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