mgmt ch. 17

US v King

King was one of owl securities and investments, (OSI)'s biggest investors. OSI raised funds for a large real estate project in costa rica. king was convicted of planning to bribe senior costa rican officials to obtain the rights to the land to be developed. he was fined and imprisoned

nationalization

when a country takes over a foreign investment in a country

confiscation

unlawful takeover of foreign property

restricting imports?

ITA and ITC

wholly owned subsidiary

a business owns the operation by doing a foreign manufacturing through this.

licensing agreement

a contract, where one business (licensor) grants another business (licensee) access to its patents and other technologies. licensor is usually granted loyalty on sales. franchising is a form of licensing

specific tariffs

a fixed tax or duty on each unit of a product

ad valorem

a tax as a percentage of the product price

insuring against risk of loss

all risk insurance policies can prove financial relief in the event of nationalization. short term private insurance usually lasts 3-5 years. some govt agencies assist in insuring exporters from risk of loss such as OPIC in the US

sovereign immunity doctrine

allows a court to give up rights to jurisdiction over foreign enterprises or countries, based on traditional notions that a sovereign should not be subject to litigation in a foreign court. results in investors not being able to obtain relief in their countries court system. some countries restrict the doctrine's application in commercial circumstances.

letter of credit

an agreement or assurance by the bank of the buyer to pay a specified amount to the seller upon receipt of certain documents that prove the goods have been shipped and hat contractual obligations of the seller have been fulfilled. may include a certificate of origin, export license, certificate of inspection, bill of lading , commercial invoice, and insurance policy. can be revocable or irrevocable

foreign trade zones

areas where businesses can import goods without paying tariffs. a secured area where goods may be processed, assembled, or warehoused. tariffs are only imposed on the finished product. products exported from the zone are not subject to tariffs

international arbitration

attempts of this have lead to organizations like the international chamber of commerce. they have rules to address issues concerning arbitration proceedings and awards.

international dispute resolution

can be complicated as evidence is in two different countries, difficulties may be reduced by treaties or conventions

international court of justice

closest thing to an international court. only nations can bring disputes here and it is rarely used for commercial disputes.

commodity control list

commerce maintains this list of goods subject to restricted licenses. can depend upon the country the import is being sent to and the reason for the restriction. includes anything being re-exported from the US

"knowing requirement" of anti bribery law

congress stated that simple negligence or mere foolishness should not be the basis for liability. the knowing requirement covers any instance where any reasonable person would have realized the existence of the circumstances or result and the individual has consciously chosen not to ask about what he had reason to believe he would discover

penalties of FCPA

department of justice criminally enforces these laws. can be fined up to 100,000 and up to 5 years in jail.

force majuere

french term meaning a superior or irresistible force. this clause protects contracting parties from problems beyond their

GATT

general agreement on tariffs and trade. published tariff schedules that countries agreed on, was replace by the WTO in 1995

the arms export control act

implemented under the international traffic in arms regulations, (ITAR). imposes many restrictions on the export of weapons and technology that can be used to make weapons, implemented through licensing requirements

US organizations

international trade administration (ITA), international trade commission (ITC), court of international trade, bureau of export administration (BEA), united states export-import bank (Ex-Im Bank), overseas private investment corporation (OPIC), US trade representative (USTR)

countervailing measures

legal under WTO rules, ex of brazil creating trade sanctions against the US after they gave improper subsidies to US farmers to beat brazilian competition

US v. mead corporation

mead imported day planner calendars. customs changed the classification of planners to "diaries" in 1993, and diaries had 4 percent tariff. mead sued in the CIT, was reversed in the court of appeals to be in favor of mead because they did not agree that planners could be considered diaries. in sum, classification rulings are best treated like interpretations contained in policy statements, a agency manuals, and enforcement guidelines

WTO

oversees trade agreements and helps lower tariffs around the world. 10 industries with tariffs eliminated completely: beer, construction equipment distilled spirits, farm machinery, furniture, medical equipment, paper, pharmaceuticals, steel, toys

duty-free ports

parts of entry that do not asses duties or tariffs on products. encourage the importation and sale of international goods within the country.

penalty provisions

penalties for violations of commerce's licensing provisions include criminal and civil penalties. ex ITT was fine 100 mil for selling night vision goggle technology to a firm in singapore that sold the technology to china

forum selection clause

picks where disputes will be settled

Foreign corrupt practices act

prohibits US companies and their agents from bribing foreign officials. law was enacted after foreign bribery happened. bribery is only allowed for "routine actions" such as bribes for visas, transportation services, or providing utilities. also requires companies to keep accurate books and track of their assets.

NAFTA

reduced or eliminated tariffs and trade barriers on most north american trade, also protects intellectual property

ITA international trade administration

responsible for export promotion. it also manages the US foreign commercial service that has office around the world. also has overseas offices called commercial consulates that supply US product information, arranges business meetings with other firms, gathers local market information, e tc

foreign exchange controls

restrict the ability to change one country's currency into another

choice of language clause

sets out the official language by which the contract is to be interpreted

joint venture

sharing an ownership with foreign partners. requires less investment but also can mean loss of managerial control. also nice to have a local partner

pros of foreign manufacturing

shipping costs, labor costs, and raw material costs may be reduced by this. may help secure long term contracts to supply goods in the country. also, may be a way to avoid restrictions or tariffs imposed by the host country

harmonized tariff schedule

standardizes how goods are classified by customs officials worldwide. countries use the same codes to classify goods traded

payment clauses

states the manner in which payment is to be received and the currency in which it is made

UNCAC united nations a against corruption

supposed to bring international cooperation to corruption enforcement actions

repatriation

the ability of a business to return money earned in a foreign country back to its home country. can be limited by some form of currency control such as foreign exchange controls

expropriation

the action of a country in taking foreign property in accordance with international law. most countries agree that there must be adequate compensation provided.

exchange risk

the potential loss or profit occurs between the time currency is acquired and the time it is exchanged for another currency

dumping

the practice of charging lower prices in the export market than in the home market, after taking into consideration important differences in the sale and the nature of the goods being sold. these goods may be subject to an antidumping duty or tax. they usually stay in place for 3 years of fair market value sales. these taxes can be appealed to the WTO

transfer pricing

when a multinational firm sells goods from a division located in one country to one in the US it has to determine and record the price. there is no market price since it takes place within the firm, so they must create an artificial price to use in its accounts

when will the US impose restrictions on exports ?

when the sale of the good will: -injure domestic industry -jeopardize national security -conflict with national policy

choice of law clause

which law of the parties in the contract will be used to settle disputes

world organizations

world bank, international monetary fund (IMF), WTO, commission on international trade law, world intellectual property organization, international court of justice