Chapter 13: Law, Policy and Regulation

Question 1

The international regulatory framework : *Common ground:

Answer 1

• Good will is necessary to the successful conduct of international business
  
  • Legal and Regulatory frameworks attempt to offer some common reference points
  • Significant efforts to promote a “Rules-based” trading system
  • Includes agreements about what constitutes a health competitive environment for international business and what measures out to be used to ensure fair competition

Question 2

The international regulatory framework :*Public-trade law: (controlled by government)

Answer 2

• Agreements between governments governing trade and global business
• Governs the import and export of goods between countries
• Establish a structure for the domestic trade legislation applied by countries across the global
• Effect is to limit and define the measures countries may take to protect their domestic markets against foreign imports.
○ Export controls, tariffs, customs, countervailing duties, anti-dumping

Question 3

The international regulatory framework

Answer 3

• Multilateral and bilateral agreements create a global network of trade and business partnerships

Question 4

Major legal systems: United States

Answer 4

○ Extraterritorial application of law
§ requires businesses to address U.S. legal issues even when they or their transactions have little connection to the United States.
○ Highly litigious, large punitive damages (you can sue anyone)
§ These act as a deterrent against non-compliance with government regulations and break of constitutional, contractual or other rights.
○ Uniform Commercial Code- different from state to state
§ Facilitates the legal aspects of conducting business throughout the country.
○ Litigation is much more common in the United States

Question 5

Major legal systems: European Union

Answer 5

(do it within one entity and it is applicable across of members)
○ Highly integrated and evolved legal systems across member states
○ Most likely the closest to a “true free trade zone” –> four freedoms
§ Unrestricted movement of goods
§ Unrestricted movement of capital
§ Unrestricted movement of services
§ Unrestricted movement of people

Question 6

Major legal systems :*Islamic Law (Shari’a)

Answer 6

○ Derived from Qur’an
○ Opposes unearned or excessive interest (classified as unearned payment)
§ Banks won’t lend with interest–> they invest in the capital gain or loss of whatever direction the potential business takes.
§ Not interest, but a service fee (1-3%)
○ Gaining increased profile in trade

Question 7

Major legal systems

Answer 7

○ Evolving; based on codified principles. Previous decisions not binding
○ Lee- the law
○ Pha- principals and values
○ Can be penalized for not acting within principals and values of business
§ The idea is to do business with a sense of integration and togetherness.

Question 8

Major legal systems:*Asian legal systems

Answer 8

○ Evolving; based on codified principles. Previous decisions not binding
○ Lee- the law
○ Pha- principals and values
○ Can be penalized for not acting within principals and values of business
§ The idea is to do business with a sense of integration and togetherness.

Question 9

Major legal systems: the internet

Answer 9

The UN has recognized the growing importance of the internet and e-commerce, and has devised a set of principles intended to assist in responding to this technological evolution

• Equivalence
• autonomy of contracts
• voluntary use of the electronic communication
• solemnity of the contract
• application to form rather than substance
• primacy of consumer-protection laws

Question 10

• Equivalence

Answer 10

electronic communications shall be the functional equivalent of paper-based documents. Given proper standards, electronic documents can be treated and given the same value as paper documents

Question 11

-autonomy of contracts

Answer 11

contracts may be in the form of electronic documents. However, this should no result in the substantive terms and conditions of a transaction

Question 12

• voluntary use of the electronic communication

Answer 12

parties may choose to enter into an electronic transaction or not at all. It is not mandatory

Question 13

• solemnity of the contract

Answer 13

. The requirements for a contract to be valid and enforceable, such as notarization, remain the same

Question 14

-application to form rather than substance

Answer 14

The law should be applicable to the form rather than substantive terms of the contract. What statutory elements are required to be present must still be present, for example, consent freely give, an object, cause or consideration

Question 15

• primacy of consumer-protection laws

Answer 15

Consumer-protection laws may take precedence over the provisions of the Model law

Question 16

Major types of intellectual property

Answer 16

• patent
• industrial design
• trademark
• copyright-
• trade secrets

Question 17

-patent

Answer 17

must make know in public –> you need ot be able to enforce a patent (you need to have enough to sue if someone attempts to steal.
§ Blanket coverage patent- cover you patent with other idea’s or modifications that you also patent.

Question 18

-industrial design

Answer 18

chair, or table, or something made

Question 19

-trademark

Answer 19

brands, logo , slogans

Question 20

-copyright-

Answer 20

works that be reproduces, movies, books, software’s

Question 21

-trade secrets

Answer 21

recipe (coke)

Question 22

Extraterritoriality

Answer 22

refers to the practice of some countries or regions, most notable the United Sates and the European Union, to apply their legal standards to subsidiaries or affiliates of domestic companies when they operate in foreign jurisdiction.

Question 23

GAAT–> WTO

(WTO counts 155 members and 29 ‘Observer’ countrie)s

Answer 23

• It is a framework for the negotiation and reduction of tariffs and other trade barriers
• It was a code of rules governing international trade between contracting partiers
• It was a forum for negotiation and solving international trade disputes
It was an international institution that assisted in making rules governing international trade among the member countries..

Question 24

Anti-dumping

Answer 24

○ WTO authorizes countries to take protective measures against dumping.
○ Dumping is a form of discriminatory prices: it is the term used to described a situation in which a seller sets different prices in different national markets.
○ Dumping is considered an unfair trade practice that distorts prices and profits, disrupts markets and injures local producers of competitive products. As a result, dumping is regulated domestically in many countries through legislation that gives local force to the rights granted under the WTO Agreement.

Question 25

Subsidies

Answer 25

Subsidies–> any financial or other commercial benefit conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of goods as a result of any scheme, practice or thing done, provided or implemented by the government of a country other than (the national government) ; and any income or price support that confers a benefit.

Question 26

Unfair trade practices

Answer 26

○ GATT as ruled the following as unfair trade practices and are subject to countervailing duties
§ The provisioning governments of direct subsidies to a firm or an industry contingent upon export performance
§ The provision or requirement by governments of internal transport and freight charges on export shipments on terms more favourable than domestic shipments.
§ The allowance of special deductions in the calculation of taxes for expenses directly related to exports or export performance that are more generous than those granted for production for domestic consumption
§ The full or partial exemption, remission or deferral of direct taxes specifically related to exports (i.e. taxes on wages, profits, interest, rents or royalties) or social-welfare charges paid or payable by industrial or commercial enterprises.

Question 27

Countervailing duty

Answer 27

A special duty imposed upon imports that have benefited from a foreign government subsidy in their country of origin. The duty is usually equivalent to the subsidy, and it is intended to eliminate any competitive advantages a foreign exporter gained through receiving the subsidy.

Question 28

Health and environmental regulations

Answer 28

• Evolving priorities
• Health and environmental considerations are becoming high priority in international trade
• Both areas becoming increasingly critical
• Any country can refuse exports if it affects the health and environment of their country (Europe refused GMO seeds of Canada)
• ‘Going Green’ is a high-profile trend and marketing approach
• Environmental impact assessments are required
Questions of sustainability and sustainable development are common requirements to conduct environmental impact assessments on international projects. Illustrates the increasing importance of an area that was once considered on the fridge of business.

Question 29

Dispute Resolution

Answer 29

• Resolving disputes across borders is a major challenge of global business
• Enforceability is critical across borders and legal jurisdictions
• Several options exist:
• Negotiation
○ Governing law- countries that come together to negotiate, want to use their own countries law of negotiation. The use of a neutral countries law is the solution. (Extraterritoriality)– US and Canadian law are often used
• Mediation
• Arbitration or litigation
• Litigation
Dispute resolution can be very expensive