Global Business Module 5

Environmental Protection Agency (EPA)

1. 1970s -goal of monitoring the environmental practices of industries, assisting the government and private business to halt environmental deterioration, developing regulations consistent with federal environmental policy, and policing industry for violations of the various federal environmental statutes and regulations and have influence on business -EPA carries out bilateral programs with other countries --permits other nations (especially countries with economies in transition) to benefit from US experience in developing appropriate and successful environmental measures ex. Taiwan with electronic waste (especially mercury) in Asia Pacific Region ex. Mexico with high living at the border: cleanwater

National Environmental Policy Act (NEPA)

1. American environmental act from 1970s that requires federal agencies to prepare environmental impact statements for every recommendation or report on proposals for legislation and whenever they undertake a major federal action that significantly affects environmental quality -created checks for corporate environmental practices in the U.S. -some say they are for it as long-term health and future; some see outsourcing to lax environmental law countires

application: environmental laws

1. Deepwater Horizon oil spill/BP oil spill -Oil Pollution Act of 1990: allows those seeking damages to contact the company responsible for the spill to request compensation and pursue civil lawsuits --also requires those responsible to pay up to $1 billion for clean up -The Cleanwater Act: makes companies liable to pay $110 per barrel and up to $4300 per barrel if gross negligence is shown 2. Palm Oil -getting it leads to deforestation from certain companies -Roundtable on Sustainable Palm Oil (RSPO) --many agreed to use sustainable methods but didn't follow through

Whistleblower protection

1. Sarbanes-Ox also protects anyone reporting questionable behavior 2. whistleblower: a person who exposes any kind of info or act that is deemed illegal, unethical, or not correct within an organization either private or public

The Maritime Labour Convention (MLC), 2006

1. Seafarers' right to decent work conditions. "Seafarer's Bill of Rights" -includes all seafarers, including: those who provide passenger services on cruise ships and commercial yachts -became binding law for 30 countries

application: contract law

1. Spain rental laws -registered with the Catalan Tourism Register (RTC) and provide the government with RTC numbers -government was able to identify illegally listed homes -fined the platforms: Airbnb and Homeaway for failure of compliance

Environmental Laws that Impact Global Business

1. 1960s is when people began to perceive that the environment was systematically deteriorating 2. as emerging economies began to industrialize, a wave of pollution, as well as a vast expansion or factories that generated waste products and a sharp rise in the production of toxic materials and associated accidents 3. as more countries industrialized, the world saw a rapid population growth and a significant increase in driving 4. through efforts by the UN and World Bank, environmental laws exist both at the international and local level 5. it is often difficult if not impossible to enforce these regulations because of the sovereignty rights of countries -for example: in 1992 the UN member nations committed their resources to limiting greenhouse gas emissions at or below 1990 levels, as put forth by the UN Framework Convention on climate change--fell apart

applying antitrust laws

1. The EU was established in 1951 with the European Coal and Steel Community (ECSC) with France, Italy, Belgium, and the Netherlands -purpose was to reduce the ability for one country or region to gain a monopoly on critical natural resources 2. The European Economic Community (ECC) was established as a part of the Treaty of Rome -this document enacted provisions to eliminate anticompetitive agreement -The Maastricht Treaty (1993) formally creating the Modern European Union with its Pillar System -The Treaty of Lisbon addresses mergers and acquisitions and bans price fixing and collusion 3. The US -antitrust policy finds roots in 1890 with the Sherman Antitrust Act which dealt with limiting the power of price-controlling cartels -1914: The Clayton Antitrust Act and the Federal Trade Commission Act --both acts sought to organize a government body equipped to protect consumers from unfair competitive practices 4. note: antitrust laws are often referred to as competition laws or antimonopoly laws 5. application is different -EU has a centralized administrative system for enforcement with punishable fines -the US sees enforcement a matter of criminal law --this means that penalties are placed against private individuals, and victims of anticompetitive crimes can sue for the full amount of damage suffered

International Labor Conventions

1. These have provided workers additional protections, helping create a safer, healthier, and more equitable workplace 2. for global businesses, restrictions on what can be asked of employees and what must be provided in return 3. positive impact on individual workers -they have an impact on company production, prices, and overall competitiveness

application: production and labor laws

1. Worker Rights Consortium (WRC) -formed by 190 universities, experts, and student groups to ensure clothing with the university logo to be manufactured in factories with fair and human conditions -ex. Nike

vertical structure of law

1. a structure of law where those at the bottom are governed by those at the top -typically seen within a nation state 2. US has government branches that have legitimate authority to create a rule of law system, and this authority is derived from the US Constitution -The US has two primary sources of law to govern contracts: --common law --Uniform Commercial Code: source of contract law

application: antitrust law

1. apple inc vs Pepper: iphone users who suggest that apple creates an uncompetitive market by forcing iphone users to purchase apps through the app store, while at the same time charging 3rd party app developers a 30% commission

laws of applicable to global business

1. comply with foreign laws and regulations -deal with vast differences in legal and regulatory environment 2. companies doing business in other countries may see inconsistency ex. Coca Cola: violated Italian law by putting the ingredients on the cap instead of the bottle

Worst Forms of Child Labor Convention, 1999

1. defines a child as a person under 18 and aims to eliminate all practices of slavery or those similar to slavery, such as the sale and trafficking of children, debt bondage, forced or compulsory recruitment of children for use in armed conflict, child prostitution, and so on -requires states to remove children from such situations and provide their rehabilitation and education

Domestic Workers Convention, 2011

1. details specific rights and protections for domestic workers in home country and as migrant workers -written contract that is enforceable in the country of employment, or a written job offer that Is available prior to traveling to the country of employment -also lists clear conditions under which domestic workers are entitled to repatriation at the end of employment, establish protections from abusive practices, and cooperation between countries to ensure application of the convention

World Intellectual Property Organization (WIPO)

1. established by the UN to implement global IP infrastructure, building international respect for IP, and implementing global policy related to IP 2. alternative dispute resolutions (ADR) to mediate disputes -preserves relationships -maintain confidentiality -reach a speedy settlement

Challenges for legal protections

1. ethics can be defined as a system of moral standards or values 2. cultural beliefs and programming influence your values 3. a sense of ethics is determined by a number of social, cultural, and religious factors 4. ethical behavior also refers to behavior that is generally accepted within a specific culture -evolves over time 5. Today, laws aimed at preventing unethical practices in global business face challenges related to cultural understanding and relevancy

The Role of production and labor laws

1. labor laws exist in the US to protect workers from potential workplace dangers and abuses 2. emergence of a number of nongovernmental organizations (NGOs) -Nation Labor Committee: involved in anti-sweatshop activities and the implementation of labor laws -Worker Right Consortium (WRC) and the Clean Clothes Campaign: --developed and publicized their own internal codes of conduct for supplier --required that factories comply with all local labor laws, refrain from employing children, and maintain safety programs --requires them to be available for inspection

Sarbanes-Oxley Act

1. law aimed at increasing level of ethical transparency within corporate America -the act clarified auditor independence issues, places increase accountability on senior executives and management, strengthened disclosure of insider transactions, stocks and prohibited loans to executives -requires that public companies adopt and disclose a code of business conduct and ethics and include these codes on its website --enforcement mechanism, consistent enforcement, clear and objectives standards for compliance, and a fair process

contracts

1. legally binding enforceable promises that if breached, result in compensable damages -require not only performance of the terms, but also honesty in dealings -when broken, the injured party can seek damages --damages: recompense for the injured party by the party that breached the contract (pay an amount that would make that party whole again) 2. ethical implication: yes in my opinion. although it may be cheaper to just pay for damages, parties rely on the promises that have been made

Regulating behavior

1. must follow the laws that require their behavior or face legal consequences in the forms of fines, penalties, and lawsuits 2. many consumers purchase according to their ethics 3. Companies like Covalence Ethical Quote have been created to Monitor the ethical behavior of businesses due to corporate ethics being a concern -track businesses in areas such as corporate social responsibility, ethics, and sustainability, and then provide ratings, news, and data to investors and the general public

horizontal structure of law

1. neither party is in a legally dominant position over the other -laws between sovereign states--treaty based -enforcement of violations can be difficult

Contract formation

1. offer and acceptance -consideration was present, the agreement was legal, the parties entered into the contract with capacity to make a contract; and the agreement was in proper form 2. agreement -when the offeree accepts in the manner specified by the offeror 3. consideration -mutual promise with some type of legal detriment to both parties: perform, a forbearance, or promise 4. promissory estoppel -promissee may take action towards statement -action or forbearance is taken -injustice can be divided only be enforcing the promise 5. illegality -unenforceable: statutory violation or violations of public policy 6. capacity -minor: contract is voidable -insane/intoxicated are voidable 7. form -written or oral agreement -statute of frauds to prevent the fraud that occurs when one party attempts to impose upon another a contract that did not in fact exist

Antitrust laws

1. perfectly competitive market: a market in which no individual economic actor can affect the price of a good -many producers and consumers, no barriers to entering and exiting the market, perfectly homogenous goods, perfect information, and well-defined property rights -produces a system in which producers are price takers who can choose how much to produce, but not the prize at which they can sell their output -example: very close commodity markets (such as coal or copper); many buyers and sellers, not diverse so subs can used, simple enough so buyers have full information 2. Monopoly: one producer and many consumers -lack of economic competition to produce the good or service and a lack of viable subs -producer is price maker that can determine the price level by deciding which quantity of a good to produce. -control lower natural resources is often a source of monopoly power in the global economy because corporations have the ability to raise the market price without losing customers to competition -ex. De Beers (natural resource): monopoly over diamonds and will defeat competition by producing similar diamonds -used this to manipulate the international diamond market -scales of diamonds low with knowledge of blood diamonds -blood diamonds: diamonds mined in war zones and sold in order to finance war efforts 3. the rise in corporation and monopoly power led to consumer protection policies. -antitrust laws with one basic objective: to protect the process of competition for the benefit of the consumers, making sure there are strong incentives for businesses to operate efficiently, keeps price down, and keeps quality up 4. WTO help regulate internationally comply with national regulations -attempts to garner international support for the establishment of global standards in competitive markets in conjunction with the internal competitive laws that govern each nation individually -they ensure that no agreements in place run counter to a competitive market (avoiding cartels or collaboration between the dominant corporations, which would allow for market manipulation) -they regulate against strategic actions that may result in diminishing the competitive elements of a market -they oversee mergers, acquisitions, joint ventures, and other strategic alliances to avoid consolidations that may be damaging to free markets

"Regulating Anticompetitive Behavior"

1. rules against restrictive practices; practices that indirectly reduce competition 2. minimum resale price maintenance is illegal from suppliers/wholesalers but can suggest 3. exclusive dialing: illegal when anticompetitive but legal for the purpose to create competition 4. tying sales: consumer is required to buy an additional item that may not be needed 5. related is the theme of bundling 6. predatory pricing: occurs when the existing firm (or firms) reacts to a new firm by dropping prices very low, until the new firm is driven out of the market

application: intellectual property law

1. source code theft: stole source code and trade secrets 2. India, 2002; a worker was fired and therefore, attempted to sell source code but it turned out to be a FBI agent. person was later prosecuted 3. India passed its first IP law in May 2016 to ensure India was compliant with the WTO's TRIPS

UN Convention on Contracts for the International Sale of Goods (CISG)

1. treaty that applies to the international sales of commercial goods 2. provides gap fillers for terms that may not be expressed 3. differences between the UCC and CISG exist: revocability of an offer, its acceptance, the requirement for a writing to be enforceable, and essential terms

Antarctica Treaty

In 1991, the UN enacted an Antarctica Treaty which prohibited mining of the region, limited pollution of the environment, and protected its animal species

Paris Agreement (2015)

The Paris Agreement: 2015, 195 countries adopted the first every legally binding, universal global climate deal -aimed at keeping long-term global temperature increase below 2 degrees celsius -reduce global emissions, international support for developing countries, as well as, required that countries submit national climate action plans and publicly report on their implementation and success -13 nations have yet to ratify who emit the most: turkey, yemen, south sudan, surinam, angola, entrea, iran, iraq, kyrgyztan, lebanon, lybia, oman, and russia -some successes: whaling and banning waste of ocean dumping -in 2009, the Climate Vulnerable Forum was setup, and nearly 50 countries vowed to use renewable energy sources by 2050; countries have embraced solar, wind, and geothermal energy

choice of law clause

a contractual provision that specifies which law and jurisdiction will apply to disputes arising under the contract

sweatshop

a factory that is guilty of some sort of labor abuse or violation such as unsafe working conditions employment of children, mandatory overtime, payment of less than the minimum wage, unsafe working conditions, abusive discipline, sexual harassment, or violation of labor laws and regulations

cartel

a formal organization of producers that agree to coordinate prices and production

consumer

a person who needs, uses, or has used a particular service or product -make up the largest economic group that are affecting and affected by almost every public and private economic decision

domestic law

all people are subject to domestic law because they all live in a sovereign state

Consumer protection policies

antitrust laws: consumer protection policy used to limit unfair business practices related to competition and control of prices

Kyoto Protocol (1997)

controlling global warming by setting greenhouse gas emissions targets for developed countries -US failed to ratify seeing the requirements for developed countries was much more than developing countries

robber barons

corporations and cartels that monopolized business in the period following the American Civil war

copyright

form of protection provided by the laws of the United States to the authors of "original works of authorship" including literacy, dramatic, musical, artistic, and certain other intellectual works

Intellectual property and intellectual property protections

knowledge is recognized as a type of asset or property that one might with to protect

horizontal laws

laws that govern disputes in a horizontal structure--like treaties, contain provisions that require the parties to the treaty to submit to a treaty--created dispute resolution panel or other neutral tribunal

Convention on the Recognition and Enforcement of Foreign Arbitral Awards

may agree beforehand how the contract would be interpreted

principle of caveat emptor "buyer beware"

not seen as sufficient -it is believed that consumers need specific protections and the rights to safety, choice, information, and redress -consumer protection supports economic prosperity as it enables honest and efficient businesses to compete. It helps consumers make the best use of resources -in the US, federal consumer protection laws are mainly enforced by the Federal Trade Commission, the Consumer Financial Protection Bureau, the Food and Drug Administration, and the US Dept of Justice -function of such legislation is to protect consumers from unscrupulous business practices are potentially dangerous products

trademarks

protection for any word, name, symbol, device, or any combination used in commerce o identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others

patents

protects inventions and improvements to existing inventions for a limited period of time in exchange for detailed public disclosure of those inventions

contract law

relates to the objectives and commitments of each party, as well as the terms that govern the transaction

Tragedy of the Commons

situation in which people acting individually and in their own interest use up commonly available but limited resources, creating disaster for the entire community

United Nations Environment Program (UNEP)

the UN also established the United Nations Environment Program (UNEP) -a specific branch aimed to dealing with worldwide environmental problems -involved in many efforts to protect what is considered the shared global environment and limit the impact of big business on the world's natural resources

collective environment

understanding that the environment not only belongs to everyone to enjoy but is also everyone's shared responsibility

monopoly power

when a specific person or enterprise is the only supplier of a particular product