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1. Science Diplomacy in the Negotiation of International Business Contracts: A Critical Assessment

Author:
Suada Dzogovic, Anita Cucovic, and Armand Krasniqi
Publication Date:
04-2024
Content Type:
Journal Article
Journal:
Journal of Liberty and International Affairs
Institution:
Institute for Research and European Studies (IRES)
Abstract:
This study investigates the significance of science diplomacy at the convergence of politics, diplomacy, and science, emphasizing its heightened relevance in contemporary geopolitics and economic development. The aim was to elucidate the role of science diplomacy in optimizing negotiation outcomes concerning international business contracts by examining students’ perceptions of its impacts in such contexts. A theoretical analysis was initially conducted to identify the main themes shaping our questionnaire by employing a comprehensive research strategy that combines quantitative and qualitative methods. Data collection was carried out through a survey using a five-point Likert scale. The study revealed the students’ positive evaluation of science diplomacy, indicating their recognition and appreciation of its utilization in enhancing negotiation outcomes over international business contracts. While political leadership remains crucial in economic negotiations, our findings underscore the significant impact of science diplomacy in promoting international economic relations and facilitating domestic companies’ access to global markets. This research significantly contributes to our understanding of the multifaceted role of science diplomacy in global knowledge dissemination and problem-solving. It elucidates the importance of science diplomacy in international relations and academia, emphasizing its constructive impact on addressing complex challenges.
Topic:
International Relations, Development, Communications, Business, Negotiation, Contracts, and Science Diplomacy
Political Geography:
Global Focus

2. Provisions on Liability for Decommissioning Upstream Offshore Oil and Gas Infrastructure in Investor-State Contracts

Author:
Martin Dietrich Brauch, Juan Carlos Fernández-Rodríguez, and María José Roa
Publication Date:
08-2023
Content Type:
Special Report
Institution:
Columbia Center on Sustainable Investment
Abstract:
•Decommissioning upstream offshore oil and gas operations involves dismantling infrastructure and equipment and mitigating their environmental impacts when the oil or gas resource becomes depleted or economically unviable. Stricter climate policy and the energy transition away from fossil fuels are likely to accelerate decommissioning processes.  • Domestic statutes, decrees, and regulations that apply to the oil and gas industry are ideally suited for governing decommissioning liability. In principle, these instruments are not subject to negotiation with private entities, reducing their leverage in setting decommissioning obligations, in particular those related to environmental and financial matters. • Oil and gas contracts between the host state and private oil and gas companies may include decommissioning provisions, whether to govern the issue comprehensively where statutory or regulatory frameworks are silent on the issue or to complement them.  • Where statutory and regulatory frameworks are insufficient, contracts should include provisions governing decommissioning as an integral stage occurring at the end of the project (and not as a post-project activity), factoring in the health, environmental, safety, and financial risks it entails throughout the project’s life cycle. • As part of an analysis commissioned by the Institute for Energy Economics and Financial Analysis (IEEFA), this paper examines contractual provisions related to decommissioning or abandonment of offshore oil and gas extraction infrastructure from various jurisdictions for which contracts are available on ResourceContracts.org. • Not every contract includes decommissioning provisions or requires the oil and gas company to develop a decommissioning plan; across contracts that do, the scope of provisions varies significantly. Certain contracts refer to a standard to be applied in decommissioning activities, with varying stringency levels. While some contracts refer to industry best practices, not all of them define what they entail. Not all contracts contain environmental protection and rehabilitation obligations specific to decommissioning.  • Certain contracts require approval and oversight by a state agency to ensure that the oil and gas company prepares and submits an appropriate decommissioning plan and that the decommissioning process takes place as set out in the applicable statutes and regulations, the contract, and the plan itself. The effectiveness of these mechanisms depends on the rigor and regularity with which the government assesses and inspects decommissioning plans and processes.  Where feasible, climate concerns should be added to standard environmental warranties. Contracts could restate environmental and climate-related requirements as forward-looking warranties made by the company to remove any ambiguity about its obligations and the consequences of failing to meet them. • To avoid a scenario where the government must cover decommissioning costs in case of noncompliance by the oil and gas company with its decommissioning obligations, contracts should create a dedicated decommissioning fund, with sufficient money to cover all decommissioning (including expected post-decommissioning) costs, and:  o Require the oil and gas company to fully prefund the decommissioning fund as part of capital and operating expenditures, with contributions assured by the ultimate parent company and beginning before project construction. Determine that funds be set aside in an escrow account dedicated to decommissioning in an independent private banking institution and in the form of a specific financial instrument that guarantees decommissioning without freezing the oil and gas company’s funds to develop the project.  o Require the company to meet the full costs of decommissioning if the offshore extraction infrastructure is transferred to third parties or if the fund is insufficient, extending the liability to the ultimate parent company whenever possible. o Require the parties to renegotiate as needed to adjust decommissioning activities or increase or decrease their costs. o Provide for tax deductibility and cost recoverability of fund contributions, to promote companies’ compliance with their obligation to contribute to the fund.  • Contracts should outline objective conditions for the release of decommissioning liability, along with any subsisting obligations that the oil company and its ultimate parent company retain in perpetuity after decommissioning or after the sale or transfer of the upstream asset. • Contracts should not include non-fiscal stabilization provisions, to ensure that states can enforce any new or amended statutes or regulations governing decommissioning liability, without having to compensate oil and gas companies that are party to pre-existing contracts.
Topic:
Climate Change, Infrastructure, Investment, Sustainability, and Contracts
Political Geography:
Global Focus

3. New Producer Contract Terms and Uncertainty: Lessons From the Recent Past

Author:
Patrick Heller, Perrine Toledano, David Mihalyi, and Tehtena Mebratu-Tsegaye
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
The petroleum industry is volatile, and governments in “new producer” countries have operated at a significant information disadvantage when negotiating with international oil companies. This challenge is growing today; new producer countries face intensifying questions around whether to offer fiscal incentives to maintain investment in the face of 1) the pandemic-induced volatility in oil prices and 2) long-term questions about the future of the industry in the face of the climate crisis and the global energy transition. This confluence of short-term and long-term uncertainty is prompting a reexamination of the narrative that once took hold in many new producer countries. The traditional story was one of linear progression from being non-producers to small levels of production to ultimately having oil and gas become a major economic contributor over the long term. This notion of progression was associated with a commonly held theory: After a country’s first major discovery, the geological risk that wells will be dry was expected to decrease. Countries could therefore shift from a position of having to grant tax breaks (and other concessions) to international investors, to taking a tougher stance in laws and negotiations for new projects going forward. In this paper we examine whether this theory has been borne out in practice and make recommendations to support new producers in their navigation of the uncertainty associated with the energy transition. Among the eight “new producer” countries, for which we analyzed a total of 26 contracts signed before and 25 contracts signed after discovery events (all occurring between 2001 and 2014), the evidence is mixed.
Topic:
Gas, Transparency, Contracts, Monitoring, Energy, and Green Transition
Political Geography:
Global Focus

4. Picture This: Social Distance and the Mistreatment of Migrant Workers

Author:
Toman Barsbai, Vojtech Bartos, Victoria Licuanan, Andreas Steinmayr, Erwin Tiongson, and Dean Yang
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We experimentally study an intervention to reduce mistreatment of Filipino over?seas domestic workers (DWs) by their employers. Encouraging DWs to show their employers a family photo while providing a small gift when starting employment reduced DW mistreatment, increased their job satisfaction, and increased the likeli?hood of contract extension. While generally unaware of the intervention, DWs’ fam?ilies staying behind become more positive about international labor migration. An online experiment with potential employers suggests that the effect operates through a reduction in employers’ perceived social distance from their employees.
Topic:
Migration, Labor Issues, Labor Market, Migrant Workers, and Contracts
Political Geography:
Philippines and Global Focus

5. Why do Sovereign Borrowers Post Collateral? Evidence from the 19th Century

Author:
Marc Flandreau, Stefano Pietrosanti, and Carlotta E. Schuster
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
This paper explores the reasons why sovereign borrowers post collateral. Such behavior is paradoxical because conventional interpretations of collateral stress repossession of the assets pledged as the key to securing lenders against information asymmetries and moral hazard. However, repossession is generally difficult in the case of sovereign debt and in some cases impossible. Nevertheless, such sovereign “hypothecations” have a long history and are again becoming very popular today in developing countries. To explain sovereign collateralization, we emphasize an informational channel. Posting collateral produces information on opaque borrowers by displaying borrowers’ behavior and resources. We support this interpretation by examining the hypothecation “mania” of 1849-1875, when sovereigns borrowing in the London Stock Exchange pledged all kinds of intangible revenues. Yet, at that time, sovereign immunity fully protected both sovereigns and their assets and possessions. Still, we show that hypothecations significantly decreased the cost of sovereign debt. To explain how, we stress the pledges’ role in documenting sovereigns’ wealth and the management of revenue streams. Based on an exhaustive library of bond prospectuses collected from primary sources, matched with a panel of sovereign bond yields and an innovative measure of sovereign fiscal transparency, we show that collateral minutely described in debt covenants served to document and monitor sovereign resources and development prospects. Encasing this information in contracts written by lawyers served to certify the quality of the resulting data disclosure process, explaining investors’ readiness to pay a premium.
Topic:
Economics, Finance, History, Innovation, Contracts, Sovereign Debt, and Collateral
Political Geography:
Global Focus

6. From Industrial Citizenship to Private Ordering? Contract, Status, and the Question of Consent

Author:
Ruth Dukes and Wolfgang Streeck
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
This paper revisits the notions of contract and status found in classical sociology, legal theory, and labour law. Adopting an historical perspective, it explores the fragmentation of the status of industrial citizenship during the neoliberal period and discusses the enduring usefulness of the status/contract distinction in analyzing current trends in the regulation of working relations, including the spread of “gig” or platform-mediated work. Elements of status, it is argued, must always be present if work is to be performed and paid for as the parties require it. Claims to the contrary – for example, that the gig economy creates a labour market without search frictions and only minimal transaction costs: contracts without status – assume an undersocialized model of (monadic) social action that has no basis in the reality of social life (Durkheim, Weber). Still, status may come in a variety of forms that are more or less desirable from the perspective of workers, businesses, and society at large. The paper traces what it conceives as the privatization of status via contracts between employers and workers under the pressure of marketization and dominated by corporate hierarchies. Towards the end of the twentieth century, sociologists observed the division of workers into two groups or classes – core (with relatively well-paid and secure employment) and peripheral (low-paid and insecure). Thirty years later, gross inequalities of wealth and conceptions of the neoliberal self as ever-improving, everperfectible, are combining to create novel forms of status not fully anticipated by the literature.
Topic:
Democracy, Entrepreneurship, Citizenship, Economy, Industry, Contracts, Precarity, and Corporatism
Political Geography:
Global Focus

7. The Principles on Commercial Transparency in Public Contracts

Author:
The Working Group on Commercial Transparency in Public Contracts
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Transparency by design: Transparency should be the norm for all government contracts, particularly regarding information on what is being exchanged and for what price. Contracting systems should be designed to support proactive publication of contracts as open data. Public contracting should be designed for transparency and efficiency. Full contract publication should be the norm. Information needed to judge value for money should be disclosed. Exceptions in the public interest: Redactions on the basis of commercial sensitivity should only be justified where the public interest in withholding information is greater than the public interest in having that information published. The assessment should take into account both any commercial harm to the contractor and the broader benefits of transparency to markets and public trust. Where exceptions to publication are considered: Information should only be redacted for reasons of commercial sensitivity when the public interest in withholding information is greater than the public interest in disclosure. The public interest test should take into account the wider economic benefits of the sharing of commercial information, as well as the case for accountability and the public’s right to know. All redactions should be clearly marked with the reason for redaction. A clear and robust process: Governments should issue detailed guidance on commercial sensitivity principles and exemptions, put in place systems to support publication, ensure that redaction is time-limited, and use other oversight mechanisms to compensate for information withheld from publication. Governments should issue clear guidance to public entities, agencies, and firms on contract publication and when information may be exempted from publication for commercial sensitivity reasons. Where redaction is potentially allowed, there should be a clear process for determining what is redacted, why, for how long, and with what appeals process. There should be a system for ensuring that contracts and contract information are in fact disclosed in practice. Where exemption to disclosure of information is granted for commercial sensitivity reasons, this should be grounds for increased scrutiny through other oversight mechanisms.
Topic:
Government, Transparency, Public Service, and Contracts
Political Geography:
Global Focus

8. New Entrants and Small Business Graduation in the Market for Federal Contracts

Author:
Gregory Sanders and Andrew Philip Hunter
Publication Date:
11-2018
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
This report tracks businesses new to the federal contracting arena from 2001-2016, otherwise known as new entrants, using publicly available contracting data from the Federal Procurement Data System (FPDS). Firm-level information on these vendors is collected over this time period and used to evaluate entrances, exits, and status changes among federal vendors with the purpose of comparing challenges faced by small businesses with those of larger ones. The final results compare the survival rates between small and non-small new entrants contracting with the federal government and calculate the graduation rates for those small new entrants who grew in size during the observation period and survived after ten years.
Topic:
Privatization, Non State Actors, Business, and Contracts
Political Geography:
Global Focus