBglo"ali(ation has reached its limits "y showing that there is maAorBscope or urther integration along

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"oth depth and "readthBmetrics!** ts primary author, ankaA hemawat, has anBinteresting term or the

.glo"ali(ation has reached its limitsFBargument .glo"aloneyF!BTo reco%er rom its growth slump, the

worl" economy nee"s aBbig "ose of new '.I% At the current rate!

$&J 1%6 trillion! new '.IB@ows are little more than 2 of worl" ). !Dou"ling that rate, toBaround E'Q 8 trillion annually, seems entirely plausi"le, andBwould ser%e as a tonicor the world economy

The $& is =ey to the global economy%Clarfel" 12Z2o", /or"es Contri"utor, Decouple This_, *4+-4*+,http344www!or"es!com4sites4ro"clareld4+*+4*4+-4decouple9this4[During the @rst ew weeks o +*+, the markets are ollowing the pre%ailing narrati%e that the E!'!economy has .decoupledF rom the widely known trou"les o urope, and the somewhat less discussed

pre%ailing risks rom China! In a ,"ecoupling; scenario! a country or region is"eeme" to be able to withstan"the troubles going on outsi"e of itsown bor"ers because of its own internaleconomic strength! I seetwo ma9or problemswith this thesis! /irst, the $%&% economy is not growingat the recently pre"icte" robust rate of / -5 rather it is struggling

to achiee a rate of 2 -2%5 % This leaes little cushion to withstan"

the ,contagion; from a ma9or economic falloutrom either urope or China, oror that matter, economic shoc=s that hae yet to surface% Asigni@cant uropean"ebt "efault! ban=ing failure! natural "isasters or geopoliticaleents, woul" surely impact the $%&% economyand markets beyon" thecurrent leel of fragile growth we simply donKt ha%e the le%els o producti%ity reIuisiteto a"sor" a maAor "low! 'econd, it was only a ew years ago when the decoupling thesis was widelyespoused ollowing the E!'! "anking crisis and ensuing recession! $t the time the thinking was that the

robust growth e(perience" in the emerging mar=ets woul" be ableto withstan" the $%&% slow"own an" pic= up some of the slac= in theglobal economy% 3e now =now how that wor=e" out D it "i"n

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leadership cycle theory, @nding that rhythms in the global economy are associatedwith the rise an" all o a pre-eminent power and the often "loodytransition from one pre-eminent lea"er to the ne( t! $s such, e(ogenous

shoc=s such as economic crises coul" usher in a re"istribution of

relatie power Gsee also ilpin! *7;* that lea"s to uncertaintya"out power

"alances, increasing the risk o miscalc ulationG/ea%er, *77-! $lternati%ely, een arelatiely certain re"istribution of power coul" lea" to a permissieenironment for con@ictas a rising power may see= to challenge a"eclining powerGWerner! *777! 'eparately, ollins G*77= also shows that glo"al economic cyclescom"ined with parallel leadership cycles impact the likelihood o conSict among maAor, medium and smallpowers, although he suggests that the causes and connections "etween glo"al economic conditions andsecurity conditions remain unknown! 'econd, on a dyadic le%el, Copeland`s G*77=, + theory o trade

e?pectations suggests that Ofuture e(pectation of tra"eO is a signi#cantariable in un"erstan"ing economic con"itions an" securitybehaiour of states! He argues that interdependent states are likely to gain paci@c "ene@ts rom

trade so long as they ha%e an optimistic %iew o uture trade relations! Howe%er, if the

e(pectations of future tra"e "ecline , particularly or difcult to replace items such as

energy resources, the likelihood or conSict increases, as states will "e inclined touse orce to gain access to those resources! Crises coul"potentially "e thetriggeror "ecrease" tra"e e(pectationseither on its own or "ecause it triggersprotectionist mo%es "y interdependent states!< Third, others hae consi"ere" the lin=between economic "ecline an" e(ternal arme" con@ict at a nationalleel% 4lomberg an" essG++ @nd a strong correlation "etween internalcon@ict and e?ternal conSict! particularly during periods o economicdownturn! They write3 The linkages "etween internal and e?ternal conSict and prosperity are strongand mutually reinorcing! conomic conSict tends to spawn internal conSict, which in turn returns the

a%our! Moreo%er, the presence of a recession ten"s to amplify the e(tent to

which international an" e(ternal con@icts self -reinforce each other!G#lom"erg & Hess, ++! p! ;7 conomic "ecline hasalso been lin=e" with anincrease in the li=elihoo" of terrorismG#lom"erg, Hess, & Weerapana, +

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Qea"s to resource wars an" terrorism --- escalates tonuclear war%arris an" 4urrows! LZcounselor in the 1ational ntelligence Council,the principal drater o lo"al Trends ++-, mem"er o the 1CKs Long2ange $nalysis Enit .2e%isiting the /uture3 eopolitical Jects o the

/inancial CrisisF, Washington Vuarterly,http344www!twI!com47april4docs47aprX"urrows!pd[ncreased otential or lo"al ConSictBN course, the report encompasses more than economics andindeed "elie%es the uture is likely to "e the result o a num"er o intersecting and interlocking orces! Withso many possi"le permutations o outcomes, each with ample opportunity or unintended conseIuences,

there is a growing sense o insecurity! %en so, history may "e more instructi%e than e%er! 3hile wecontinue to belieethat the )reat .epression is not li=ely to berepeate"! thelessons to be "rawnrom that period includethe harmfuleects on @e"gling "emocracies an" multiethnic societies Gthink Centralurope in *7+s and *78s and on the sustaina"ility o multilateral institutions Gthink League o 1ations in

the same period! There is no reasonto think that this woul" not be true in thetwenty-#rst as much as in the twentieth century% /or that reason, the ways in

which the potential for greater con@ict coul" grow would seem to "e e%en

more apt in a constantly %olatile economic en%ironment as they would "e i change would"e steadier!Bn sur%eying those risks, the report stressed the likelihood that terrorism and nonprolierationwill remain priorities e%en as resource issues mo%e up on the international agenda! TerrorismKs appeal willdecline i economic growth continues in the Middle ast and youth unemployment is reduced! /or thoseterrorist groups that remain acti%e in ++-, howe%er, the diJusion o technologies and scienti@c knowledge

will place some o the worldKs most dangerous capa"ilities within their reach!Terrorist groupsin ++-will likely "ea com"ination o descendants o long esta"lished groups inheriting organi(ationalstructures, command and control processes, and training procedures necessary to conduct sophisticated

attacks and newly emergent collections o the angry and disenranchised that "ecome sel9radicali(ed, particularly in the a"sence o economic outlets that would "ecome narrower in aneconomic downturn!BThe most dangerous casualty o any economically9induceddrawdown o E!'! military presencewould almost certainly"e the Middle ast!$lthough ranKsacIuisition o nuclear weapons is not ine%ita"le, worries a"out a nuclear9armed ran could

lead states in the region to de%elop new security arrangements with e?ternalpowers, acIuire additional weapons, and consider pursuing their own nuclearambitions% It is not clear that the type of stable "eterrentrelationshipthat e?isted "etween the great powers or most of the Col" 3ar woul"emergenaturally in the Middle ast with a nuclear ran! pisodes o low intensity conSict and terrorismtaking place under a nuclear um"rella could lead to an unintended escalation and "roader conSict i clear

red lines "etween those states in%ol%ed are not well esta"lished! The close pro(imity ofpotential nuclear rialscom"ined with underde%eloped sur%eillance capa"ilities and mo"iledual9capa"le ranian missile systems also will pro"uce inherent "iFcultiesin achie%ingrelia"le indications and warning o an impending nuclear attack!The lack o strategic depthinneigh"oring states like srael, short warning and missile Sight times, and uncertaintyo ranian intentions may place more ocus on preemption rather than deense,

potentially lea"ing to escalating crises !BTypes o con@ict that the worldcontinues to e?perience, such as oer resources! coul" reemerge ,

particularly if protectionism grows and there is a resort to neo9

mercantilist practices! erceptions o renewed energy scarcity will dri%ecountries to take actions to assure their uture access to energy supplies! n theworst case, this could result in interstate conSictsi go%ernment leaders deem assuredaccess to energy resources, or e?ample, to "e essential or maintaining domestic sta"ility and the sur%i%alo their regime! %en actions short o war, howe%er, will ha%e important geopolitical implications!

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Maritime security concernsare pro%iding a rationale or na%al "uildups and moderni(ationeJorts, such as ChinaKs and ndiaKs de%elopment o "lue water na%al capa"ilities! the @scal stimulusocus or these countries indeed turns inward, one o the most o"%ious unding targets may "e military!

#uildup o regional na%al capa"ilities could lead to increased tensions, ri%alries, andcounter"alancing mo%es, "ut it also will create opportunities or multinational cooperation in protectingcritical sea lanes! With water also "ecoming scarcer in $sia and the Middle ast, cooperation to manage

changing water resources is likely to "e increasingly difcult "oth within and "etween states in a moredog9eat9dog world!

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1AC D plan te(t

Te(t: The $nite" &tates fe"eral goernment shoul" repealthe 'oreign Account Ta( Compliance Act%

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Contention / is &olency

'ATCA repeal chec=s goernment oerreach an" preseres$& cre"ibility%

'tu augen 5-1, $merican marketing, sales and general managemente?pert, .$n $merican Ta? 1ightmare,F -9*8, 1ew Uork Times,http344www!nytimes!com4+*-4-4*