Presentation on international business laws (1)

THIS PRESENTATION MAY INCLUDE THE INTERNATIONAL BUSINESS LAW THAT COVERS THE DIFFERENT ASPECTS OF BUSINESS TRANSACTIONS.

1. Presentation on international business laws covering different aspects of business transaction

2. International business laws International business law also known as international commercial law is the body of law that governs international sale transactions. A transaction will qualify to be international if the elements of more than one country are involved.

3. International commercial contracts International commercial contracts are sale transaction agreements made between parties from different countries . The methods of entering the foreign market include: Export directly. Use of foreign agent to sell and distribute . Use of foreign distributor to on-sell to local customers. Manufacture products in the foreign country by either setting up business or by acquiring a foreign subsidiary . Licence to a local producer. Enter into a joint venture with a foreign entity. Appoint a franchisee in the foreign country ETC.

4. Convention on the International Sale of Goods The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the main convention for international sale of goods. The importance of CISG is its interpretation. International context, uniformity and observance of good faith must be regarded when interpreting the Convention. Matters not expressly settled by CISG are to be determined according to the general principles of CISG.

5. Incoterms Incoterms are the set of rules which define the responsibility of sellers & buyers for the delivery of goods under sales agreement. They are published by international chamber of commerce (ICC) and are widely used in commercial transactions. Incoterms were first published in 1936, it has been revised every 10 years. Incoterms 2010, the 8th revision, refers to the newest collection of essential international commercial and trade terms with 11 rules.

6. The Incoterms are classified in 4 different classes: Ex ( ExW ); Free (FOB, FAS, FCA); Cost (CPT, CIP, CFR, CIF); Delivery (DAP, DAT, DDP ). The 11 terms can also be classified into two different categories depending on its contents : Rules for any modes of transport: ExW , FCA, CPT, CIP, DAT, DAP, DDP; Rules for sea transport : FAS, FOB, CFR, CIF.

7. Contract of carriage of goods The bill of lading (transport document used almost exclusively for carriage of goods by sea) is a contract of carriage between the consignor, the carrier and consignee that acts as a receipt of transfer of goods and as a negotiable instrument . Most bills of lading today are governed by international conventions such as the Hague-Visby Rules, which is a revised version of the Hague Rules by a Brussels Protocol in 1968; and Hamburg Rules. On the other hand, the United States and the United Kingdom adopted the Carriage of Goods by Sea Act (COGSA ).

8. Insurance in international trade Insurance against perils is an important aspect of international commercial transactions. In the event of loss or damage to cargo, an insured party will be able to recover losses from the insurer. The type of insurance required depends on the mode of transport agreed between parties to transport the cargo. Such insurance forms include marine, aviation and land . The type of insurance contract depends on the Incoterm adopted by the parties in a sale contract. A CIF sale contract requires the seller to obtain insurance cover. An FOB contract however places no obligation on the buyer or seller to obtain insurance.

9. Payment in international trade Practically, payment is effected by the following methods: Cash in Advance : buyer transfers funds to the seller’s account in advance pursuant to the sale contract. Open Account : arrangement for the buyer to advance funds to an ‘open account’ of the seller on a fixed date or upon the occurrence of a specified event, such as delivery of the goods. Documentary Credits : the bank, on behalf of buyer, issues a letter of credit  undertaking to pay the price of the sale contract on condition that the seller complies with credit terms.

10. World trade organisation (WTO) The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations . The WTO officially commenced on 1 January 1995 signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade ( GATT). It represents a crucial aspect of international commercial law through its objectives of facilitating global trade flow; liberalising trade barriers and providing an effective dispute settlement mechanism.

11. Principles of International Trade Laws WTO contains three important basic principles: Most-favoured nation principle (MFN) : expresses that any advantage to a product originating or destined for another country shall be treated in accordance with a like product originating in or destined for the contracting country . National treatment principle : prohibits discrimination between imported and like domestic products, other than through the imposition of tariffs. Reciprocity principle : encourages negotiations between contracting parties on a reciprocal and mutually advantageous basis, directed towards the reduction of tariffs and other charges on imports and exports.

12. Regional trade blocs Regional trade blocs are arrangements between States to enable parties to benefit from greater access to each other’s markets . Regional trade initiatives and economic integration is integral to international commercial law through its impact on commercial transactions . Some examples include the European Union, North American Free Trade Agreement. GATT allows the creation of customs unions and free trade areas as an exception to the MFN principle if it facilitates trade and does not raise barriers to trade of other contracting parties.

13. Anti-dumping and countervailing measures Dumping refers to the unfair trading practice of exporting products at a cost below market price. Anti-dumping regimes involve imposing duties that represent the price difference between goods sold on the exporter’s domestic market and goods sold on the import market. Countervailing measures A countervailing duty is imposed for the purpose of offsetting a subsidy. The Agreement on Subsidies and Countervailing Measures forms the current regime for imposing countervailing duties on subsidised goods to conform to GATT principles. The Committee on Subsidies and Countervailing Measures exists to carry out tasks assigned under the Agreement

14. International contracts relating to intellectual property (IP) Developments in international trade through e-commerce have seen an increased emphasis on IP protection . The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which replaces earlier international IP agreements, outlines rules to control anti-competitive practices in international licences relating to IP . TRIPS enables compliance disputes to be brought to attention of the WTO . Further it applies basic WTO principles to IP rights, such as the national treatment principle and the MFN principle.

15. A Quick Recall After Incoterms 2010, how many Incoterms are there? 8 6 11 None of these

16. World trade organisation officially commenced on which year? 1994 1936 1995 1945

17. 3. When was the first incoterm was published? 1945 1997 1936 1994

18. 4. Incoterms are published by? WTO ICC WIPO None of these

19. Answers (C) (C) (C ) (B)