Chapter 11 Quiz Study Guide
Agency Relationships versus Distributorships
A U.S. firm that engages in indirect exporting and also wishes to limit its involvement in an international market will typically establish an agency relationship with a foreign firm.
Property Rights to Space Resources
Article II of the Outer Space Treaty bans the national appropriation of territory in space. Under U.S. law, the government must have sovereignty over territory before it can confer title to associated property to its citizens.
The World Trade Organization
Most of the world's leading trading nations are members of the World Trade Organization (WTO).
Commercial Spaceflight:
The Federal Aviation Admin-istration (FAA) regulates private spaceports and the launch and reentry of private spacecraft under the Commercial Space Launch Act. The FAA is working to establish licensing and safety criteria for private spacecraft. Some U.S. states limit the liability of space tourism providers under state tort law. But state legislatures— and ultimately, courts—will need to consider other issues in this context including insurance requirements and the enforceability of liability waivers.
The Convention on International Liability for Damage Caused by Space Objects (the Liability Convention).
The Liability Convention provides that a launching state is absolutely liable for personal injury and property damage caused by its spaceobjects on the surface of the earth or to aircraft in flight. Liability for injury or damage in space is subject to a determination of fault. The convention also prescribes procedures for the settlement of claims for damages.
Prohibitions
Under the Trading with the Enemy Act, no goods may be imported from nations that have been designated enemies of the United States. Other laws prohibit the importation of illegal drugs, of agricultural products that pose dangers to domestic crops or animals, and of goods that infringe on U.S. patents.
Under the New York Convention, a court will compel the parties to arbitrate their dispute if all the following are true:
1) There is a written (or recorded) agreement to arbitrate the matter.2) The agreement provides for arbitration in a convention signatory nation.3) The agreement arises out of a commercial legal relationship.4) One party to the agreement is not a U.S. citizen. In other words, both parties cannot be U.S. citizens.
Licensing
A U.S. firm may license a foreign manufacturing company to use its copyrighted, patented, or trademarked intellectual property or trade secrets for a fee. Just as with another U.S. firm, a licensing agreement with a foreign-based firm requires a payment of royalties on some basis.
distribution agreement
A U.S. firm with a substantial market in a foreign country may wish to appoint a distributor located in that country. The U.S. firm and the distributor enter into a _____(a contract setting out the terms and conditions of the distributorship).
Import Controls
All nations including the United States have restrictions on imports, including prohibitions, quotas, and tariffs.
Manufacturing Abroad
An alternative to exporting is the establishment of foreign manufacturing facilities. U.S. firms typically establish manufacturing plants abroad when they believe that doing so will reduce costs.
Space Debris
An estimated 650,000 objects made by humans are in orbit around the earth. Most of these objects are no longer under any party's control and are classified as
International Customs
An important source of international law consists of the international customs that have evolved among nations in their relations with one another.
International Tort Claims
An increasing number of U.S. plaintiffs are suing foreign (or U.S.) entities for torts that these entities have allegedly committed overseas. Often, these cases involve human rights violations by foreign governments.
Export Controls
Article I, Section 9, of the U.S. Constitution provides that "No Tax or Duty shall be laid on Articles exported from any State." Even though Congress cannot impose any export taxes, it can use a variety of other devices to restrict or encourage exports, including the following:1) Export quotas. Congress sets export quotas, or limits, on various items, such as grain being sold abroad.2) Restrictions on technology exports. Under the Export Administration Act, the flow of technologically advanced products and technical data can be restricted. 3) Incentives and subsidies. The United States (and other nations) also uses incentives and subsidies to stimulate exports and thereby aid domestic businesses.
Common Law and Civil Law Systems
Companies operating in foreign nations are subject to the laws of those nations, and international disputes are often resolved through the court systems of individual nations. Legal systems around the globe generally are divided into common law and civil law systems.
Other Free Trade Agreements
Congress has also ratified free trade agreements with Colombia and Panama. The Colombian trade agreement includes a provision requiring an exchange of tax information, and the Panama bill incorporates assurances on labor rights.
International Space Law
Consisting of international treaties and U.N. resolutions, international space laws recognize funda-mentally that activities conducted in outer space and the benefits derived from those activities should improve the welfare of all nations and all humanity.
U.S. Space Law
Each U.S. government agency that operates or authorizes spacecraft is responsible for complying with U.S. law and international treaties.
normal trade relations (NTR)
Each member country is required to grant ____ status to other member countries. This means that each member must treat other members at least as well as it treats the country that receives its most favorable treatment with regard to imports or exports.
A forum-selection clause
Effect of Choice-of-Law and Forum-Selection Clauses
Antidiscrimination Laws
Federal laws in the United States that prohibit discrimination on the basis of race, color, national origin, religion, gender, age, and disability generally apply extraterritorially. Thus, U.S. employees working abroad for U.S. employers are protected under the Age Discrimination in Employment Act and the Americans with Disabilities Act.
Investment Protections
Firms that invest in foreign nations face the risk that the foreign government may expropriate or even confiscate the investment property.
Islamic Legal Systems
In Islamic countries, the legal system and law are often influenced by sharia, the comprehensive code of principles that governs both the public and private lives of persons of the Islamic faith.
Common Law Systems
In a common law system such as the United States, the courts independently develop the rules governing certain areas of law such as torts and contracts.
The New York Convention
International contracts frequently include arbitration clauses in which the parties agree in advance to be bound by a specified third party's decision in a dispute
Adopt Resolutions
International organizations adopt resolutions, declarations, and other types of standards that often require nations to behave in a particular manner.
Civil Law Systems
Most European, Latin American, African, and Asian nations base their legal systems on civil law, or codified law (an ordered grouping of legal principles enacted into law by a legislature or other governing body).
The Republic of Korea-United States Free Trade Agreement (KORUS FTA)
Provisions in KORUS were aimed at eliminating 95 percent of each nation's tariffs on industrial and consumer exports from the other nation. It was expected to boost U.S. exports and access to new markets. To date, exports have not increased as much as predicted.
When a Foreign State Will Not Be Immune:
Section 1605 of the FSIA sets forth the major exceptions to the jurisdictional immunity of a foreign state: 1) When the foreign state has waived its immunity either explicitly or by implication.2) When the foreign state has engaged in commercial activity within the United States or in commercial activity outside the United States that has "a direct effect in the United States."3) When the foreign state has committed a tort in the United States or has violated certain inter-national laws.4) When a foreign state that has been designated "a state sponsor of terrorism" is sued under the FSIA for "personal injury or death that was caused by an act of torture" or a related act of terrorism.
The European Union EU
The EU arose out of the 1957 Treaty of Rome, which created the Common Market, a free trade zone comprising the nations of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany. Today, the EU is a single integrated trading unit made up of a number of European nations.
Astronauts and Space Objects
The Outer Space Treaty was expanded by several other agreements: The Agreement on the Rescue of Astronauts, the Return of Astronauts and the Return of Objects Launched into Outer Space (the Rescue Agreement). The Rescue Agreement provides that each nation will undertake to rescue and assist astronauts in distress and return them to their "launching State." All nations are to assist in recovering space objects that return to earth outside the territory of the launching state.
Create Uniform Rules
The United Nations Commission on International Trade Law has worked to establish uniformity in international law as it relates to trade and commerce. A significant contribution was the creation of the 1980 Convention on Contracts for the International Sale of Goods (CISG).
Doctrine May Immunize a Foreign Government's Actions
The act of state doctrine and the doctrine of sovereign immunity tend to shield foreign nations from U.S. court jurisdiction. Firms or individuals that own property generally have little legal protection against government actions in the countries where they operate.
When a Foreign Government Takes Private Property
The act of state doctrine is frequently employed in cases involving expropriation (when a government seizes a privately owned business or privately owned goods for a proper public purpose and awards just compensation) or confiscation (when a government seizes private property for an illegal purpose and without just compensation).
Minimizing Trade Barriers:
The elimination of trade barriers (restrictions on imports) is sometimes seen as essential to the world's economic well-being. Regional trade agreements and associations help to minimize trade barriers between nations.
Exploration and Exploitation
The foundation of international space law is the U.N. Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies.
Sources of International Law
There are three sources of inter-national law: international customs, treaties and international agreements, and international organizations.
U.S. Antitrust Laws:
U.S. antitrust laws may subject firms in foreign nations to their provisions, as well as protect foreign consumers and competitors from violations committed by U.S. citizens.
Application of the Act:
Under Section 1603 of the FSIA, a foreign state includes both a political sub-division of a foreign state and an instrumentality of a foreign state.
Exports of Space Technology
Under current U.S. regulations, all spacecraft are classified as "defense articles," which restricts the transfer of space technology (and related information) to any foreign person or nation under the U.S. Department of State's International Traffic in Arms Regulations and makes it difficult for U.S. space companies to compete in global space markets.
Wholly Owned Subsidiaries
When a wholly owned subsidiary is established, the parent company remains in the United States. The parent maintains complete ownership of all the facilities in the foreign country, as well as total authority and control over all phases of the operation.
the doctrine of sovereign
When certain conditions are satisfied,______immunity exempts foreign nations from the jurisdiction of U.S. courts.
Franchising
With franchising, the owner of a trademark, trade name, or copyright (the franchisor) licenses another (the franchisee) to use the mark, name, or copyright, under certain conditions, in the selling of goods or services
direct exporting
a U.S. company signs a sales contract with a foreign purchaser that provides for the conditions of shipment and payment for the goods.
Exporting
can take two forms: direct exporting and indirect exporting. Companies that export indirectly can make use of agency relationships or distributorships.
Space law
consists of the international and national laws that govern activities in outer space.
A choice-of-law clause
designates the applicable law.
Sharia
directs many aspects of day-to-day life, including politics, economics, banking, business and contract law, and social issues. Although sharia affects the legal codes of many Muslim countries, its interpretation and the extent of its impact vary widely.
Joint Ventures
he U.S. company owns only part of the operation, while the rest is owned either by local owners in the foreign country or by another foreign entity. All of the firms involved in a joint venture share responsibilities, profits, and liabilities.
Effect of Choice-of-Law and Forum-Selection Clauses
if a sales contract does not include an arbitration clause, litigation may occur. When the contract contains forum-selection and choice-of-law clauses, the lawsuit will be heard by a court in the specified forum and decided according to that forum's law.
Treaties and International Agreements
is an agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation.
International Organizations
is composed mainly of officials of member nations and usually established by treaty. The United States is a member of more than one hundred multilateral and bilateral organizations, including at least twenty through the United Nations.
multilateral agreement
is formed by several nations. Regional trade associations such as the Association of Southeast Asian Nations and the European Union are the result of multilateral trade agreements.
bilateral agreement
is formed by two nations to govern their commercial exchanges or other relations with one another.
International law
is the body of law—formed as a result of international customs, treaties, and organizations—that governs relations among or between nations.
Antidumping Duties: Dumping
is the sale of imported goods at "less than fair value." Foreign firms that engage in dumping hope to undersell U.S. businesses and obtain a larger share of the U.S. market. To prevent this, an extra tariff—known as an antidumping duty—may be assessed on the imports.
National Law
is the system of laws within a particular nation
Indirect exporting
occurs when a U.S. company establishes a specialized marketing organization in a foreign country by appointing a foreign agent or a foreign distributor.
The Act of State Doctrine
provides that the judicial branch of one country will not examine the validity of public acts committed by a recognized foreign government within that government's own territory.
The Principle of Comity:
refers to legal reciprocity. One nation will defer and give effect to the executive, legislative, and judicial acts of another country, as long as they are consistent with the laws and public policy of the accommodating country.
terrif
tax on an import is usually a percentage of the value of the import, but it can be a flat rate per unit.
The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)
was formed by Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States despite significant opposition in certain nations. Its purpose is to reduce trade tariffs and improve market access among the signatory nations.
The United States-Mexico-Canada Agreement
was formerly known as the North American Free Trade Agreement (NAFTA), which created a regional trading unit consisting of Canada, Mexico, and the United States. The goal was to eliminate tariffs among these three nations on substantially all goods by reducing the tariffs incrementally over a period of time.