Chapter 10: International Law in a Global Economy

Who in the United States has the power to ratify a treaty?

Donald Trump with the consent of 2/3 of the senators.

Doctrine of Sovereign Immunity

immunizes foreign nations from the jurisdiction of U.S courts. FSIA: Foreign Sovereign Immunities Act

International customs

"Evidence of a general practice, accepted as law"

International Principles and doctrines

1. Principle of Comity 2. Act of State Doctrine 3. Doctrine of Sovereign Immunity Employed by various nations to resolve or reduce conflicts that involve a foreign element.

U.S Antitrust laws

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Distributorship

A contract setting out the terms and conditions of distributorship, such as price, currency of payment, availability of supplies, and method of payment.

Force Majeure Clause

A provision in a contract that certain unforeseen events will excuse a party liability for non performance of contractual obligations.

A treaty

An agreement or contract between two or more nations that must be authorized and ratified by the supreme power of each nation.

Act of state doctrine: Taking private property

Can have consequences for individuals doing business with other countries. Expropriation and confiscation

Export Controls

Congress cannot impose any export taxes but they can use a variety of devices to restrict or encourage exports. 1. Export quotas 2. Restrictions on technology exports. (allowed) 3. Incentives and subsidies (Banks are encouraged to invest in export trading companies)

International organizations creating uniform rules

Convention of Contracts for the International Sales of Goods settles disputes about sales contracts.

North American Free Trade Agreement (NAFTA)

Created a regional trading unit consisting of Canada, Mexico, and the United States . Goal is to eliminate tariffs among countries on substantially all goods. Gives competitive advantage by retaining tariffs on goods imported from countries outside of NAFTA. attempts to eliminate citizenship requirements for the licensing of accountants, attorneys, and other professionals.

Exporting

Direct: signs a sales contract with a foreign purchaser that provides conditions for shipment and payment of goods. Indirect exporting: if sufficient business develops in a different country the US may set up a specialized marketing organization in that foreign market by appointing a foreign agent or distributor.

Regulation of Specific Business Activities

Doing business abroad can effect the economies and domestic policies so they must have some controls or agreements for how activities are regulated.

Anti-dumping duties

Dumping: the sale of imported goods at "less than fair value" A tariff is imposed to combat too cheap of things that other countries want to use as to take over market share.

Republic of Korea-United States Free Trade Agreement (KORUS FTA)

Eliminate 95% of each nation's tariffs on industrial and consumer exports within 5 years. largest FT agreement since NAFTA. May boost exports up to $10 billion a year.

Investment Protections

Firms that invest in foreign nations face the risk that foreign government may take possession of investment property.

Forum-Selection Clause

Indicating what court, jurisdiction, or tribunal will decide any disputes arising under the contract.

What are the three sources of international law?

International customs Treaties & international agreements International organizations

What is the difference between international law and national law?

International law cannot be governed by authorities.

Licensing

Licensing agreement for payment of royalties on some basis - coca-cola

Expropriation

Occurs when a government seizes a privately owned business for public purpose and awards just compensation.

Principle of Comity

One nation will defer to and give effect to the laws and judicial decrees of another country, as long as they are consistent with the law and policy of the according nation. Marriage is a prime example.

Subsidiaries

Parent company is in the united states and retains complete ownership of all facilities in a foreign country. Joint-venture: US company owns only part of the organization, the rest is owned by local owners.

Civil Dispute Resolution

Parties agree to an arbitration clause that a third party will handle disputes.

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 its own territory. For example: oil companies cannot sue another country for mal-practice of their oil industry

Quotas and Tariffs

Quotas: limits on the amount of goods that can be imported. Tariffs: taxes on imports - a percentage of value or can be a flat rate.

International Clauses: Contract Clauses

Set clauses to avoid problems with language or legal differences.

The European Union (EU)

Single integrated trading unit made up of 28 european nations

Political Factors

Sometimes countries impose tariffs on nations in retaliation for political acts.

What happens if a nation violates international law?

Take coercive actions: economic sanctions, severance of diplomatic relations, boycotts, or war.

What is new about international business today?

The dramatic growth in world trade and the emergence of a global business community

International organizations adopting resolutions

These organizations adopt standards that require nations to behave in a particular manner. Disputes with these resolutions may be brought before international court of justice. but can only settle when nations submit to jurisdiction.

Minimize Trade Barriers

Trade barriers are restrictions of imports - elimination of trade barriers are seen as essential. Members of World Trade Organization is required to grant normal trade relations to other member countries: required to treat other members as well as they treat the country that gets best treatments.

Treaties and International Agreements

Treaties, bilateral agreements, and multilateral agreements

FSIA: Foreign Sovereign Immunities Act ?? need to review

U.S codified this rule for sovereign immunity. Governs the circumstances in which an action may be brought to the united states against a foreign nation.

Manufacturing Abroad

US will establish plants abroad it they believe that it will reduce costs and enable them to compete more competitively in foreign markets.

National Export Initiative

We do not export goods as much as other nations do, so Obama set up NEI to try to double exports.

Confiscation

When a government seizes private property for an illegal purpose or without just compensation.

Bilateral agreement vs multilateral agreement

a bilateral agreement is formed by TWO nations to govern their commercial exchanges. a multilateral agreement is formed by several nations.

Letters of Credit

a written document in which the issuer promises to honor drafts or other demands for payment by third persons in accordance to terms. go over??

International organizations

an organization that is composed mainly of member nations and established by a treaty. The united states is a part of over 100.

The Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR)

formed by central american and dominican republic with US to reduct tarries and improve markets.

International Tort Claims

increasing number of U.S plaintiffs are suing foreign entities for torts that they have committed over seas. - often human rights violations.

Advantages of doing international business transactions or establishing a foreign production facility

lower labor costs, fewer government regulations, and lower tax and trade barriers.

Anti discrimination Laws

major laws regulating employment discrimination (more in notes)

Import Control: Prohibited goods

no goods may be imported from nations that were enemies with. Cannot import illegal things Or crops that cause danger.