Example Of Law For Global Business Essay
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1. The Legal Environment of International Business
a. The three forms of international business and the international laws that govern them are:
i. Trade- International trading is the importation and exportation of commodities and services beyond national borders that is usually in the form of exchange. Exportation is the shipping of goods or providing of services to a purchaser in a foreign state, while importation is bringing of goods into the customs territory of a country or receiving services from an external source.
ii. Licensing of Intellectual Property Rights- These are legal rights accorded to individuals on their privileges over the creation of their intellectual productivity in the industrial, scientific, literary, and artistic fields. Intellectual rights can be in diverse forms: patents, trademarks, copyrights as well as trade secrets.
iii. Foreign Direct Investment- This type of an international business refers to the ownership and operation of active investments or productive assets of an ongoing business in a certain country by an individual or corporate investor residing in another state.
The legal conduct of international business is governed by diverse laws and regulations that particularly state how a certain business should be conducted in another country’s jurisdiction. The most common of which are the tariffs, and non- tariff barriers. Tariffs are import duties or taxes imposed on commodities entering a country’s territory, while non-tariffs are usually laws and regulations that customarily restrict the entering of foreign goods or services in a country’s domestic market. Examples of non-tariff barriers are health and safety regulations and commodity standards that must be adhered to by a foreign manufacturer who endeavored to penetrate the domestic market of another sates.
b. Jurisdiction and minimum contacts; and their application in international disputes:
Jurisdiction is one of the main concepts of jurisprudence that states the extent of a court’s authority in hearing and deciding a case. While jurisdiction can have varied connotations, one can perceived its importance such that without it, a court does not have the power to act or decide on a case. In personam jurisdiction and minimum contacts, a court is allowed jurisdiction over individuals who are not within the territorial jurisdiction of the court, but in order for justice and fairness to be serve, has to be held accountable for a complaint. The court will have to determine if that person has minimum contact with the forum, such as a) extent of presence in the state, b) presence of his business within the state c) burden on the respondent and impartiality to the complainant among others. It is often difficult for courts to imposed jurisdiction over individuals of foreign nationality, as the imposition of personal jurisdiction on a foreign national can sometimes cross the line of fairness and impartiality.
2. International Sales, Credits, and the Commercial Transaction.
a. The CISG and its importance in global business:
The CISG was ratified by the Senate of the United States and became effective in 1988. It was also adopted by about two-thirds of global trades and found to be effective by most countries that carried the system. The CISG presented a code that is acceptable to the common law and civil law countries and it was able to set rules that can govern the trading contracts between sellers and purchasers from different states. The purpose of CISG is to facilitate trading business across national borders. The applicability of the CISG is dependent on the following conditions: a) the contract is for the commercial sale of goods, b) it is between parties whose places of business are in different countries, c) the parties’ location of business are in countries that have approved the convention.
The CISG have played a significant role in the conduct of global business since its inception. For instance, in cases where there is dispute between a buyer and seller from two different countries, and no choice of law provision was specified on their initial agreement, it is the tasked of the CISG to look into the matter provided both of the parties ratified the CISG. The convention further provided specific remedies for performance in cases of fundamental breach: a) avoidance or cancellation of the contract, b) the right to remedy or cure, c) the setting of additional time, or extension for performance d) price reduction, e) money damages d) specific performance.
b. In my opinion, the international conventions limiting liability for air carriers (Montreal Convention) are fair enough, but that of sea carriers (COGSA) needs further consideration. While there is a stated limit to the liability in the Montreal Convention, these bounds are attributed to proven negligence on the part of the passengers that resulted to the accident or loss. The air carrier, however, has to prove that its employees were not at fault or negligent in carrying out their duties. The application of the Montreal Convention causes an action against air carriers, the state or local laws. With this, complaints can be filed against other defendants who are alleged to have contributed to the cause of loss or injury. The MC also states the liability of air carriers on damages caused by unforeseen or unusual event that is outside the doing of the traveler. On the other hand, COGSA provided excessive limit on its liability over its passengers and cargoes. While it states its main responsibility of observing diligence at the start of the voyage, it expressly inhibits the carrier from further obligation from faults attributed to miscalculated navigation, inefficient management of the ship and other circumstances external of the passenger. I think there should be an amendment of the COGSA as most of its imposed laws are not fair enough.
3. International and U.S. Trade Law
a. The World Trade Organization and its Importance:
In 1995 The World Trade Organization replaced the General Agreement on Tariffs and Trade and since then a number of multilateral agreements were created that provide the structure by which international trading is regulated at present. The WTO mainly serves to 1) expedite cooperation among states regarding trade issues, 2) to administer WTO system, 3) to provide opportunities for upcoming trade conferences, 4) to observe trading guidelines, 5) to help some of the developing states to comply with the guidelines set by WTO by providing technical assistance, 6) to arrange for the creation of forums that aims to settle trading disputes.
The importance of WTO is realized by studying its major principles bound by its trade laws and as stated in the WTO treaty. With the agreement, different states became bound to attend multilateral trade negotiations that aim to reduce tariffs and non-tariff barriers. Reciprocal tariffs concession are then made, with the maximum percentage charged on an item stated and the schedule of concessions and provided to international trading states. The convention also aims to create clear and predictable international trading prospects, making way for global companies to understand the way of doing business in a prospect country. There is also an observed impartiality among members creating an equal importing and exporting opportunity even to smaller countries. The equal trading opportunity calls that a WTO member will not favor commodities coming from one country over that of the other. In addition to that is the benefit of peaceful consultation and dispute resolution, asking concerned states to settle disagreements in a peaceful manner. The dispute forums of WTO give states the legal means to resolve trade disputes. The impartiality of the WTO is observed in the inability of any single country to veto the decision reached by the panel.
b. "Market access" provision of WTO policies on helping or hinder developing economies:
The market access provisions acted as a means to give way to freer international trading. I think that this WTO provision can help the growth, not only of highly progressive states but also of countries with developing economies. This is because less restrictive trading and non-discriminatory trading rules allows many countries of better chances to international exposure. For instance, while the WTO Agreement on Technical Barriers to Trade set guidelines to states in applying their own rules and standards, the convention is specific in stating that health and safety regulations applied should be trade neutral, and should be imposed only when necessary. The market access provision proves to be a challenge for smaller countries to improve on their products according to standards and get a better exposure in the international market.
4: Regulation of the Marketplace
Recommendation to a president of a developing country on legal restrictions on DFIs:
Economic scholars noted the emphasis on the regulation of foreign economic investment of host nations especially developing states. The intent of these states is to avoid foreign economic domination, thus focusing on passive debt investment because the later provide capital sans the foreign control of management. In my opinion, a president of a developing country should adopt measures to allow direct foreign investment in his country. This is critical in the increase of active investment in a specific country. One example of the success of allowing direct foreign investment was that of Mexico’s private sector: Mexico’s Carlos Slim, one of the world’s richest man have put more emphasis on the economic advantage of permitting foreign investment rather than worry about foreign domination. Other advantages of allowing direct foreign investment are the increase in the needed foreign exchange, the technical know-how brought by high technology firms, creation of employment opportunities to the locality, increase in revenue due from tax collections. In addition to that is the ease of access of a firms products to local customers as international barriers to trade is mitigated by the entry of the foreign firm in a host country.
b. The U.S. and the E.U. emphasis on international laws protecting intellectual property:
Intellectual Property rights are valued resources in this highly globalize economy. Firms are continuously conducting research and development studies to create IPRs that can be useful in the advancement of its cause. Because of the extreme procedures to come up with strong IPR, it is but reasonable that its owners protect it from being used or copied unscrupulously.
I think U.S. and E.U. have put a fair emphasis on creating laws to protect their IPRs. For instance, with the proliferation of the counterfeit goods, the U.S. government became active in the promotion of effective enforcement of intellectual property laws. But the U.S. and E.U have contracting views when it came to the disclosure of biological resources used in manufacturing pharmaceutical products. While many E.U counties supported the idea to disclose biological sources in in patent application forms, other developed countries, especially the U.S being the home of pharmaceutical IPRs contradicted the provision.
Another instance where the U.S. emphasized on the IPRs is the Grey Market; however fear of U.S. licensor on the Grey Market is justified. As holders of legitimate trademarks, U.S. licensors have invested time, effort and resources to develop a good reputation to command a share in the U.S. market. It is thus, unfair that another product will get on with the free ride, and get a share of the trademark holder’s share in the market.
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