MIE305 Exam 2

Administrative Agencies Impacted by 3 Branches of Govt.

1. Congress creates- enabling legislation 2. Executive controls- presidential veto, appointment powers over agencies (SEC and EPA). 3. Judicial controls- exhaustion doctrine (party seeking court review must first exhaust all admin remedies before suing by seeking relief before admin law judge at the agency. Admin agencies have their own court system). Decisions of admin law judges can be appealed to federal court. Ripeness doctrine states that the court will not review admin law decision until it is "ripe" for review. The appeal will either go to a U.S. district court of U.S. court of appeals depending on the federal law in question.

The Study of Admin Law Requires an Understanding of:

1. Enabling legislation- laws passed by congress to specify the name, purposes, function, and powers of admin agencies. For example, the Federal Trade Commission (FTC) is authorized to create rules and regulations to carry out the act, conduct investigations of business practices, obtain reports from interstate corps abt their business practices, and investigate possible violations of federal antitrust statutes and the like. 2. The types of agencies: - Executive: appointed by president with advice and consent of senate, and can be removed by the president at any time. These are within the executive branch in the cabinet departments. The rules focus on a broad range of industries, particularly social regulations. FAA, DHHS, FDA. - Independent regulatory agencies: governed by a board of commissioners, one of whom is the chair. The president appoints the commissioners with the advice and consent of the senate. They serve fixed terms, and can only be removed by the president with cause. These rules focus on economic regulations, and narrow the focus to a particular industry. FTC, FCC, SEC. - State admin agencies: created by legislative branches of state, and administer state regulatory laws. - Local admin agencies: created by cities, municipalities, and counties. Administer local regulatory law. 3. The rule-making process: - Formal Rulemaking- congress enabling act, research of problem, proposed regulations, comment period, regulation choice. - Informal Rulemaking- same as formal but with no public hearings. 4. Agency powers and the constitution: The power to make laws or rules is delegated to administrative agencies by congress and state legislatures. The constitution does not expressly provide for such agencies, but they were created by congress to "administer" laws (legislature enacts a statute and creates an agency to administer and enforce that statute). They create a "rapid" response to changing legal and technological needs. The federal register is a publication where agencies propose rules daily.

Selected Risks of International Business

1. Export controls 2. Piracy 3. Sovereignty- lawsuits in a foreign country 4. Nationalization, confiscation, and expropriation

Sixth Amendment

Right to an attorney. #1 thing to remember. Right to have your case heard before jury. Right to be told what your alleged offenses are. Right to confront your accusers. Right to a speedy trial.

Forum Non Conveins

"You have the wrong court." Principle in U.S. where cases brought forth in the wrong court are dismissed.

Fifth Amendment

- Due process: Cant be deprived of life, liberty, or property without due process under the law. This is in 5th (federal govt.) and 14th (state actions) amendments. Procedural due process. Notice, hearing, unbiased fact finder, presentation of evidence, right to cross-examine witnesses, right to appeal issues of the law, etc. - Self-incrimination: have right not to do this! Miranda rights.. must be informed of rights, right to an attorney, can't be made to testify against oneself. Chief Justice Warren says that testimony made in custody is truly the product of free choice, the situation is inherently intimidating. IF THE DEFENDANT IS NOT INFORMED OF THEIR MIRANDA RIGHTS, NOTHING THEY SAY IS ADMISSIBLE IN COURT. "I take the 5th." "I plead the 5th." Only available to natural persons, Enron dude plead the 5th. Corps and other business entities (except sole props) don't have this right.

Foreign Direct Investment

2 options: 1. Foreign subsidiaries: beware of issues related to piercing the corporate veil. Remember Bhopal. Many large U.S. corps set up foreign subsidiaries for a variety of reasons. Sometimes to take advantage of cheap labor or access new markets. 2. Joint ventures: Usually created for specific purposes. Sometimes only way the foreign country would permit entry into its market. Advantages of joint ventures: - firm can benefit from partners knowledge abt culture and customs. - both countries invest a lot in the firm. Advantages in sharing costs and risks. - allows firms to enter foreign markets they might otherwise have been unable to enter. - JVs less prone to being nationalized or targeted as a foreign firm since the local firm has a significant stake as well. Disadvantages of joint ventures: - companies could differ on strategic intent of jv and mgmt. style. - risk of giving local firm control of technology. - even if they went into the jv with similar goals, something could come along and change that. - local firm also has foreign aspirations. Might enjoy money and technology, but doesn't want to be a mere adjunct to a foreign firm, wants to make its own decisions. Risks: Theft of intellectual property!!! Patents, copyrights, trademarks, trade secrets, etc. Costs include human costs, counterfeiting of drugs, piracy of recorded creative works, and economic espionage. Example: Chery in China. GM expanded into China.

Individual Criminal Liability

2 ways to be liable: 1. Direct liability- you commit the crime. 2. Vicarious liability- managers liable for acts of their subordinates. Hard to prove under mens rea- how much did the manager know/how much should they have known?

Should Companies Be Allowed to Settle Cases Without Admitting Wrongdoing?

A common tactic in settling such cases is that a company will only settle if they are allowed to deny wrongdoing! "neither admit/deny wrongdoing." Sen. Elizabeth Warren (May 2013) - Any watchdog that is shown to be unwilling to take big banks to trial has "a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer" SEC does have a new approach- new SEC director Mary Jo White will require companies to accept liability in certain cases where the agency wants to send a strong deterrent message.

What the Foreign Corrupt Practices Act (FCPA) Prohibits

A payment, offer, authorization or promise to pay money or anything of value to a foreign govt. official (including a party official or a manager of a state-owned concern- or to any other person knowing that it will be passed to that official) with a corrupt motive for the purpose of: 1. influencing any act or decision of that person 2. inducing that person to do or omit any act in violation of their lawful duty 3. securing an improper advantage 4. inducing that person to use their influence to affect an official act or decision In order to assist in getting/keeping business from a person or direct business to a person.

Are Fines Adequate?

What are the fines meant to achieve? Judge Jed Rakoff says focus should be on individuals and that not prosecuting individual malefactors after the financial crisis may "be judged one of the more egregious failures of the criminal justice system in many years."

Prosecutor Must Prove

Actus rea (the guilty act- they did it.) and mens rea (the guilty mind- they meant to do it,). In some crimes with strict liability, mens rea isnt even necessary. Both civil and criminal actions can arise from the same facts, because you can have civil liability for criminal acts.

Organization of Economic Cooperation and Development (OECD)

Adopted an international anti-bribery convention, requiring countries to work together to pursue allegations of bribery. This took forever to implement, even though today 40 countries are members. Many companies are voluntarily turning over evidence of wrong-doing with the hopes of getting leniency from prosecutors. For the past few years, there has been a global crackdown on companies who use bribery to advance their foreign business interests.

Washington Post Article

After the Walmart scandal, a ton more companies got in trouble. Complaints that the FCPA is too vague in its definition of bribery. More companies have been complying or surrendering info abt themselves or other companies to get in less trouble.

Deferred Prosecution Agreements

Agreements to delay/cancel prosecution if companies change their behavior. Explains absence of prosecutions in financial crisis cases. Corps have to pay penalties/restitution and correct the conduct. EXECS DON'T GO TO JAIL- a lot of people say the govt. is too soft on this.

Hague Proceedings

Allow U.S. to exercise discovery in foreign banks to find people who are engaging in tax evasion.

Freedom of Information Act (FOIA)

Allows access to certain info federal agencies possess and required that the agencies publicly disclose their procedures and decisions. Can also make a FOIA request for more info.

Foreign Corrupt Practices Act (FCPA)

Applies to business concerns that have their home offices in the U.S. Made bribing international officials illegal under U.S. law- results in civil/criminal penalties for those in violation, brought by the SEC and DOJ. The two main parts are: 1. The payment or promise or whatever bribe to the official to secure business is a federal crime. 2. Requires accurate and transparent accounting- can't make an illegal campaign contribution and then characterize it as a consulting fee to a third party. Also can't pay the bribe and call it a professional/expediting fee. Basically don't tell lies. The FCPA has broad jurisdictional reach in that it reaches: 1. Domestic concerns 2. Publicly traded companies (called issuers in the statute)- related to the theory of correspondent account liability (banks effectuate the transfer of funds through correspondent banks in the U.S.). Foreign companies whose emails are stored on U.S. servers constitute acts taken within the U.S. 3. People other than domestic concerns and publicly traded companies. FCPA also applied to foreign firms and people who cause acts in violation of the law to take place within the U.S. "Grease payments" or payments to foreign officials for "facilitation" are not prohibited. Get foreign officials to do jobs they wouldn't normally do or would do slowly without payment. Penalties for individuals violating the FCPA- up to 250k per violation and 5 yrs imprisonment. Penalties for corps violating the FCPA- 2 million per violation. Can try to obtain 2x the amt the bribes attempted to gain (engorgement).

The Accounting Provisions

Apply in tandem with the anti-bribery provisions. Apply to public companies. Must maintain accurate books and records. Must keep an adequate system of internal accounting controls.

"The Buck Needs to Stop Somewhere Where Corporate Misconduct is Concerned"

Attorney General Holder was frustrated with DOJs inability to hold financial execs criminally liable for misconduct. Proposed ways to make it easier: 1. Increase financial incentives for whistleblowers (?) 2. Extending Responsible Corporate Officer Doctrine to the financial services industry.- can be convicted of wrongdoing even without intent if in a position to prevent it and didn't do so. (?) 3. Adopt regulatory reforms common in the UK that would require senior bank execs to file a "statement of responsibilities" with regulators. (?)

State Soverignty

Both grants and limits power- gives states complete control over their own territory while restricting their influence over one another. Key element is exclusivity of jurisdiction. States are in complete and exclusive control of all the people and property within their territory. One state does not have the right to interfere with the internal affairs of another state. Recent case- offshore bank accounts. The end of bank secrecy and the practice of many Americans to hide their funds overseas to avoid paying taxes. Swiss banking law v. U.S. banking law. U.S. wins.

Civil Law v Criminal Law

Civil: person wronged brings suit, the wrongful act caused harm to the person or their property, the burden of proof lies in the preponderance of evidence, verdict usually only has to be 3/4 majority, and the remedy is damages to compensate for the harm or decree to achieve an equitable result. Criminal: the state brings the suit, the act is violating a statute that prohibits something, burden of proof must be beyond a reasonable doubt, verdict must almost always be unanimous, and the remedy is a punishment (fine, imprisonment, or death).

EU

Comprised of Western European nations and some former members of the Eastern bloc. No customs duties between members, one currency, no political woes, borderless economy, economic security. EU central bank exists. Members have surrendered much sovereignty to the EU. The actions of the EU can SIGNIFICANTLY impact U.S. business. Recently EU made new rules against e-cigs--> beginning in 2016, advertising for e-cigs will be banned in member nations, e-cig packages must have the same graphic labels as regular cigs. Also limits the amt. of nicotine in them. Additionally, the EU has stricter privacy laws in regards to Facebook, in order to protect their citizens' privacy. One law prohibits the facial recognition software used for "tagging" people. EUs Article 29 data- people MUST consent to the use of their images.

Criminal Liability

Corporate criminal liability- corps may be convicted if respondeat superior (crime is within agent or employees scope of employment) or if crime is authorized/requested by corporate principal or officer. Liability of corporate officers or directors- personally liable for crimes either they or their agents commit under the doctrine of agency (?). Cant be held liable for acts of corp- too difficult to prove, most corps are incorporated in Deleware where there is a lot of precedent favoring officers, and even if fault is found, they usually have insurance- no individual accountability.

Hague Convention

Countries partial to this cooperate with civil litigation discovery requests.

Administrative Law

Created by admin agencies. Complying with these laws is a significant "cost of doing business." These agencies exist at all levels of government and provide a comprehensive regulatory scheme for U.S. businesses. Many businesses try to influence regulatory environment because of the high cost of doing business. Functions of Admin Agencies: 1. Promulgating regulations 2. Enforcing rules 3. Adjudicating rules Administrative agencies have the powers of substantive rule making, interpretive rule making, statements of policy (proposed courses of action published- look into the future with them), and licensing.

Dealing with the FCPA- NY Times Article

DOJ and SEC still aggressively pursue bribery cases. Las Vegas Sands Corp.- reported itself for violations of internal control. Kimco Realty Corp.- admitted it had received a subpoena from the SEC in the Walmart investigations Pfizer- payments to foreign doctors Aforementioned clarification guide still wasn't very clear on rules for FCPA. Letters written asking for a "compliance defense" protection companies who willingly complied with the FCPA or gave up info, etc. Concern is what message more leniency would send. Other countries are making similar laws to the FCPA, particularly Canada.

Trading Blocs

Desire of some world economic to deny access to their rivals by linking up with neighboring countries. They usually form free trade zones for nations within their bloc. Members of the bloc can cut deals for members and discriminate against outsiders. NAFTA and the EU are examples.

Goldman Sachs

Did not have criminal charges brought upon it because burden of proof could not be met. They had created investment structures that were meant to fail because a client asked them to, and they lied about it to customers who bought the structures. SEC filed a fraud lawsuit against them. Goldman said it was engaging in product risk mgmt. Bankers/insurers called the crisis "an act of God." The client who asked them to do this was not the defendant in any lawsuit.

JP Morgan Bribery Issue

Did the commit bribery by hiring the kids of Chinese politicians? Hired the son of the chief of a state-controlled financial conglomerate and daughter of state-controlled China railway group. Message from U.S. govt. from companies is to be mindful of the law, and confess quickly and reach a settlement if you find you have violated it.

International Trade is defined as

Exporting goods and services from a country and importing goods and services into a country. Direct or indirect methods exist. Middlemen can be used such as export managers or trading companies, or even foreign representatives. Export controls are applied by govts. to prohibit/restrict the export of certain sensitive goods or exports to certain countries.

Classifications of Crimes

Felonies- Serious. Mala in se (inherently evil). Punishable by fines/imprisonment for over 1 year. Commenced by a grand jury indictment of info presented at a preliminary hearing. Many crimes against people and some business crimes are felonies. Misdemeanors- Punishable by fines/imprisonment for less than 1 year. Many property crimes are misdemeanors. Commenced by the govt. filing a charge called an information- a formal written charge.

Lawsuits in Foreign Countries

What happens when your country is sued in a foreign nation? Example: Ecuador judge orders Chevron to pay $9B. Chevron purchased Texaco and inherited a lawsuit.

Antitrust Laws in the International Marketplace

Firms from other countries operating in the U.S. or engaging in activities that substantially impact the U.S. are also subject to our antitrust laws because they are not foreign officials and are also engaging in commercial trade. Likewise, U.S. firms operating in other countries are subject to their antitrust laws.

2 Principles which Drive the Creation of International Organizations

Free trade and comparative advantage ("If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of our own industry, employed in a way in which we have some advantage." -Adam Smith, "The Wealth of Nations").

Fourth Amendment

Govt. needs probable cause to issue a warrant. The warrant MUST DESCRIBE the place to be searched and the persons/things to be seized. The exclusionary rule exists to keep police from going too far. Evidence collected in violation of a persons rights is inadmissible in court. View of Roberts court-knock & announce rule gone. Now cops can knock & burst in. Hudson v. Mighigan. Herring v. U.S. said police could engage in isolated carelessness.

Nationalization in Russia

Head of Yukos arrested at gunpoint. Had been supporting opposition political parties and negotiating to sell part of his company to Exxon Mobil w/o the Kremlin's blessing. He was an outspoken opponent of the Russian govt. Sent to Siberian prison. They keep adding more stuff on, he'll prob be in jail a really long time. Obama urged Russia to honor the "rule of law" as Bush had done.

Foreign Sovereign Immunities Act

Important restriction on sovereign immunity related to commercial activities. Foreign states shall not be immune from the jurisdiction of U.S. Courts when: 1. commercial activity carried on in the U.S. 2. act performed in U.S. in connection with commercial activity elsewhere. 3. act in connection with commercial activity of a foreign state elsewhere that causes a direct effect in the U.S. A person can bring lawsuit against a foreign nation in the U.S.! Examples: - a foreign govts. issuance of regulations limiting foreign currency exchange bc such authoritative control of commerce cannot be exercised by a private party (sovereign immunity). - a contract to buy army boots or bullets is a commercial activity, because private companies can similarly use sales contracts to acquire goods (commercial activity).

The Administrative Procedure Act

In the absence of clear congressional direction, all admin agencies must follow the APA in notice, rulemaking, and adjudication. The APA is a federal statute that establishes procedures to be followed by federal administrative agencies while conducting their affairs- how federal agencies make rules, conduct investigations, hold meeting and hearings, reach decisions, and obtain and release information. Example: The arbitrary and capricious test- the APA gives courts the power to hold agencies actions "Arbitrary and Capricious" if they are not in compliance with constitutional due process. FCC vs FOX TV studios. Example: APA also governs rule Making- 3 steps of Notice and Comment Rulemaking. 1. Notice of the proposed rulemaking 2. Comment period- public input expected. This is a period of transparency that gives people the opportunity to influence, especially lobbyists and other groups, etc. 3. The final rule.

Example of a Business Crime

Insider trading. Securities and Exchange act prohibits fraud in the trading of securities. Rule 10b-5 of the SEC clarifies this. Insider trading is associated with illegal conduct, but the term actually pertains to both legal and illegal conduct. Legal version is when corporate insiders (officers, directors, employees) buy and sell stock in their own companies. Illegal insider trading is buying/selling a security, in breach of fiduciary duty or other relationship of trust/confidence, while in possession of material, nonpublic info about that security.

Sovereign Immunity and Act of State Doctrine

International legal principles that affect the rights of private commercial parties when a government becomes involved with or interferes with an international commercial transaction. Sovereign Immunity- Countries are granted immunity from suits in courts in other countries. U.S. courts must decline to hear cases against foreign nations out of foreign nation's role as sovereign. Foreign nations are not always immune from prosecutions in another country's courts, just from lawsuits regarding their public activities. This is also granted to agents or instrumentalities of foreign states. Controversies related to this were Russian diplomats and Medicaid fraud, and Indian diplomats and abuse of servants. THIS IS NOT ABSOLUTE IMMUNITY. - a lawsuit is permitted if a foreign country waves its immunity. - commercial activity: countries are not immune from liability for their private acts of a commercial nature. They lose their immunity if they engage in commercial activities. - violations of international law take away immunity. Such parties are often engaged in transnational commerce.

Non-statutory Sources of International law

Language, environment, technology, social organization, contexting, authority, nonverbal behavior, time concept

Intellectual Licensing

Licensor contracts with another party (licensee) to permit the licensee to use its intellectual property in exchange for some compensation.

International Franchising

Licensor permits licensee to use its trademark to market licensor's goods and services in another country. There are big problems with protecting intellectual property rights overseas.

Not guilty...

May not mean innocent.

International Monetary Fund (IMF) and World Bank

Meant to expand world trade with a lending system designed to bring stability to differing currencies.

Kyoto Treaty

Meant to reduce emissions. Nobody did this...

Federal Register Act (FRA)

Necessary for the APA to work. Created the Federal Register System- oversees publication of federal agency info. Made up of the U.S. govt manual, Code of Federal Regulations, and the Federal Register.

Government in Sunshine Act

Open meeting law- requires public notice of meetings between agency heads of agencies whose heads were appointed by the president. Any agency with the word 'commission' in it has a head appointed by the president.

Expropriation

Part of AOS doctrine. Recognition by U.S. courts actions of other govts. as valid despite noncompliance with traditional U.S. rights and procedures. Private property of citizens and businesses in another country can be taken by that govt. without protection from the U.S. The Hickenlooper Amendment does require the president to suspend forms of assistance to countries who have engaged in expropriation that has harmed U.S. citizens. Expropriation is usually done with adequate compensation, like eminent domain.

Clean Air Act of 1970

Passed by Nixon w strong bipartisian support. Allows federal and state regulations to limit emissions from stationary and mobile sources. EPA was created to implement this- to protect the nations air quality and the Ozone and set allowable limits for GHG emissions and other pollutants. MA v EPA case (2007)- A bunch of organizations petitioned the EPA asking them to limit greenhouse gas emissions because they were forcing climate change. The EPA held a comment period, then denied the petition on the basis that the clean air act didn't authorize them to issue mandatory regulations to address climate change and even if they had the authority to do so they didn't think it would be wise at this time. MA, other states, and the organizations filed suit bc it was arbitrary and capricious, violative of the APA, and ultra vires because of statutory mandates for EPA action. Court of appeal dismissed, Supreme Court granted cert. Reversed and remanded, EPAs actions found to be arbitrary and capricious. They needed to change their ruling or state good reason for it.

Repatriation

Process of bringing back to your own country profits earned on investments in another country. Some nations have limits on this and how much $$$ can be removed. These are considered AOS and immune from litigation in the U.S.

Lescant Factors

Recommendations from the American bar association. Customs and values in a culture often have a controlling effect on business negotiations. Consider language, environment and technology, social organization, contexting, authority, nonverbal behavior, and time concept, as well as respect for the rule of law and foreign corruption.

Federal Privacy Act (FPA)

Reduces exchanges of info between agencies about individuals and businesses. Cant communicate records to any other agency or person without consent. This doesn't apply to law enforcement agencies, and so is congress.

U.S. v Giffen

Relates to Sovereign Immunity commercial exception. Kazakhstan became a sovereign nation. Had oil and gas reserved to sell. Giffen was the principal shareholder in Mercator Corp, a NY company. Apparently made a ton of payments to Prime Minister of Kazakhstan, in violation of the FCPA. He moved to have these dismissed because he had been named a counselor of the dude. Argued he was a govt. official and was immune under the AOS doctrine. Supreme court said it was a violation of the FCPA, and that the payments occurred outside of Kazakhstan and thus couldn't be protected by the AOS doctrine, plus they were commercial anyway so still not protected. AOS doctrine didn't protect him, especially since his appointment letters as a govt. official didn't say he needed to make the payments for some governmental purpose.

Conflicts of Law

Rules on conflicts of law in international transactions: 1. If the parties choose which laws will apply, those will apply. 2. If no law is chosen, the laws of the country in which the contract was performed will be used.

White Collar Crime- Penalties

SEC and FBI can bring actions. Non-business crimes: only those involved in the planning/execution of a crime can be held liable plus those involved in aftermath. Business crimes: managers who committed the crime can be held liable if they authorized it, had knowledge of it and did nothing, or did not act reasonably. U.S. v Park.- Acme had rats. Told Park to get rid of them. He talked to the VP of legal affairs who said it would be done. The conditions improved but there were still rats. Acme and Mr. Park were both charged with violations of the Federal Food, Drug, and Cosmetic Act. He was convicted. Supreme Court said it was because he was warned and aware his subordinates weren't doing their stuff.

Sovereign Immunity v. Act of State

SI- an act of govt. in a foreign country is not subject to a lawsuit in the foreign country. Act of Mexican govt. cannot be sued in U.S. courts. The exception is for commercial activity AOS- act of the govt. in its own country is not subject to a lawsuit in another country. Act of Mexico cannot be sued in U.S. courts. Examples of AOS: Nacional de Cuba v Sabbatino- Castro took control of Cuba and nationalized a ton of industries, many of which were American interests. When U.S. businesses challenged this, they invoked the AOS doctrine. Supreme Court agreed with Cuba.

Companies that have been Investigated by the U.S. Govt. for Violations of the FCPA

Siemens, Walmart, Las Vegas Sands Corp, Avon, Goldman Sachs., General Electric.

Primary Source of Criminal Law

Statues called "penal codes." Federal and state regulations often also impose criminal penalties (such as SEC regulations). Model Penal Code.

Tariffs

Taxes on goods as they move in and out of countries. Tariffs increase the cost of the goods they are imposed upon, and thus limit the competitiveness of foreign products within a country.

General Rule for International Law

The laws of the country where the company is located govern, except in those limited circumstances where extraterritorial laws are applied and where the corporate veil can be pierced. Examples: 1. U.S. Antitrust Statutes- specific statutory authority to sue foreign diplomats where conduct affects trade or commerce with foreign nations. U.S. courts still need personal and subject matter jurisdiction. 2. U.S. Product Liability Laws- can apply state long-arm statutes 3. FCPA

International Organizations- WTO

Their primary goal is to encourage free trade. 159 Nations are members, accounting for 98%+ of world trade. Other nations are being considered for membership. WTO replaced GATT and is much broader in scope. The goal is to reduce barriers in free trade. -WTO members must accord each other tariff treatment no less favorable than it provides to other WTO members. -WTO members may not discriminate against imported products in favor of domestically-produced "like products." -Each time tariffs reduced, they are bound and may not be increased again. China is important to the WTO in that 4 years ago they accounted for less than 4% of the world's trade, but now they are the world's largest exporter and account for 10% of international trade. Also world 2nd largest economy. When China joined the WTO, NCs textile industry suffered after the multifiber agreement barring their participation in our industry expired. The WTO has methods of dispute resolution, particularly to save time from diplomatic dispute resolution. Sometimes nations also enter into side agreements, like the TRIPS agreement between the U.S. and China. If a member of the WTO feels a rule is being ignored, it may ask the WTO to resolve the dispute. But honestly, the WTO doesn't have the power to impose sanctions. It can simply allow a nation that has been harmed to raise trade tariffs or barriers to trade from an offending country/countries. One such dispute was between the U.S. and Brazil, and Brazil was allowed 2.5B of economic retaliation against the U.S., the 2nd largest in history (bc we were subsidizing our cotton people). Honestly the industries affected had nothing to do with cotton, it was all a cover for something else.

International Legal Environment of Business

There are numerous legal systems found in the world, each differing in their basis, meaning, structure, and operation. Major families of law: 1. Romano-germanic civil law- based on statutes rather than court decisions. Examples include Justinian and Napoleonic codes, and canon law. Courts don't really have room for discretion, must refer to the legislature, which has a strict interpretation of the law intended to spell things out explicitly. Has an inquisitorial process in which the judge asks the lawyers questions. Limited role of juries, limited defendant rights. Common in Western Europe- Italy, germany, france, spain, japan, etc. 2. Anglo-american common law- U.S., England, India, Ireland, New Zealand, and Australia. Based on tradition and precedent. The judge finds the law in the precedent. Adversarial process- more roles for dueling attorneys, judge acts as a referee ruling on procedural items, juries are common, more defendant rights, "innocent until proven guilty." 3. Islamic law- Shari'a. Based on the Koran, Mohammed, and the writings of Islamic scholars. This is largely a moral code, concerned more with family matters than commerce and international relations. Sometimes Western norms are followed in business. Saudi Arabia is more strict while Turkey and Indonesia are more moderate. 4. Socialism- most recent form of law. From the writings of Marx and Engels. In the 70's roughly 60% of the world lived under some form of socialism. Law is not respected as much here- derived from economic interests, protects capitalists at the expense of the people, major economic interests are owed by the state. China and Cuba.

Wall Street Journal Article

U.S. attempted to clarify anti-bribery law. A cup of coffee can just be a cup of coffee. Chamber of Commerce and others had wanted to amend the FCPA with more protections for corps. Says if a company discovers a company it recently acquired has been bribing people, stop the bribe, report it to the U.S. govt., and institute reforms in the acquired company. Good clarification, many were happy with it, others still wanted more.

Understanding the Criminal Justice System

U.S. system is one of the most advanced and humane in the world. One of the central principles is blank. Persons charged with crimes in the U.S. also have a lot of constitutional protections.

Contracts for the International Sale of Goods (CISGs)

Vienna convention is another name for this U.N. convention. Provides international contracts with convenience and uniformity. Reflection of the Uniform Commercial Code.

Boeing v. Airbus

WTO said Boeing got illegal tax subsidies from U.S. However so did Airbus in getting started up from the E.U. Difference is Airbus has to pay it back. European govts. say they are basically investors in Airbus, so it isn't a subsidy. U.S. says if they couldn't get commercial investors then it is a subsidy. EU says U.S. gives Boeing indirect subsidies by using them for defense spending, plus Boeing gets state-level tax subsidies for production. Litigation in WTO. Possibly either the EU or U.S. could be allowed to impose tariffs raising prices of the opposing planes. WTO is trying to decide if govt. help on one side materially harmed the ability of the other side to compete. Best result would be free and open competition.

Walmart Bribery Scandal

Walmart bribed Mexican officials. Apparently senior mgmt. knew! Govt. can't really afford to cripple such a big company, plus lots of people say you can't even do business in Mexico without bribing people. Guess is that Walmart will fire a few executives and launch internal investigation. This whole deal could bring up bad feelings about their poor treatment of workers and human rights violations in Asia. This could be the worst scandal yet for Walmart, because they could lose public trust. Walmart did conduct an internal investigation as soon as the Mexican official blew the whistle. At least one high-level executive has "rebuked internal investigators for being overly aggressive."