International Law

What affects men sharply about a foreign nation is not so much finding or not finding familiar things; it is

rather not finding them in the familiar place.”G.K Chesterton, British Author

“The greatest meliorator of the world is selfish, huckstering trade.”

Ralph Waldo Emerson, American Philosopher and Poet

Exporting: Shipping goods or services out of a country

Importing: Shipping goods or services into a country

Export Administration Act of 1985◦ Balances the need for free trade with important

requirements of national security◦ Permits the federal government to restrict exports

if they: Endanger national security Harm foreign policy goals Drain scarce materials

◦ Controlled Commodities List Made by the Secretary of Commerce Lists restricted items which may not be exported

without a license

Arms Export Control Act◦ Permits the president to make a second list of

controlled items, all related to military weaponry

Tariff: A tax imposed on goods when they enter a country◦ Classification - A customs official inspects the

merchandise as it arrives and classifies it, in other words, decides precisely what the goods are

◦ Valuation Ad valorem: Customs officials impose duties

“according to the value of the goods”

Duties for dumping and subsidizing◦ Dumping: Selling merchandise at one price in the

domestic market and at a cheaper, unfair price in an international market US Department of Commerce will impose a dumping

duty when they suspect that the low prices are intended to harm American companies

◦ Countervailing duties: A tariff on subsidized goods

General Agreement on Tariffs and Trade (GATT)◦ Created the WTO to stimulate international

commerce and resolve trade disputes World Trade Organization (WTO): Organization

created by GATT to stimulate international commerce and resolve trade disputes

Regional agreements◦ North American Free Trade Agreement

(NAFTA): A treaty eliminating almost all trade barriers, tariff and nontariff, between the United States, Canada, and Mexico

◦ European Union (EU): Twenty-seven countries belong to the EU, including Great Britain, Germany, France, Italy, and Spain, as well as Latvia and Slovakia

The sales contract◦ What law governs?

Texas law French law An international treaty United Nations Convention on Contracts for the

International Sale of Goods (CISG): Applies automatically to any contract for the sale of goods between two parties from different countries if each operates in a country that is a signatory Signatory: A nation that signs a treaty

The parties must decide:◦ What law governs◦ Where disagreements will be resolved

Parties must select:◦ A language for the contract - Vital because legal

terms seldom translate literally◦ A currency for payment - Vital because the

exchange rate may alter between the signing and payment

Letter of Credit

• A commercial device used to guarantee payment in international trade

Negotiable Bill of Lading

• A document which describes exactly the goods received—their quantity, color, quality, and anything else important

Draft

• A formal order, based on the letter of credit

Repatriation of profits: Occurs when an investing company pulls its earnings out of a foreign country and takes them back home

Expropriation: Government’s seizure of property owned by foreign investors◦ Nationalize: Action in which a government

assumes ownership of property◦ Confiscation: Government takes property

without fair payment

Sovereign immunity: Holds that the courts of one nation lack the jurisdiction (power) to hear suits against foreign governments◦ Foreign Sovereign Immunities Act (FSIA): A

statute which states that American courts generally cannot entertain suits against foreign governments

◦ Three possible exceptions when seeking compensation for foreign expropriation: Waiver Commercial activity Violation of international law

◦ Overseas Private Investment Corporation (OPIC): Insures U.S. investors against overseas losses due to political violence and expropriation

Foreign Corrupt Practices Act (FCPA): Makes it illegal for an American businessperson to give “anything of value” to any foreign official in order to influence an official decision◦ Has two principal requirements:

Bribe Recordkeeping

◦ Not all payments violate the FCPA A grease or facilitating payment is legal

◦ A payment does not violate the FCPA if: It was legal under the written laws of the country in

which it was made

Extraterritoriality: The power of one nation to impose its laws in other countries◦ International subsidiaries: That many

American companies do business through Foreign companies controlled by these American

companies

““Overseas investment, like sales Overseas investment, like sales abroad, offers potentially great abroad, offers potentially great

rewards but significant pitfalls. A rewards but significant pitfalls. A working knowledge of international working knowledge of international law is essential to any entrepreneur law is essential to any entrepreneur or executive seriously considering or executive seriously considering

foreign commerce.”foreign commerce.”