Transcript document

Chapter 7
The Legal Environment of
International Trade
Twomey, Business Law and the
Regulatory Environment (14th Ed.)
General Parameters of
International Law [7-1]
Party Choice
Autonomy
Conferences &
Organizations
Treaties
Choice of
Law
UN-CISG
GATT
WTO
Choice of
Forum
NAFTA
UNCTAD
EU
Choice of
Dispute
Resolution
IMF-WORLD
BANK
OPEC
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Goals of International Trade
Organizations and Treaties [7-2]
General Agreement on
Tariffs and Trade (GATT)
Liberalizes world trade
United Nations Convention
on Contracts for the
International Sale of
Goods (CISG)
Establishes uniform rules
for international sales
contracts
United Nations Conference
on Trade and Development
(UNCTAD)
Redistributes income
internationally through
trade
European Economic
Community (EEC)
Removes trade barriers
and unifies economic
policies
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Goals of International Trade
Organizations and Treaties (cont’d)
United States–Canada
Free Trade Agreement (FTA)
Increases trade between
these countries
North American Free
Trade Agreement (NAFTA)
Eliminates tariffs between
Mexico, Canada, and the
United States
International Monetary
Fund (IMF)
Facilitates expansion and
balanced growth of
international trade
Organization of
Petroleum Exporting
Countries (OPEC)
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Controls oil production
and exploration
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Forms of Business Structure for
International Trade [7-3]
Export Sales
Agency relationships
Foreign
distributor
Foreign
licensee
Foreign
franchisee
Business entities
Joint
venture
Wholly owned
subsidiary
Government
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Doing Business Internationally [7-4]
Export Sale

Direct sale; payment commonly based on
irrevocable letter of credit

U.S. firm not present in foreign country

Export subject to tariff, but U.S. firm not subject
to local taxation by importing country
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Doing Business Internationally
(cont’d)
Agency


Foreign agent—representative
Commonly subjects U.S. firm to local tax
Foreign Distributorship


Distributor takes title, risks
U.S. firm avoids managing foreign operation
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Doing Business Internationally
(cont’d)
Licensing

Transfer of technology rights for royalties
Wholly Owned Subsidiary

Maintain control
Joint Venture

Responsibilities governed by contract
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Types of Regulation in
International Trade [7-5]
Export regulations
Counterfeit goods
Licensing
Gray market goods
Intellectual property issues
Act of State doctrine
Antitrust
Expropriation
Jurisdiction and protection
Sovereign immunity
Securities
Export controls
Antidumping laws
Tariffs and trade barriers
Import controls
Foreign Corrupt Practices Act
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Chapter 7 Summary
The General Agreement on Tariffs and Trade, a
multilateral treaty 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 United Nations
Convention on Contracts for the International
Sale of Goods provides uniform rules for
international sales contracts between parties in
contracting nations.
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Chapter 7 Summary [2]
The European Union is a regional trading group
that includes most of Western Europe. The North
American Free Trade Agreement (NAFTA) is an
agreement among Mexico, Canada, and the
United States that eliminates all tariffs between
the three countries over a 15-year period.
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Chapter 7 Summary [3]
American firms may choose to do business abroad
by making export sales or contracting with a foreign
distributor to take title to their goods and sell them
abroad. American firms may also license their
technology or trademarks for foreign use. An
agency arrangement or the organization of a foreign
subsidiary may be required to participate effectively
in foreign markets.
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Chapter 7 Summary [4]
This results in subjecting the U.S. firm to
taxation in the host country. However, tax
treaties commonly eliminate double taxation.
The Export Administration Act is the principal
statute imposing export controls on goods and
technical data.
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Chapter 7 Summary [5]
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 effect
on competition in U.S. domestic markets. United
States antitrust laws have a broad extraterritorial
reach.
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Chapter 7 Summary [6]
United States courts apply a “jurisdictional rule
of reason,” weighing the interests of the United
States against the interests of the foreign country
involved in making a decision on whether to
hear a case. Illegal conduct may occur in U.S.
securities markets. United States enforcement
efforts sometimes run into foreign countries’
secrecy and blocking laws that hinder effective
enforcement.
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Chapter 7 Summary [7]
Antidumping laws offer relief for domestic firms
threatened by unfair foreign competition. In
addition, economic programs exist to assist
industries, communities, and workers injured by
import competition. Programs also exist to
increase the foreign sales of U.S. firms.
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