Ch.33 International Business Law Flashcards
The Importation of Goods into Canada
Import and export of goods subject to several federal statutes:
Customs Act
Sets out powers and duties of customs, procedures for importation of goods, appeal procedures
Customs Tariff Act
Sets out various duty rates applicable to imported goods and any preferential rates for certain countries
Lists goods that may be imported into Canada i.e. prohibited commodities
World Customs Organization
provides internationally recognized identification numbers for goods traded internationally
Special Import Measures Act
Dumping
Special duty levied on goods with lower price than price normally sold in country of origin
Prevents foreign sellers from selling subsidized goods to Canadian market
Must establish dumping before imposing the duty
Dumping
selling abroad of goods at prices lower than the prices of the goods sold domestically in the country of origin
Export and Import Permits Act
Controls flow of goods into Canada from countries where goods are produced at prices so low that Canadian firms cannot compete fairly
Imposes limits on quantities of certain imported goods and requires permits
Requires exporters to obtain permits before exporting certain controlled goods
Customs brokers
firm with specialized knowledge of customs duties that will assist firms in the importation of goods
Export of Goods from Canada
Canadian firms exporting goods face trade and tariff barriers
Tariff
Subject to Export and Import Permits Act
Export of goods encouraged by government - creates jobs and wealth
Canadian exporters faced with trade barriers that foreign countries use to protect themselves
International trade agreements providing common structure and control à growth of trade
Tariff
duty (payment) charged by Federal Government on goods imported into Canada
World Trade Organization (WTO)
multi-nation organization that provides a forum for the negotiation of trade rules
Provides mechanism for the resolution of international trade disputes
Most Favored Nation (MFN)
obligation of a member of WTO to impose the same lowest rate of duty granted on goods from one member state to the same goods from all other member states
National Treatment (NT)
prohibition on imposing special taxes or duties on goods after import that exceed those of domestic production
1994 - NAFTA born from:
Successful FTA between Canada and U.S.
Three-way interest with Mexico to expand agreement
Phased reduction and elimination of tariffs
Provided Trilateral Trade Commission to resolve disputes and enforcement
Provisions on intellectual property rights, investments, market access, and standards
2017 – U.S. insisted on renegotiation of NAFTA - Canada-U.S.-Mexico Agreement (CUSMA)
Took NAFTA as its basis
Greater access for U.S. to Canada’s dairy market
Provisions for automobiles to be considered domestic (duty-free)
Improved labour and employment conditions in Mexico
Harmonization of copyright periods with those of the U.S.
Government Trade Assistance
Federal government agencies exist to assist firms wishing to establish export markets
Types of Government Trade Assistance
- Financial assistance
- Provide security for payment of goods sold under export transactions
- Provide loan guarantees
Export Development Corporation:
Encourages foreign trade
Provides insurance against associated risk
Risk attached to international operations varies:
Broad spectrum of risk depending on the activity undertaken and the country dealt with
- Low risk (export operations) vs. high risk (physical investments in unstable foreign markets)
Misunderstandings of culture
Foreign exchange risk
Local political and economic instability abroad
Being a foreigner in a foreign market
International Contracts of Sale
Contract is at heart of export sale
International Contracts of Sale Consists of four documents:
- Contract of sale
- Bill of lading
- Contract of insurance
- Commercial invoice
Other important documents for International Contracts of Sale:
Bank financing and guarantee agreements
Contract of Sale Needs to address international aspect of sale:
Trade terms and terminology
Governing law
Specifics as to goods: quantity, quality, per unit price, delivery dates, modes of shipping, packaging
Force majeure
Payment: currency, time, place
Arbitration
Pre-contractual matters
Acceptance of an offer is effective on receipt
Need not be in writing to be enforceable
Bill of lading
- contract entered into between a bailor and a common carrier of goods (bailee) that sets out the terms of the bailment and represents a title document to the goods carried
Sets out carrier’s responsibilities
Sets out name of seller (shipper/consignor) and consignee (buyer or buyer’s agent) ØPermits and licenses
Document of title
Receipt for the goods
Usually coupled with a sight draft
Contract of insurance:
Varies according to risks seller or buyer wishes to protect against
Protect against risk of shipping goods
- Specific shipment or open basis
One party has obligation to insure goods
Contingency insurance –
Political risk insurance
- When country is politically or economically unstable
Contingency insurance
other party takes out in case other party forgets or is negligent
Commercial Invoice
In addition to contracts related to export sale, commercial invoice necessary
Required by buyer’s customs office
Represents:
- Invoice for the goods sold
- Customs document set out details of goods
Commercial Invoice Other documents:
Export permits or licenses, certificates relating to purity or analysis for goods, etc.
Choice of Law
Each contracting party usually desires their own national laws to govern contract
- Parties free to choose any law
- Governing law can be different from governing jurisdiction
-Governing law – law that governs the interpretation and enforcement of the contract
-Governing jurisdiction – place where the dispute is heard, which court or tribunal has jurisdiction to hear
Courts generally respect the choice of the parties
Commercial arbitration:
Method of resolving disputes arising out of an agreement made between two or more parties
Often incorporated as the choice of dispute resolution
Employs one or more third parties who impartially decide the dispute
- Decision becomes binding on parties to agreement
- Enforcement of decision may be in agreement or by adoption of particular arbitration law
Enforcement of Arbitration Awards
Enforcement of award usually dealt with by statute
Canada adopted various conventions on recognition and enforcement of foreign arbitral awards
- United Nations Commercial Arbitration Code
- United Nations Foreign Arbitral Awards Convention Act
Enforcement by application to the local courts à issue is whether local courts will enforce award
