THE NEW YORK TIMES BUSINESSTUESDAY, OCTOBER 8, 2019 N B5TRADEcases writing regulations that are
far more restrictive than the tech
industry would prefer.
Europe has enacted tough poli-
cies to curb the behavior of com-
panies like Facebook and Google
and passed laws to deal with pri-
vacy, hate speech and disinforma-
tion. China has largely cordoned
itself off from the rest of the inter-
net, allowing Beijing to censor po-
litical content and bolster Chinese
tech companies like Alibaba and
Tencent. In India, Indonesia, Rus-
sia and Vietnam, governments
are introducing regulations to os-
tensibly protect their citizens’ pri-
vacy and build domestic internet
industries that critics say will
stymie the ability of American
companies to provide services in
those countries.
The United States wants its
more permissive rules to form the
basis for worldwide regulation.
But there is a rising debate about
whether its regime of internet reg-
ulations has failed to protect con-
sumer privacy, encouraged the
spread of disinformation and sup-
ported a powerful forum for har-
assment and bullying.
The American rules, codified in
Section 230 of the Communica-
tions Decency Act, shield online
platforms from many lawsuits re-
lated to user content and protect
them from legal challenges stem-
ming from how they moderate
content. Those rules are largely
credited with fueling Silicon Val-
ley’s rapid growth. The language
in the trade deals echoes those
provisions but contains some dif-
ferences.
That freedom has come under
intense criticism from lawmakers
and advocates. They say the 23-
year-old law has allowed compa-
nies like Facebook and Google to
avoid responsibility for harm as-
sociated with content that reaches
billions of users. That anger has
been compounded by revelations
about the role of Silicon Valley’s
business practices in the spread of
disinformation and treatment of
user data.
The leaders of the House Ener-
gy and Commerce Committee
said in August that it was “in-
appropriate for the United States
to export language mirroring Sec-
tion 230 while such serious policy
discussions are ongoing.” The
committee’s Democratic chair-
man, Representative Frank Pal-
lone Jr. of New Jersey, and its
ranking Republican, Representa-
tive Greg Walden of Oregon,
warned Mr. Trump’s top trade ad-
viser, Robert Lighthizer, that it
would be a mistake to include the
protections “in any trade deal go-
ing forward.”
On Monday, they called on Mr.
Lighthizer to testify before the
committee on the issue.
Enmity toward Section 230 is bi-
partisan. Conservatives have
raised concerns in light of claims,
largely made without evidence,
that major online platforms like
Facebook are biased against their
positions. Senator Josh Hawley, a
Republican from Missouri, has
said the liability shield should
cover large platforms only if they
are certified as politically neutral.
The White House is also said to be
drafting an executive order that
would narrow the law’s protec-
tions.
Last year, Congress over-
whelmingly approved a bill mak-
ing it possible to sue online plat-
forms for knowingly facilitating
sex trafficking. Lawmakers have
raised the prospect of creating ad-
ditional carve-outs for the online
sale of opioids.
Critics of Section 230 say they
are alarmed by the inclusion of its
provisions in trade deals.
“These trade agreements are
only allocating more power to the
companies at the expense of the
individual,” said Carrie Goldberg,
a New York lawyer who is chal-
lenging the gay dating app
Grindr’s ability to use Section 230
to defend itself from a lawsuit.
American trade negotiators
have largely shrugged off those
concerns, insisting that new trade
deals include language that re-
quires partners to limit legal li-
ability for online platforms. Simi-
lar protections first appeared last
year in the draft pact with Canada
and Mexico that Mr. Trump hopes
will replace the North American
Free Trade Agreement.
Administration officials say
Congress has tasked them with
negotiating trade agreements
that closely mirror American law.
If those laws are a problem, it is up
to Congress to change them, they
say.
“This is U.S. law,” Mr. Lighthi-
zer said in a congressional hear-
ing in June. “I didn’t write 230.
The Congress did — it was signed
by the president, number one.
“Number two, we think it’s —
that there are — there are no-
where near the problems that you
see on issues of public morality
and the like,” he added. “We put in
specific language to make sure
that that was not a problem.”
Trade agreements don’t com-
pletely prevent a country from
passing legislation that contra-
dicts their terms — including on
legal liability — but they make do-
ing so more complicated and
risky. If a country violates a trade
agreement, other members of the
pact can bring trade disputes
against them and may be able to
impose tariffs or argue for leaving
the pact.
The Trump administration de-
scribes the broader tech provi-
sions in the agreements as a “gold
standard” for the digital economy,
and says it plans to use them in fu-
ture negotiations, including with
the European Union and Britain, if
it leaves the bloc. The rules, which
also provide for open access to
government data and protections
for company source codes and al-
gorithms, are also part of the
United States proposal for negoti-
ations over e-commerce with doz-
ens of countries at the World
Trade Organization.
The tech industry has provided
vocal support for the provisions as
a way to discourage other coun-
tries from making platforms liable
for their content. They argue that
such legal exposure could clamp
down on many kinds of normal
business activity — including
hosting user reviews and ratings
— and could become a tool of gov-
ernments hoping to crack down
on free speech.
“Failing to include these protec-
tions — which have been a part of
U.S. law for two decades — in
trade agreements would nega-
tively impact the countless small
businesses and entrepreneurs
that use online platforms to ex-
port and advertise their busi-
nesses,” said Michael Beckerman,
the president of the Internet Asso-
ciation, which represents compa-
nies including Google, Amazon,
Facebook, eBay and Twitter.
The idea has a powerful sup-
porter in Senator Ron Wyden of
Oregon, the top Democrat on the
Finance Committee, which has ju-
risdiction over trade. Mr. Wyden
also has a personal connection to
the issue: He co-wrote Section 230
while serving in the House.
In an interview, Mr. Wyden re-
jected the idea that trade agree-
ments were an end run around
Congress.
“I know some people are trying
to say, ‘Oh, my goodness, there’s
this brand-new thing: Some-
body’s talking about trade and
230,’ ” he said. “Get real.”
Mr. Wyden said strong digital
trade agreements should support
free speech and “include the prin-
ciple that online businesses are
able to moderate content generat-
ed by users without being treated
as the speaker.”
Regardless, countries around
the world have weighed whether
to increase the responsibility that
companies have for user content
on their platforms — raising the
prospect that American trade ef-
forts to enshrine the Communica-
tions Decency Act’s protections
may run aground.
“I don’t think there’s a chance
that major economies like the E.U.
are going to accept C.D.A. 230”
said Daphne Keller, the director of
intermediary liability at Stanford
Law School’s Center for Internet
and Society. “So I’m not sure what
the net effect is.”Companies like Facebook support the Trump administration’s efforts to
enshrine liability protections in trade deals despite congressional resistance.
JIM WILSON/THE NEW YORK TIMESU.S. Trade Deals Slip In
Protections for Big Tech
FROM FIRST BUSINESS PAGE
agreement, and said sealing the
deal would show that the grid-
locked Congress could achieve
some consensus.
“People really want to know
about how we’re working together
and where there’s bipartisan
agreement,” she added. “They
want to know that we’re trying to
solve real problems.”
Representative Abigail Span-
berger, Democrat of Virginia, said
the trade deal was a rare conse-
quential measure that could pass
the House without falling victim to
Republican resistance in the other
chamber or in the White House.
“The notable thing about
U.S.M.C.A. is that it’s also a pri-
ority for the Senate and for the
president,” Ms. Spanberger said
of the new trade deal. “That hasn’t
been the case for some of our most
impactful legislation.”
To move the agreement for-
ward, Democrats will need to con-
clude that it is beneficial enough
to them that they are willing to
share credit with Mr. Trump over
an accomplishment that he will
undoubtedly herald in his re-elec-
tion campaign. Ms. Pelosi, who
voted for NAFTA in the House,
has told colleagues that she wants
to get the new trade agreement
approved, and has made clear that
she hopes Democrats can sepa-
rate the impeachment fight and
the trade deal.
WASHINGTON — The escalating
impeachment drama between
Congress and the White House
that has all but doomed hopes of
most legislative progress this fall
has instead enhanced the
prospects for approval, within
weeks, of one major initiative: a
sweeping new trade agreement
among the United States, Canada
and Mexico.
Top lawmakers in both parties
and others closely following the
talks said that substantial
progress had been made in resolv-
ing the sticking points, and that a
decisive House vote on the accord
to replace the North American
Free Trade Agreement could oc-
cur before Congress departed for
Thanksgiving.
The deal may be a rare bright
spot in an otherwise dysfunctional
dynamic that has taken hold in the
capital, and it owes its progress to
a coincidence of timing, produc-
tive negotiations that have un-
folded behind closed doors for
months and political necessity for
two parties that each has distinct
reasons to hope it succeeds.
“We are on a path to yes,”
Speaker Nancy Pelosi told report-
ers last week in one of the strong-
est signals yet that she would put
the full weight of her leadership
behind passage of the agreement,
the United States-Mexico-Canada
Agreement.
Both parties have strong politi-
cal incentives to approve the trade
deal despite deep Democratic
skepticism over such pacts after
American jobs flowed into Mexico
after the ratification of NAFTA in
1993.
For President Trump and Re-
publicans, the agreement is a ma-
jor priority that could bolster
American businesses and help
struggling farmers, while show-
ing voters that they have been
good stewards of the economy.
For Democrats, the accord is a
way to give lawmakers from
swing districts a broadly popular
achievement to show constitu-
ents, and a way to counter criti-
cism that they have accomplished
little during their time in Washing-
ton, which has more often con-
sisted of passing legislation that
dies in the Republican-controlled
Senate.
That has become even more im-
portant now that House Demo-
crats are engaged in an impeach-
ment inquiry that could lead to the
president’s ouster. Democrats
who represent Republican-lean-
ing districts are facing a potential
backlash from Republican and in-
dependent voters angry over the
Democrats’ emphasis on im-
peachment, and they are looking
for ways to show that they can still
produce policies that benefit
Americans.
“We are going to demonstrate
that simultaneously you can gov-
ern,” said Representative Richard
E. Neal, the Massachusetts Demo-
crat who leads the Ways and
Means Committee. Mr. Neal is
leading a delegation to Mexico for
a meeting on Tuesday with Presi-
dent Andrés Manuel López
Obrador to seek final assurances
over aspects of the trade agree-
ment.
Top Democrats also see the
agreement as a vehicle to achieve
some major progressive goals
that would otherwise be impossi-
ble to extract from a Republican
administration. Republicans are
considering potential sweeteners
for Democrats, including a plan to
shore up pensions that has been
sought by Mr. Neal and labor un-
ions.
House Democrats and Robert
Lighthizer, the United States
trade representative, have been
exchanging proposals and coun-
terproposals for weeks, trying to
satisfy demands for labor and en-
vironmental guarantees. Both
sides say the confidential talks
have produced results that are
leading to increasing confidence
that Ms. Pelosi will put the meas-
ure on the floor relatively soon.
“It has been a patient give-and-
go, and I think we have moved the
ball toward the goal,” Mr. Neal
said.
Even Democrats skeptical of a
trade deal based on their previous
experience said the talks with Mr.
Lighthizer, who has built credibil-
ity with the lawmakers, had been
substantive and helpful.
“We have been having conver-
sations for I think over a year, and
the Democrats made very seri-
ous, thoughtful proposals around
issues that we have been consis-
tent on over the years,” said Rep-
resentative Rosa DeLauro of Con-
necticut, a member of a working
group appointed by the speaker to
work out Democratic concerns
over the agreement.
But Ms. DeLauro, who opposed
the deal and was an early critic of
the failed Trans-Pacific Partner-
ship agreement, was not quite
ready to sign off.
“We are making headway,” she
said. “Our view is that when it is
right, we will go. We are not thereyet.”
There are substantial issues
that could still hold up a final
agreement. It is not clear, for in-
stance, how negotiators plan to
address Democrats’ objections to
a provision that would extend pro-
tections to pharmaceutical com-
panies for new products. Demo-
crats argue that such measures
could hamper future efforts to en-
act legislation to lower the cost of
prescription drugs.
Democrats say that their main
fear is that Mexico will not enforce
the provisions of the trade deal in
areas such as minimum wage re-
quirements and environmental
standards, and that the United
States will not be allowed to make
inspections to determine whether
the agreement is being followed.
They were alarmed by news re-
ports of labor department budget
cuts in Mexico, a fear the Mexican
government has raced to allevi-
ate.
Republicans lobbying for the
agreement argue that supporting
it should be an easy choice for
Democrats who have long criti-
cized NAFTA, since the new ver-
sion amounts to an update with
several far more progressive ele-
ments than the existing agree-
ment, such as new minimum pay
levels.
Senator Rob Portman, Republi-
can of Ohio and a chief trade nego-
tiator for President George W.
Bush, is a leading proponent of the
agreement and has been trying to
sell Democrats on its merits.
“If you vote no on this, that
means you are saying, ‘Let’s go
with NAFTA,’ and politically for
most Democrats, NAFTA is a four-
letter word,” Mr. Portman said in
an interview. “I just think logic
prevails in the end.”
More than that, some Demo-
crats believe the trade agreement
is their best prospect for achiev-
ing some bipartisan success in
such a highly polarized envi-
ronment.
“People understand and appre-
ciate that we’re trying to get to
yes, and we’re trying to get it
right,” Representative Lizzie
Fletcher said.
Ms. Fletcher, who represents
the Houston area, noted in an in-
terview the number of trade rela-
tionships between her district and
both countries in the new trade“They have nothing to do with
each other,” Ms. Pelosi said. She
added that if the president did not
work with Democrats because
they questioned his conduct,
“then the ball is in his court.”
Despite the priority the Trump
administration and congressional
Republicans have put on the trade
agreement, some concern has
arisen in recent days that Mr.
Trump, furious over the impeach-
ment showdown, would pull back
on the agreement and try to blame
Democrats for its collapse, saying
they could not get it done because
of a single-minded focus on im-
peachment.
“The Do Nothing Democrats
don’t have time to get it done!” Mr.
Trump tweeted Thursday about
the trade deal.
Ultimately, backers of the
agreement believe, the White
House will embrace congres-
sional approval of the long-sought
agreement as a major victory for
the president.
“We are pretty bullish,” said
Neil Bradley, executive vice presi-
dent at the U.S. Chamber of Com-
merce. “The speaker is saying all
the right things, and they are actu-
ally making progress in the nego-
tiations.”
“At the end of the day,” he said,
“you want to show that impeach-
ment is not the only thing you are
focused on.”Impeachment Fight May Aid New NAFTA Deal
By CARL HULSE
and EMILY COCHRANEPresident Trump, center, with Prime Minister Justin Trudeau of Canada,
right, and President Enrique Pena Nieto of Mexico in November.KEVIN LAMARQUE/REUTERSThis announcement is neither an offer to purchase nor a solicitation of an offer to sell rights of GigCapital, Inc. The Offer (as defined below) is made
solely by the Offer to Purchase, dated October 8, 2019, and the related Letter of Transmittal, and any amendments or supplements thereto. The Offer
is not being made to, nor will tenders be accepted from or on behalf of, holders of rights in any jurisdiction in which the making or acceptance
of offers to sell rights would not be in compliance with the laws of that jurisdiction. In any jurisdiction where the securities, blue sky, or
other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed made on behalf of GigCapital, Inc. by
MacKenzie Partners, Inc. (the “Information Agent”) or one or more brokers or dealers registered under the laws of such jurisdiction.Notice of Offer to Purchase for Cash
byGigCapital, Inc.
of
Up to 14,873,256 of its Rights to Receive One-Tenth of One Share of Common Stock
at a Purchase Price of $0.99 Per RightGigCapital, Inc., a Delaware corporation (the “Company”), is offering to purchase up to 14,873,256 of its outstanding rights (the “Rights”), at a
purchase price of $0.99 per Right, in cash, without interest, for an aggregate purchase price of $14,724,523.44 (each of the Rights representing the right
to receive one-tenth of one share of the Company’s Common Stock) upon the terms and subject to certain conditions described in the Offer to Purchase
(“Offer to Purchase”) and in the related Letter of Transmittal (“Letter of Transmittal”, which together, as they may be amended or supplemented from
time to time, constitute the “Offer”).
On February 22, 2019, the Company, Kaleyra S.p.A., an Italian corporation (“Kaleyra”), Shareholder Representative Services LLC, as
representative for the sellers, and each of the following holders of the ordinary shares of Kaleyra, Esse Effe S.p.A, Maya Investments Limited, Hong
Kong Permanent Shine Limited, Ipai Terry Hsiao, Giacomo Dall’Aglio, Alex Milani, Luca Giardina Papa, Filippo Monastra, Matteo Castelucci, Kirk
Tsai, Justyna Miziolek, Erjon Metko, Claudio Ippolito, Andrea Riccardi, and Francesco Vizzone, entered into a stock purchase agreement, as amended
(and as it may be further amended from time to time), pursuant to which the Company agreed to acquire all of the outstanding ordinary shares of
Kaleyra and its subsidiaries (the “Business Combination”).
Upon the closing of the Business Combination, which is anticipated to occur in the fourth calendar quarter of 2019, each outstanding Right will
be converted into one-tenth of one share of the Company’s Common Stock. The purpose of the Offer is to provide the holders of the Rights who may
not wish to retain the shares into which their Rights convert following the Business Combination the possibility of receiving cash for their Rights in
connection with the closing of the Business Combination.THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT ONE MINUTE PAST 11:59 P.M.,
NEW YORK CITY TIME, ON WEDNESDAY, NOVEMBER 6, 2019, UNLESS THE OFFER IS EXTENDED.
The Offer is not conditioned upon any minimum number of Rights being tendered. The Offer is, however, subject to other conditions as set forth
in the Offer to Purchase.
The Company expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and payment for, any Rights by giving oral or written notice of such extension to Continental
Stock Transfer & Trust Company, the depositary for the Offer (the “Depositary”), and making a public announcement of such extension not later than
9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the Offer.
The Offer will expire at one minute past 11:59 p.m., New York City time, on Wednesday, November 6, 2019, unless the Company exercises its right,
in its sole discretion, to extend the period of time during which the Offer will remain open, in which event the term “expiration date” shall refer to the
latest time and date at which the Offer, as so extended by the Company, shall expire.
The Offer is only available for outstanding Rights. The Company also has outstanding shares of Common Stock, warrants and units. Each unit is
comprised of one share of Common Stock, three-quarters of one warrant to purchase one share of Common Stock and one Right. You may tender Rights
that are included in units, but to do so you must first separate such Rights from the units and then tender such Rights. Right holders desiring to tender
Rights must follow the procedures set forth in the Offer to Purchase and in the related Letter of Transmittal.
Generally, a U.S. Holder (as defined below) will be subject to U.S. federal income taxation and applicable withholding with respect to cash received
in exchange for the Rights the right holder tenders in the Offer. The receipt of cash for tendered Rights will generally be treated for U.S. federal income
tax purposes either as (1) a sale or exchange eligible for gain or loss treatment or (2) a distribution in respect of stock from the Company, as described
in Section 14 of the Offer to Purchase. A Non-U.S. Holder (as defined below) may be subject to withholding at a rate of 30% on payments received
pursuant to the Offer and may also be subject to tax in other jurisdictions on the disposal of Rights. All right holders should read carefully the Offer to
Purchase for additional information regarding the U.S. federal income tax consequences of participating in the Offer and should consult with their own
tax advisors with respect to their particular circumstances.
A “U.S. Holder” is a beneficial owner of Rights that for U.S. federal income tax purposes is: (i) an individual citizen or resident of the United States;
(ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United
States or any State thereof or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its
source; or (iv) a trust if it is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to
control all substantial decisions of the trust, or it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
A “Non-U.S. Holder” is a beneficial owner of Rights that is not a U.S. Holder.
The Company’s Board of Directors has approved the Offer. However, none of the Company, its Board of Directors, the Depositary or the
Information Agent makes any recommendation to any right holder as to whether to tender or refrain from tendering any Rights. None of
the Company, its Board of Directors, the Depositary or the Information Agent has authorized any person to make any recommendation with
respect to the Offer. Right holders should carefully evaluate all information in the Offer to Purchase and in the related Letter of Transmittal
and should consult with their own financial and tax advisors. Right holders must decide whether to tender their Rights and, if so, how many
Rights to tender. In doing so, a right holder should read carefully the information in the Offer to Purchase and in the related Letter of
Transmittal before making any decision with respect to the Offer.
The Company’s directors and executive officers have advised the Company that they do not intend to tender their Rights in the Offer. In addition,
the Company has entered into agreements with certain right holders that provide that such holders will not deliver their Rights in response to the Offer,
and the Company may enter into similar agreements with other right holders, including one right holder with whom the Company has announced that
it has entered into a non-binding letter of intent to not deliver their Rights in response to the Offer. The Company is informed that all right holders with
whom it either has an agreement or has entered into a non-binding letter of intent currently hold approximately 11,160,891 Rights.
The information required to be disclosed by Rule 13e-4(d)(1) of the Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference. The Company is also filing with the Securities and Exchange Commission an Issuer Tender Offer
Statement on Schedule TO, which includes certain additional information relating to the Offer.
Copies of the Offer to Purchase and the related Letter of Transmittal are being mailed to all right holders, including brokers, dealers, commercial
banks and trust companies whose names, or the names of whose nominees, appear on the Company’s right holder list or, if applicable, who are listed as
participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Rights, as reflected on the records of the
transfer agent as of October 8, 2019. The Offer is explained in detail in those materials.
Questions or requests for assistance may be directed to the Information Agent, at the address and telephone numbers set forth below. Copies of the
Offer to Purchase, the Letter of Transmittal and other related materials will be furnished promptly by the Information Agent at the Company’s expense.
Right holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:1407 Broadway
New York, New York 10018
(212) 929-5500
or
CALL TOLL FREE (800) 322-2885
Email: [email protected]
October 8, 2019