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Twomey & Jennings BUSINESS LAW

Twomey & Jennings BUSINESS LAW. Chapter 7 The Legal Environment of International Trade. General Principles. Parties may choose the parameters of their agreement. Which country’s laws will govern the transaction? Where and how will disputes be resolved?

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Twomey & Jennings BUSINESS LAW

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  1. Twomey & JenningsBUSINESS LAW Chapter 7 The Legal Environment of International Trade

  2. General Principles • 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.

  3. Major Organizations, Laws & 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.

  4. Asante Technologies, Inc. v PMC-Sierra, Inc. (2001) International Intrigue: Whose Law Applies? Major Organizations, Laws & Treaties • The United Nations Convention on Contracts for the International Sale of Goods (CISG) provides uniform rules for international sales contracts between parties in contracting nations.

  5. GATT/WTO promote world trade United Nations Convention on Contracts for the International Sale of Goods (CISG) establish uniform rules for international sales contracts United Nations Conference on Trade and Development (UNCTAD) redistribute income inter- nationally through trade European Economic Community (EU) remove trade barriers and unify economic policies Goals of International Trade Organizations and Treaties

  6. United States - Canada Free Trade Agreement (FTA) increase trade between these countries North American Free Trade Agreement (NAFTA) eliminate tariffs between Mexico, Canada, and U.S. facilitate expansion and balanced growth of international trade International Monetary Fund (IMF) Organization of Petroleum Exporting Countries (OPEC) control oil production and exploration Goals of International Trade Organizations and Treaties

  7. 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

  8. Governmental Regulation • Export Regulations. • Determine if License is Needed. • Export Control Classifications Numbers. • Criminal Sanctions. • Export licenses needed for high-technology.

  9. Lever Brothers Co. v U.S. (1992) Barring Imported Soap! Governmental Regulation • Intellectual Property Protections. • Counterfeit Goods. • Gray Market Goods.

  10. Antitrust Considerations • In choosing the form for doing business abroad, U.S. firms must be careful not to violate the antitrust laws of host countries. • Anticompetitive foreign transactions may have an adverse impact on competition in U.S. domestic markets.

  11. SEC v Banca Della Suizzera Italiana (1981) The Long Reach of the SEC. 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.

  12. Sabritas v United States (1998) Customs Crunch! Barriers to Trade • Tariffs are the most common barrier to trade. • Tarriff Barriers. Tariff is a tax on goods as they move in/out of a country. • Nontarrif barriers- e.g., import quotas.

  13. 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.

  14. 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.

  15. 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.

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