Ch.33 International Business Law

Question 1

The Importation of Goods into Canada

Answer 1

Import and export of goods subject to several federal statutes:

Question 2

Customs Act

Answer 2

Sets out powers and duties of customs, procedures for importation of goods, appeal procedures

Question 3

Customs Tariff Act

Answer 3

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

Question 4

World Customs Organization

Answer 4

provides internationally recognized identification numbers for goods traded internationally

Question 5

Special Import Measures Act

Answer 5

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

Question 6

Dumping

Answer 6

selling abroad of goods at prices lower than the prices of the goods sold domestically in the country of origin

Question 7

Export and Import Permits Act

Answer 7

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

Question 8

Customs brokers

Answer 8

firm with specialized knowledge of customs duties that will assist firms in the importation of goods

Question 9

Export of Goods from Canada

Answer 9

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

Question 10

Tariff

Answer 10

duty (payment) charged by Federal Government on goods imported into Canada

Question 11

World Trade Organization (WTO)

Answer 11

multi-nation organization that provides a forum for the negotiation of trade rules

Provides mechanism for the resolution of international trade disputes

Question 12

Most Favored Nation (MFN)

Answer 12

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

Question 13

National Treatment (NT)

Answer 13

prohibition on imposing special taxes or duties on goods after import that exceed those of domestic production

Question 14

1994 - NAFTA born from:

Answer 14

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

Question 15

2017 – U.S. insisted on renegotiation of NAFTA - Canada-U.S.-Mexico Agreement (CUSMA)

Answer 15

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.

Question 16

Government Trade Assistance

Answer 16

Federal government agencies exist to assist firms wishing to establish export markets

Question 17

Types of Government Trade Assistance

Answer 17

1. Financial assistance
2. Provide security for payment of goods sold under export transactions
3. Provide loan guarantees

Question 18

Export Development Corporation:

Answer 18

Encourages foreign trade

Provides insurance against associated risk

Question 19

Risk attached to international operations varies:

Answer 19

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

Question 20

International Contracts of Sale

Answer 20

Contract is at heart of export sale

Question 21

International Contracts of Sale Consists of four documents:

Answer 21

1. Contract of sale
2. Bill of lading
3. Contract of insurance
4. Commercial invoice

Question 22

Other important documents for International Contracts of Sale:

Answer 22

Bank financing and guarantee agreements

Question 23

Contract of Sale Needs to address international aspect of sale:

Answer 23

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

Question 24

Bill of lading

Answer 24

• 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

Question 25

Contract of insurance:

Answer 25

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

Question 26

Contingency insurance

Answer 26

other party takes out in case other party forgets or is negligent

Question 27

Commercial Invoice

Answer 27

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

Question 28

Commercial Invoice Other documents:

Answer 28

Export permits or licenses, certificates relating to purity or analysis for goods, etc.

Question 29

Choice of Law

Answer 29

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

Question 30

Commercial arbitration:

Answer 30

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

Question 31

Enforcement of Arbitration Awards

Answer 31

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