BUS LAW22

Glossary

Antidumping duty a tariff to equalize the difference between the price at which the product is sold in the exporting country and the price at which the importer will sell the product in the importing country; designed to prevent foreign businesses from artificially lowering their prices and gaining unfair advantages outside their home market. Choice-of-language clause in international contracts especially, a clause that specifies the language that will apply to the contract between parties in the event of a dispute, so that there will be an official version in one language only. Choice-of-law clause a common provision in a contract that specified what law must be used to resolve a dispute that arises between the parties to a contract. Commodity Control List or CCL, a list maintained by the Department of Commerce that classifies restrictions on the exportation of certain goods to certain nations. Confiscation the act whereby a sovereign takes private properly without a proper public purpose or just compensation. Countervailing measures the WTO Agreement on Subsidies and Countervailing Measures restricts the use of subsidies and regulates the actions countries can take to counter the effects of subsidies. A country can use the WTO's process to seek the withdrawal of a subsidy, or a country can charge extra duties (countervailing duty) on subsidized imports that hurt domestic producers. Dumping when a seller provides a large quantity of goods at less than fair market value or less than the cost of production; selling goods in another country for less than the market price at home. Duty-free port a special economic zone in a nation where goods may be imported or exported without being subject to usual tariffs; often done for transshipment of goods or to encourage processing in a country. Expropriation the taking of a privately-owned properly by a government. Governments are required to, but at times do not, pay compensation for such takings. Force majeure a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event beyond the control of the parties, such as a war, strike, riot, crime, or act of God (flooding, earthquake, volcanic eruption), prevents one or both parties from fulfilling obligations under the contract. Foreign exchange controls restrictions imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents. Foreign trade zones or FTZ, designed areas that provide special customs procedures to plants engaged in international trade-related activities. Duty-free treatment is accorded items that are processed in FTZs and then reexported. Forum selection clause a contractual provision in which the parties establish the placesuch as the country, state, or type of courtfor specified litigation or arbitration in the event of a dispute. Harmonized tariff schedule a set of definitions to classify goods; adopted by many countries so that they share common terminology when setting tariffs. Joint venture a business agreement between two or more individuals or companies engaged in a solitary business enterprise for profit without actual partnership or incorporation Letter of credit a written document in which the party issuing the documentusually a bankpromises to pay third parties in accordance with the terms of the document. Licensing agreement a contract whereby one firm, the licensor, grants another firm, the licensee, the right to exploit certain assets of the licensor, such as a patent or trademark. Nationalization the act of bringing an industry under governmental control or ownership; often this is applied to foreign-owned firms. Payment clause the portion of a contract that specifies how and when payment is to be made and, important in international business, what currency will be used. Repatriation the process used to transfer assets or earnings from a host nation to another nation. Representation election in labor law, when at least 30 percent of workers in a current or proposed bargaining unit sign a request to have an election to determine if all workers in that workplace will be represented by a particular union. Sovereign immunity the doctrine under which a non-sovereign party is precluded from engaging in a legal action against a sovereign party, unless the sovereign gives its consent. Subsidy a government monetary grant to a favored industry. Tariff a tax imposed on imported goods by the government to encourage domestic industry or to raise revenues. See also Excise tax. Transfer pricing the setting, documentation, and adjustment of charges made between related parties for good, services, or use of property. Transfer prices among parts of a business may be used to reflect allocation of resources across components, or for other purposes; the prices are often artificial, not real market prices. Wholly owned subsidiary a business, often in another country, that is organized as a legal entity but is completely owned by another company, the parent firm, or by a government.