International Law

What affects men sharply about a foreign nation is not so much finding or not finding familiar things; it is rather not finding them in the familiar place.” G.K Chesterton, British Author “The greatest meliorator of the world is selfish, huckstering trade.” Ralph Waldo Emerson, American Philosopher and Poet

 Exporting: Shipping goods or services out of a country  Importing: Shipping goods or services into a country

 Export Administration Act of 1985 ◦ Balances the need for free trade with important requirements of national security ◦ Permits the federal government to restrict exports if they:  Endanger national security  Harm foreign policy goals  Drain scarce materials ◦ Controlled Commodities List  Made by the Secretary of Commerce  Lists restricted items which may not be exported without a license

 Arms Export Control Act ◦ Permits the president to make a second list of controlled items, all related to military weaponry

 Tariff: A tax imposed on goods when they enter a country ◦ Classification - A customs official inspects the merchandise as it arrives and classifies it, in other words, decides precisely what the goods are ◦ Valuation  Ad valorem: Customs officials impose duties “according to the value of the goods”

 Duties for dumping and subsidizing ◦ Dumping: Selling merchandise at one price in the domestic market and at a cheaper, unfair price in an international market  US Department of Commerce will impose a dumping duty when they suspect that the low prices are intended to harm American companies ◦ Countervailing duties: A tariff on subsidized goods

 General Agreement on Tariffs and Trade (GATT) ◦ Created the WTO to stimulate international commerce and resolve trade disputes  World Trade Organization (WTO): Organization created by GATT to stimulate international commerce and resolve trade disputes

 Regional agreements ◦ North American Free Trade Agreement (NAFTA): A treaty eliminating almost all trade barriers, tariff and nontariff, between the United States, Canada, and Mexico ◦ European Union (EU): Twenty-seven countries belong to the EU, including Great Britain, Germany, France, Italy, and Spain, as well as Latvia and Slovakia

 The sales contract ◦ What law governs?  Texas law  French law  An international treaty  United Nations Convention on Contracts for the International Sale of Goods (CISG): Applies automatically to any contract for the sale of goods between two parties from different countries if each operates in a country that is a signatory  Signatory: A nation that signs a treaty

 The parties must decide: ◦ What law governs ◦ Where disagreements will be resolved

 Parties must select: ◦ A language for the contract - Vital because legal terms seldom translate literally ◦ A currency for payment - Vital because the exchange rate may alter between the signing and payment

Letter of Credit A commercial device used to guarantee payment in international trade Negotiable Bill of Lading A document which describes exactly the goods received— their quantity, color, quality, and anything else important Draft A formal order, based on the letter of credit

 Repatriation of profits: Occurs when an investing company pulls its earnings out of a foreign country and takes them back home  Expropriation: Government’s seizure of property owned by foreign investors ◦ Nationalize: Action in which a government assumes ownership of property ◦ Confiscation: Government takes property without fair payment

 Sovereign immunity: Holds that the courts of one nation lack the jurisdiction (power) to hear suits against foreign governments ◦ Foreign Sovereign Immunities Act (FSIA): A statute which states that American courts generally cannot entertain suits against foreign governments

◦ Three possible exceptions when seeking compensation for foreign expropriation:  Waiver  Commercial activity  Violation of international law ◦ Overseas Private Investment Corporation (OPIC): Insures U.S. investors against overseas losses due to political violence and expropriation

 Foreign Corrupt Practices Act (FCPA): Makes it illegal for an American businessperson to give “anything of value” to any foreign official in order to influence an official decision ◦ Has two principal requirements:  Bribe  Recordkeeping ◦ Not all payments violate the FCPA  A grease or facilitating payment is legal ◦ A payment does not violate the FCPA if:  It was legal under the written laws of the country in which it was made

 Extraterritoriality: The power of one nation to impose its laws in other countries ◦ International subsidiaries: That many American companies do business through  Foreign companies controlled by these American companies

“Overseas investment, like sales abroad, offers potentially great rewards but significant pitfalls. A working knowledge of international law is essential to any entrepreneur or executive seriously considering foreign commerce.”