IBT_Donono_Spring2010

8/13/2019 IBT_Donono_Spring2010

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Spring 2010 International Business Transactions Donoho

19JAN

- Documentary Sales Transaction

- Buyer is o ligate! to pay "or the !ocuments# Documents themsel$es represent an entitlement tothe goo!s No guarantee that you %ill get goo!s as promise! un!er the transaction &nly assurance ' uyer %ill get goo!s as assure! in Bill o" (a!ing )B&(*

- Seller %hen goo!s are release! to the ship+ the uyer may re,ect the !ocuments ) reach*

In a!!ition to Documentary Sale+ merchants use (etter o" re!it )(& *- ./ (A /S B /. 3IT4 BAN5 )BBan6*- Seller loo6s to BBan6 "or payment# .elie$es ris6 o" non-payment#- Buyer %ill alle$iate ris6 o" non-con"orming goo!s an inspection certi"icate at least somein!epen!ent party has loo6e! to the goo!#

- (essening o" ris6 in international transaction in a %ay that "acilitates international tra!e#

ro lem 1- Buyer %ants guano# Searches internet# Sees a!$ertisement# 3ants 200 ags I7 7ort(au!er!ale 8ra!e A# Seller %ants to sell#)&T4/. ISS /S*- The goo!s arri$e+ ut he s alrea!y pai!# Does that mean he s accepte! the goo!:- Seller has to !eli$er con"orming goo!s !oes that ta6e place %hen uyer gets them or earlier:- 4o% to !etermine that goo!s are non-con"orming:./A( ISS /S

1# Bo ) uyer* %ants ;the right< guano )reme!ies ' option "or getting replacement guano

$ersus la%suit or reach o" contracts*2# I" he cannot ;the right< guano+ he may %ant re"un! or %ant to use %rong guano in a!i""erent %ay

=# Bo %ants legal a!$ice ' his options un!er the contract># Sue )seller* %ants the money "or the guano#?# Sue %ants rapport %ith customer )goo! reputation*#@# Sue is intereste! to 6no% %hat the cost o" legal e penses )legal a!$ice*#

Implie! 3arranty o" erchanta ility ) C on$ention on the International Sale o" 8oo!s*1# 3hat are the terms o" this contract: Do they inclu!e DIS (AI /. o" %arranty )an ;as

is< clause*:

2# 3hat is the "orum "or the !ispute: 3hat is the choice o" la%:a# 3hy is this an issue: arties ha$e a "ree choice to !etermine %hat la% go$erns#ontra!iction in rules that %oul! apply in e$ent o" a reach# /ach citi en has an

interest in the choice o" la%#i# /E / TI&N T& A.TI/S 7.// T& 4&&S/ 4&I / &7 (A3

/ # ontracts "or illegal acti$ity applies in S ut not in Bots%ana cannot say that Bots%ana la% %ill apply )certain man!atory terms+ alsohealth an! sa"ety type rules*#


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ii# (a% that applies state that has most signi"icant relationship %ithtransaction ).estatement approach or a state s o%n approach*

1# Su ,ect-matter o" transaction2# lace o" per"ormance=# iti enship o" parties

># / set o" presumptions to !etermine %hat is the most signi"icantrelationship# Juris!iction most closely connecte!

Juris!ictions may ha$e "ormalities "or contracting )"ormalities may e !i""erent in !i""erent ,uris!ictions*#- /E# IS8 !oes not reFuire that contracts e in %riting# has arole /$i!ence .ule an!Statute o" 7rau!s reFuiring certain contracts to e in %riting#

Do the parties in the pro lem ha$e a contract:- IS8 $# #

IS8

1# I" you per"orm a contract+ then there %as a contract#2# I" there %as not per"ormance+ then %as there a contract:=# 3as the a!$ertisement !e"inite: Does it "it un!er Article 1>)2*:># (egal IssueG .egar!ing the terms: 3hat happens in the conte t o" con"licting !ocuments:

a# Applica le .ules Determine Terms )7lori!a (a%*i# )rules "or sale o" goo!s*

ii# IS8 )"e!eral la% i" it applies*# .ules "or sales o" goo!s1# Both parties ha$e their places o" usiness %ithin !i""erent parties to

the treaty# 3hat i" they ha$e more than one place o" usiness:)Article 10 place that has most connection to the transaction*#3hen parties to the transaction ha$e places o" usiness in !i""erent

IS8 countries2# an opt out o" applying IS8# &ther%ise+ i" contract is silent on

%hat la% applies+ un!er such circumstances it applies#=# arties not "rom IS8 country %ill not apply#># ISS /G Is mail con"irmation as acceptance or counter-o""er:

ateriality#

21JAN

Battle o" the 7orms tra!ers !o not ta6e the time !o engage in long-term negotiations# 3hathappens %hen things go a!:- 4o% %oul! the approach to Battle o" 7orms e !i""erent un!er IS8 or

2-20H )@H2#20H 7la# * 3hat the "e!eral la% %oul! pro$i!e un!er IS8:

- Article 19 IS8# ;As is< clause as a material $ariation creates a re,ection an! countero""er- The uyer per"orms ' acceptance o" the countero""er - IS8 !oes ha$e implie! %arranties %hich can e !isclaime! )%oul! e an alteration o" partiesresponsi ilities an! %oul! e consi!ere! material*


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7&B )"ree-on- oar!*I7 )cost+ insurance+ an! "reight*

4 &G1# 10Cro! !eli$ery in .

a# /E3 )/ %or6s*# Seller s o ligations are ,ust to ma6e goo!s a$aila le at his o%n premises# Buyer has to ta6e care o" all other costs#i# lace o" !eli$ery %oul! e seller s place o" usiness#

ii# .is6 o" loss %oul! e trans"erre! in !eli$ery# Implicitly transportation%oul! e incurre! y uyer#

iii# /E3 may not tell you ho% an! %hen the seller is suppose! to get pai!i$# In the 10+ no transportation costs+ no customs costs co$ere!#$# It s only a goo! !eal i" you can actually !o this an! i" you can arrange "or

it etter than they can# oul! the uyer !o this cheaper:2# 11Cro! !eli$ery to $essel in . ort=# 1=Cro! !eli$ery $ia seller s carrier to Destination ort

># 1?Cro! !eli$ery to Buyer s a!!ress- rice !i""erence in each $ariation- lace o" !eli$ery !i""erence in each $ariation- Transportation arrangements !i""erent in each $ariation

3hat issues shoul! the Buyer e concerne! %ith:1# .is6 o" loss2# ayment %hen an! ho%:=# Insurance># 3hich is the est !eal:?# 3ho arrangesC%ho pays "or transport:@# 3hen !oes !eli$ery ta6e place: 3hen %ill the seller ma6e a$aila le the goo!s )the seller

has "ul"ille! his contractual o ligation*H# Inspection: ) e"ore or a"ter paying*K# Acceptance9# (oa!ing costs+ !elay costs10# ustoms+ tari""s+ ta es+ inspection costs

2@JAN1# Deli$ery at 7actory at Bei,ing /E3# Deli$ery at the seller s place o" usiness#2# 11Cro! !eli$ery to $essel in . ort# ) ost increase !ue to increase in seller s o ligation*#

Lessel is the point at %hich !eli$ery occurs# )7AS ma6e a$aila le at port# 7&B get

it loa!e! on the $essel*=# 1=Cro! !eli$ery to seller s carrier to Destination ort# ) I7 7ort (au!er!ale in!icatesthe port o" !estination*#

># 1?Cro! !eli$ery to uyer s a!!ress#- Associate! %ith arrangements "or transportation+ %ho s responsi le "or it+ an! %hat s the price#

E 7 D )increasing seller responsi ility*


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I7 - Seller is in usiness an! %oul! e in etter position to arrange transportation7&B Buyer %oul! asically e responsi le "or arranging transportation "rom point o" !eli$ery)$essel must e there+ other%ise*

I7 Deli$ery ta6es place at the rail o" the ship7&B Same

/E3 & ligations en! at the !oor &ST is more "or I7#

.is6 o" loss trans"ers at the .AI( "or oth I7 an! 7&B- /E3 ris6 o" loss trans"ers outsi!e the !oor - D Term seller has the o ligation until they clear customs or ta6e it to Buyer s a!!ress

I7 Seller ta6es charge o" insurance )can uy !i""erent types o" insurance*

I7 an! 7&B ten! to e relate! to price- 3hen sellers use I7 term+ arrangement is that uyer %ill pay against !ocuments#

- ou can as6 "or a !ocumentary sale M uy on a I7 term )inclu!es implicitly that the uyer pay against !ocuments*#

Inspection1# .ight to inspect e"ore you pay2# .ight to inspect e"ore you accept

a# 7&B presume! that the uyer has the right to inspect )!oes not necessarily meanthat the uyer %ill inspect &N D/(IL/. AT T4/ .AI(*#

# 7&B uyer AN (AT/. re,ect the goo!s as non-complyingc# I7 uyer %ill pay upon receipt o" !ocuments )no right to inspection*#

Documentary sale pay upon receipt o" con"orming !ocuments+ primarily the Bill

o" (a!ing )B&(*# aying ase! on representations ma!e in the ill o" la!ing# oucoul! inclu!e it as one o" the !ocuments#

I7 seller has to pay "or goo!s to uyer s port7&B seller has to pay "or goo!s only to seller s port

Inspection rights !i""erent

Insurance !i""erent

.is6 o" lossC!eli$ery is the same "or oth

I7 !ocumentary sale7&B not !ocumentary sale

CONTRACT REMEDY

3hat !oes the IS8 pro$i!e %ith regar!s to reach an! reme!ies "or reaches o" contract:


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.&B(/- Seller ha$e # 2000 100 otton %ith ;Bloc6 usterG rou! Sponsor o" the SuperBo%l

E(IL< ?C,ersey# Deli$ery y January =0+ 2010# 7&B arta#- Buyer Sports .ag

&n 7e # 2+ uyer has not recei$e! noti"ication o" shipment# 3ANTS T4/ S/((/. T&/.7&. cheaply an! %ith least ris6 an! least e penses#

- IS8 o""ers reme!ies "or reach# olom ia an! nite! States are parties to IS8+ so it %oul!apply#

Article =0Seller s & ligations

1# Deli$er goo!s %hich con"orm to Fuantity+ Fuality+ an! title in the contract at a time set y

the contract#a# ro lem# January =0+ 2010 is the time y %hich the goo!s shoul! e !eli$ere! inthe contract#

i# I" not speci"ie!+ Article =1 Seller has to !eli$er goo!s o$er to the "irstcarrier#

ii# I" time not speci"ie!+ a reasona le time#iii# 8ap "illers also applica le customary practices in that usinesses+ or

et%een the parties i" they $e !ealt together e"ore# # ro lem# 7&B term in contract# Lessel to e arrange! y the uyer#

i# I" I7 term Seller must !eli$er appropriate !ocuments in a!!ition togoo!s )particularly %ith B&(*#

Article 2?7un!amental Breach- Su stantially !epri$e the other party %hat the other party reasona ly e pects un!er the contract#)Bene"it o" the argain*#- De"ect cannot e cure! y uyer# 3hether the cure is possi le is potentially rele$ant to %hetherthe reach is "un!amental# The contract itsel" may help !etermine %hat is "un!amental#

I" contract so states "un!amental essence o" the contract#

a# Article >9# I" the time "or per"ormance has not yet passe!+ the seller can "i the !e"ectas long as it !oes not cause un!ue har!ship to the uyer#

# Article >K# Su ,ect to Article >9+ the Seller can cure# 3hether you can cure %ill!etermine %hat is "un!amental#

2KJAN

Seller has "aile! to !eli$er goo!s %hich con"orm to the contract# n!er IS8+ criticalconsi!eration is the nature o" the reach# Not all reaches are the same# 3hat is a "un!amental

reach $ersus non-"un!amental reach o" the contract:


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- IS8 $ersus %ith respect to "un!amental reaches

ro lem 1- Seller sen!s late !eli$ery )$ersus non-!eli$ery %hich is a "un!amental reach*#

- Does late !eli$ery !eny uyer o" reasona le e pectations un!er contract: Terms the more speci"ic the contract is+ the more easily you can ma6e a !e"initi$e!etermination o" "un!mentality#

arties e pectations C 6no%le!ge C constructi$e 6no%le!ge Oo ,ecti$e stan!ar!+ tra!e usageP)i" he is una%are o" the importance o" the !eli$ery !ate+ then is it a "un!amental reach:/ pectation is unilateral i" only uyer 6ne%*#- I" you plan to sue "or late !eli$ery )"un!amental reach reme!y o" a$oi!ance*+ pro$i!e noticeto Seller )timely notice o" non-con"ormity*#- ourts that reach e i!enti"ie! %ith speci"icity so that they may reasona ly "i it#

Article >? .eme!ies "or reach o" contract y the seller )these reme!ies are "or any reach+ not

,ust "un!amental reaches*#- Along %ith any reme!y you pic6+ you can also get !amages as %ell# )A$oi!ance Q !amages+a""irmation o" contract Q !amages+ speci"ic per"ormance Q !amages*- Su stitute 8oo!s treate! !i""erently than speci"ic per"ormance ) ecause speci"ic per"ormanceis a court or!er*#

Article >@ Speci"ic er"ormance )or !eman! su stitute goo!s+ ut only i" "un!amental*

Article >H Notice o" a!!itional reasona le time# I" seller "ails to per"orm %ithin that a!!itionalreasona le time+ then contract is a$oi!e!#

Article >K uring reachArticle => uring !ocumentsArticle =K ure e"ore !eli$ery

Article >9 A$oi!ance in the e$ent o" a "un!amental reach# Both parties are e cuse! "rom per"ormance un!er contract su ,ect to any !amages that may e !ue#

ro lem 2- Breach is goo!s that are non-con"orming# IS8 %arranty pro$isions )in !e"ining %hether therehas een a reach*#1# &nly 1000 shirts )partial !eli$ery*

2# ?00 shirts are ma!e o" 20 polyester )pro a ly not "un!amental*=# ?00 shirts are incorrectly la el )pro a ly "un!amental*- ay "or the part that is goo!- rotect goo!s that are not )i" uyer a$oi! the goo!s+ he has to ta6e care o" the goo!s ANDmitigate his !amages*- 3hat i" you ha$e !ou ts a out %hether something is a "un!amental reach:

AcceptCA""irm Q !amages# I" you re in !ou t a out "un!amentality a""irm the contract+ utsee6 !amages# The uyer+ i" they can !o something %ith the goo!s+ is pro a ly etter o""#


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Steps1# Buyer gi$es speci"ic notice o" the !e"ect so that the seller can potentially reme!y the

!e"ect#2# Assess %hether these !e"ects are "un!amental reaches#a# an uyer re"use cure "or non-"un!amental reach: M pro a ly shoul! accept

cure# # Buyer can re"use cure "or "un!amental reach#

Article ?0 pay "or goo!s that con"orm#) ayment against !ocuments payment has alrea!y occurre!*#) ayment against goo!s an! i" upon receipt a""irm contract an! re!uce price y non-con"orming goo!s# &nus on reaching party to e tract "rom you i" they are %rong*#

027/BBuyer s an! seller s reme!ies un!er IS8

T&DA G & ligations o" a seller in a contract to intro!uce reme!ies "or reach o" uyer so ligations# )(ast time*# &ptions that uyer %oul! ha$e in conte t o" seller s reach )!eli$ery o"con"orming goo!s*#

.eme!ies a$aila le "or uyer s reach# 7irst+ %hat are uyer s most asic o ligations un!erIS8 an! )to e !one in accor!ance %ith the contract+ unless contract is silent as to %hen

payment %ill e ta6en+ ho% it %ill e ta6en+ or %hen !eli$ery %ill ta6e place+ IS8 %oul!supply ans%ers# resumptions in a sence o" contractual pro$isions*G

1# A2# Timing o" INS / TI&N !epen!s on type o" contracts=# TA5/ !eli$ery

.&B(/ B /. ./7 S/S T& A / T D/(IL/. an! ./7 S/S T& A- I" the ontract ha! een I7+ then it %oul! ha$e een payment against !ocuments )payment%oul! come e"ore acceptance o" !eli$ery# The uyer s reach %oul! e a re"usal to pay against!ocuments*#1# 3hat %ill Seller !o "irst in the e$ent o" the Buyer s reach: 8IL/ N&TI / to the other si!e#2# ust ma6e !eterminations as to the NAT ./ &7 T4/ B./A 4# Is the reach a7 NDA /NTA( B./A 4:

&ptions "or the B /. i" a "un!amental reach )Art# >? IS8*#A# A$oi! a contract# .eFuires "un!amental reach# &. B# Speci"ic per"ormance# .eFuires "un!amental reach# Art# 2K )local la%+ %hether it ma6es

sense+ might inclu!e su stitute goo!s+ !eman! "or su stitute goo!s !oes not reFuire courtor!er* &.

# A""irm the contract )accept*#


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Q !amages

&ptions "or the B /. i" N& "un!amental reachA# A""irm the contract Q !amages

&ptions "or S/((/. in the e$ent o" B /. S reach )Art# @1 IS8*Art# @2# Speci"ic per"ormance "or a S/((/.# Di""erent "rom speci"ic per"ormance y a uyer#S/((/. is "orcing B /. to pay an! "orcing B /. to accept !eli$ery#- n!er + you trie! to sell+ you coul! not sell+ "orce uyer to ta6e the goo!s an! pay "or them)not speci"ic per"ormance un!er + no reFuirements o" uniFuenessCina!eFuate legal reme!y*#- IS8 also reFuires !uty to mitigate#

Art# >H )Q>9* Notice )Qa$oi!ance*Art# >K ure )@=C@>*Art# >9 A$oi!ance )@>*

Art# @= "i an a!!itional time

- I" Buyer has goo!s alrea!y speci"ic per"ormance is easier options# I" they !o not pay "or thegoo!s+ you can !eman! the goo!s ac6 )restitution*# /asy to sue them "or the price#- 3hen is re"usal to pay a "un!amental reach: ayment is "un!amental+ ut timing o" paymentis not "un!amental )not necessarily the essence o" the contract*#- 8IL/ T4/ B /. A DAT/ /.TAIN 7I.ST A7T/. 34I 4 7AI( ./ T& A IS A7 NDA /NTA( B./A 4- A$oi! the contract an! uyer has goo!s ' uyer must return goo!s# Best option is to sue "or

price an! !amages# Alrea!y ha$e the goo!s#- I" the uyer is insol$ent+ then try to retrie$e goo!s so you can resell them )in this case a$oi!ing

the contract is etter *

- ou can al%ays see6 !amages# 8eneral measure o" !amages "or reaches is in Art# H># SumeFual to the loss )inclu!ing lost pro"its*# (I IT/D B 7&./S//ABI(IT in light o" the "actsthat are 6no%n# IS8 says you get your losses as long as they %ere "oreseea le#1# onseFuentials2# (oss o" "oreseea le pro"its )selling goo!s "or resale+ lose resale $alue in the e$ent o" the

reach*# ust pro$e it#=# Inci!entals )Storage+ sa"e6eeping+ e tra insurance+ a!!itional transportations*#

- Su stitute transactions ) &L/.*# Art# H?# Buyer coul! get price o" J/.S/ S "rom a N/3

S/((/.# Non- reaching party has certainty to pro$e#- Seller coul! price o" ha$ing to resell the goo!s+ !i""erence et%een %hat B /. promise! youan! %hat N/3 B /. ga$e you#

Implicit in these is mitigation#

Art# HH a out mitigation o" !amages# an loo6 outsi!e local region uyer s reme!ies )see6ingsu stitute transactions*# Best price possi le+ e$en non-locally#


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- Shoul! also try to cancel su contracts as a %ay to mitigate !amages# At least as6 "or it )in this.&B(/ + as6 Bloc6 uster "or accommo!ation*#

CARRIER LIABILITY

.&B(/ Nauru Seller >000 pairs o" genuine alligator s6in oots+ 100Cpair+ I7 )!ocumentary saletransactions* Nauru# Shippe! in t%o installments#- Sam Seller %ill ta6e the goo!s to the carrier Big Boats# BB %ill issue a B&(#B&(

1# Document o" title+ ut only i" it is a negotia le B&(# omerene Act presumption thatB&( %ill e negotia le )unless you say it is speci"ically non-negotia le*# I" not ;to-or!er+< ut ma!e out to particular person as consignee+ may e non-negotia le#

a# 4ol!er o" B&( has a right to possession )title*#2# In!icates that I+ the shipper+ put these goo!s in the han!s o" the carrier#

=# .e"lects a contract "or carriage )hea$ily in"luence! y &8SA statutory reFuirement*#

- B&( Shipper %ill present them to Buyer# Buyer inspects !ocuments# Buyer %ill !eci!e%hether he %ill pay i" !ocuments con"orm# 4e %ill pay ecause he %ants the goo!s#- 3hat is the Buyer loo6ing "or in the B&(:

1# That goo!s %ere loa!e! on the oat#2# That con"orming goo!s %ere sent# )B&( is a representation*# ar6ings that the uyer

%ill loo6 "or an! rely on them an! then !eci!e i" he %ants to pay#=# Ruantity )Num erC3eight*+ on!ition

lean on- oar! goo!s appear to con"orm )as oppose! to clause! ill a unch o" mol!y o es*.&B(/

A# 7irst B&(# ;&n oar!+ 100 o es sai! to contain gator oots+ in apparent goo! or!erS3( ## In goo! or!er Oor a! con!ition !escri e!P ) &NDITI&N*

7irst B&( is gi$en to Billy e$en though he sol! his B&( to Sally- arrier can choose not to !eli$er to proper o%ner i" they !on t ha$e proper+ original B&(# Ta6eit to court#

- an ta6e a reasona le time to !eci!e $ali!ity o" a!$erse claim o" someone %ho is purporting to e o%ner %ithout proper B&(

- Secon! B&( %ill say the same thing+ e cept !i""erent as to Fuantity1# &nly 200 o es arri$e!#2# H? o es ha! sa%!ust=# 2? o es %ere soa6e!># 100 ha! imitation alligator-s6in oots

omerene K011=)a*# Nonreceipt or mis!escription y carrier )lia le to o%ner o" goo!s or hol!ero" negotia le ill*#

- 8oo!-"aith reliance on a representation to your !etriment estop that person "rom relying onthe "act that they ma!e a truth- 4ol!er gi$es $alue goo! "aith )no notice* in reliance on B&(# )I" you gi$e $alue "or something+you re protecte!# Buil!s con"i!ence in negotia le paper*#

/ pan! on &8SA rail-to-rail an! e ten!e! to other carriers an! shippers#- omerene applies %here B&( originates in the #S#- &8SA applies "or outgoing an! incoming# .epresentation in B&( are prima "acie e$i!encethat the carrier recei$e! the goo!s as !escri e! )re utta le presumption carrier can !ispro$ethis*#- B&( outsi!e o" #S# common la% estoppels "rom omerene Act

1# ISSIN8 8&&DS omereneC &8SA )estoppel the plainti"" ga$e $alue to the B&(in goo!-"aith+ relying on representations therein*# &8SA prima "acie e$i!ence+re utta le presumption#

2# SA3D ST ;Sai! to contain#< oul! e culpate the carrier ecause they !on t 6no%%hat s insi!e# 4o%e$er+ i" the %eight are too !i""erent et%een B&( an! %hen %eighe!on oar!+ might hol! constructi$e 6no%le!ge#

=# I ITATI&N ;Sai! to contain#< Lery !i""icult to ma6e carrier lia le#


12/43


># S&88 B&E/S arrier coul! e lia le# /stoppe! "rom !enying that they %ere ingoo! con!ition as represente! in B&(#

S(3 Shipper s (oa! 3eight an! ount# arrier is representing to the Buyer that the Shipper put the goo!s on oar! an! the count an! %eight carrier %as tol! y shipper# arrier is not

ma6ing representation o" ho% much or many o" the goo!s there are#- I" there are lost goo!s+ no lia ility as to 3/I84T an! & NT ) ut not &NDITI&N*# I" theysee !amage )$isi le !amage* they can still e lia le#

- (oss o" goo!s ) ?00 per pac6age limit unless other%ise agree! to*#1# an agree to higher $alue2# Notice to uyer "or reasona le opportunity to !eclare higher $alue=# Serious !e$iation in eha$ior )%here the carrier misrepresents their o%n eha$ior M saysomething %eighs 100 poun!s %hen it actually %eighs ?00 poun!s*#># er pac6age )coul! e customary %ay o" shipping units*#

097/B

(etters o" re!its )(& *

.e$ie%- & ligations o" the carrier interme!iary in the transactions# Transactions !epen! on the B&(issue! y that carrier#- ossi le lia ilities o" the carrier# Depen!s on thin6ing o" the B&( as a representation+ utsome%hat limite!#- arrier can !isclaim some o" the representation Fuantity an! num er o" pac6ages# (imit the

possi ilities o" lia ility on part o" the carrier#

(& alle$iates inherent ris6 in !oing international transactions# Su stitutes the an6 "or the uyer#

Problem Class

Buyer )5i! s .& 8A* %ants to uy

D .& .u"" s Bone+ 3in!o%s H ompati le+ I7 Sa$annah+ 8A+ !eli$ery on or a out April1?+ 2009#

"romSeller ) opy ats Argentina*

Seller is %illing to honor as long as there is payment y a con"irme!+ irre$oca le (& #

1# Buyer %ill contact a an6 )ISS IN8 BAN5 7irst 7armers Ban6*#


13/43


2# Buyer %ill secure a (& "rom 7armers Ban6 )"orms a &NT.A T et%een Buyer an!ISS IN8 BAN5*#

=# Issuing Ban6 %ill e$aluate the Buyer#a# Ban6 may reFuire all the money up-"ront# )Buyer %ill !eposit the money*#

# Ban6 may e ten! to Buyer cre!it %here he ma6es installment payments to Ban6#

># Issuing Ban6 %ill then agree to pay Bene"iciary )or Seller* upon presentation o"!ocuments such as )reFuirements are !ri$en y %hat the Buyer nee!s*Ga# ommercial In$oice

# lean+ on- oar! B&(c# Insurance an! certi"icate o" origin!# Dra"t )Bill o" / change B&E* echanism that allo%s "or payment#

?# Issuing Ban6 %ill then pay Seller# 3hen:a# Sight

# Delaye! ayment@# Issuing Ban6 agrees to issue (& # A!$ise the A!$ising Ban6 that the (& has een

opene!# romise to pay e ten!s to the Seller $ia the A!$isingC on"irming Ban6#

a# on"irming Ban6 %ill pay Seller upon presentation o" !ocuments# # Seller has three !i""erent promises to e pai! in con"irme! letter o" cre!it) on"irming Ban6 romise+ Issuing Ban6 romise+ Buyer promise*#

3hat s the o ligation o" the an6: 3hat are they suppose! to !o:

ni"orm ustoms an! ractices @00 ) @00*# u lishe! y the I pri$ate internationalla%# Incorporate! into the contract#- %oul! supplant i" so state!

Article 1># Ban6 must only loo6 at the !ocuments on their "ace#- Strict compliance# Ban6s are simply "unctionaries to see i" !ocuments con"orm# /$en minor!iscrepancies coul! ser$e to ren!er the (& unpaya le#- Some !iscrepancies are easyG1# I" it calls "or Inspection erti"icate an! there is no inspection certi"icate# Simple# Notcon"orming#2# 3hat i" there is a minor misspelling in one o" the !ocuments reFuire! "or (& : Stan!ar!seems o$erly strict $ie% o" compliance#

Is the !iscrepancy one that coul! possi ly inure to the !etriment o" the an6 or the uyer:- A!!ress is %rong in a less meaning"ul !ocument# A!!ress is correct in meaning"ul !ocuments

#S# courts %ill rule "or compliance#

117/B

- Strict compliance stan!ar!# 3hat 6in! o" !iscrepancies matter:- ommercial in$oice M !escription in a commercial in$oice %hat is presuma ly in the

pac6ages# / act in con"irmation in %hat the (& calle! "or#- DescriptionsCinconsistencies in the !ocument M !ata# Description o" the goo!s#


14/43


- 3hat i" an6 !i! not see the !iscrepancy:

1# ompact Disc $ersus D-.&2# 3in!o%s H $ersus 3in!o%s=# .ecei$e! $ersus lean on Boar!

- &riginal $ersus copy# Ban6 coul! !ishonor#- Tra!itional stan!ar! applies#- ommercial in$oice is !istinct in the !egree o" strictness as oppose! to B&(# Not trying to e

precise# Not oun! y (&

- Discrepancies et%een commercial in$oice an! (& calle! "or - 3hether all !ocuments calle! "or are there- I" there are inconsistencies in the !ocuments- B&( an! other !ocuments ha$e to consistent )not necessarily precise* %ith regar! to!escription o" the goo!s

- Inspection certi"icate:Strict ompliance

In!epen!ence rinciple (& transaction

- aterial )"un!amental* reach in the un!erlying transaction uyer can a$oi!#- Ban6 !ocuments con"orm+ so the an6 must pay#- Buyer can protect themsel$es y reFuiring !ocuments in the (& to pre$ent reach

ro"essor Don 4o Seller Secure (& 105 Ds SB Buyer

SB 105+ 3in!o%s H D-.& + erti"icate o" &rigin+ &B B&(

1@7/B

(imite! e ception to in!epen!ence principle in the conte t o" "rau!

- Ban6 is eing presente! %ith !ocuments that seem to comply on their "ace %ith %hat s calle!"or on the (&

7la# Stat# @H?#109# 7rau! an! "orgery in commercial (& #

)1* I" a presentation Oprocess y %hich you collect !ocuments an! you present them as calle!"orP on its "ace O an6s !o not loo6 eyon! "our corners o" the !ocumentsP+ strictlycomplies %ith the (& + B T reFuire! !ocument Oonly reFuire! !ocuments trigger thisstatuteP is "orge! Onot an authentic signatureP or materially "rau!ulent+ or honor o" the

presentation %oul! "acilitate a material "rau! y the ene"iciary Opossi le limit on theapplication o" the statute i" "rau! is !one y the carrier+ then this statute %oul! not applyPon the issuer or the applicant Othese are generally the parties a""ecte! y the transaction "rau! on these parties triggers this statuteP+ then


15/43


a# Issuer S4A(( honor Oi#e#+ !espite the "rau! in paragraph )1*P i" the "ollo%ing parties !eman! that they honor itG

i# Nominee O ecause these are people that are relying on the !ocuments ingoo! "aith# (a% is protecting the negotia ility o" the transactionP

ii# on"irmer

iii# 4ol!er in !ue coursei$# Assignee # Issuer may Oan optionP honor or !ishonor in goo! "aith O!e"ine! as honesty in "act#

(imit on the option to honor or !ishonorP in any other case O!espite eing noti"ie!o" "rau!P#

)2* I" the applicant claims that a reFuire! !ocument is "orge! or materially "rau!ulent+ or thathonor o" the presentation %oul! "acilitate a material "rau! y the ene"iciary on the issueror applicant+ a court o" competent ,uris!iction may temporarily or permanently en,oin theissuer "rom honoring a presentation or grant similar relie" against the issuer or other

persons only i" the court "in!s thatGa# .elie" is not prohi ite! y la%

# The ene"iciary+ issuer+ or applicant %ho may e a!$ersely a""ecte! is a!eFuately protecte! against loss that it may su""er ecause relie" is grante!c# All con!itions to entitle a person to relie" ha$e een met!# Applicant is more li6ely than not to succee! on the merits

3hat a out a!eFuacy o" reme!y to stop an6s "rom paying (& :- Seller might e insol$ent: 8oo! argument "or lac6 o" a!eFuate reme!y#- .eme!y in another ,uris!iction: 4a$e to sho% that there is a reason %hy you can t litigate thisin another country# (ea$e the issuer out o" it#

- /$i!ent proo" o" "rau! an6 must !ishonor - Ruestion as to %hether there is "rau! an6 may !ishonor IN 8&&D-7AIT4

Stan!- y (etter o" re!it )S(& *- n!er #S# an6ing la%+ #S# an6s %ere "or i!!en "rom issuing per"ormance guarantees# A"orm o" "inancial promise only triggere! %hen the principal party !e"aults#- I" a party issues a guarantee they re saying i" this other guy "ails+ then I ll pay# Ban6s %erenot allo%e! to issue guarantees# se! (& in a "unny %ay#

A/B $# Banesto- Isolu is seller an! 3A DA is uyer# S(& is a %ay to ensure per"ormance# It is "inancialsecurity that the other party %ill per"orm un!er their contract#- 3A DA is scare! Isolu %ill e "ail to per"orm un!er their contract# 3ant to ensure that Isolu%ill per"orm#- 3A DA reFuires Isolu to go to a an6 an! get a S(& # Banesto says %e %ill pay uyer i"Isolu "ails to per"orm#O ro a ly shoul! ha$e a neutral party !eci!e that you !i! not per"ormP- Deman! guarantee ecause ser$ices are a huge part o" tra!e# 7rau! e ception applies# &ne o"the things that can happen M


16/43


/- ommerce %hat issues come up# 3hat %oul! I e concerne! %ith: (oo6 preliminarily at thestatutes# 3hat is the response un!er the /lectronic ommerce Act:

Ne t %ee6G mo$e to go$ernment an! the role o" international organi ations in the regulation o"tra!e# An o$er$ie% o" the 3T

1K7/B

Sur$ey o" /- ommerce

ro lem#

I# Issues raise! y his pro lems# Does he %ant to get out o" the contract:a# ontract "ormation# &""er-acceptance )counter-o""er:* Lariation in terms: Battle

o" the 7orms: # ontract "ormalities signature )attri ution Q intent to e oun!*

c# Disclaimer o" the 3arranties!# Applica le la% any me!iatory la%s applica le usiness $ersus consumer e# olicy Fuestion %here !oes the transaction ta6e place"# Statute o" 7rau!s:g# ri$acyC on"i!entialityCuse o" personal in"ormationh# ountry o" originC,uris!ictional

II# 3ays to a!$ise this person:

/mail ' signature+ assent to contract "ormation:

7e!eral Statute is actually pre-empte! y STAT/ (A3 Set up asic rules+ ut encourage states

to enact ITA )uni"orm act*#

Just ecause you !i! it through email !oesn t mean that it s not a in!ing contract# That alone isnot a groun!s "or in$ali!ity# &ther reasons %hy this particular transaction in electronic "orm%oul!n t e $ali!#- This !oesn t mean it means all the reFuirements o" la%# ust e some other reason that theelectronic contract is in$ali!# It s not a "ree-"or-all# There are reFuirements speci"ic "or electroniccontracts#- N IT.A( means y %hich you can trace tampering %ith electronic recor!#- /(/ T.&NI ./ &.D ' it IS a %riting as long as certain pro$isions are met#

/lectronic Signature# I agree to e oun! an! this signature i!enti"ies me# In consumer la%+clic6ing ;agree< is enough# ay later not e enough into transaction#- B&(# 3ho has the right to possession o" the goo!s: The hol!er o" a properly en!orse! B&(#4o% !o you en!orse: ou )or your agent* %oul! sign it#- Authenticity o" a signature in a B&( is $ery important to a$oi! "rau!# Trans"erring title togoo!s#- /ncryption to authenticate signature#


17/43


7&. T4/ .&B(/ G 3riting is "ine# / change o" !ocuments are "ine# /mail M is it enough toattri ute to him an intent to e oun! ecause 4/ sent the email:- 3hat a out contract "ormation: A!!itional terms M !epen!s on the la% a!!itionalterms %oul! e out ) attle o" "orms*# IS8 ser$e as a counter-o""er#

- (a% o" 4ollan! )or / !irecti$e*: 3oul! this apply:

7&. T4/ .&B(/ G hoice o" la% may e a !ispute! term o" the contract# Depen!ing on%here the suit starts+ a 7lori!a %ill %ant to !etermine %hether choice o" la% %as term o"contract# T4/ 7&. 3I(( S/ ITS . (/ T& D/T/. IN/ 34AT (A3 IT 3I(( S/T& D/T/. IN/ LA(IDIT &7 &NT.A T#- 8ra$ity o" interest# 3hich ,uris!iction is most implicate! in this transaction: u lic interest+etc#:

Automate! systems# /lectronic agent is a %ay in %hich you e press assent#- /$en i" it is an automate! agent on the other si!e o" the transactions+ you coul! still e oun!#

Ne t %ee6G international regulation+ the role o" go$ernments# 3T In terms o" applying la%+a out the pillars o" the gap )> Article 1+ 2+ 11+ =*#- ost "a$ore! nation treatment:- National treatment:

2=7/B

reliminary oints on 3T&C8ATT 19>HC199>

1# Tra!e )%hy there is tra!e*# The 7ree-Tra!e remise#a# 3T&C3estern /uropean system# 7ree-tra!e is a more or less an un"ettere! goo!#

i# ompetition in the mar6et %ill !ri$e choices as to %here %e promoteresources# /77I I/N #

ii# /$en i" one country is supreme in e$ery %ay+ you shoul! put moreresources into e$erything that you re goo! at# & A.ATIL/ADLANTA8/# Tra!e %here you ha$e a comparati$ely greater a!$antage#Despite !isparities in income an! !e$elopment+ !isparities in mar6et %illallo% such tra!e to ma6e sense#

# 3hy restrict tra!e:i# (egitimate pu lic interest )sa"ety+ health+ %el"are*#

ii# 4uman rightsiii# rotection on the en$ironmenti$# /conomic protectionism )illegitimate*

2# The .ole an! status o" international institutions an! treaties#a# Treaty an agreement et%een countries# Not e actly a contract+ ut has a

promise "rom one country to another to !o certain things#i# A source o" international la%# A promise B/T3//N countries# ontrols

eha$ior on an international le$el#ii# Tra!itional Armistice Treaty#


18/43


iii# Su ,ect- atter o" Treaties ha$e really change!# 3hat is their status asla%:

i$# Treaties are the Supreme (a% o" the (an! Article @# Treate! the same asany other "e!eral la%#

1# Not all treaties are the same# I" the Senate has gi$en its a!$ice an!

consent# Some treaties are automatic la% )sel"-e ecuting*# leara out o ligations+ signe! an! rati"ie! ' ongress inten!e! "or it to e la%# ) IS8*#

2# &thers reFuire implementing legislation# Non sel"-e ecuting#ongress inten!e! to promise to apply it later# Not inten!e! to

ha$e !omestic e""ect#$# / ecuti$e Agreements# 4istorical anomaly# resi!ents enter into

agreement %ithout any participation o" Senate# Inherent po%er o"resi!ent to negotiate %ith other countries#

# ongress has ultimate authority o$er Tra!e (a%# Article I+ cl# =# Interstate)"oreign country* commerce clause# ongress !elegates authority to resi!ent to

enter into 7 N )"rien!ship commerce an! na$igation* an! BIT ) ilateralin$estment treaties*#c# o!ern-approach# 7ast-trac6 authority# ongress passes a statute that tells

resi!ent to enter into an agreement %ith a country# Then %e %ill su mit treatyte t e"ore ongress# Then ongress %ill $ote in$ol$e!# ut it in as legislation#Lote it upC!o%n %ith no amen!mentsCchanges# 3ithin >? !ays+ cannot hel! up incommittee or "ili ustere!#

Tari""# #S# ustoms Ser$ice ustoms Sche!uleG ho% much to ta a particular thing#.ules in the 8ATT- ost 7a$ore! Nation Treaty# No !iscrimination ase! on the origin o" the goo!s# Any ene"itthat I gi$e to one country+ I %ill gi$e to all countries# )This right is not a solute*#- Negotiating at on"erence ratchets the tari""s !o%n#- Intergo$ernmental &rgani ation 3T The creature o" a treaty# An institution create! y atreaty# 3hat is the role o" the 3T&: (oo6 to the treaty# StatesCnations create the treaty "orStates#- 8ATT legal rules# 3T& institutional "rame%or6# 7orum "or negotiation# onitorCmanagerules#

2?7/B

3T& !esigne! to ser$e the interests o" mem er states %ith regar! to tra!es8ATT 19>H create! as an e ecuti$e agreement un!er #S# la% a"ter International Tra!e&rgani ation pro$isions !ie! in the Senate#- A!!e! !ispute settlement mechanisms later+ %hich %ere "aulty# / #G a State that %as calle! intoa !ispute !i! not ha$e to su mit themsel$es to !ispute settlement process# All the mem ers o" the8ATT+ inclu!ing the De"en!ant+ coul! !isagree %ith the result o" the panel unanimity to a!opt

panel !ecision to e in!ing# 3ea6 system#8ATT 199> impro$e! legal regime#

1# / pan!e! the su ,ect-matter un!erneath um rella o" rules o" the 3T&C8ATT


19/43


2# Agreement o" ser$ices+ intellectual property rights=# The only in!ing agreement %as 8ATT 19>H# Di! not ha$e to e a mem er o"

su seFuent agreements to e a mem er o" 8ATT# In 199>+ 8ATT reFuire! a!option o"all agreements )or you re not a mem er*# A(( &N/ NI7I/D B&D &7 (A3e pan!e! o$er %hat it %as e"ore#

- &rgani ational structure !i$i!e! up y su ,ect-matter# Three segments o" la%1# 8oo!s most !e$elope!2# Ser$ices=# Intellectual roperty .ights- lurilateral# 3hen they a!opte! 8ATT 199>+ they sai! all the agreements %oul! e man!atory+e cept "or some o" them )plurilateral agreement*# / #G go$ernment procurement agreement+ utnot a man!atory agreement un!er 8ATT system#

Dispute Settlement anel

.&B(/ Basic rinciples o" 8ATT

7oun!ational illars o" 8ATT# All pre$ious 8ATT !eal %ith respecting national so$ereignty$ersus "ree tra!e#

1# Non-!iscrimination2# (east restricti$e alternati$e test )tell States you can !o %hat you got to !o+ ut you must

achie$e goals in least tra!e restricti$e means possi le*# No !isguise! goals#=# &riginal 8ATT ' limiting the 6in!s o" restrictions the States coul! engage in )Fuotas+

ta esCtari""s*#

ritical 7acts1# Australia impose! a an on %il! salmon "rom North aci"ic2# / empt !omestic pro!ucers "rom heat treatment reFuirement=# No international stan!ar!s "or the parasites># Sprea! o" contamination ' i#e#+ empirical e$i!ence that !ri$es restrictions# ST

.&L/ ./AS&N 7&. I &SIN8 ./ST.I TI&NS in N/3 8ATT#- DS is man!atory un!er 8ATT

reliminary onsi!eration1# 3ho can sue: &nly em er States# Best possi le %ay is to ha$e in!ustry %i!e

organi ation to as6 the go$ernment to ring the claim on their ehal" on a topic o"concern#

2# 8ATT rocess is Stages an! they are time!#a# Stage &ne# 7ormali e! process o" consultations et%een a!$ersarial States#

# Stage T%o# anel o" three e perts# T%o si!es must agree on e perts %ho are "air#anel are li6e ,u!ges must ta6e e$i!ence )!ocumentary+ e pert

testimonyCa""i!a$its*# De$elop e pertise ,urispru!ence# &""icially+ their opinionsare not in!ing e cept on party# Analytical in!e use as o!y o" la%+ stare!ecisis

c# & ,ecti$e assessment o" "acts y the panel# 7act-!epen!ent an they ignorenational authorities in researching an! ma6ing ,u!gment:


20/43


i# 8ATT panel can secon!-guess priorities o" national authorities:: Acceptthe "act-"in!ings as long as they are ase! in o ,ecti$e e$i!ence )"actual

asis "or !ecisions ma!e y national authorities* to ,usti"y the measure!# .eme!ies

i# anel %ill tell the o""en!ing state to change its policy ease an! !esist

.easona le time to implement change that is necessary I" the o""en!ingState !oes not comply+ o""en!e! State may ./TA(IAT/ )3ith!ra%al o"concessions+ agree to compensations# ust e compara le to the !amage!one#*

ii# No "inesiii# No !amagesi$# No compensation "or past losses$# 3hat a out a small country )8uam* sanctioning a ig country )the #S#*:

The #S# %ill not care+ B T there might e political rami"ications in theglo al perspecti$e )long-term !amage to the system*# N&3G Allo%smaller countries to in$o6e speciali e! sanctions pic6 on one thing that

coul! really hurt the o""en!ing State#.&B(/

ISS /SC (AI S1# 7N2# National Treatment=# / ceptions

Banning importation )or Fuota* Art# EI Ruantitati$e .estriction )general prohi ition o"Fuotas*#

)or Tari""CTa or other restrictions+ such as heat treatment M imposition on restriction on uyCsellCuse o" goo! in mar6et non-tari"" arrier*#

3hen they agree to a concession agree to stic6 %ith it Art# II

7NG (ess "a$ora le treatment ase! on origin M that is+ !iscrimination et%een 8ATTmem ers- Di""erential treatment et%een importe! goo!s in !omestic mar6et )ta es+ regs+ use*

National Treatment# Art# III- ossi le health an! sa"ety ,usti"ications Art# EE e ceptions- 7oo! or "oo! resource contamination S S )sanitary-phytosanitary*

Art# EI- Basic i!eaG stop Fuantitati$e restriction# lear $iolation o" the rules in the ro lem

Art# I 7N- 3ith respect to certain categories o" eha$iorG customs !uties+ metho!s o" le$ying !uties+ rulesan! "ormalities connection %ith importation an! e portation )inspections+ !elays+ locations+


21/43


%arehousing+ assessments+ $aluation+ time "or assessment* goo!s as they are treate! as theycome insi!e the country- Any 6in! o" treatment )"a$or+ pri$ilege+ immunity+ a!$antage catch-all pre"erentialtreatment*# /$en e ceptions must e applie! non-!iscriminatorily#- ust e accor!e! to all other contracting parties %ith respect to (I5/ .&D TS )%hat the

hell is a (I5/ .&D T::::::*- Technical legal !e"initionG all eers are the same- 3hat a out %ine:

(oo6 at te t o" 6ey pro$isions# 3hat are the 6ey terms an! phrases+ ho% !o I rea6 it !o%n ho%it operates in the legal sense+ an! %hat terms !o I ha$e to really un!erstan! )%hich ones %oul!reFuire interpretation+ particularly in National Treatment+ Art# III*#- Ta es $ersus &T4/. T./AT /NTSC./8 (ATI&NS:

09 A.

- ountry has legitimate health sa"ety concerns that %ill con"lict %ith 8ATT promises o" "reetra!e#- n!erlying policy issue o" %here these issues shoul! e ma!e# 8ATT priorities:

ro lem- arasites in salmon- Australia an on aci"ic %il! salmon ) ut not Atlantic*- 4eat treatment "or all "arm raise! salmon prior to retail sale+ ut !omestic Australian "arms aree empt- There are no international stan!ar!s- ontamination ris6+ health ris6s+ $isi le in"estations+ empirical e$i!ence an! science

reliminary roce!ural onsi!erations# 3ho can sue+ %here+ an! ho% un!er %hat la%G DS asics#

1# o$er !isputes un!er entire legal regime M here tra!e in goo!s lea!ing to application o"rules on such tra!e#

2# 8ATT >H an! relate! agreements inclu!ing S S#=# States only># 7ormali e! process o" negotiations "irst?# an!atory panels o" = e perts@# Appeal to permanent appellate o!yH# A!option automatic

K# Bin!ing only on parties to !ispute9# .eme!y: ease an! !esist10# enalty "or non-complianceG Suspension o" concessions or negotiations

laims1# 7N )"ocuse! on the importation* rules that apply to goo!s !epen! on %here they

come "rom


22/43


2# National Treatment )internal regulations to !omestic mar6et* importe! "ish ha! toun!ergo heat treatment

=# Ruantitati$e restrictions )Fuotas*

De"enses

1# ossi le health an! sa"ety ,usti"ications )Art# EE*2# 7oo! or "oo! resource contamination )S S*

3hat has to e sho%n: 3hat is a $iolation: )Art# EEIII*

- Ruantitati$e restrictions )Fuotas* generally illegal- Tari""s lo%er these- Non-tari"" arriers )NTBs* other %ays go$ernments coul! su tly restrict tra!e- The !ilemmaG legitimate health U sa"ety regulations $ersus protectionist legislature !istortingtra!e- olicy ase! e ceptions in Article 20 )protection o" health+ conser$ation+ etc#+ Article 21 on

national security*#Article III )ta es+ la%s+ an! Fuantitati$e restrictions shoul! not e applie! to a""or! !omestic

pro!ucts protection*#

11 A.

&ne mem er o" 8ATT shoul! treat other mem ers o" 8ATT the same )origin*# National treatment not !iscriminating et%een "oreign goo!s an! !omestic goo!s# .ules "or

7NCNT 6ic6 in "or li6e pro!ucts#

National treatment 8ATT te t treats ta !i""erently#

3hat is a li6e pro!uct:

.esponses to $iolations to the 8ATT1# 4ealth+ sa"ety+ pu lic %el"are $ersus 8ATT "ree tra!e )Art# 20*# Allo%s "or countries to

$iolate the 8ATT rules %hen the reFuirements o" Art# 20 ha$e een met# 3hat are thereFuirements o" Art# 20: Speci"ic e ceptions ha$e their o%n reFuirements )necessary "orthe preser$ation o" human+ animals+ health*#- se alternati$e that has least restricti$e tra!e impact )!oes not $iolate 7NCNT*- an you accomplish goals %ithout an on the pro!uct: )Fuantitati$e*- annot impose restrictions that creates un,usti"ia le or ar itrary !iscrimination oncountries or !isguise! !iscrimination on tra!e


23/43


!P! A"reement

.elationship et%een S S Agreement an! 8ATT >H )Art# 20 7NCNT*:

Art# 2)1* Basic & ligations un!er the S S Agreement# em ers ha$e the right to ta6e

measures necessary "or the protection o" human+ animal or plant li"e or health+ pro$i!e! that suchmeasures are not inconsistent %ith the pro$isions o" the Agreement#V em er states can ta6e measures that are consistent %ith all the reFuirements o" theAgreement#Art# 2)2* Necessary measures to protect human+ animal or plant li"e or health must e ase! onscienti"ic e$i!ence#Art# ?)H* I" scienti"ic e$i!ence is unclear+ you can err on the si!e o" caution# State !oes notha$e to %ait "or science to catch up to ta6e action an! protect its citi enry#Art# 2)=* 7NCNTCNo !isguise! restrictions on tra!e )similar to Art# 20 o" 8ATT >H*# Noar itrary or un,usti"ia le restrictions to !iscriminate et%een em ers %here i!entical or similarcon!itions pre$ail#

- .ea! Art# =C? in light o" %hat Art# 2 says# .ea! Art# = an! ? together#- 8ATT >H Art# 20 threats to li"e an! health are any threats to li"e an! health ) roa!er*+ %hereasS S Art# 2+=+? !eal %ith contaminants+ pests#- TimingG (atter agreement )S S* re"ers ac6 to the 8ATT# Speci"ic o!y o" la% that a!!ressessame concerns in ol! 8ATT >H#

Art# = 4armoni ation# se international stan!ar!s to !e$elop !omestic mo!els#)1* ).esem le* Base! onG start %ith international stan!ar!s+ gui!elines+ or recommen!ations)2* ) o!el* on"orms toG e act mo!el)=* )Impro$e* em ers may intro!uce measures that result in a higher sanitary protections

ase! on rele$ant international stan!ar!s+ gui!elines+ or recommen!ations )!iscretionary*

3hat is the conseFuences o" each o" these three choices:)1* Base! on no presumption that stan!ar! %as necessary )no presumption o" $ali!ity*)2* on"orms to presumption that stan!ar! %as necessary an! ,usti"ie! y science# 7lips the

ur!en o" proo"#)=* Impro$e must e ,usti"ie! y science or appropriate ris6 assessment "rom Art# ? )%hich

is ase! on scienti"ic ,usti"ication Q other ris6 "actors*#

Say you impose a Fuota# ou gotta meet reFuirements o" not only Art# 20 o" 8ATT+ ut you alsonee! to meet reFuirements o" S S# annot impose complying measures in a !iscriminatory %ayeither

Art# ? .is6 Assessment)1* Su section 1# Shall ensure that you use a ris6 assessment# Ta6e into account the ris6s#

.estricti$e measures must e ase! on ris6 assessments#)2* Su section ?# 3hen you !o it+ you shall a$oi! ar itrary an! un,usti"ia le !istinctions in

the le$els o" protection that you consi!er appropriate in !i""erent circumstances i" those


24/43


25/43


- International Tra!e ongress create! another a inet-le$el o""ice#1# #S# Tra!e .epresentati$e2# Dept# o" ommerce=# Dept# o" Treasury># Dept# o" 4omelan! Security

onsi!er alsoG1# The Ju!iciary# ourt o" International Tra!e )on par %ith 7e!eral District ourt# Article III

,u!ges ha$e een appointe! "or li"etime tenure*# Speciali e! court# ases that in$ol$eissues o" international tra!e#

a# 7e!eral ircuit# ourt o" Appeals "or tra!e relate! pro lems# # (ast resort %oul! e the Supreme ourt#

2# In!epen!ent Agency# International Tra!e ommission#a# ollects in"ormation important to tra!e

# A!minister tra!e reme!y la%# Ruasi-,u!icial "unction#

4o% customs %or6s+ classi"ication %hy is it an issue# &rigin+ $aluation#

Classi#ication- ni"orm %ay a out tal6ing a out %hat the pro!ucts are#- Sche!ule o" i!enti"iers o" pro!ucts !eri$e! "rom international nomenclature#- .esi!ual categories )other* so that all categories can e !elineate!#- se+ material+ an! common name

Bi6e# Bi6e inclu!es parts#- hains- Tires- 4an!les- etal components use! "or !ri$ing %heels- 8eneral .uleG ategori e parts %ith the %hole# Dri$e the classi"ication to a particular place#

ro$isoG as long as the part has the essential characteristics o" the %hole goo!#

.ule =)a*1# .elati$e speci"icity test# ost speci"ic !escription o" a particular component

Better $ome Plastics Corp% v% &%!%- 4o% to !e"ine sho%er curtain:

urtain "a ric 12nclassi"ia le last in numerical or!er 12lastic liner =

.ule =) *1# /ssential character test %hen classi"ie! un!er more than one hea!ing# 3hat is the

characteristic that gi$es the goo! its essential character:


26/43


.ule =)c*1# I" =)a* an! =) * in!eterminate+ last in numerical or!er in 8.I#

Sho%er curtain essential "unction o" sho%er curtain is represente! y the plastic liner#

Importer ma6es !eclaration# ustoms re"ute it# Importer can as6 "or customs ruling "romIn!epen!ent Agency# I" you !o not li6e the result+ you sue# 4o%e$er+ there is a presumption thatcustoms is correct# 4/L.&N D/7/./N /#

I" customs ta6e a position in!ing throughout #S#- &nly change! y announcement#

&rigin

- Attach a goo! to a country# 8oo!s are o"ten manu"acture! or treate! in more than one country#

To the e tent that a pro!uct is solely %ithin one country+ no origin pro lem#- anu"acture! goo!s origin issue#- &rigin is .ITI A( in !etermining tari""# Another component has to e matche! %ith that to!eci!e %hat the actual tari"" %ill e#

1K A.

!'perior (ire v% &%!%- 3ire is a pro!uct o" Spain or ana!a:- 8eneral .ule o" &riginG Su stantial trans"ormation test1# A goo! is a pro!uct o" a country %hen it is su stantially trans"orme! in that country#- Ne% an! !i""erent article %ith a !istincti$e name+ character+ or use- Is it !i""erent %hen you loo6 at it: hysically: Altere! in some %ay:

Laluation- 3hen uyer an! seller an! relate!+ customs %ill not use the in$oice price# They %oul! use$alue pai! "or i!entical or similar goo!s in the mar6et# Tests out %hether this in$oice et%eenrelate! parties is a genuine in$oice# )no trans"er pricing*

2= A.

Laluation statute relies on actual transaction $alues an! su tracts out )an! puts in* certain that%ill i!enti"y the $alue o" the actual goo!#- ustoms ser$ices %ill not use the in$oice $alue# In$oice price might e suspect#

/ port ontrols

.easons "or controls#1# National security )main reason*2# 7oreign policy )main reason*


27/43


=# Short supply

3ho regulates tra!e- ongress is the primary source o" tra!e regulation- Delegation )policy !irecti$e "rom ongress* /E/ TIL/ B.AN 4 )Dept# o" ommerce

Bureau o" In!ustry an! Security )BIS**

/ port A!ministration Act )/AA*# Not a permanent #S# Statute# 4as a sunset pro$ision# anlapse# )3hen lapse!+ historically the resi!ent has reinstate! it ecause o" e ecuti$e !elegation Qresi!ual authority*#Sources un!er %hich ongress authori es the resi!ent to act- International /mergency o%ers Act- Tra!ing %ith the /nemy Act

/ port A!ministration .egulations )/A.*# Source o" the rules pertaining to e portation# Bareminimum re"lect the same language use! un!er the statute )/AA*# A!! other rulema6ing stu""

)interpretation+ gui!ance*#- A!ministere! y the BISBIS regulates those e ports that are su ,ect to /A.# De"ine! y the commerce control list) (*#- /mphasis on technological goo!s that reFuire licenses- onitor e ports o" all 6in!- BIS regulates !ual-use things things that can ha$e !ual applications )military or non-military*

&ther agencies are in$ol$e! %ith !istinct sets o" goo!s )munitions an! armaments are su ,ect toDept# o" State )D&S* ecause they !o not ha$e !istinct !ual-use*#- Nuclear materials are controlle! y the Dept# o" /nergy )D&/*- Drugs an! pharmaceuticals controlle! y the 7oo! an! Drug A!ministration )7DA*

nilateral controls ) #S# ase!* an! multinational controls )agreements %ith "oreign "rien!lycountries*# ommon approach to certain 6in!s o" !angerous goo!s#- 3ashner Agreement# Se$eral countries %here #S# cooperates an! coor!inate restrictions %iththese other countries !ealing %ith certain goo!s#- 4armoni ation %ith %hat #S# an! other countries thin6 are !angerous to !eser$e control an!regulation#

#S# go$ernment+ unilateral control is (I /NSIN8#- Not all goo!s reFuire a license# &nly reFuire! %hen regulations reFuire#- (icense represents go$ernment appro$al# annot e port this goo! to this !estination unlessgo$ernment appro$es it#- an control en!-uses+ con!itions o" e port+ to %hom it can e e porte!+ Fuantitati$e an!temporal restrictions#- Su ,ect to /A. !oes not necessarily mean that it has a / N or on the (# Does not reFuire

permission# I" it is not on the list+ it is a commo!ity calle! /A.99 ) ut secon!ary pro$isionsmust e "ul"ille! AND e port !eclaration "orm must e "ille! out so BIS can monitor e$en thesee ports*#


28/43


Trigger o" (icense .eFuirement#1# 3hat# Type o" 8oo! )classi"ication*2# 3here# Destination=# 3ho# /n! ser

># 4o%# /n! se

4i-Tech or !ual-use goo!s# /ncryption technology+ source co!es+ enco!ing+ etc#

/E# AT to Denmar6# /ncryption has !ual-use# 3e are not concerne! %ith Denmar6+ ut %hat%ill Denmar6 !o %ith the goo!:

/m argo# Special restrictions that are generally non-permanent# In response to a national crisis+might e a temporary restriction on tra!e#

1# Is the 8oo! Su ,ect to /A.:

a# 3hat is an e port: .egulations are concerne! %ith much larger picture than the physical mo$ement o" goo!s# Basically e$erything is an e port# .elease o"in"ormation un!er the rules to someone )or some%here* outsi!e the nite! States+e$en "oreign nationals resi!ing in the nite! States#

2# Does it ha$e an / N or on the (: ategori ing the pro!uct#=# 3hat are the reasons "or control: )control issues+ i#e#+ nuclear proli"eration+ national

security+ anti-terrorism+ etc#*># ross .e"erence %ith the ountry hart )is this goo! restricte! "or this particular

country*?# Is there a licensing e ception: )(icense reFuire! unless M e ceptions apply*

a# (imite! Ruantities # A$aila ility o" the goo!s )other countries a$aila ility in the open mar6ets

similar Fuality+ similar con!itions process to pro$e this e ception*# ommonlya$aila le goo!s#

@# /n! userCen! use# onsult the list#

rocess# 4o% to get a (I /NS/

1# 7igure! out on your o%n+ no e ceptions apply )or you $e as6e! them*# ay e ecauseuser is a suspect person# / cepte! country#

2# Supply !ocumentation electronically on SNA -. to acFuire license

ompliance

3hat is a $iolation: / # I get a license %ith an en!-use restriction# /n!-user is not allo%e! toree port to another country# Am I responsi le: 3hen am I responsi le: 3hen am I in $iolationo" the statute "or licensing: 3hat are the responsi ilities o" the e porter )&ther than strictlia ility "or not ha$ing license*: 3hat are the penalties:


29/43


Do restrictions on e port e ten! to users other than #S# citi en:

2? A.

3as not here

=0 A.

7ree Tra!e Areas e ceptions to 8ATT

7ree Tra!e Area# 8o$ernment in$ol$e! in the technical an! sa"ety reFuirements#- /liminate tari""s an! Fuotas et%een countries in tra!e area )Fuotas not necessarily al%ayseliminate!*- 8enerically+ eliminating tra!e arriers %ithin the region+ %ith a primary emphasis on tari""s#- Internal regulation %ithin the 7TA+ ut the countries maintain in!epen!ent e ternal customs

ustoms nion#- 7ree tra!e %ithin "ree tra!e area#- common tari"" sche!ule to countries outsi!e o" customs union- other tra!e-relate! topics eing co$ere!- coul! !e$elop a common policy on anti-trust an!Cor competiton+ or recogni ing intellectual

property

4 &G 5orean parts into e ico# e ico maintains its o%n tari"" sche!ule on this goo! 10e ican Tari"" %hen the 5orean parts arri$e in e ico#

Is 5orean pro!uct su ,ect to !uty-"ree internal treatment %hen e ico transports to the #S#: I"yes+ !uty-"ree# I" no+ then #S# importer %oul! pay tari"" "or 5orean parts at #S# tari"" rate#- 5ey Fuestion is a out origin# 4o% !o you ma6e it a NA7TA pro!uct: /ach country maintainsits o%n e ternal tari"" sche!ule#

4 &G I" 5orean pro!uct comes into Italy+ Italian pays import tari"" sche!ule+ an! then "reecirculation %ithin ustoms nion#

Non-NA7TA pro!ucts e ternal tari"" %oul! still apply as it enters e$ery NA7TA country#

o%er o" 7N i" you negotiate a ene"it+ it ripples across the entire system# I" you negotiate"ree-tra!e %ith ,ust a "e% goo!s+ you un!ercut le$erage o" 7N#- 8ATT allo%s e ception "or "ree-tra!e i" su stantially all goo!s are su ,ect to !uty-"reetreatment#

- Su stantially all arriers to tra!e must e eliminate!# 3ith ustoms nions+ the e ternal tari""smust e consi!er %eighte! a$erage tari""s )tra!e $olumes+ a!! all tari""s*# Those countriesaggrie$e! y the ne% structure ha$e the right to complain# Negotiate %ith those countries that areaggrie$e! y the ne% tari"" structure an! compensate them in the tra!e sense#


30/43


NA7TA1# hase! in the elimination o" tari""s "or goo!s y sector#2# In$estment )!esigne! to protect in$estors %hen those in$estors ha$e !isputes %ith the

go$ernment*#=# 7oreign 3or6ers )NA7TA Lisa*#

># Intellectual roperty?# Ser$ices@# Si!e Agreements )/n$ironment an! (a or Stan!ar!s*

hapter 19 internal !ispute resolution mechanisms# I" e ico elie$es #S# is $iolating NA7TA pro$isions on any o" these su ,ects+ can ta6e them e"ore a panel o" e perts use! toren!er a !ecision to !etermine o" %hether or not #S# is $iolating NA7TA agreement#- #S# %as rule! to e in $iolation o" e ican truc6ing situation# e ican too6 retaliatorymeasures#- Tra!e reme!y la% coul! e applie! %ithin the mem ers states that coul! $iolate NA7TA#

ro$i!e that normal processes %oul! e un!erta6en in each mem er country# oul! ha$e that

case appeale! !irectly to international ar itral panel# S6ips o$er !omestic court system#- anel re$ie%s to "in! out %hether the a!ministrati$e authority properly applie! the la%s o" the ,uris!iction )"airly an! reasona le*# Do not !eci!e %hat the la% is+ ta6e it as is# Ta6e "acts as they%ere gi$en or !eci!e! )unless "rau! or ias*#- A"ter the panel s !ecision+ the !ecision can e appeale! to an e traor!inary challenge

pro$ision#

hapter 20

01A .

ustoms nion a!!s to the "ree tra!e aspect o" "ree tra!e area )7TA*# ommon e ternal tari""#- / G a!ministere! y the union itsel"+ all the countries %ithin the customs union %oul! ha$e onesingle tari"" entering the union# &nce goo! enters the area+ it no longer "aces a!!itional tari""#7ree circulation# ustoms unions are a goo! place to !o usiness#- NA7TAG rules o" origin are o" prominent important# Is it a pro!uct o" the 7TA )"or "reecirculation* or "oreign )it %ill e hit y tari""s as it tra$els et%een countries in 7TA*#- Su stantial trans"ormation test harmoni e! tari"" sche!ule# Not approach ta6en y NA7TA#7or most goo!s+ they ecome a NA7TA pro!uct ase! on tari"" shi"t#

4 7lour "rom / use! to a6e ca6es in e ico# 3oul! ecome a NA7TA pro!uct %hen itshi"ts "rom one tari"" chapter to another chapter# hapter 11 hapter 19# ust e liste! as a

Fuali"ying mo$e#A pro!uct might mo$e "rom h# 11 to h# 19 ' trans"ormation+ an! thus pro!uct o" NA7TA#- Tari"" shi"t is primary metho!#- Also consi!ers LA( / ADD/D#- Speciali e! pro!uct test#

No origins issues %ithin ustoms nions#


31/43


/ #1# (a%-ma6ing capacity# 4as the po%er to create legislation# Bin!ing rules %ith

conseFuences# This legislati$e output is superior %ithin the sphere o" competency o" theunion# arallels to "e!erations )constitution+ treaties )organic la%*+ institutions an! o!ies

that ha$e la%-ma6ing capacity+ an! in!ing la% on national go$ernments an! superioro$er national la%+ an INDILID A( can act upon it )i#e#+ in!i$i!uals can sue+ an! thenational institutions must apply these la%s as recourse "or in!i$i!uals**

a# NA7TA !oes not ha$e a la%-ma6ing capacity+ no real !ecision-ma6ing capacity#2# /uropean ourt o" Justice )/ J*# Basic "unctions o" the ,u!iciary# 7inal authority o$er

interpretation an! application o" / la%# 4as the po%er o" ,u!icial re$ie% )national la%is inconsistent %ith / la%*# .e$ie%s lo%er court !ecision#

=# /uropean arliament# Does not really ha$e legislati$e capacity )la% !oes not originatehere*# o!ecision-ma6ing process %ith another la%-ma6ing institution# ay ha$e thecapacity to stop legislation# .epresent the /& (/ o" the / #

># ouncil o" inisters# National go$ernment o""icials )pu lic o""icials "rom each mem er

state rele$ant to a particular issue*# These o""icials represent their go$ernments)national interests*#?# /uropean ouncil ) ouncil o" /urope is separate an! !istinct "rom /uropean ouncil*

an! / *#@# ommission# .epresent the / # ommissioners represent interests o" the entire /uropean

nion#

ontrast / %ith 3T- 3T& ma!e up o" ureaucrats assigne! !i""erent roles# 3ho !o they represent:- 3hat is their ,o "unction:- 3T& is a6in to a clu # Ser$es interests o" the 3T It is not a NI&N# It is a !e$ice to ser$einterests o" each mem er states# Do not represent interests o" 3&.(D-T.AD/# 3ant to get%hat they can "or T4/I. country#- No institutional representation o" !i""erent constituency#- 3ant rules to promote "ree tra!e in light o" interests o" each mem er state#

N- ertain actors in the N that represent the N# 7or the most part+ N is li6e a clu #

/ J $# !ispute resolution in 3T&- / JG nominate!+ scrutini e!+ a!opte!+ an! ser$e "or a term# (a% comes "rom !i""erent sources#- 3T&G has an appellate o!y# ore permanency+ more uni"ormity o" rule+ more e pertise o$ertime+ !e$elope! la% is more consistent an! principle!# 3T& panel !ecisions are not technically

in!ing )li6e / J !ecisions %oul! e in!ing*# Not too much legitimacy ehin! 3T- NA7TA# No representation as an entity# Decision-ma6ing capacity is $ery limite!# &$erseen y!omestic la% an! !omestic court#

NA7TA ---------------------- 3T& --------------------- /- & ,ectors to NA7TA are those %ho are concerne! %ith a""ects on national economies#- Aggregate gain ' in!i$i!ual pain


32/43


/E / TI&NS 7&. 7N ./R I./ /NTS# re"erences "or n!er!e$elope! ountries#

8S )8enerali e! System o" re"erences*#

4 &G lient %ants a source "or cheap goo!s )or ra% materials*# 8S programs are in olumn1) * ' D T -7.// /NT. into the nite! States#

1# BD2# Speci"ie! Designate! ro!uct )eligi le*

0@A .

- /scape lause an! anti- oycott legislation 8&N/ "rom Sylla us- Tra!e Ser$ices Ne t- Trans"ers o" Technology intellectual property rights reme!ies Ne t

Import ra% materials )inputs*+ manu"acture them here+ e port them# Dra% ac6 !uty originally pai! on ra% materials an! inputs+ an! get reim urse! %hen you e port manu"acture! goo!soutsi!e the country again#

Tra!e .eme!ies

Anti-Su si!y an! Anti-Dumping .eme!ies#- .ely on a!ministrati$e processes#- 4 &G Agency o" #S# go$ernment )share! responsi ility et%een Dept# o" ommerce an!IT * %ill in$estigate tra!e $iolations )Fuasi-,u!icial*#

ro lem- I" ana!ian pro$i!es "inancial contri ution an! a sor s costs+ you can sell lum er "or less in"oreign mar6ets#- Su si!ies !istorts regular competiti$e playing "iel!#- Allo%ing "or su si!ies ND/. IN/S tari"" sche!ule in 8ATT .en!ers lo%er tari""meaning"ulness- oul! run !omestic competitors out o" usiness

(egitimate Su si!y- Social !e$elopment- /conomic !e$elopment )an! other competing concerns*

oul! go to 3T& on ana!ian $iolation o" S agreement#

1# 7ile a petition )a!ministrati$e reme!y* #S# # 1@H1# &ne goes to the A!ministrati$eAuthority an! one to the IT #

a# hec6 petition to see i" )in!ustry support+ intereste! party+ allegations+ pro$i!esu""icient in"ormation "or process to go "or%ar!*


33/43


# A!min Authority loo6s to in"ormation relate! to e istence o" actiona le su si!yan! amount o" that su si!y

c# IT "ocuses on %hether there is an in,ury to the !omestic #S# in!ustry!# In preliminary stage+ reasona le in!ication that there is a su si!y )or in,ury* lo%

e$i!entiary ur!en#

2# 3ho can "ile: Intereste! party on ehal" o" in!ustry )2? o" pro!ucers* )unions+ pro!ucers+ consumers+ manu"acturers+ importers+ "oreign pro!ucers*#a# &n ehal" o" in!ustry support in the in!ustry "or claim )cuts out %i!e-s%ath o"

parties inclu!e! in ;intereste! parties< !e"inition*# oalition generally "orms asis"or in!ustry support#

# In pro lem H? o" #S# so"t%oo! pro!uction ' ma,ority o" in!ustry "or support o"claim#

=# AllegationsGa# ounter$aila le su si!y

# ;By reason o"# Determination higher ur!en o" proo" %ithin time "rames#

a# pon "in!ing o" preliminary in!ications that there is a su si!y or in,ury+ importersare reFuire! to post a on! in the amount that %oul! co$er a potentialcounter$ailing !uty#

# 4 &G 19 counter$ailing !uty# Increase! it %ith 12 surcharge# reliminary!etermination cause! a on! to e impose! to co$er any potential !uties#

?# In,ury reFuirement only applies %hen pro!uct is coming "rom a country su ,ect to the8ATT rules

S BSID Q INJ . ' 7.& 8ATT )part o" #S# la% ut only "or 8ATT countries*

rocess y %hich agencies share responsi ility/ssential roles )D& su si!y+ IT in,ury*Set o" !eterminations that progress "rom preliminary to "inal

1# Is there a su si!y: es+ i" they gi$e a "inancial contri ution# /ach one in this pro lemgi$es a "inancial contri ution# )7air mar6et $alue o" stumpage $ersus ana!ian stumpageat go$ernment rate*

a# Supply %or6ers # (oan that %oul! other%ise %oul! una$aila lec# (oan at !iscounte! interest rate!# 3hat a out roa!s:

2# 3hen is it counter$aila le:a# Su si!y is speci"ic

i# / port su si!ies )su si!y is ma!e !epen!ent on e ports# 8i$e su si!y i"you e port*# rohi ite! / port !epen!ent in la% )e pressly* or "act


34/43


)in!ustry pro!uction cannot e a sor e! in local mar6et+ in "act %ill ereFuire! to e port+ lin6 this as e port su si!y*#

ii# Import su stitution# Strictly "or i!!en# 8et the su si!y as long as youha$e a certain amount o" localC!omestic content# ou %ill use a certain

percentage o" !omestic pro!uctC%or6ers#

iii# Domestic su si!y# ounter$aila le i" it is speci"ic to an in!ustry orenterprise in la% )e pressly* or in "act#1# Sometimes this is o6ay i" the su si!ies are generally a$aila le#2# I" eligi ility is automatic )no !iscretionary su si!i ing*

0KA .

- 3hich su si!ies are prohi ite! an! actiona le an! %hich are allo%e!:- 3hat !oes it mean to say that a su si!y is speci"ic "or purposes o" !omestic8o$ernment su si!y that is limite! to a speci"ic in!ustry or an enterprise# 4 &G gi$e hrysler

elo% mar6et loans#

- &ther %ays to e speci"ic# 8eneral su si!y may !istort mar6et# But i" !irecte! at speci"icin!ustry+ suspicion is that they are !irectly eing gi$en competiti$e a!$antage in the internationalmar6et- a6es sense to use speci"icity as a criterion "or !etermining actiona le su si!y#- Speci"icG more !istorte! %ithin speci"ic in!ustry#

ro lem+ lass 211# 7orest Access .oa! onstruction an! aintenance rogram

a# / port Su si!y: No # Import Su stitution: Noc# Domestic Su si!y: Speci"ic to the "orest in!ustry M : Depen!s on ho% you

!e"ine the in!ustry#!# )Is it a su si!y: es+ "inancial contri ution# .eim ursing them to uil! the roa!s#

Bene"it that they %oul! not other%ise ha$e i" not "or the su si!y*2# 7orest In!ustry apital Ta re!it

a# Su si!y: 7inancial contri ution# Ta that they %oul! other%ise ha$e to pay: es+ ene"it#

# / port: Noc# Import Su stitution: No!# Domestic Su si!y: Any company in the "orest pro!ucts in!ustry# es#

=# .esearcha# .esearch an! !e$elopment grant is e cepte! in #S# #

(oo6 "or su si!y li6e eha$ior that might e challenge! an! support an import#1# 7inancial contri ution Q ene"it:2# Type o" su si!ies that are counter$aila le:=# / ceptions:># Then sho% that su si!y causes material in,ury

Dumping


35/43


- 7oreign country sells e ports in import mar6et at less than "air $alue#1# ompare price in "oreign )e port or home* mar6et )i#e#+ normal price* %ith price in importmar6et )i#e#+ e port price*#

rice is ene"icial to consumers# But i" there is some mar6et con!ition that allo%s them to sellat lo%er price in e port mar6et M N&T D IN8#

I" there is su si!y )or some a!$antage* that is allo%ing them to sell elo% cost M- No reFuirement in #S# la% or 8ATT that reFuires us to tie !umping to pre!atory practice#- Dumping is not anti-competiti$e# .eme!y is al%ays anti-competiti$e#

(&&5 AT T4/ (/8A( D/7INITI&N1# lass or "oreign merchan!ise is eing sol! at less than "air $alue o" sales

a# omparing prices a!,ustments ma!e ase! on !i""erent "actors # I" !i""erence et%een prices are small enough+ they %ill !ismiss the case )perhaps

2 %oul! e consi!ere! !e minimis*# That is+ there must e a !i""erential !umping margin

2# An! there is some material in,ury )or threat o" material in,ury*# This reFuirement came

"rom 8ATT#

ro lem+ lass 221# Non-mar6et economy )go$ernment sets the price# oul! not "airly compare price to that

in e port mar6et*# I" you cannot use the normal price "or sale in "oreign mar6et:a# se thir! country analogous %here a "air comparison can e !ra%n# )alternati$e

mar6et*# 4ere+ it %as / - =0 per linear "oot# #S# price is 10 per linear "oot#2# ausation ) y reason o"*=# aterial in,ury must e one that is not inconseFuential#

a# Lolume )in$entory* # /""ect on Import rices

c# on!itions in the actual in!ustry# 3hat 6in!s o" things %oul! e important "actorsin terms o" the health o" the in!ustry#i# Jo losses

ii# lant closuresiii# (ess-than-"ull capacity operation )un!er capacity*#i$# In$entories$# (o% pro"it margins )or losses*

># Threat o" material in,ury# No in,ury right no%+ ut that there %ill e tren!s in!icating a potential o" "uture in,ury# (o%ering o$er time o" price# Buil!ing in$entory#

?# .eme!y !uty impose! at or!er %hich %oul! o""set counter$ailing su si!y or %oul!o""set the !umping margin

S6ip o$er anti- oycott legislation

1=A .

8reen $# Bor6


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ossi le Liolations in .&B(/

1# ;Sales ommission# Something o" $alue?# To a "oreign o""icial )political party+ o""icial+ can!i!ate*

nla%"ul "or anyone to gi$eCo""er anything o" $alue toG "oreign o""icial or can!i!ate or thir! person )6no%ing that %ill supply this in"ormation to o""icials or can!i!ate* "or purposes o"in"luencingC$iolating !uties+ or in or!er to o tain usiness#

omple !e"inition o" %hat essentially loo6s li6e ri ery#A""irmati$e De"ense- (a%"ul un!er the la%s o" that country- Bona "i!e usiness e pense

1?A .

Intellectual roperty .ights1# atents

a# rotects in$entions )something inno$ati$e* # / clusi$e right to e ploit the inno$ation in the territory that grante! you that

patentc# I" you %ant to protect a pro!uct in a glo al mar6et+ you ha$e to protect it

e$ery%here it %oul! matter !# ou also ha$e to "ollo% all the rules an! limitations impose! y the "oreign

countries2# opyrights


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a# rotect %or6s o" arts=# Tra!emar6s

a# .egister a tra!emar6#

T.I S

- %hat coul! e inclu!e! )or e clu!e!* "rom patenta ility- %hat i" a country "ails to "ul"ill its o ligations to o""er a!ministrati$e reme!y "ortra!emar6Ccopyright $iolations: 8o to the 8ATT

irate!C ounter"eit 8oo!s- In"ringement# I" the goo!%ill is !ilute!+ or i" the tra!emar6 %ill ten! to con"use the consumer#

ro lem1# Bogus%are hinese corporation %hich openly copies Ds

- 8oo! is protecte! here# .eme!ies are a$aila le here#- 5i!s .& coul! go o$er to hina an! go to a court an! as6 ourt to ma6e Bogus%are

to stop#- &nly i" you secure intellectual property rights in hina can you en"orce in hinese court- 3T& an! T.I s #S# still !oes not ha$e to recogni e some other country sintellectual property rights unless they ha$e I rights in #S# as %ell#

a# #S# 7e!eral ourt# ro lematic "or se$eral reasons#i# slo% processii# "oreign corporation %ill not comply %ith court or!er iii# "oreign corporation %ill !issol$e an! come up un!er a ne% namei$# har!er to ma6e case against #S# corporations in$ol$e!

# ustoms Sei urei# "or copyrights an! tra!emar6s

c# A!ministrati$e .eme!ies!# 7oreign Juris!iction

8ray ar6et

20A .

I rights are territorial# ust ha$e rights in ,uris!ictions %here you %ant to en"orce it#- ou cannot to the 3T&

ustoms roce!ures#- opyrightCtra!emar6s $ersus patents# ustoms proce!ures are relate! to "ormer#- irate! goo!s more o" a practical than legal pro lem# a6e sure customs can "in! thosegoo!s that are in"ringing so they can e sei e!# A!$ance! in"ormation#

4 &G Italian i6e company# Name is LNA# 4as this name tra!emar6e!# (icense the tra!emar6to e use! in the nite! States y a #S# manu"acturer )name! LNA #S#A#*- n!er license you get the right "rom tra!emar6 hol!er to e ploit+ use+ sell )coul! e limite! ycontract*#


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- De"en!ant is /uro Imports# 4as "or many years een importing tires "or sale in the #S# 3henthey go to /urope an! they uy the tires in the open mar6et+ they are not !oing anythingimproper#- 8ray mar6et pro lem# /uro imports is ta6ing tires "or sale in the #S# LNA #S#A# %ants toe clusi$ely sell this racing tire in the #S#

- ou cannot !o a customs sei ure ecause they !o not in"ringe on the tra!emar6 )/uro Importsis selling real LNA tires in the #S#+ no contract et%een !e"en!ant an! LNA #S#A#*

?2@ (AI - 7oreign manu"acture! goo! earing a tra!emar6 o%ne! y a #S# company thatthey ha$e recor!e! %ith customs# #S# company has not gi$en permission# ustoms can sei e thegoo!s#

- / ception is the & &N &NT.&(

Name %holly o%ne! su si!iary %oul! Fuali"y# De"inition in the regulations ' stan!ar!s o"%hat common controls consists o" )interloc6ing oar!s o" !irectors+ o%nerships o" shares*#

- LNA SA an! LNA Italy only ha! the same name# But Italian company has no shares or oar!o" interloc6ing !irectors %ith #S# company#- lainti""s )LNA SA* %ants imports sei e!# ustoms says they can t sei e ecause LNA an!LNA Italy are the same#- lainti""s %oul! appeal this "in!ing# The De"en!ant %ill point out the contract arrangements tosho% that Italian company can control %hat #S# company coul! !o#- ourt hel! that it is not enough that there are other practical metho!s to control tra!emar6#Does not sho% o%nership# Depen!s &./ on o%nership interests $ersus practical control li6e%ithin in a contract#- Since e ception !oes not apply so goo!s %ill e sei e!#

ro lemG 5i! .oms# anu"acture! an! ore a genuine tra!emar6# se ?2@#

Lever Case- anu"acture! in Britain# #S# licenses company in Britain to ma6e Shiel! an! Sunlight# ThenBritish manu"acturer sen!s ac6 to #S#- 8enuine goo!+ "oreign manu"acturer+ importe! ac6 to #S# earing tra!emar6+ rought it%ithout consent o" #S# hol!er# ?2@ %oul! apply+ e cept roctor an! 8am le %as a""iliate! in/nglan!#- ommon control e ception applie!# /$en i" you cannot sei e gray mar6et goo!s+ are thereother groun!s to say they cannot e importe!:- (anham Act %as aime! at !eceit or con"using use o" tra!emar6# Basic rights# 8oo!%illassociate!# ou coul!n t sei e it ecause it %as a genuine goo!#- /$en though it ears a genuine tra!emar6+ ecause there are physical !i""erences+ they must esei e! un!er (anham Act "or con"usion ) ut not ?2@ common control e ception*#- ?2@ ommon control e ception applica le to (anham Act: No+ the goo!s coul! e sei e!#- #S# hol!er o" tra!emar6 runs into common control e ception un!er ?2@# Secon! argument isthat they are materially !i""erent+ $alue o" tra!emar6 %oul! e !i""erent# ourt sai! that this %as"ine an! you coul! e clu!e them#


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ustoms then came out %ith a ne% rule# Importation o" physically an! materially !i""erent graymar6et goo!s pro$i!e! that a la el is a""i e! e plaining that this is a !i""erent pro!uct )in or!erto protect the #S# hol!er*#

Copyright?- Goods come in looking the same. Copyright versus trademark? License for the trademark butno permission to use copyrighted material.- Use a different form of IP to protect against importation. his can !ork.- "#haustion of right? $nce you sell it% you cannot control !hat happens to the productdo!nstream. he original o!ner&s rights are e#hausted.- Copyrights e#hausted by first sale to the U.'. do!nstream% so no recovery?

atents- Not su ,ect to sei ure rules#- .eme!ies that $iolate I )"ocuse! on patent $iolation*

- ==H- Alternati$e to suing "or patent in"ringement )this is Fuic6er+ so it is a goo! alternati$e*

3ho %ill hear the reme!ies:- International Tra!e ommission )"i$e appointe! commissioners*# Actions are hear! yA!ministrati$e (a% Ju!ges# ore o" a Fuasi-,u!icial process $ersus !umping hearings# Initial"in!ing must e accepte! y IT #

3hat must e "oun!:1# n"air practices

a# ust su stantially in,ure or !estroy #S# company )!i""erent phrase that thismeans something other than material in,ury*# This is a se$ere reFuirement#

2# In"ringement $ia imports

3hat are the elements:- ust ha$e an import- ust in"ringe a #S# patent )"ocus here "or patents+ other reme!ies are su""icient "or copyrightan! tra!emar6*+ tra!emar6+ copyright+ !esign+ mas6 %orn- An import must simply in"ringe one o" those rights o" a #S# citi en or corporation )"oreigncompany %ith #S# patents*- I" incorporate! in #S#+ that !etermines citi enship o" corporation

- In!ustry relating to that pro!uct e ists in the nite! States1# lant2# /mployment o" people=# / ploitation o" in$estment

22A .


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3hat the reme!ies might e#1# IT has the po%er to issue e clusion or!ers

a# Those !irecte! at the particular goo! )or particular manu"acturer* # 8eneral e clusion or!er )co$ers the entire country an! all possi le goo!s that

might in"ringe that particular I right*#2# o%er to or!er cease an! !esist at a particular party )in con,unction %ith e clusionor!ers*# i$il penalties can e assesse! against party s that "ails to comply %ith ITor!ers#

a# oul! e "oun! lia le ci$illy ecause you circum$ente! those or!ers# # .eme!ies are not automatic un!er 1==H#

i# u lic %el"areC ene"its e ceptions# The IT can or!er+ unless it "in!s thatit is %ithin the pu lic s interests not to or!er e clusions# Allo% in"ringinggoo!s to still come into the country ecause pu lic nee!s it )health an!sa"ety issue*#

ii# IT or!ers are not "inal until they are appro$e! y the resi!ent# This

po%er to gi$e "inal appro$al )time perio! %here resi!ent can !isappro$e !elegate! to #S# tra!e representati$e*#

=01 the #S# tra!e representati$e can negotiate %ith "oreign go$ernments to open up mar6ets#&ut%ar! loo6ing# Set o" criteria %here #S# tra!e representati$e can in$estigate to see i"retaliatory action is reFuire!#- Liolations o" I rights# 8ATTCT.I S ountry E is "ailing to pro$i!e a!eFuate reme!ies toen"orce #S# patents secure! in E+ or are allo%ing pirate! goo!s to e e porte! to #S# Bring

=01 action challenging %hat E is !oing or not !oing# 3oul! !o$etail %ith actions here to stopimportation o" the goo!s#- Super =01# 3atch or in$estigate countries that are egregious $iolators o" I rights#

./LI/3

ro lem 11# Sale o" 8oo!s# Allocation o" terms to a contract+ %e ha$e !one %or6 on Battle o" the

7orms# ay attention to terms o" the contract anticipating the Fuestions#2# Spot the issue# (oo6 at %hat o""er an! acceptance %as# I" they ha! een the same+ !on t

%orry a out %hat are the terms o" the contract#=# 7or e ample+ is ;As Is< !isclaimer part o" the contract:># Tal6 a out %hat the terms are+ then %hat the reach is+ an! %hat the reme!ies are#?# Irre$oca le letter o" cre!it )loo6 "or %hat %as reFuire! y (& to !etermine %hether

!ocuments supplie! %ere in compliance %ith (& *@# ommercial in$oice has to !escri e the goo!s %ith precision )other !ocuments nee! only

e consistent*#H# arriers possi le lia ility o" carriers# 3hat %ere the representations that %ere ma!e in

the B&(: arrier s lia ility !o$etails tightly %ith the B&(#


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K# Sai! to contain no representation o" %hat is actually recei$e!# Sai! to contain is thesame thing as a mar6ing# ar6e!Cmar6e! %ith ' sai! to contain# Num er Q or!er ' cleanB&(#

9# S(3 ' !isclaimer# I !on t really 6no% ho% many o es %ere loa!e! or %hat they%eighe!+ ut I %as tol! that they %eighe! E# 4as to e true )that shipper !i! not loa!* to

!isclaim lia ility#10# 3hat is strict compliance: 3hat !o an6s ha$e to 6no%: Some things nonsensical:

ro lem 1A1# Di! not !eli$er %hat they promise!# Allegation o" "rau!: T%o possi le to stop payment

un!er the (& # Discrepancy et%een %hat %as calle! "or an! %hat %as presente!# lusno% %e ha$e "rau! in the transaction# 7rau! e ception %ill not apply an! o$er%helm thein!epen!ence principle#

ro lem 1B1# 7ocus no% on the carrier# Turns out that the o es %ere !eli$ere! an! the carrier !oes not

!isgorge "rom the ship the o es that %ere actually !eli$ere!#a# T%o soa6e! %ith engine oil # T%o are emptyc# T%o are lan6 Ds#

2# I" they loa!e! them+ an! they %ere empty+ they %oul! ha$e ha! to notice that they %ereempty# .epresentation that it %as "ault+ an! carrier shoul! ha$e 6no%n it %as "alse#

=# Soa6e! one apparent goo! or!er not true Di! not !o their !uty#># No carrier lia ility "or lan6 Ds#

ro lem 11# Breach# Seller has !eli$ere! noncon"orming goo!# 3hat are the reme!ies an! rights

un!er the IS8:

Ruestion 1 &utline o" Issues- Ban6s !o not ha$e to 6no% anything a out the %orl!# They !o not ha$e to !o an in$estigation#They only ha$e to 6no% a out an6ing %orl!#- Typos in (& little it o" lee%ay- Allegation o" "rau! in the transaction # I" the !ocument is "orge!+ "rau! in the un!erlyingtransaction+ the an6 must pay certain people any%ay+ ut may re"use payment in other cases#- Noncompliance $ersus "rau! )intent to !ecei$e*#- The an6 may pay as long as it pays in goo!-"aith )or stop or pay*# /$en i" an6 suspects "rau!+they can still in goo!-"aith su mit payment#- Actual 6no%le!ge o" "rau! negates allegations o" "rau!#- See6 an in,unction against payment#

&8SAC omerene Act# an e rea! together#- Applica ility o" omerene Act is limite! to B&(s originate in the #S# A!!s an e plicita!!itional reme!y )creates an estoppel argument*#- B&( is a prima "acie e$i!ence a out %hat %as recei$e! an! its con!ition# It is p" true# I" it sai!100 o es in goo! or!er+ there is a presumption that it is true#


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7oreign corrupt practices#- Lalue eing gi$en %ith purpose that the o""icial e in"luence! in con!uct o" pu lic a""airs inor!er to retain or 6eep usiness#- / ceptG grease payment+ e pe!ite! payment+ routine payment#

IBT_Donono_Spring2010

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Transcript of IBT_Donono_Spring2010