Law of Global Commerce A Tour. A Tour of Law for Global Commerce NAFTA

Law of Global Commerce A Tour

A Tour of Law for Global A Tour of Law for Global CommerceCommerce

NAFTANAFTA

33

The Three MembersThe Three Members

CanadaCanada MexicoMexico USA USA

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CanadaCanada

Huge land area, largest of the Huge land area, largest of the membersmembers

Small populationSmall population GNP/Capita about $23,000GNP/Capita about $23,000 Not much business with MexicoNot much business with Mexico USA is dominant trade partnerUSA is dominant trade partner

55

MexicoMexico

Population over 100 millionPopulation over 100 million Smallest NAFTA nation in land Smallest NAFTA nation in land

areaarea GNP/capita $8000GNP/capita $8000 Little Trade with CanadaLittle Trade with Canada USA is largest trading partnerUSA is largest trading partner

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U.S.A.U.S.A.

Second in land area after Second in land area after CanadaCanada

$31,000 GNP/capita$31,000 GNP/capita Population about 300 millionPopulation about 300 million Canada and Mexico both major Canada and Mexico both major

trade partners trade partners

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History of NAFTAHistory of NAFTA

FTA concluded between USA FTA concluded between USA and Canada in 1989and Canada in 1989

Mexico asked for FTA with USA Mexico asked for FTA with USA in 1990 hoping to improve in 1990 hoping to improve economyeconomy

Canada asked to join Canada asked to join negotiationsnegotiations

Agreement reached in 1992 Agreement reached in 1992

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What NAFTA doesWhat NAFTA does

Free Trade Area establishedFree Trade Area established Tariffs phased out over 15 year periodTariffs phased out over 15 year period Many non tariff barriers eliminatedMany non tariff barriers eliminated Many import quotas and licenses eliminatedMany import quotas and licenses eliminated Standardized “country of origin Standardized “country of origin

determination and markingsdetermination and markings Eliminated charges for using customs Eliminated charges for using customs

service, export taxes, & many other thingsservice, export taxes, & many other things

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Other NAFTA provisionsOther NAFTA provisions

Chapter 5 streamlines customs proceduresChapter 5 streamlines customs procedures Chapter 6 addresses energy sectorChapter 6 addresses energy sector Chapter 7 deals with agricultural issuesChapter 7 deals with agricultural issues Chapter 8 provides emergency procedures if Chapter 8 provides emergency procedures if

NAFTA causes too much disruptionNAFTA causes too much disruption Chapter 9 addresses technical standardsChapter 9 addresses technical standards Chapter 10 requires more access to Chapter 10 requires more access to

government procurementgovernment procurement

1010

NAFTA and ServicesNAFTA and Services

Chapter 12 cover cross border trade in Chapter 12 cover cross border trade in servicesservices

Chapter opens telecommunications a bitChapter opens telecommunications a bit Chapter 14 opens Mexican Banking Chapter 14 opens Mexican Banking

somewhatsomewhat Chapter 16 requires some immigration Chapter 16 requires some immigration

provisions be changed to allow a few provisions be changed to allow a few foreign workers to perform specific foreign workers to perform specific services services

Chapter 17 requires protection of Chapter 17 requires protection of intellectual property intellectual property


European UnionEuropean Union

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Beginnings of European IntegrationBeginnings of European Integration

End of the age of empires reduced End of the age of empires reduced competition between European powerscompetition between European powers

Great desire for cooperation and peace Great desire for cooperation and peace after second world warafter second world war

Schuman, in unique position being Schuman, in unique position being partly both French and German, and partly both French and German, and well placed in French government, well placed in French government, conceived the idea of cooperation for conceived the idea of cooperation for market regulation market regulation

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European Coal and Steel CommunityEuropean Coal and Steel Community

Designed to avoid Franco - German Designed to avoid Franco - German conflictconflict

Fixed prices and production of coal Fixed prices and production of coal and steeland steel

Other European countries Other European countries participated as wellparticipated as well

Became European Economic Became European Economic Community in 1958 Community in 1958

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Structure of European Structure of European IntegrationIntegrationExecutive - Council of MinistersExecutive - Council of Ministers

Legislative - European ParliamentLegislative - European Parliament Judicial - European Court of JusticeJudicial - European Court of Justice

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Economic PurposeEconomic Purpose

Eliminate tariffs and barriers to tradeEliminate tariffs and barriers to tradeMake all member nations a single Make all member nations a single

marketmarketCustoms UnionCustoms UnionAll above achieved by 1992All above achieved by 1992

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Treaty Basis for European Treaty Basis for European CommunityCommunity1952 Treaty of Paris establishing Coal 1952 Treaty of Paris establishing Coal

and Steel Communityand Steel Community1958 Treaty of Rome establishing 1958 Treaty of Rome establishing

European CommunityEuropean Community1958 Treaty establishing European 1958 Treaty establishing European

Atomic Energy CommunityAtomic Energy Community

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Single European ActSingle European Act

1987 enactment of European 1987 enactment of European ParliamentParliament

Aimed at giving sovereignty to Aimed at giving sovereignty to European Union as opposed to European Union as opposed to member nationsmember nations

Enacted by treaty of Maastricht 1993Enacted by treaty of Maastricht 1993Most West European nations now Most West European nations now

belong except Switzerland and Norwaybelong except Switzerland and Norway

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Purpose of EUPurpose of EU

Social and Economic Social and Economic ProgressProgress

Present common Present common position on position on international mattersinternational matters

Introduce European Introduce European citizenshipcitizenship

Promote free Promote free movement within movement within EuropeEurope

Promote voting rightsPromote voting rights Provide protection for Provide protection for

Europeans abroadEuropeans abroad Protect right to Protect right to

petition EU petition EU parliamentparliament

Develop area of Develop area of freedom and justicefreedom and justice

Build EU lawBuild EU law

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European InstitutionsEuropean Institutions

European CouncilEuropean CouncilEuropean CommissionEuropean CommissionEuropean Court of JusticeEuropean Court of JusticeEuropean Investment BankEuropean Investment Bank


The Law of the SeaThe Law of the Sea

Basis for The Law of the Basis for The Law of the SeaSea

U.N. Conference on Law of the U.N. Conference on Law of the SeaSea

Geneva, 1958Geneva, 1958

2002 Pearson Education, Inc.Upper Saddle River, NJ 07458

Law of Global Commerce, 1/eDavid A. Neipert

Basic PremiseBasic Premise

• Sovereignty of a nation extends beyond Sovereignty of a nation extends beyond its land to the adjacent (territorial) seaits land to the adjacent (territorial) sea– US likes 3 milesUS likes 3 miles– Other countries claim 12Other countries claim 12– US will accept 12 if free passage is allowedUS will accept 12 if free passage is allowed

• Baseline: Tidal Low Water markBaseline: Tidal Low Water mark

• Includes airspace and subsoil Includes airspace and subsoil



The BaselinesThe Baselines

• Where deep indentations you can Where deep indentations you can draw baselines from appropriate draw baselines from appropriate pointspoints

• Landward side of baseline is internal Landward side of baseline is internal waters of statewaters of state

• For bays you use 24 mile baselinesFor bays you use 24 mile baselines

• For rivers straight across mouth For rivers straight across mouth



Rights of Passage in Rights of Passage in Territorial SeaTerritorial Sea• All nations have right of innocent All nations have right of innocent

passagepassage

• You do not have right to stop or anchorYou do not have right to stop or anchor– Exception is for act of god or distressException is for act of god or distress

• Passage which disturbs peace and good Passage which disturbs peace and good order of state is not innocentorder of state is not innocent

• Subs must navigate on surface and fly Subs must navigate on surface and fly their flagtheir flag



Rights of Coastal Nations in Territorial Rights of Coastal Nations in Territorial SeaSea

• Countries may Prevent passage not innocentCountries may Prevent passage not innocent

• Ships may be stopped if on way to internal Ships may be stopped if on way to internal waterswaters

• Nations may not charge for use of territorial Nations may not charge for use of territorial seasea

• Cannot stop ship using innocent passage to Cannot stop ship using innocent passage to investigate a crimeinvestigate a crime– Express exception for drug cases Express exception for drug cases

• Hot pursuit from territorial or inland Hot pursuit from territorial or inland permittedpermitted



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Authority of Nations in Territorial Authority of Nations in Territorial SeaSea

• Under the sovereign control of the Under the sovereign control of the nationnation

• Nation has the right to control and Nation has the right to control and govern for:govern for:– The good of its peopleThe good of its people– The furtherance of commerceThe furtherance of commerce– The protection of the environmentThe protection of the environment

High Seas Contiguous to High Seas Contiguous to Territorial SeasTerritorial Seas

• Out 24 miles from Territorial limitOut 24 miles from Territorial limit

• Country may enforce:Country may enforce:– ImmigrationImmigration– customscustoms– sanitary lawssanitary laws



High Seas Open to All High Seas Open to All NationsNations

• Freedom of navigationFreedom of navigation

• Freedom of fishingFreedom of fishing– (many nations claim 200 mile economic (many nations claim 200 mile economic

zone)zone)

• Freedom to lay cables and pipelinesFreedom to lay cables and pipelines

• Freedom of overflight Freedom of overflight



Countries Having no Countries Having no SeacoastSeacoast

• Still have right to operate shipsStill have right to operate ships

• other countries are encouraged to other countries are encouraged to give them access to seagive them access to sea



Registration of VesselsRegistration of Vessels

• Each country fixes its own conditionsEach country fixes its own conditions

• Must be genuine link between country Must be genuine link between country and vesseland vessel

• Each country must establish safety Each country must establish safety regulationsregulations

• Problems on high seas aboard vessels Problems on high seas aboard vessels under jurisdiction of flag of vesselunder jurisdiction of flag of vessel



Duties of Vessels at SeaDuties of Vessels at Sea

• Render Assistance to persons Render Assistance to persons found in peril on the seafound in peril on the sea

• Rescue other vessels in distress Rescue other vessels in distress with all possible speedwith all possible speed

• Render assistance to other ship Render assistance to other ship after collisionafter collision



Obligations of Coastal Obligations of Coastal CountriesCountries• Maintain search and rescue Maintain search and rescue

capabilitycapability

• Suppress piratesSuppress pirates

• Prevent its vessels from being used Prevent its vessels from being used as slaversas slavers



Carriage of Goods by SeaCarriage of Goods by Sea

• Common CarriageCommon Carriage– Common is available to everyoneCommon is available to everyone– Must be two or more independent Must be two or more independent

shipments aboardshipments aboard– Contract is called bill of ladingContract is called bill of lading

• Private CarriagePrivate Carriage– Usually in form of charter partyUsually in form of charter party– Whole capacity of ship leasedWhole capacity of ship leased– Liability often changed by contractLiability often changed by contract



Harter ActHarter Act

• Covers carriage between US inland Covers carriage between US inland ports and seaportsports and seaports

• Prevents clauses in bill of lading Prevents clauses in bill of lading limiting liability for negligence, fault, limiting liability for negligence, fault, or failure to properly loador failure to properly load



Carriage of Goods by Sea Carriage of Goods by Sea ActAct• Bill of Lading issued upon receipt of Bill of Lading issued upon receipt of

cargocargo

• B/L is contract between three partiesB/L is contract between three parties– B/L Shows condition of the cargoB/L Shows condition of the cargo

• if no marks is “clean b/l”if no marks is “clean b/l”

– is receipt for the cargois receipt for the cargo– indicates title if negotiableindicates title if negotiable– specifies who is to receive notice of arrivalspecifies who is to receive notice of arrival– Clause Paramount indicates law to applyClause Paramount indicates law to apply



Terms for Carriage of I/M Terms for Carriage of I/M ContainersContainers

• Stated on B/LStated on B/L– house to house - loaded by shipper - clean b/l house to house - loaded by shipper - clean b/l

doesn’t prove muchdoesn’t prove much– pier to pier - loaded by carrierpier to pier - loaded by carrier

• If damage occurs:If damage occurs:– Cargo owner must prove delivery in good Cargo owner must prove delivery in good

conditioncondition– carrier must prove seaworthy vessel and carrier must prove seaworthy vessel and

damage caused by COGSA exceptiondamage caused by COGSA exception– Burden shifts to shipper to prove carrier’s Burden shifts to shipper to prove carrier’s

negligence part of the causenegligence part of the cause



If carrier’s negligence was If carrier’s negligence was part of the causepart of the cause• carrier must prove that part of the carrier must prove that part of the

damage was from COGSA exception or damage was from COGSA exception or pay all of the losspay all of the loss

• Liability limited by COGSA to $500 per Liability limited by COGSA to $500 per packagepackage– No definition to “package” in COGSANo definition to “package” in COGSA– Bundle on pallets is one packageBundle on pallets is one package– Entries on bill of lading may define Entries on bill of lading may define

packagepackage



What is a “package” What is a “package” continuedcontinued• COGSA does not apply to live COGSA does not apply to live

animals or cargo stowed on deckanimals or cargo stowed on deck

• If freight is not packaged then a If freight is not packaged then a package is customary freight unit.package is customary freight unit.

• ““What is customary for that type of What is customary for that type of cargocargo– It may be one automobileIt may be one automobile– May be based on transportation chargesMay be based on transportation charges



Deviation from Proposed Deviation from Proposed VoyageVoyage

• Voids limits for liabilityVoids limits for liability

• Unjustifiably raises riskUnjustifiably raises risk

• Therefore a breach of contractTherefore a breach of contract

• Deviation must be “unreasonable”Deviation must be “unreasonable”



COGSA DefensesCOGSA Defenses• One year Statute of One year Statute of

Limitations from Limitations from date of deliverydate of delivery

• Uncontrollable Uncontrollable cause of loss:cause of loss:– Negligence of Negligence of

master or crewmaster or crew– firefire– perils of the seaperils of the sea– act of godact of god

• Act of WarAct of War

• Act of Public EnemyAct of Public Enemy

• Official detentionOfficial detention

• Quarantine Quarantine RestrictionsRestrictions

• Acts of omission of Acts of omission of shippershipper

• labor problemslabor problems

• Riots or civil Riots or civil commotionscommotions



More Cogsa DefensesMore Cogsa Defenses

• Saving or attempting Saving or attempting to save life or to save life or property at seaproperty at sea

• Waste caused by Waste caused by inherent vice of the inherent vice of the goodsgoods

• Insufficient Insufficient packagingpackaging

• Insufficient marksInsufficient marks

• Latent defects not Latent defects not discoverable by discoverable by due diligencedue diligence

• Any other cause Any other cause not the fault of the not the fault of the carrier carrier



Carriage of PassengersCarriage of Passengers

• Highest duty to protect passengersHighest duty to protect passengers– ““Birkenhead Drill”Birkenhead Drill”

• Indian Ocean sinking in 1852Indian Ocean sinking in 1852

•Captain ordered: “Women and Children first, Captain ordered: “Women and Children first, men stand fast”men stand fast”

•No men moved, 445 men drownedNo men moved, 445 men drowned

•Drill respected world wide except for case of Drill respected world wide except for case of OceanosOceanos



The OceanosThe Oceanos• Sank in same place in 1991Sank in same place in 1991

• Greek Crew Abandoned shipGreek Crew Abandoned ship

• Left 361 passengers to fend for selvesLeft 361 passengers to fend for selves

• Captain and five officers were Captain and five officers were convicted of dereliction of dutyconvicted of dereliction of duty

• Lorraine Betts assumed commandLorraine Betts assumed command•Cruise entertainment directorCruise entertainment director

•Coordinated rescue effort that saved all Coordinated rescue effort that saved all passengerspassengers



A Tour of Law for A Tour of Law for Global CommerceGlobal Commerce

The Law of the SkyThe Law of the Sky

Chapter 14Chapter 14

Airspace above a CountryAirspace above a Country

Extension of national territoryExtension of national territory Each state has complete sovereigntyEach state has complete sovereignty Application of conventionApplication of convention

Treaty applies to civil aircraft onlyTreaty applies to civil aircraft only Civil aircraft may not be used for military Civil aircraft may not be used for military

purposespurposes



Non Scheduled FlightNon Scheduled Flight

All aircraft may make flights into or across All aircraft may make flights into or across any nationany nation

State flown over may require landingState flown over may require landing inspect for customsinspect for customs immigration’immigration’ taxestaxes

Some areas may be restricted for military Some areas may be restricted for military reasonsreasons



RegulationsRegulations

Each country may impose regulations on Each country may impose regulations on flying for:flying for: mailmail passengerspassengers cargocargo



Scheduled FlightScheduled Flight Cannot make scheduled flight without Cannot make scheduled flight without

permissionpermission All nations have right to refuse permission All nations have right to refuse permission

for domestic flights by foreignersfor domestic flights by foreigners No nation may make exclusive agreement No nation may make exclusive agreement

with one foreign airline to exclusion of otherswith one foreign airline to exclusion of others Military restriction on airspace for airlines Military restriction on airspace for airlines

must also apply to own nationalsmust also apply to own nationals



EmergenciesEmergencies

Nations may restrict flying during Nations may restrict flying during emergenciesemergencies

Aircraft may be ordered to land when a Aircraft may be ordered to land when a military or safety threat is perceivedmilitary or safety threat is perceived



Airports of EntryAirports of Entry

A country may designate airports of entryA country may designate airports of entry Landing can be required at airport of Landing can be required at airport of

entry before proceeding to interiorentry before proceeding to interior Same regulations must apply to a Same regulations must apply to a

countries own nationals countries own nationals



Nations May Regulate Nations May Regulate Passengers with regard Passengers with regard to:to: entryentry clearance of customsclearance of customs immigrationimmigration passportspassports customscustoms quarantinequarantine



AircraftAircraft Airport charges must be uniform for domestic Airport charges must be uniform for domestic

and foreignand foreign Cannot charge solely for right of transitCannot charge solely for right of transit Aircraft have nationality of state where Aircraft have nationality of state where

registeredregistered Aircraft must display registration and Aircraft must display registration and

nationality marksnationality marks Every country must report ownership of a Every country must report ownership of a

certain registrationcertain registration




Immigration LawImmigration Law


Immigration LawImmigration Law

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History of Immigration Law

• No traditional right to travel• English got commercial travel

rights guaranteed in Magna Carta• Trend has been to expand travel

privileges

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Sovereignty and Right to Enter

• General rule is sovereign nation may admit or exclude any foreigner it wishes

• Many trade blocs require members to permit entry of nationals of other members for various reasons

• EU allows citizens of members to work anywhere in the EU

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Entry Rules• Nations may:

– Refuse entry to anyone– Permit entry with conditions– simply allow entry

• Nations may require visas to be obtained in advance– Visas may be of different types such

as tourist, business, resident etc.

57

Passports• Originally letters from Kings requesting

safe passage• Passport system evolved in Europe• Dropped for a while in 19th century but

revived because of wartime controls in 20th century

• Now standardized in form and contents

A Tour of Law for Global Commerce

Customs Law

59

Importation of Goods

Entry Form Tariff classification

– Formerly difficult process– Harmonized Tariff Schedule has helped

Invoice, Pro forma invoice Other documents Role of Customs brokers


North American Advertising Law

61

Constitutional Protections

• Free speech and communication protected

• Applies to advertising by 1976 Supreme court decision

• False, misleading, or dangerous information not protected

• Both federal and state agencies regulate false or misleading advertising

62

Federal Trade Commission

• Established to prevent unfair methods of competition in commerce

• Prohibits false, deceptive, and unfair advertising

• Special authority in areas of cosmetics, food and pharmaceuticals

• Prescription drugs regulated by FDA

63

FDA Rules for Prescription Drugs

• Advertising must contain:• The name of the drug• The chemical formula• Medical information about its safe

use

64

Special Provisions

• Tobacco and Liquor Product advertising severely restricted

• Media industry regulates itself• Movie ratings• Video game ratings• TV ratings


West European Advertising Law

66

European Directive Defines Advertising

• “the making of a representation in any form in connection with a trade, business, craft or profession in order to promote the supply of goods or services, including immovable property, rights and obligations.”

67

EU Members Required to Prohibit:

• “any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which, for those reasons, injures or is likely to injure a competitor”

68

Remedies

• Authorities may order cessation of misleading advertising

• Authorities may publish their decision that advertising is misleading

• Authorities may require guilty party to publish a correction

69

EDMA details

• Burden of proof on advertiser• Must prove his advertising is not

deceptive• Sometimes hard to prove for

pharmaceuticals

• EDMA provides minimum standards and members may impose higher ones

70

Comparative Advertising in EU

• Traditionally many nations prohibited comparing one’s products directly to a competitor’s

• Now EU allows such comparisons if they are .not misleading

• There are still a number of restrictions

71

Three Methods of Regulation

• Legalistic• Self Regulation• Ombudsman


Advertising Law of

Other Parts of the World

Chapter 19

73

Advertising Regulation in Arabia

• Deception forbidden by Islam• Print advertising often medium of choice• Many countries do not permit certain

types of print advertising but do permit importation of other Arab journals that do have it

• May not advertise pork, alcohol, other things forbidden by Islam

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In Arabia Be Careful About:

• Offending Islam• Advertising tobacco• Using images of women• Advertising pharmaceuticals

75

Latin America

• Previous trends to strictly regulate business are subsiding

• But advertising still heavily regulated• Most regulation based on civil and

criminal law like in France• Presently there is a movement

toward self regulation but it has made little progress

76

Japan

• Self regulation and formal regulation both used

• Self regulation through JARO• Deceptive Ad. Statute adopted after WWII• Enforcement through Japanese Fair Trade

Commission• Abatement ordered for violation• must publicize fact of violation

77

China

• Has statute “Regulations for Advertising Management.”

• Vague and uncertain wording• Rarely applied


Commercial Commercial TreatiesTreaties

79

COCOMCOCOM

Designed to prevent exports of Designed to prevent exports of military value from the West during military value from the West during Cold WarCold War

Original COCOM expired in 1994Original COCOM expired in 1994 Replaced by Wassenar ArrangementReplaced by Wassenar Arrangement

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UNCISGUNCISG World’s commercial code for international World’s commercial code for international

salessales Covers sales of goods between citizens of Covers sales of goods between citizens of

diverse countriesdiverse countries Applies a culture test to interpretationApplies a culture test to interpretation

What does it mean to a reasonable person of the What does it mean to a reasonable person of the kind against who the contract is to be enforced?kind against who the contract is to be enforced?

Introduces uncertainly to contract processIntroduces uncertainly to contract process Author advocates specifying other law in most Author advocates specifying other law in most

contractscontracts

81

Warsaw ConventionWarsaw Convention

Covers liability of international air Covers liability of international air carriers for loss of cargo and injury carriers for loss of cargo and injury to passengersto passengers

Carrier must pay unless it can prove Carrier must pay unless it can prove no faultno fault

Carrier need pay no more than $9.07 Carrier need pay no more than $9.07 per poundper pound

82

Carriage of Goods by Sea Carriage of Goods by Sea ActAct

USA Federal StatuteUSA Federal Statute Specified as applicable law in many Specified as applicable law in many

ocean bills of ladingocean bills of lading Limits liability of carrier for damage Limits liability of carrier for damage

during ocean transport to $500 per during ocean transport to $500 per package package

Rules make it difficult to establish Rules make it difficult to establish liabilityliability


World Trade World Trade OrganizationOrganization

8484

Origin of the WTOOrigin of the WTO

Smoot Hawley Act of 1930 showed the world Smoot Hawley Act of 1930 showed the world how not to manage tradehow not to manage trade

At Bretton Woods 1944 idea of international At Bretton Woods 1944 idea of international trade organization was conceivedtrade organization was conceived

New International Trade Organization failed New International Trade Organization failed for lack of support from USAfor lack of support from USA

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The GATTThe GATT

In 1947 many trading nations formed General In 1947 many trading nations formed General Agreement on Trade and TariffsAgreement on Trade and Tariffs

Set restrictions that limited Smoot Hawley Set restrictions that limited Smoot Hawley type competitiontype competition

Set about to reduce tariffsSet about to reduce tariffs Weak for no underlying organization Weak for no underlying organization

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Growth of GATTGrowth of GATT

By 1995 GATT had 128 membersBy 1995 GATT had 128 members Tackled tariff and dumping issuesTackled tariff and dumping issues WeaknessesWeaknesses

No good enforcement mechanismNo good enforcement mechanism No good dispute resolution mechanismNo good dispute resolution mechanism

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Uruguay RoundUruguay Round

Negotiations lasted eight yearsNegotiations lasted eight years Resulted in Marrakesh agreementResulted in Marrakesh agreement Formed World Trade OrganizationFormed World Trade Organization Extended GATT to services and intellectual Extended GATT to services and intellectual

property property

8888

Functions of WTOFunctions of WTO

Administer AgreementsAdminister Agreements Provide forum for negotiationsProvide forum for negotiations Handle trade disputesHandle trade disputes Monitor trade policies of nationsMonitor trade policies of nations Provide assistance to developing countriesProvide assistance to developing countries cooperate with other international cooperate with other international

organizations organizations

8989

Where WTO has been involvedWhere WTO has been involved

Valuation rulesValuation rules Inspection rulesInspection rules Rules of originRules of origin Anti-dumpingAnti-dumping Anti-subsidyAnti-subsidy Trade policy reviewTrade policy review Dispute resolutionDispute resolution

Intellectual property Intellectual property protection and protection and enforcementenforcement

TariffsTariffs Trade in servicesTrade in services Reducing non-tariff Reducing non-tariff

barriers barriers


International Sales

91

UNCISG Applies to international sales unless

parties opt for other law No requirement for writing Written contract may be modified by

oral agreement May require seller to furnish insurance Interpretation is what contract means to

a person of the type it is enforce against

92

An International Trade Contract Should:

Describe the goods to be sold and the manner of shipment

Set forth who is responsible if the goods are damaged or destroyed at each phase of delivery

Express who is responsible to pay the expenses of clearing customs

Express who is responsible for providing insurance while the goods are in transit

93

Express who is responsible for freight charges

Express who is responsible for loading and unloading costs

Express who is to pay for any inspections Name the place where any litigation or

arbitration will take place if a dispute arises under the contract

Name what law will apply to disputes that arise under the contract

94

E X W: Ex Works or Ex Factory

Suppose we want to sell to the foreign buyer in nearly the same way we sell to a local domestic customer

The buyer will assume all costs, risks, and make arrangements associated with the transport of the goods and he will have to pay for it and arrange for it

If any damage takes place after the goods leave our dock it is the buyer’s loss

95

F C A: Free Carrier

In this case, the seller might agree to provide the goods free carrier, packaged and marked, with a commercial invoice, to a carrier for transport to the buyer

The seller’s responsibility for costs and risk of loss will end when the rail car or truck trailer is loaded, or in the case of sea or air transport, when the goods are delivered to the carrier for loading

96

F A S: Free Along Side

If seller agrees top deliver the goods to a ship, but not to pay for loading them, the term is Free Along Side

FAS is similar to FCA in most other respects

The seller must deliver the goods to the dock and that is the point where responsibility passes

97

F O B: Free On Board The seller must supply the goods specified in

the contract and obtain any necessary export documentation

He is required to package and mark the goods in the customary way

He must only get them onto the vessel and take care of all export formalities. He must get a delivery notice and bill of lading and other necessary documentation to the buyer

The seller bears the risk of damage and all costs until the cargo passes over the ship’s rail and thereafter it is the buyer’s risk and expense to continue the journey to the destination

98

C F R: Cost And Freight

The seller may be willing to pay transportation expenses, but not be willing to assume liability for damage en route. In this case the contract should specify “CFR”

In the CFR contract, the seller has the usual FOB obligation, and after the vessel is loaded the seller is absolved from liability for damage to the cargo

99

C I F: Cost Insurance Freight

The only difference between a “CFR” and “CIF” is that under a CIF contract the seller must purchase a marine insurance contract to cover the goods while they are on the voyage

100

C P T - C I P: Carriage Paid ToCost Paid To

The FOB, CFR, and CIF terms apply to ocean carriage. If other modes of transport are involved these terms do not apply

If the parties wish to make a CFR style arrangement when the carrier is a combination of ship, truck, rail, air, or inland waterway transport they may specify CPT in the contract

Risk of loss passes when the goods have been delivered to the first carrier

101

F C A: Free Carrier

In this case, the seller might agree to provide the goods free carrier, packaged and marked, with a commercial invoice, to a carrier for transport to the buyer

The seller’s responsibility for costs and risk of loss will end when the rail car or truck trailer is loaded, or in the case of sea or air transport, when the goods are delivered to the carrier for loading

102

D A F: Delivered At Frontier

On land it is often most convenient for the seller to deliver the goods to the seller’s border and let the buyer take over from there. It is similar to FOB

The seller gives notice and delivers the goods to the buyer near the border at the point specified in the contract and thereafter they are the buyer’s responsibility

103

D E S - D E Q: Delivered Ex-shipDelivered Ex-Quay

DES applies only to marine and maritime transportation

The seller bears all costs and all risks of getting the cargo to the port of destination where buyer takes delivery and responsibility

If the seller is to pay the cost and bear the risk of unloading and clearing customs, and make delivery on the dock thereafter, term is DEQ

104

DDU - DDP: Delivered Duty Unpaid Delivered Duty Paid

If seller is not to pay for clearing customs the term is DDU and the contract should specify a delivery point

Risk passes at the delivery point DDP is similar to DEQ except that cargo

is delivered to a named point other that the dock next to the ship

105

The Letter of Credit Transaction

The buyer applies for a letter of credit

LOC lists conditions which, if satisfied, guarantee payment to seller by the bank

Normally calls for a bill of lading proving the goods are on the way


International Investment

107

Background

• Japan’s infant industry protection system• High tariffs keep out imports to give local

industry chance to develop• Successful in Japan

• Copied world wide• Did not work in most other countries• Protected industries became inefficient• Prices rose and consumers were hurt

108

Nationalization

• Idea was to protect interest of people rather than profit

• Governments usually mismanaged nationalized business

• Political rather than economic management often led to inefficiencies

• Present trend is to privatize government enterprises

109

Licensing

• Dangerous where intellectual property protection is weak

• Trains competitors• Many nations had restrictions on

such contracts that made them unprofitable

110

Present Trend

• Policies adopted to encourage investment• Intellectual property laws are being

strengthened• Restrictions on foreign ownership being

relaxed• Bilateral investment treaties proliferating• Regional blocs adding investment

privileges


International Protection International Protection ofof

Intellectual PropertyIntellectual Property

Chapter 24Chapter 24

112112

Historical BackgroundHistorical Background

• Statute of Monopolies

• Statute of Anne

• Modern expansion of intellectual property rights

113113

Types of Intellectual PropertyTypes of Intellectual Property

• Patents

• Trademarks– Logos

• Copyrights

• Trade Secrets

114114

PatentsPatents

• Protection generally 20 years by WTO rules• European Patent Convention• African Regional Industrial Property

Organization• U.S. Patent office

– First to invent vs. first to file issues

• Paris Convention• Patent Cooperation Treaty and TRIPS

115115

TrademarksTrademarks

• Can be words, brand names, symbols, or sounds

• Have perpetual life as long a they are used

• Problems– Surnames– geographical places– descriptions

116116

Protection of TrademarksProtection of Trademarks

• Paris Convention

• Madrid Agreement

• Madrid Protocol

117117

CopyrightsCopyrights

• Protects tangible expression of creative works

• No filing required but it’s a good idea

• Have a life span under the law– After that they go into public domain

• Berne Convention

• TRIPS

118118

BackgroundBackground

• Japan’s infant industry protection system– High tariffs keep out imports to give local

industry chance to develop– Successful in Japan

• Copied world wide– Did not work in most other countries– Protected industries became inefficient– Prices rose and consumers were hurt

119119

NationalizationNationalization

• Idea was to protect interest of people rather than profit

• Governments usually mismanaged nationalized business

• Political rather than economic management often led to inefficiencies

• Present trend is to privatize government enterprises

120120

LicensingLicensing

• Dangerous where intellectual property protection is weak

• Trains competitors

• Many nations had restrictions on such contracts that made them unprofitable

121121

Present TrendPresent Trend

• Policies adopted to encourage investment

• Intellectual property laws are being strengthened

• Restrictions on foreign ownership being relaxed

• Bilateral investment treaties proliferating

• Regional blocs adding investment privileges

Documents

Law of Global Commerce A Tour. A Tour of Law for Global Commerce NAFTA