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TitleInternational Business Law and Its Environment
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LanguageEnglish
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Table of Contents
                            Front Cover
Title Page
Copyright
CONTENTS
TABLE OF CASES
TABLE OF TREATIES
TABLE OF STATUTES
PREFACE
PART ONE: THE LEGAL ENVIRONMENT OF INTERNATIONAL BUSINESS
	CHAPTER ONE: INTRODUCTION TO INTERNATIONAL BUSINESS
		Economic Interdependence
		Forms of International Business
		Conducting Business in Developing and Newly Industrialized Countries
		Countries in Transition: Eastern Europe, Russia, and the Newly Independent Republics of the Former Soviet Union
		Managing the Risks of International Business
	CHAPTER TWO: INTERNATIONAL LAW AND THE WORLD’S LEGAL SYSTEMS
		International Law
		Some General Concepts of Public International Law
		International Organizations
		Ethics, Social Responsibility, and Corporate Codes of Conduct
		Comparative Law: Differences in National Laws and Legal Systems
	CHAPTER THREE: RESOLVING INTERNATIONAL COMMERCIAL DISPUTES
		Avoiding Business Disputes
		Alternate Dispute Resolution
		Litigation
		Conflict of Laws
		Enforcement of Foreign Judgments
		Commercial Disputes with Nations
PART TWO: INTERNATIONAL SALES, CREDITS, AND THE COMMERCIAL TRANSACTION
	CHAPTER FOUR: SALES CONTRACTS AND EXCUSES FOR NONPERFORMANCE
		Introduction to Contracts for the International Sale of Goods
		The Convention on Contracts for the International Sale of Goods
		Validity and Formation of International Sales Contracts
		Performance of Contracts
		Remedies for Breach of Contract
		Events Beyond the Control of the Parties: Excuses for Nonperformance
		Cultural Influences on Contract Negotiations
	CHAPTER FIVE: THE DOCUMENTARY SALE AND TERMS OF TRADE
		Transaction Risk
		The Documentary Sale
		Allocating Shipping Responsibilities and the Risk of Loss
	CHAPTER SIX: THE CARRIAGE OF GOODS AND THE LIABILITY OF AIR AND SEA CARRIERS
		The Liability of International Air Carriers
		Liability for the Carriage of Goods by Sea
		The Liability of Ocean Transportation Intermediaries
		Marine Cargo Insurance
	CHAPTER SEVEN: BANK COLLECTIONS, TRADE FINANCE, AND LETTERS OF CREDIT
		The Bill of Exchange
		The Letter of Credit
PART THREE: INTERNATIONAL AND U.S. TRADE LAW
	CHAPTER EIGHT: NATIONAL LAWMAKING POWERS AND THE REGULATION OF U.S. TRADE
		The Separation of Powers
		The Treaty Power
		Executive Agreements
		U.S. Trade and Tariff Legislation
		Trade Agreements
		Federal–State Relations
		Federal Agencies Affecting Trade
	CHAPTER NINE: GATT LAW AND THE WORLD TRADE ORGANIZATION: BASIC PRINCIPLES
		Introduction to Trade Regulation
		The General Agreement on Tariffs and Trade
		The World Trade Organization
		GATT/WTO Dispute–Settlement Procedures
		GATT 1994: Major Principles of Trade Law
		Nondiscrimination, Most Favored Nation Trade, and National Treatment
		National Treatment
		GATT and the Elimination of Quotas
	CHAPTER TEN LAWS GOVERNING ACCESS TO FOREIGN MARKETS
		The General Principle of Least Restrictive Trade
		Technical Barriers to Trade
		Import Licensing Procedures
		Government Procurement
		Trade in Services
		Trade in Agriculture
		Trade in Textiles and Clothing
		Other WTO Trade Agreements
		Trade Sanctions and U.S. Section 301: The Threat of Retaliation
	CHAPTER ELEVEN: REGULATING IMPORT COMPETITION AND UNFAIR TRADE
		The Double-Edged Sword of Import Regulation
		Safeguards Against Injury
		Unfair Import Laws: Dumping and Antidumping Duties
		Unfair Import Laws: Subsidies and Countervailing Duties
		Judicial Review in International Trade Cases
	CHAPTER TWELVE: IMPORTS, CUSTOMS, AND TARIFF LAW
		The Administration of Customs and Tariff Laws
		Dutiable Status of Goods
		U.S. Trade Preferences for Developing Countries
		Other Customs Laws Affecting U.S. Imports
	CHAPTER THIRTEEN: THE REGULATION OF EXPORTS
		Trade Controls over Arms, Munitions, and Defense Systems
		National Security and Foreign Policy Issues
		History of U.S. Export Control Laws
		Export Controls on Commercial and Dual-Use Goods and Technologies
		The President’s Emergency Powers During Peace and War
	CHAPTER FOURTEEN: NORTH AMERICAN FREE TRADE LAW
		The North American Free Trade Area
		Rules of Origin
		Trade in Goods: Sectoral Issues
		Trade in Services
		Cross-Border Investment
		Other NAFTA Provisions
		Administration and Dispute Settlement
		Production Sharing: Assembly Plants and the Mexican Maquiladoras
		The Free Trade Area of the Americas
	CHAPTER FIFTEEN: THE EUROPEAN UNION AND OTHER REGIONAL TRADE AREAS
		The Philosophy of Economic Integration
		European Union
		Other Regional Trade Areas
PART FOUR: REGULATION OF THE INTERNATIONAL MARKETPLACE
	CHAPTER SIXTEEN: INTERNATIONAL MARKETING LAW: SALES REPRESENTATIVES, ADVERTISING, AND ETHICAL ISSUES
		Regulation of Relationships with Representatives
		Regulation of Advertising Abroad
		The Foreign Corrupt Practices Act
	CHAPTER SEVENTEEN: LICENSING AGREEMENTS AND THE PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
		Reasons for Intellectual Property Transfer Arrangements
		Intellectual Property Rights: Transfer Arrangements
		International Protection for Patents, Trademarks, and Other Intellectual Property
		The Doha Declaration on TRIPS and Public Health
		Nonenforcement of IPR Laws
		The Mechanics of IPR Transfer Regulations
		The Gray Market
		Franchising: Licensing Outside the Technological Context
	CHAPTER EIGHTEEN: HOST-COUNTRY REGULATION: CORPORATE LAW, TAXATION, AND CURRENCY RISK
		Host-Country Corporate Law Affecting Foreign Investment
		Minority Ownership Investments
		Controlling Currency Risk
	CHAPTER NINETEEN: NATIONALIZATION, EXPROPRIATION, AND PRIVATIZATION
		Theories Relating to Takings of Foreign Property
		Guarding Against Political Risk
		Historical Development of Privatization
		Preparation for Privatization
		Models of Privatization
	CHAPTER TWENTY: LABOR AND EMPLOYMENT DISCRIMINATION LAW
		General Directions of Labor Law Abroad
		Employment Discrimination Outside the United States
		Foreign Laws Permitting Dificult Work Conditions
	CHAPTER TWENTY-ONE: ENVIRONMENTAL LAW
		Consideration of Varying Environmental Requirements
		Traditional International Remedies
		Emerging Problems and Solutions
	CHAPTER TWENTY-TWO: REGULATING THE COMPETITIVE ENVIRONMENT
		Historical Development of International Competition Law
		Basic Regulatory Framework
		Distinctions of Non-U.S. Competition Law
		Extraterritorial Effect of Competition Laws
APPENDICES
	A UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS
INDEX
                        
Document Text Contents
Page 2

Buenos
Aires

Santos

Cristobal

Halifax

Charleston

Jacksonville
Savannah

New York/New Jersey

Port of Virginia

Oakland

Seattle
Vancouver

Baltimore

Houston
South

Louisiana

Los Angeles

Long Beach

Tacoma

Veracruz

Corpus
Christi Miami

San Juan

Kingston

Major Ocean Ports
of the World
(Maps not to scale)

Philadelphia

Boston

Beaumont

WilmingtonBaton
Rouge

Mobile

Port Everglades

North, Central, and South America

Page 395

In order to apply a safeguard, a country must
first undertake an administrative investigation,
which includes a public hearing at which impor-
ters, exporters, and other interested parties can
present evidence and their views of whether the
safeguard would be in the public interest. In the
United States, investigations are conducted by
the International Trade Commission, an indepen-
dent agency of the federal government. The investi-
gating body is required to evaluate all relevant
economic factors bearing on the industry’s posi-
tion, and it must find that the increased imports are
the actual cause of the domestic industry’s decline.
If other factors are shown to be causing injury
simultaneously, then the increased imports are not
considered to be the cause. Emergency action can
be taken without the investigation if clear evidence
justifies the safeguards, but any additional tariffs
imposed must be lifted within 200 days.

GLOBAL SAFEGUARDS. Safeguards applicable to
WTO member countries are often called global
safeguards. As the term indicates, the safeguards
are imposed on imports of specific products
regardless of the country of origin. For example,
if increased imports of non-rubber footwear are
causing serious injury to a domestic industry, the
safeguards must be applied to all imports of
non-rubber footwear, regardless of where they are
produced. There are also specific safeguards appli-
cable to goods sold within certain free trade areas,
such as imports within North America. Most
countries also have special safeguards applicable
to imports from China.

LIMITS ON THE USE OF SAFEGUARDS. The safe-
guards agreement places limits on safeguards
because they are a temporary remedy to be used
only until the problem is resolved. They may not
exceed 4 years (with an extension to 8 years). The
restrictions on imports must be gradually lifted as
conditions warrant. Imposing safeguards on a
product can only be done without discrimination,
regardless of the product’s country of origin, and
only as is necessary to prevent or remedy serious
injury. WTO Appellate Body reports have ruled
that a safeguard “may not be more restrictive than
necessary to prevent or remedy a serious injury
and to facilitate adjustment.” Tariffs are the pre-
ferred safeguard. A quota, if used, may not reduce

the quantity of imports below the average level of
imports of the prior 3 years. Quotas should be
allocated among supplying nations based upon
their proportion of the total quantity of imports
during the preceding years. Governments may not
attempt to protect domestic industries by pressur-
ing foreign firms to voluntarily hold back ship-
ments. Although once a popular method of
restraining imports, these voluntary restraint
agreements are no longer permitted under WTO
rules. Nations must follow certain limits when
imposing safeguards on products from developing
countries.

Safeguards can only be applied to imports from
developing countries if a particular developing
country is supplying more than 3 percent of the
total imports of that product.

TRADE COMPENSATION. WTO rules from the 1994
GATT agreements encourage a country imposing a
safeguard to compensate a supplying nation for the
burden the safeguard measure has imposed on it.
For instance, if the United States imposes safeguard
tariffs on imported bicycles and Taiwan supplies
large numbers of bicycles to the United States, then
the United States should make trade compensation
to Taiwan by reducing tariffs on other Taiwanese
imports in an equivalent amount. The countries are
expected to negotiate trade compensation; if they
fail to reach agreement, then the supplying nation
may “suspend . . . substantially equivalent conces-
sions” or raise tariffs in retaliation.

THE WTO COMMITTEE ON SAFEGUARDS. Countries
must notify the WTO Committee on Safeguards
when taking safeguard actions. The Committee
reports to the WTO Council for Trade in Goods.
It monitors compliance with WTO safeguard pro-
visions and assists countries in negotiating trade
compensation.

Safeguards against Injury
under U.S. Law
The U.S. escape clause is found in Section 201 of
the Trade Act of 1974 as amended by the Omni-
bus Trade and Competitiveness Act of 1988 and
the Uruguay Round Agreements Act. U.S. law does
not follow the guidelines of GATT Article XIX and

358 Part 3: International and U.S. Trade Law

Page 396

the WTO Agreement on Safeguards completely,
but is similar. U.S. law does not refer to the term
safeguards, but rather to “positive adjustment to
import competition” or “import relief.”

STANDARD FOR IMPORT RELIEF. Under U.S. law,
import relief can be granted when “an article is
being imported into the United States in such
increased quantities as to be a substantial cause of
serious injury or threat thereof to the domestic
industry producing an article like or directly com-
petitive with the imported article.” The president
may make an adjustment to imports (e.g., impose
tariffs or quotas) only after an investigation by the
U.S. International Trade Commission (ITC) and
only if, in the president’s discretion, it will “facili-
tate efforts by the domestic industry to make a
positive adjustment to import competition and
provide greater economic and social benefits than
costs.” Because of this discretionary power, a pres-
ident who adopts free trade or free-market con-
cepts might be reluctant to apply a safeguard
remedy at all. Although largely political in nature,
a president’s decision is usually based on the
national interest.

ITC SAFEGUARD INVESTIGATIONS. A petition for
relief may be filed with the ITC by any firm, trade
association, union, or group of workers, or by
Congress or the president, or it may be initiated by
the commission itself. The ITC gives public notice
in the Federal Register of its investigation and
hearings. If it finds that the requirements of the
law are met, it may advise the president as to what
action to take. The commission conducts public
hearings at which interested parties may present
evidence and make suggestions as to the form
of import relief. The ITC prepares a detailed
economic analysis of the affected market and
then makes its determination. The factors that
the commission considers in determining whether
increased imports are a substantial cause of seri-
ous injury include:

1. A significant idling of productive facilities in
the industry.

2. The inability of firms to operate at a reason-
able profit.

3. Unemployment or underemployment in the
industry.

4. Growing inventories.
5. A decline in sales, market share, production,

wages, or employment.
6. A firm’s inability to generate capital for plant

and equipment modernization or for research
and development.

7. An actual increase in imports or in market
share held by imports.

8. Other factors that may account for the serious
injury to the domestic industry (e.g., incom-
petent management or lack of technological
innovation).

U.S. law defines substantial cause as “a cause
which is important and not less than any other
cause.” (Review the requirements for applying a
safeguard measure as set out by the WTO Appel-
late Body in the Argentina Footwear case.) The
ITC may not consider overall economic trends,
such as the impact of a recession on the industry,
but must look at the impact of the increased
imports. In the ITC report on the U.S. motorcycle
industry, Commissioner Eckes found that increased
imports of heavyweight motorcycles threatened
serious injury to the petitioner, Harley-Davidson,
despite the severe impact of a long recession on
total sales in the industry.

In the event that a foreign country requests a
WTO panel to review a U.S. safeguard decision,
the entire investigative process comes under scruti-
ny. If a WTO panel reviews the fact-finding deci-
sions of the ITC or of an investigative agency in
another country, what is the standard of review?
Several Appellate Body decisions have addressed
this (including the Argentina Footwear decision
in this chapter) and concluded that Article 11 of
the Dispute Settlement Understanding obligates a
panel to make an “objective assessment” of the
facts, not by trying to determine the facts of the
case anew, but by looking to see whether domestic
agencies have evaluated all relevant facts and have
provided an adequate and reasonable explanation
about how the facts supported their determina-
tions. This is a practical realization that judges in
Geneva cannot gather facts and information from
industries around the world.

AVAILABLE REMEDIES UNDER U.S. LAW. Any relief
granted by the president must be temporary (limit-
ed to 4 years, with an extension to 8 years if

Chapter 11: Regulating Import Competition and Unfair Trade 359

Page 790

LIST OF FREQUENTLY USED ACRONYMS

AD or ADD Antidumping Duty
ADRs American Depository Receipts
AECA Arms Export Control Act
AGOA African Growth and Opportunity Act
AGP Agreement on Government

Procurement (WTO)
AID Agency for International Development
APEC Asia Pacific Economic Cooperation
ASEAN Association of Southeast Asian

Nations
ATPA Andean Trade Preference Act
ATS Alien Tort Statute
BEA Bureau of Economic Analysis, U.S.

Department of Commerce
BIS Bureau of Industry and Security

(U.S. DOC)
BIT Bilateral Investment Treaty
BOP Balance of Payments
BOT Balance of Trade
CACM Central American Common Market
CAFTA-DR Central American Free Trade

Agreement
CAP Common Agricultural Policy of the

European Union
CARICOM Caribbean Common Market
CBERA Caribbean Basin Economic Recovery

Act
CBI Caribbean Basin Initiative
CBP Bureau of Customs and Border

Protection (U.S. DHS)
CBSA Canadian Border Services Agency
CCC Customs Cooperation Council
CCJ Caribbean Court of Justice
CCL Commerce Control List
CE Conformité Européene
CE Mark Conformite Européene
CET Common External Tariff (or CXT)
CFI European Court of the First Instance
CIS Commonwealth of Independent States
CISG Convention on Contracts for the

International Sale of Goods
CIT Court of International Trade
CITES Convention on International Trade in

Endangered Species of Wild Fauna
and Flora

CITT Canadian International Trade
Tribunal

CMI Comite Maritime International
CO Certificate of Origin
CODEX Codex Alimentarius Commission

COE Council of Europe
COGSA Carriage of Goods by Sea Act
CVD Countervailing Duty
D/A Documents Against Acceptance
D/P Documents Against Payment
DFAIT Department of Foreign Affairs and

International Trade (Canada)
DG-COMP European Commission Directorate

General for Competition
DOC Department of Commerce
DSB Dispute Settlement Body (WTO)
DSU Dispute Settlement Understanding

(WTO)
EAR Export Administration Regulations
EBRD European Bank for Reconstruction

and Development
EC European Community
ECCN Export Control Classification Number
ECJ European Court of Justice
EDI Electronic Data Interchange
EEA European Economic Area
EFTA European Free Trade Association
EIB European Investment Bank
EMC Export Management Company
EOTC European Organization for Testing

and Clarification
EPO European Patent Office
ERM Exchange Rate Mechanism
ETC Export Trading Company
EU European Union
EXIMBANK Export-Import Bank of the U.S.
FCIA Foreign Credit Insurance Association
FCN Friendship, Commerce, and

Navigation treaties
FCPA Foreign Corrupt Practices Act
FCTC World Health Organization’s

Framework Convention on Tobacco
Control

FDI Foreign Direct Investment
FMC Federal Maritime Commission
FPA Free of Particular Average
FSC Foreign Sales Corporation
FSIA Foreign Sovereign Immunities Act
FTA Free Trade Agreement or Area
FTAA Free Trade Area of the Americas
FTZ Foreign Trade Zone
GATS General Agreement on Trade in

Services
GATT General Agreement on Tariffs and

Trade

Page 791

GDP Gross Domestic Product
GmbH Gesellschaft mit beschrankter Haftung
GSP Generalized System of Preferences
HTSUS Harmonized Tariff Schedule of the

United States
IATA International Air Transport

Association
IBRD International Bank of Reconstruction

and Development
ICC International Chamber of Commerce
ICC International Criminal Court
ICJ International Court of Justice

(World Court)
ICSID International Center for the

Settlement of Investment Disputes
IDA International Development

Association
IEEPA International Emergency Economic

Powers Act
IFC International Finance Corporation
IHRL International Human Rights Law
ILO International Labor Organization
IMF International Monetary Fund
IMO International Maritime Organization
IPR Intellectual Property Rights
ISO International Organization for

Standardization
ITA International Trade Administration
ITC International Trade Commission
JETRO Japan External Trade Organization
JIS Japanese Industrial Standards Mark
JPO Japanese Patent Of� ce
LC Letter of Credit
LDCs Least Developed Countries
MAC Market Access and Compliance

(U.S. Department of Commerce)
MERCOSUR Mercado Common del Sur (Southern

Common Market)
METI Ministry of Economy, Trade, and

Industry (formerly MITI„ Japan)
MFN Most Favored Nation Trade Status

(see NTR)
MNC Multinational Corporation
MNE Multinational Enterprise (also MNC)
MOFTEC Ministry of Foreign Trade and

Economic Cooperation (China)
MTN Multilateral Trade Negotiations
NAFTA North American Free Trade

Agreement
NATO North Atlantic Treaty Organization
NGO Non-governmental Organization
NIS Newly Independent States
NLR No License Required
NME Non-market Economy Nation

NTB Non-tariff Barrier
NTDB National Trade Data Bank
NTE National Trade Estimate Report
NTR Normal Trade Relations (formerly

MFN)
NVOCCs Non-Vessel Operating Common

Carriers
OAS Organization of American States
OECD Organization for Economic

Cooperation and Development
OFAC Of� ce of Foreign Assets Control

(Department of Treasury)
OPIC Overseas Private Investment

Corporation
OSRA Ocean Shipping Reform Act of 1998
PCT Patent Cooperation Treaty
SDR Special Drawing Rights
SED Shipper•s Export Declaration
SWIFT Society for Worldwide Interbank

Financial Telecommunications
TAA Trade Adjustment Assistance
TBT Technical Barriers to Trade
TNC Transnational Corporation

TRIMS Trade-Related Investment Measures
TRIPS Trade Related Aspects of Intellectual

Property Rights
TWEA Trading with the Enemy Act
UCP Uniform Customs and Practices for

Documentary Credits
UDRP Uniform Domain Name Dispute

Resolution Policy
UNCITRAL United Nations Commission on

International Trade Law
UNCTAD United Nations Conference on Trade

and Development
UNDP United Nations Development Program
UNEP United Nations Environmental

Program
UNIDO United Nations Industrial

Development Organization
UNIDROIT International Institute for the

Uni� cation of Private Law
UNODC United Nations Of� ce on Drugs and

Crime
USAID United States Agency for International

Development
USITC U.S. International Trade Commission
USTR U.S. Trade Representative
VAT Value Added Tax
WCO World Customs Organization
WIPO World Intellectual Property

Organization
WTO World Trade Organization

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