1.Intro to Intl Law

8/18/2019 1.Intro to Intl Law

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INTRODUCTION TO

Containers

at port in

Manila, PI

Created by Pamela S. Evers, Assoc. Prof., UNCW, for Educational Purposes © 2007


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• ALL BUSINESS IS INTERNATIONAL

•Economic Interdependence

•Globalization

children with

American

Su erhero

backpacks


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Alexandria 2002

Hong Kong at Night


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Rio de Janiero,

Chinese goods on

way to US


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for US tourists on a cruise

ship

Jeweler, Egypt


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Japanese robot

(ASIMO at 2007 Consumer

Cloned Pig, Taiwan


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German Navy Ship

Lutgens saluting US

Nav shi after 9/11


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Globalization

• ec s us ness orma on, con rac s annegotiations, logistics, etc.

•

Shanghai ⇒


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International LawInternational Law

Public International Law

,treaties, and organizations

governs relations among nations

Private International Law

national laws (laws of a particular

nation) related to internationalissues that affect private citizens

Afghani Women in

Front of UN Sign


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Sources of International LawSources of International Law

The sources of international law are:

Treaties and International Agreements

, , ,Mercosur)

International Organizations and Conferences

National Laws


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Basic Principles and

’ Basic Principles and

’ Important principles

and doctrines appliedin the interest ofmaintainingharmonious relationsamong nationsinclude: Doctrine of Sovereign

Immunity Kenyan Boys


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Act of State DoctrineAct of State Doctrine

Judicial branch of one country will not examinevalidity of public acts committed by recognizedforei n overnment within its own territor

Thus nations may:

Expropriate: occurs when host government interferesw ore gn nves or s un amen a owners p r g s

Confiscate

. . e nz orce o se oma o

processing plant under threat of

Venezuelan expropriation


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Doctrine of Sovereign ImmunityDoctrine of Sovereign Immunity

Exempts foreign nations from jurisdiction inU.S. courts

Foreign Sovereign Immunities Act expanded

jurisdiction of U.S. courts for creditors offoreign governments

Note: sovereign immunity also prevents a

citizen from suing a government! Theoretically…see Peterson v Iran


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Principle of ComityPrinciple of Comity

One nation defers and gives effect to laws and judicial decrees of another nation, as long as

with the law and public policy of

accommodatin nation

Lisbon


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International Law & BusinessInternational Law & Business

International lawapplies to business to

business organization

and development, ways of doing business

in foreign states, and

domestically withforeign trading partners

Textile plant in Sri Lanka;

contractor for major US lingerie

rms


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Impact of Treaties on Business

because state’ s obligation becomes a citizen’ sobli ation E.g., Convention on Global Warming


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GATT

primary treaty affecting U.S. business

Goal: reduce & eliminate trade barriers

US signed in 1994, with 124 other nations GATT created World Trade Organization

(WTO) to resolve trade disputes

Currently (8/07): 151 members


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WTO

s ec s on recor causes concern a ouimpact of trade on environment & human

WTO working on General Agreement on

Protestin Trade Issues –

Washington, DC


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CISG

. . onven on on e n erna ona a e oGoods (1980)

transactions of businesses within signatory

Similar to the U.S. Uniform CommercialCode UCC but: writing not required, mirror image acceptance,

additional remedies for breach of contract


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Forms of International Business

•

• Foreign Direct Investment• Technolo Transfer & Licensin

Walmart in

Shenzhen,

China


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TR DE

• mpor ng: rocess o uy ng goo s rom

foreign supplier and entering them into

cus oms err ory o eren na on

“ ”

jewelry for US market


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TR DE

• xpor ng: pmen o goo s or ren er ng

of services to a foreign buyer located in a

ore gn coun ry

German Monopoly board


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Trade

• e a ve y uncomp ca e process a can g vecomparative advantage

• Advantage exists if

costs of production &price received for

goods allow goods to

e so a g er pr cein foreign country than

Truck en route to market,

Central Africa


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Trade Trends

• US trade stats•US merchandise imports accounts for 1/5 of worldra e

•World's 2nd largest exporter (Germany is 1st, 7%

above US)• Imports, primarily from Canada & China, exceedexports, primarily to Canada & Mexico

• • about 20% of global trade and 60% of global output


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U.S. Department of Commerce, 8/14/2007


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FOREIGN DIRECT INVESTMENT

• e ers o owners p an ac ve con ro oongoing business concerns

, , ,operations, and other forms of production

• Provides reatest involvement & risk•expropriation or obstacles to repatriation of funds, forexample


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Foreign Direct Investment

• Forms of Multinational Enter rises MNEs :

•Wholly owned foreign subsidiary•Joint venture• Acquisition

Port in

Bremerhaven,Germany


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TECHNOLOGY TR NSFER

• e n on: exc ange o ec no ogy an

manufacturing knowledge between firms indiffering nations through licensing agreements orfranchising

Sprite On Fire

advertisement


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Technology Transfer

• Technology transfer is an "easy" method ofentr into international market

• Technology transfer agreements incorporate• Trademark, patent, or copyright

• Most nations closely regulate technologytransfers


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Intellectual Property Transfer

• greement or contract y w c o er ointellectual property grants certain rights in

specified conditions for a specified time

e.g., right to manufacture

product pursuant to

,

mark or image, right to

distribute artwork or

book


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Licensing

• Licensing: applied in manufacturing contextLicensor grants licensee right to: (a) manufacture

,apply a trade name, trade image, or trademark to

products, or (c) publish, print, or otherwise produce art orterary wor s un er a copyr g t

Nike plant inViet Nam


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Franchising

Franchisor grants franchisee right to use a trade name,trade image, trademark, copyrights, and patents (in sum,business know-how) in exchange for royalty payments tofranchisor

BangkokMcDonald’s


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Intellectual Property Piracy

• Intellectual Property contributed more than US $1trillion to global commerce in 1998 (The Economist)

legitimately, $1 worth was obtained illegally

(Business Software Alliance, Piracy Study, 7/04)• World software piracy losses of $29 billion in 2004

(CNN, 7/04)


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Counterfeits in China


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• ,

of movies are downloadeddaily (Motion Picture Assoc., 8/04)

• Counterfeits make up 10% of

global market in medicinesor ea rgan za on

• Pirates staged 445 attacks in

,people (The Independent, 3/04,UK)

market circuit boards


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LETTER OF CREDITLETTER OF CREDIT

Primary financial device used in int’

l businesstransactions to reduce risk

Involves buyer ’ s and seller ’ s banks and

supporting associated banking institutions

German

Bank


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REGULATION OF ACTIVITIESREGULATION OF ACTIVITIES

facilitate international business

Marketing and Sales

Production Export and Import Controls: Quotas, Tariffs and Anti-

Dumping Rules

Influenced by International Organizations and Agreements: World Trade Org., European Union,

. .,


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U.S. Trade ControlsU.S. Trade Controls

U.S. has substantial export controls, e.g.,

Export Administration Act of 1985

○ Permits federal govt to restrict exports if theyendanger national security, harm foreign policy

oals or drain scare materials○ Controlled Commodities List limits what may be

exported; license required and may be denied

Arms Export Control Act○ President may create 2nd list of controlled goods


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U.S. Trade ControlsU.S. Trade Controls

. .

Tariffs or Duties

○ Customs officials “classify” the goods, then impose

duty based on classification○ Example: Marubeni America v. U.S. (Pathfinder)

Websites for trade regs: http://ia.ita.doc.gov/

and http://www.trade.gov/td/tic/


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Non-Tariff BarriersNon-Tariff Barriers

Non-tariff trade barriers are non-monetary

methods of limiting imports uo as: m ng e amoun o a par cu ar goo

Import ban: preventing a particular good or particular

nation’ s im orts e. . Cuba Requirements for ingredients, manufacturing, etc.

○ E.g., Japan requires “kimono guards” on imported US autos

○

E.g., the “

tuna-dolphin”

dispute was centered on a USattempt to prevent importation of certain ingredients (tunacaught “on dolphin” ) in canned tuna


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Applicability of U.S. Law AbroadApplicability of U.S. Law Abroad

U.S. antitrust laws and the Foreign CorruptPractices Act apply to the activities of U.S.

acting abroad

under U.S. antitrust laws and the Alien TortClaims Act in U.S. courts


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Applicability of U.S. Law AbroadApplicability of U.S. Law Abroad

enera y, . . rms mus a e y . .

anti-discrimination law, even in foreign,

them to violate laws of the foreign country

“ ”


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DISPUTE SETTLEMENTDISPUTE SETTLEMENT

Options for resolution of internationalcontract disputes are like civil disputes inthe United States

Litigation or Alternate Dispute Resolution,nc u ng r ra on or e a on

Primary problems in international business

spu es re a e o ur s c on, scovery,enforceability, and collections


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RISKY BUSINESS

Doing business abroad can be

complicated and costly equ res r s managemen

Before doing business overseas:

er orm a r s assessmen po ca r s ,contractual and transaction risk, currency and

exchange rate risks)

Develop appropriate strategy Develop crisis management plan

’ nsure or r s

damaged in protest of

Iraq war


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Managing Risk

• n s ra eg c p ann ng:•Consider problems of distance,

,

differences, relevant laws

•(government agencies, attorneys,

brokers, bankers) when

appropriate!•Prepare for ethical issues


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Discussion

doing business? Com are: US firm im ortin textiles from China

vs. CA firm buying textiles from NC firm


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Discussion

How would selling goods in anonmarket economy differ from selling

What if a dispute arises?

Mali market


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