Politics, economics, government regulations and new federal laws can have a huge impact on the business and legal climate across the globe. Global lawyers try to stay current with world affairs specifically because changes can directly or indirectly affect their clients as well as their practices. We have asked our reporters from different regions to briefly recount some of the major changes that have taken place in the past year and predict what may occur in the coming months.

LATIN AMERICA

The swing left in Latin America has placed a host of social issues on the regulatory agenda for 2020, while clouding prospects for corporate deals.

The region's biggest economy —Brazil— is seen snipping away at red tape and streamlining its tax regimen under the pro-business government of President Jair Bolsonaro. Those efforts should generate significant momentum for investment.

In Mexico, the region's second-biggest economy, however, business activity has slowed dramatically since President Andrés Manuel López Obrador took office in 2018 with strong support in Mexico's Congress. 

Social unrest in Chile, meanwhile, has stalled plans in another robust market for corporate lawyers.

"Outside of Brazil, we see a very slow year," says Juan Francisco Torres Landa, managing partner for Hogan Lovells' Mexico office.

A combination of budget cuts and an onerous revolving door ban for top government officials has gutted regulatory capacity in Mexico despite an ambitious agenda to tackle corruption.

Lawyers will also be closely eyeing the conservative government of Chile's overhaul of the country's constitution to appease protestors, and fallout from Colombia's ban of ride-hailing service Uber in a concession to taxi drivers. Argentina is looking to legalize abortion. Brazil, Colombia and Mexico are working to decriminalize cannabis. 

– Amy Guthrie

CHINA

U.S.-China decoupling 

The world's two largest economies have placed hundreds of billions dollars' worth of tariffs on each other's exports ranging from steel to soybeans. However, the trade war has developed into "decoupling" in other arenas as well. 

In technology, the U.S. has blacklisted Chinese tech companies including Huawei through its "entity list" and restricted exports of foundational technology such as artificial intelligence to China. In the financial markets, Chinese companies are closely monitoring progress of the "Equitable Act" currently making the rounds in Congress, which proposes to delist Chinese companies that fail to comply with U.S. information disclosure requirements. U.S. companies in China, meanwhile, are waiting to see China's own version of an "unreliable entity list" and gauge its impact. 

A significant number of foreign companies have relocated at least some of their supply chains from China to countries in Southeast Asia. But the size and potential of the Chinese market has so far prevented a mass exodus. Whether that remains the case will largely depend on how the Chinese economy fares in 2020 — whether the slowdown in economic activity continues or even worsens.  

Social credit system 

China's social credit system is entering the final year of its six-year development plan in 2020. The corporate aspect of the system monitors both foreign and local businesses' compliance with relevant rules and regulations. Company data and compliance records are centralized, publicized and integrated in national databases. Blacklists are used to flag noncompliant businesses, which are then punished through joint punishments by multiple government agencies. In 2020, foreign businesses will be keeping tabs on whether a new development plan for the system is published; how the corporate and individual aspects of the system interact; and whether it is mobilized as a weapon to target foreign businesses in China should the geopolitical environment worsen. So far, there has yet to be a foreign business involved in a social credit-related scandal in China, but that might change once the effects of the social credit system are felt in 2021 and beyond.

Cybersecurity crackdown

China's cybersecurity regime was codified in June 2017 with the passing of the nation's first ever Cybersecurity Law, which regulates the activities of virtually all businesses in China that employ information technology. Penalties for contravening the law are as high as RMB 1 million ($144 thousand). Chief among the government's concerns is the cross-border transfer of data. The Cybersecurity Law requires data amassed by "critical information infrastructure operators" in China to be localized. A security assessment must be conducted if data is to be transferred overseas – a problematic requirement especially for international companies with headquarters abroad. In 2019, the government also heightened its scrutiny of encryption services and the collection of personal data with new draft measures and laws. Much attention will be paid to how these draft regulations are finalized and adopted in 2020.    

Inbound foreign investment 

A new Foreign Investment Law, which came into force on Jan. 1 of this year, marks the most significant reform to China's foreign investment regulatory regime in several decades. The law stipulates a level playing field for foreign businesses in China and bars forced technology transfers. However, there is considerable skepticism among foreign businesses over the implementation of the new law, which many believe to be vaguely worded. As a result, many foreign businesses are keen to see the new law in practice before judging its merits. One area that has garnered plenty of attention is the law's national security provisions, which have strengthened the system under which China scrutinizes foreign investment for national security purposes. Responsibility for conducting national security reviews was assumed by China's powerful macro-planning agency last April — an indication of the government's intent to restrict foreign investment in areas of the economy it deems sensitive. 

Financial industry opening up

China's newly amended Securities Law caps a significant year of reform and opening up for China's $45 trillion financial industry. China's financial regulators have accelerated the removal of foreign ownership limits on financial firms, including securities and life insurance businesses. Beginning Dec. 1, global investment banks will be allowed to operate by themselves without a local partner. Foreign banks and investors will be keen to see whether these developments are followed by the removal of restrictions on the scope of activities permitted once they enter these markets. They will also have to contend with well-established local financial firms, which will compete with them in talent recruitment and other areas. 

In the capital markets, foreign investors will keep an eye on how much China builds on liberalizing reforms it has introduced in recent months, including IPO system changes and investment quota removals. However, record increases in penalties for illegal financial practices in recent months are clear signs that Chinese regulators are taking a two-pronged approach to reforming the country's debt and equity markets — opening up while cracking down. 

– Vincent Chow

AUSTRALIA

The Australia Tax Office, the Australian Securities & Investments Commission, the Australian Consumer & Competition Commission and the Australian Prudential Regulatory Authority, could all see increased activity in 2020.

They've all become much more aggressive in their investigations — prompted by criticism of some regulators in the 2019 report of the Banking Royal Commission, which looked into misconduct in the financial services sector.

The class action space in Australia also saw two significant changes in 2019. The first was when the High Court rejected common fund orders. These are court orders which oblige all group members in a class action to pay a share of a litigation funder's commission out of the proceeds, regardless of whether or not they have signed an agreement with the funder and the firm bringing the action. 

The common fund orders saved on the time and expense of having to round up a large number of litigants for a class action, known as a bookbuild. Lawyers say the court finding rejecting them could have a chilling effect on class actions in Australia, but how much it will slow them down is not yet clear.

In addition, the state of  Victoria has introduced legislation to allow lawyers in class actions to seek contingency fees, which if passed by Parliament would make it the first Australian state to allow the practice. If the proposed law passes, class actions are expected to increase substantially. 

– Christopher Niesche

UNITED KINGDOM

U.K. regulators imposed the first fines under GDPR in 2019, and this enforcement action provided a wakeup call for lawyers and companies alike: GDPR is real. This means that companies in the U.K. will be forced to continue to think about how it applies to them, thereby resulting in a renewed focus on data privacy. 

U.K. regulators have also been focusing on corporate directors doing the right thing and will continue to do so in 2020. The Senior Managers and Certification Regime which took effect late last year, was created as a way to hold senior members of a company – not just directors – to account. It is expected to affect the way senior leaders consider their own personal liability. 

There will also likely be a further push around environmental social governance. New regulations will force private and public companies to discuss their carbon footprint and energy usage. They also will require certain companies to provide new information in their annual reports, including a statement of how company directors have acted for stakeholders' best interests. 

And finally, the biggest regulatory elephant in the room is Brexit. The departure of the U.K. from the European Union could see endless new regulation being ushered in. 

– Varsha Patel

EUROPEAN UNION

Antitrust and Competition regulations issued by the EU have had a huge impact globally and are expected to continue to consume the attention of companies and lawyers in 2020, especially as they deal with the U.S. and China. 

Margrethe Vestager, the EU's antitrust chief, was given an unprecedented second term late last year, and also was also put in charge of tech sector regulation. She will hold the title for the next five years.  

Vestager spent much of her time last year working out how to deal with the antitrust issues surrounding U.S.-based Big Tech" companies such as Google, Amazon and Facebook. In March, she hit Google with a $1.7 billion fine for abusing its dominance in the online advertising market. This was the third multibillion-dollar fine that he had slapped on the company for market abuses, bringing the total to over €8 billion, or nearly $9 billion. 

Amazon also came into Vestager's sights. In July she launched an investigation into whether the company was using information it obtained from its Marketplace platform to discriminate against small companies using the site.

Meanwhile, Airbnb faced complaints about its success from traditional hoteliers. In December, it won a case brought by French hoteliers who had argued that the online accommodation service should be regulated like a real estate agent. 

The proliferation of cases tested the ability of EU antitrust law to deal with the power of the tech giants, prompting Vestager to seek outside expert advice about the challenges. She commissioned three experts to write a report, which was published in April. That report, "Competition Policy in the Digital Era," set out a number of ideas on how to deal with the tech giants. It said that traditional approaches to the definition of "market share" and "abuse of dominant position" were not adequate to deal with the rapidly changing digital economy. It argued instead for ensuring there was competition within the dominant players' ecosystems. 

These ideas are expected to be taken up by Vestager this year as she looks for practical ways to improve enforcement in the digital sector. 

On issues of privacy, Facebook faced a number of challenges over how it handles personal data. In October, the EU's Court of Justice ruled that the company had a responsibility to remove hateful posts from all its sites worldwide. 

U.S. tech companies also found themselves under scrutiny from another angle: Vestager launched a series of investigations into whether multinationals, especially those that are U.S.-based, were paying enough in taxes. 

In September, lawyers for tech giant Apple appeared before judges in the EU's Court of Justice in Luxembourg to defend a tax deal with Ireland that, the Commission argued, had allowed the company to avoid paying $14.4 billion in tax. The court is expected to rule on the Apple case early this year. 

Tech companies did receive some good news last year when the Privacy Shield, a set of legally binding rules for U.S. companies handling EU citizens' data that had been challenged by privacy advocate Max Schrems, was found by the EU court to be in line with EU law on data protection. 

In addition to competition in the tech sector, Vestager is likely to continue to address issues surrounding competition coming from China. The Chinese market and its effect on the EU became a major focus in February of last year, when Vestager blocked a merger between French train maker and its German rival Siemens for antitrust reasons. The French and German governments had argued that the merger was needed to ensure that Europe had a railway company big and strong enough to fight off global competition from the Chinese state-owned China Railway Construction Corporation.

In March, fear of Chinese companies snapping up strategically important businesses in the EU led to an agreement on new rules for screening acquisitions planned by foreign investors to see if they pose security risks. The legislation is inspired by the CFIUS rules in the U.S. that allow some deals to be blocked on national security grounds. 

But the EU's rules are much weaker than those in the U.S. And the European Commission does not have the right to block planned acquisitions by companies from outside the EU. Legislation will require all EU member states to introduce national investment screening schemes. Over time, the EU rules are expected to be beefed up as they are tested by Chinese acquisitions. 

– Simon Taylor