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Monday, June 23, 2014

Transnational Politics: Fighting on the FATCA Front

"Political transnationalism is often characterized as from above (outreach by government) or from below (migrant-initiated)."

"Discussions of political transnationalism usually draw on research on South-North migration...with the result that many of the broader explanations for transnational engagement have an underlying assumption of South-North migration.  These assumptions do not hold in the case of Americans - North-North migrants..."

Dr. Amanda Klekowski von Koppenfels
Migrant or Expatriates? Americans in Europe

Transnational political activity on the part of developed country migrants in North America, Europe and Asia has not been the subject of much interest by academics working on international migration. It's not even on the radar in the local or international media.  And yet, in the case of US migrants, it's been going on pretty continuously since the 1950's.  For the French abroad (over 100,000 in the US by the way) they have had direct representation in the national homeland parliament since 2004.  Both groups have the right to vote in their home countries and, if they are duals, the right to vote in both countries.

Both Americans abroad and the French abroad (not to mention any other migrant group) have broadly very similar political options before them.  They can work to influence politics both back in the home country and in the host country.  Or, in the case of duals, they can be very effective political actors in both countries of citizenship.  They can also appeal to supra-national organizations like the EU or internationals organizations like the OECD or the UN.

The Foreign Account Tax Compliance Act (FATCA) has generated a lot of controversy and a fair number of unintended consequences on a global scale.  Out of the outrage over the "collateral damage" has come political activity on the part of, not just US citizens abroad, but also migrant groups within the US because both are deemed to be US Persons by the American government. (Yes, a "US Person" can be, and quite often is, someone who is NOT a US citizen).

So just as Americans around the world are experiencing banking discrimination, so too are migrants, legal residents, in the US who are seeing their bank accounts being closed in their home countries just because they live in the US or have some connection to it.  This is a particularly pernicious problem for STEM migrants - those much sought after "highly qualified migrants in the US - who had accounts in their home countries where they lived and worked and paid taxes long before they ever moved to the US

Let's take a look at some of the political activity on the part of both US Persons inside and outside the US.  It's an interesting mix of initiatives, court cases and appeals to elected representatives.

Alliance for the Defence of Canadian Sovereignty (ADCS): This is a coalition of US Persons who live in Canada:  American citizens (many duals) and Green Card holders; "Accidental Americans" who just became aware that they are, in addition to being Canadian, also US citizens; and individuals who believed that they had lost their US citzenship when they became Canadians back in the 1960's/1970's and who are now facing questions about their citizenship status.  Because the US and Canada share a very long, relatively porous border, Canada has one of the largest "US Person" populations in the world (estimated at well over 2 million).

ADCS is fighting the "extraterritorial application of U.S. law in Canada." Whatever their connection to the United States, they are Canadians living in Canada, they say, and as such should not have to live as second-class citizens with fewer privacy rights than their compatriots. FATCA, they argue, "violates the Canadian Constitution in general, the Canadian Charter of Rights in particular, numerous other laws of Canada, the principles of Canadian democracy and the fundamental rights of all Canadians."  They are fighting back by taking the Government of Canada to court.

What is fascinating here is that political support for their position is coming from the Green Party of Canada (definitely Left-wing/progressive) which is hardly a bastion of support for international tax havens or tax evasion/avoidance.

Republican Overseas:  The two major political parties in the US have branches which are committed to organizing Americans outside the US:  Democrats Abroad and Republicans Overseas.  Both are working on FATCA but from different angles.  DA is arguing for reform while RO is working for repeal by the US Congress and on a challenge to FATCA in US court.

The last is very interesting because like the Canadian challenge this is a challenge based on citizens' rights but, in this case, it's the rights of Americans under the U.S. Constitution (wherever they live) that they are defending.

The lawyer, Mr. James Bopp, Jr (a very well-known US "superlawyer") they retained has said, “It is our preliminary opinion that the potentially meritorious claims are a violation of the treaty power, an 8th Amendment Excessive Fines Claim, and a 4th Amendment Search and Seizure Claim. We believe that these three claims form the basis for a successful suit that would stop the damage that FATCA and FBAR have inflicted on U.S. citizens.”

Stay tuned because this one promises to be interesting.  While Americans abroad do not have direct representation in Congress like the French abroad, this does not mean that they are completely without influence in US elections.  Dr. von Koppenfels notes that there have been at least 5 recent homeland elections that were "tipped" because of overseas ballots.  THE reason in all 5 cases that a Democrat or Republican won was because of the overseas vote which made Americans abroad the "deciders".

Since 2014 is an election year (called "mid-term elections") with many US Congressmen and women facing re-election battles, the big question (or fear) is how Americans abroad will vote.  Will the RO efforts have an impact and will Americans abroad favor the Repubs over the Dems?  Hard to say but there certainly is an opportunity there and given the widespread anger against FATCA it seems likely that many Americans abroad will favor the political party that is perceived to be working hardest in their interests.

Congress/National & EU Parliaments:  There are representatives in national and supra-national parliaments who are working to defend their constituents who are living the negative consequences of FATCA.  Lots of letters, lots of email from the people they represent and in turn these reps are doing their job by bringing the situation to the attention of other lawmakers, government agencies, and the media.

Jaime Herrera Beutler is a US Congresswoman (Republican) who represents the 3rd District in Southwest Washington State (US West Coast).  She has been raising questions in hearings based on mail she has received from her consituents - US citizens living abroad facing banking discrimination.  She clearly takes the mail very seriously and you can see her here raising questions to the new IRS commissioner.

Sophie in't Veld, a MEP (Member of the EU parliament) from The Netherlands has been very active in defense of dual citizens and the privacy rights of Europeans.  Her party is the social liberal party Democrats 66 (part of the Alliance of Liberals and Democrats for Europe.)  Go here for her remarks at the EU public FATCA hearing last year.

Frédéric Lefebvre (UMP) represents the French abroad in North America (Canada & the US). Following contact he had with a number of his constituents in the US - French citizens who had their bank accounts in France closed as a result of FATCA -  he started speaking out on their behalf.  The Huffington Post recently published an article he wrote called FATCA:  a Reminder of the Social Role of French Banks (French version here).  He also met recently with two dual French/US citizens and a report of that meeting was just published here.

Quite a lot going on.  What they all share, of course, is that they are working though the political/legal systems in each country on what is clearly a transnational/cross-border/international issue.  Different angles of attack (sovereignty, guaranteed constitutional/Charter/EU liberties, and migrants' rights) certainly, but what I notice immediately is that it is impossible to take all of this activity and place it in a box that says Right-wing versus Left-wing or Conservative versus Progressive.

An interesting example of international political action "from below" - it was not governments or political parties who led the initial fight against FATCA - it all started with migrants/expatriates taking action and organizing themselves, and then raising their concerns to people in the political realm.

How will it end?  I have no idea but I contend that it is one of the best shows on earth right now and I am astounded that it passing unperceived.

Perhaps all politics isn't local after all.


Ellen Lebelle said...

Great post, Victoria!

P. Moore said...

I bet this 'show' will get all the more interesting after July 1st. Then it likely will have more action when the 1st significant 30% is deducted from some investments, particularly if it is an institutional investor or international bank.

Used to be Democrat said...

This law is weakening USA ability to compete.
Small regular business persons in USA who try to expand to Asia/Europe found themselves in trouble as it is harder to deal with any banks or loan agents if one is an American.
Americans are also shut out of oversea business deals and promotion as they might trigger too much paper works.
Americans are losing out on a lot of deals and opportunities.
Foreigners with money , ambition and talents rather go to Canada , China, Russia than USA and get tangled as a "US person."
No one needs to expose their business or banking accounts to IRS.

Blaze said...

Victoria: The NDP in Canada is also very left-wing. They are lining up with the Repugs on FATCA while the Harper Cons are in bed with the Obamacrats.

Go figure.

Victoria FERAUGE said...

@Thank you, Ellen. I thought pulling it all together would give the context which is just fascinating...

@P. Moore. Just a few short days and we shall see what FATCA really does.

@Used to Be, Not sure what to think here. Do they care that Americans abroad are less globally mobile and less able participants in globalization? Or do they think that the sun, moon and stars revolve around the US and they want these folks (us) to come home and use out talents there?

@Blaze, Amazing. What strange bedfellows are made in this fight. Here are the Democrats in the US on the same side as the conservative government in Canada. And the Repubs in the US on the same side as the Green Party and the NDP in Canada. Not to mention a Dutch social Democrat and a French UMP rep...
Who woulda thought THAT would ever happen?

Christophe said...

Nicely written as always, Victoria.
I read the report from Ellen on her meeting with Frederic Lefebvre with Keith. Thank you both for meeting with him.
From the report, I feel a sense of sympathy from him, but did he suggest concrete actions to be taken to prevent discrimination and the privacy issues, especially in the case of French people married to Americans whose financial info is going to be transferred? What count is actions and what he can get done to protect French citizens.
Did the Canadian lawsuit come up.
HAs he researched possible ground for a similar lawsuit in France or at the European level? For god's sake, he is a lawyer!

Bread said...

Great post. Thanks Victoria.
While the government is busy looking for coins under sofas, USA might be missing out a lot of other business opportunities around the world.
Well, if I were a young and ambitious foreigner I might not want to have anything to do with USA as it might trap me as a "US Person" and I will be liable of any investments I might owned/inherited and taxes I might owe around the world.
Rich young and highly educated Chinese and Indians are giving up their green cards ASAP.

Victoria FERAUGE said...

Got some good news recently (well "good" is relative).

Friends and family members in the US have seen the reports in the WSJ and the Canadian media and that seems to have sparked their interest. And right now I have a family member visiting from the Pacific Northwest and he gave me his view. Kudos, he said, all that work is paying off and you are finally getting some attention. We'll see if that translates into any sort of action on the US side, he said.

It was nice to hear. :-)