Chapter 7 The Legal Environment of International Trade Twomey, Business Law and the Regulatory Environment (14th Ed.)

(c) 2000 West Legal Studies Chapter 72 General Parameters of International Law [7-1] Party Choice Autonomy Choice of Law Choice of Forum Choice of Dispute Resolution Treaties GATT NAFTA Conferences & Organizations UN-CISG WTO UNCTAD EU IMF-WORLD BANK OPEC

(c) 2000 West Legal Studies Chapter 73 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

(c) 2000 West Legal Studies Chapter 74 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) Controls oil production and exploration

(c) 2000 West Legal Studies Chapter 75 Forms of Business Structure for International Trade [7-3] Export Sales Agency relationships Foreign distributor Foreign licensee Foreign franchisee Business entities Wholly owned subsidiary Joint venture Government Private

(c) 2000 West Legal Studies Chapter 76 Export Sale l Direct sale; payment commonly based on irrevocable letter of credit l U.S. firm not present in foreign country l Export subject to tariff, but U.S. firm not subject to local taxation by importing country Doing Business Internationally [7-4]

(c) 2000 West Legal Studies Chapter 77 Agency l Foreign agent—representative l Commonly subjects U.S. firm to local tax Foreign Distributorship l Distributor takes title, risks l U.S. firm avoids managing foreign operation Doing Business Internationally (cont’d)

(c) 2000 West Legal Studies Chapter 78 Licensing l Transfer of technology rights for royalties Wholly Owned Subsidiary l Maintain control Joint Venture l Responsibilities governed by contract Doing Business Internationally (cont’d)

(c) 2000 West Legal Studies Chapter 79 Types of Regulation in International Trade [7-5] Export regulations Licensing Intellectual property issues Counterfeit goods Gray market goods Securities Tariffs and trade barriers Foreign Corrupt Practices Act Antitrust Jurisdiction and protection Act of State doctrine Expropriation Sovereign immunity Export controls Antidumping laws Import controls

(c) 2000 West Legal Studies Chapter 710 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.

(c) 2000 West Legal Studies Chapter 711 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. Chapter 7 Summary [2]

(c) 2000 West Legal Studies Chapter 712 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. Chapter 7 Summary [3]

(c) 2000 West Legal Studies Chapter 713 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. Chapter 7 Summary [4]

(c) 2000 West Legal Studies Chapter 714 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. Chapter 7 Summary [5]

(c) 2000 West Legal Studies Chapter 715 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. Chapter 7 Summary [6]

(c) 2000 West Legal Studies Chapter 716 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. Chapter 7 Summary [7]