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Unformatted text preview: Chapter 7
THE LEGAL ENVIRONMENT OF INTERNATIONAL TRADE General Principles Legal Background: Parties may choose the
parameters of their agreement. Which country's laws will govern the transaction? Where and how will disputes be resolved? What currency or monetary system will be used for the transaction? A large number of international trade organizations exist to help facilitate multinational transactions in goods, services and investments. Arbitration is the norm for international disputes.
2 International Trade Organizations, Conferences & Treaties
The General Agreement on Tariffs and Trade
(GATT), subscribed to by the United States and most of the industrialized countries of the world, is based on the principle of trade without discrimination. The World Trade Organization (WTO) took over policing GATT in 1995. WTO provides international dispute resolution.
3 International Trade Organizations, Conferences & Treaties
CISG provides uniform rules for international
sales contracts between parties in contracting nations. UNCTAD represents lesser developed countries. EU: European Council, European Commission, European Parliament, European Court of Justice. NAFTA. OPEC.
4 International Trade Organizations, Conferences & Treaties
GATT/WTO promote world trade establish uniform rules for international sales contracts redistribute income internationally through trade remove trade barriers and unify economic policies United Nations Convention on Contracts for the International Sale of Goods (CISG) United Nations Conference on Trade and Development (UNCTAD) European Economic Community (EU) 5 International Trade Organizations, Conferences & Treaties
United States - Canada Free Trade Agreement (FTA) North American Free Trade Agreement (NAFTA) International Monetary Fund (IMF) Organization of Petroleum Exporting Countries (OPEC) increase trade between these countries eliminate tariffs between Mexico, Canada, and U.S. facilitate expansion and balanced growth of international trade control oil production and exploration 6 Forms of Business Organizations
Direct sales from business to international customer no "middleman." Export Sales
Domestic business works with foreign business to sell or produce product. Agency Foreign Distributorship Licensing and Franchising Domestic business sets up a business in a foreign country & maintains control. Wholly Owned Subsidiary Joint Venture 7 Governmental Regulation
Export Regulations. Determine if License is Needed. Export Control Classifications Numbers. Criminal Sanctions. Export licenses needed for high-technology. 8 Governmental Regulation
Intellectual Property Protections. Counterfeit Goods. Gray Market Goods. Antitrust. Jurisdiction: The Effects Doctrine: if foreign conduct has substantial effect on U.S. commerce. Jurisdictional Rule of Reason: foreign state may have jurisdiction over conduct.
9 Governmental Regulation
Antitrust (cont'd). Defenses. Act of State Doctrine. Sovereign Compliance Doctrine. Foreign Trade Antitrust Improvements Act. Foreign Antitrust Laws. EU: Treaty of Rome. 10 Securities Regulation
Illegal securities transactions affect U.S.
economy. Jurisdiction: federal courts have jurisdiction over securities fraud cases that impact Americans--here or abroad. Foreign Secrecy Laws. 11 Barriers to Trade
Tariffs are the most common barrier to trade. Tariff Barriers. Tariff is a tax on goods as they
move in/out of a country. Non-tariff barriers- e.g., import quotas. Export Controls as Instruments of Foreign Policy. 12 Relief Mechanisms
Antidumping Laws and Export Subsidies. Selling goods in a foreign country below the fair
value. Uruguay Round Agreement Act of 1994. Retaliation and Relief Against Foreign Unfair
Trade Restrictions. U.S. Trade Representative can retaliate under the
Ominibus Trade and Competitiveness Act. 13 Expropriation
U.S. business have legitimate concern about
foreign government seizing assets. Businesses in defense, natural resources, banking
and communications are susceptible. Insurance of businesses will minimize loss. Overseas Private Investment Corporation is
under policy control of U.S. Secretary of State. 14 Government Assistance
Export Trading Company Act of 1982. Promotes formation of U.S.-based export
companies. Foreign Sales Corporation Act of 1984. Tax incentives for qualified businesses. U.S. Export-Import Bank. Foreign Corrupt Practices Act. 15 ...
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