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Chapter12

LawsAffectingInternationalBusinessandTravel2021/5/912TopicsHomeCountryandHostCountryLawsContractsEthicsandtheLawInternationalLawsGlobalPatentsNonwrittenLawInternationalTravelandLaw2021/5/92Copyright©2014PearsonEducation,Inc.3Theworldhasnumerouslawsthataffectinternationalbusiness.

Whenacompanyisengagedininternationalbusiness,whatthecompanyrepresentativescanlegallydoiscontrolledbyboththeirnationandtheforeignnationwithwhichtheywishtoconductbusiness.

2021/5/93Copyright©2014PearsonEducation,Inc.4TermsActofStateDoctrine-Eachcountrycandoasitwisheswithinitsownboundaries.HomeCountryLaws-Laws,treaties,oractsthatgovernbusinesswithinyourowncountry(andthosegoverningbusinesswithothercountries).HostCountryLaws-Laws,treaties,oractsthatgovernbusinesswithintheforeigncountrywithwhichyouwishtoconductbusiness.2021/5/94Copyright©2014PearsonEducation,Inc.5LegalRequirementsthatGovernU.S.Citizens'ActionsDuringNegotiationsAntidiversionRequirement-BillofladingandinvoicemustclearlydisplaythatthecarriercannotdiverttheshipmenttoacountrytheU.S.governmentconsidersrestricted.2021/5/95Copyright©2014PearsonEducation,Inc.6AntiboycottRegulations-ProhibitsU.S.companiesfromparticipatinginboycottsbetweentwoforeigncountriesbyrefusingtodobusinesswithafriendlynationtocomplywithaforeignboycott.AntitrustLaws-DesignedtoensurefaircompetitionandlowpricestoU.S.consumers;theselawsaffectexportersinsuchareasasmergersandacquisitionsofforeignfirms,rawmaterialprocurementagreements,knowledgelicenses,distributionchannels,etc.2021/5/96Copyright©2014PearsonEducation,Inc.7WrittenInformationLawsTheExportAdministrationActof1985-requiresfederallicensingoftechnicalinformationinbusinesscorrespondence.TheArmsExportControlActof1968andTradingwiththeEnemyActof1917-prohibitthetransferofinformationonmilitarymaterialordefense-relatedmaterials.TheInternationalEmergencyEconomicPowersActof1977-governsinformationthatisresearchorientedfrombeingcommunicatedtoforeigners.2021/5/97Copyright©2014PearsonEducation,Inc.8TechnologyLawsTheWorldIntellectualPropertyOrganization(WIPO)oftheUnitedNationspromotesintellectualpropertyrightsworldwideandcurrentlyadministers23treatiesfor185membernations.2021/5/98Copyright©2014PearsonEducation,Inc.9TechnologyLawsBerneConventionImplementationActof1988-recognizedthecopyrightsofallthesignatorynationstotheact;165countriesweresignatoriesin2011.MadridConvention-trademarksareprotectedbythe35countriesthataresignatories.(TheU.S.isnotasignatory.)2021/5/99Copyright©2014PearsonEducation,Inc.10EmploymentLawsMostnationshavelegislationgoverningwages,hours,union-managementrelations,residencevisas,andworkpermits.Somenationsrequireacertainratioofnationalstoforeigners.Legalquestionsthatmaybeaskedofapotentialemployeedifferbycountry.2021/5/910Copyright©2014PearsonEducation,Inc.11MaquiladoraLaw

InternationalmaquiladoraprograminMexicoallowstheduty-freeimportofequipment,machinery,andmaterialstoassemblepartsofproductsthatarethenreturnedtothehomecountry.PresidentialDecreefortheDevelopmentandOperationoftheMaquiladoraIndustryProgramof19832021/5/911Copyright©2014PearsonEducation,Inc.12TheU.S.TariffCodeallowsthefinalproducttobebroughtintothecountrywithonlythefinalvalueaddedtothegoodsbeingtaxed.Animportantconsiderationinthisprogramisthedifferenceinformoflaw.TheU.S.(exceptLouisiana)practicescommonlaw(basedonwhathasbeentraditionallyacceptedasrightovermanyyears);Mexicopracticescivillaw(bodyoflawsofastateornationrelatedtoprivatematters).Thedifferenceisthatcivillawratherthanprecedentisconsideredduringlitigation.2021/5/912Copyright©2014PearsonEducation,Inc.13InternationalLawInternationalCourtofJustice(alsoknownastheWorldCourt)-bodyoftheUnitedNationsthatprovidesawaytosettleinternationaldisagreementsbetweencountriesratherthancorporations.ThethreelegalbodiesintheUnitedNationsare:UnitedNationsCommissiononInternationalTradeLaw(UNCITRAL),TheInternationalCommission,andtheSixthCommitteeoftheGeneralAssembly.2021/5/913Copyright©2014PearsonEducation,Inc.14

Amovementbyinstitutionsconcernedwithinternationalbusinesshasencouragedthedevelopmentofagreementsandlawsthatareuniformlyacceptedinworldtrade.Theseinstitutionsare:InternationalChamberofCommerceInternationalCommercialTerms(Incoterms)ECEStandardConditionsTheHagueConventionTheViennaAgreement2021/5/914Copyright©2014PearsonEducation,Inc.15Quasi-internationalLaw-rulesfortherelationshipbetweenlegalentitiesandstatesthatdonothavenationalstatus,suchasprivatecorporations.Sanctions–prohibitU.S.companiesfromdoingbusinessintargetedcountries.WhentheU.S.governmentdoesnotapproveofacountry’spolicies,theyimplementsanctionstotrytoreformthecountry.2021/5/915Copyright©2014PearsonEducation,Inc.16Macaulay'sThesis-considerslong-termrelationshipmoreimportantthancontracts.Thematization-processbywhichaframeworkformutualcommunicationandsatisfactionisreached;processcouldberelatedtothelaw,economies,power,orreligion.2021/5/916Copyright©2014PearsonEducation,Inc.17GovernanceStructuresMarketgovernance-contractbasedTrilateralgovernance-addsanarbitratorBilateralgovernance-maynotspelleverythingoutbutimpliesacontinuingrelationshipUnifiedgovernance–nodetailsarenegotiatedinadvance;maximumflexibilityisprovided-onlyonepartysetstermsforbothparties;appropriateforsubsidiariesofasingleorganization2021/5/917Copyright©2014PearsonEducation,Inc.18ContractsContract-anagreementbetweenpartiestodosomethingthatisoral,written,orimpliedthroughconduct.HowarecontractsviewedintheU.S.?Veryimportant;oralcontractislegallyenforceable.2021/5/918Copyright©2014PearsonEducation,Inc.19HowarecontractsviewedinJapan? Maybemadeverbally,inwriting,orbyconductbutarealwaysopentorenegotiation.HowarecontractsviewedbytheRussianFederation? Inthepastlittleneedexistedforcontracts;goodswereallocatedandfirmsacceptedwhatwassent.Thispracticeisnowchanging,buttheystillhaveproblemswiththeconcept.2021/5/919Copyright©2014PearsonEducation,Inc.20GlobalPatentsCompanyfilespatentapplicationwiththeU.S.Patentoffice;limitationtofileabroadisoneyearfromthedateoftheU.S.application.PatentCooperationTreaty-whenpatentsarefiledinothercountries,thenewpatentsclaimprioritytothedateontheU.S.patentthusprevailingovercompetingrightsofotherinvestors.Treatiesoverrideallotherdomesticlaws;nationsneedtobeawareoftheirsovereigntyandrememberthattreatiesshouldbebasedongoodscience,ratherthanonwishfulthinkingorbadpolitics.2021/5/920Copyright©2014PearsonEducation,Inc.21UnwrittenLawUnwrittenbusinesslawsarecalleddrawerregulationsinBrazilbecausetheyoperatefromunwrittenoperationalcodesratherthanlaws.Manydrawerregulationsaredisappearingwithcountriesjoiningfreetrademarkets.Inhigh-contextcultures(Japan),littleemphasisisgiventothewrittenword;thesituationwoulddeterminewhethertoadheretothelaw.Oralagreementswouldbeconsideredbinding,andwrittencontractswouldbeconsideredflexible.2021/5/921Copyright©2014PearsonEducation,Inc.22EthicsandtheLawprofitcompetitionjusticeadvertisingFourmotivationsforunethicalconductinbusiness:2021/5/922Copyright©2014PearsonEducation,Inc.23Thethreedimensionsofnegotiationethicsare:Means/ends–measuredbyutilityRelativism/absolutism–considerstwoextremes:eithereverythingisrelativeoreverythingiswithoutdeviationfromtheruleTruthtelling–considerswhetherconcealinginformation,consciousmisstatements,exaggeration,orbluffingduringnegotiationsisdishonest2021/5/923Copyright©2014PearsonEducation,Inc.24LawsRelatedtoEthics

inBusinessForeignCorruptPracticesActof1977-requiresU.S.companiestoaccountforandreportinternationaltransactionsaccuratelyandprohibitsbribes(includinggiftsandentertainment)thatareusedtogainabusinessadvantage.2021/5/924Copyright©2014PearsonEducation,Inc.25TheDoctrineofSovereignCompliance-aninternationallegalprinciplethatcanbeusedasadefenseinyourhomecountryforworkcarriedoutinahostcountrywhenthetwocountries'legalpositionsaredifferent.ExportTradingCompanyActof1982-allowscompaniesthatnormallywouldnotbeallowedtoparticipateinjointventurestodeveloptradingcompaniessimilartothoseinBritainandJapan(e.g.,GM,Ford,andChryslermakepartswithEuropeanandJapanesecarmanufacturerstojointlyproduceandsellcars).2021/5/925Copyright©2014PearsonEducation,Inc.26LegalandEthicalPracticesareViewedDifferentlyTheword"contraband"intheU.S.suggestsbreakingthelawbysmuggling.InLatinAmerica,however,theSpanishwordiscontrabando(fromthewordcontrabandido,whichmeans"againstthebandits,")andisviewedinapositiveway.2021/5/926Copyright©2014PearsonEducation,Inc.27InternationalTravelandLawAPassport-proofofcitizenship;needacopyofyourbirthcertificateandcurrentphotos.Citizenship-thestateofbeingvestedwithcertainrightsanddutiesasanativeornaturalizedmemberofacountry.Visa-givesyoutherighttoenterandstayinacountryforaperiodoftimeforaspecificpurpose.2021/5/927Copyright©2014PearsonEducation,Inc.28Consulate-madeupofindividualssentbythegovernmenttoothercountriestopromotecommercialinterestsoftheirhomecountry.CustomsAgents-enforceexportandimportlawsofthecountry;havetherighttosearchandconfiscateanythingyoumayhavewithyou.Duties-importtaxes2021/5/928Copyright©2014PearsonEducation,Inc.29SuggestionsforInternationalTravelRegisterwiththeU.S.Embassyorconsulatewhenyouarrive.TurntotheEmbassyorconsulateforlegal,medical,orfinancialproblems.ContacttheAmericanConsulforalistofattorneys,tonotifyyourfamily,andtoprotestanymistreatment.TheConsulcanvisityouinjailbutcannotgetyoureleasedorprovideforbondsorfines.2021/5/929Copyright©2014PearsonEducation,Inc.30Rememberthatyouaresubjecttothelawsofthecountrywhileyouarethere.Registerwiththelocalauthoritiesifyouplanaprolongedvisit.Youmaybeaskedtoleaveyourpass-portovernightortocompletecertainforms.Useauthorizedoutletsforcashingchecksandbuyingairlinetickets;avoidtheblackmarketorstreetmoneychangersthatyouwillseeinmanycountries.2021/5/930Copyright©2014PearsonEducation,Inc.31Askbeforeyouphotographanythingtobesureitispermissible.Avoidthesecommoninfractionsofthelaw:tryingtotakehistoricalartifactsorantiquitiesoutofthecountry,customsviolations,immigrationviolations,drunkordisorderlyconduct,andbusinessfraud.ObtainanInternationalDriver’sLicenseifyouneedtodrive.Travelagentscanassistwiththis.Manycountriesrequireproofofinsurancewhiledriving.2021/5/931Copyright©2014PearsonEducation,Inc.32Donotdealindrugs;thisisaseriousoffenseinallcountries,andpenaltiescanbemuchmoreseriousthanintheU.S.,includingdeath.Keepalistofcreditcard/traveler’schecknumbersinasafeplaceincasetheyarelostorstolen.ObtainacopyofSafeTripAbroad.2021/5/932Copyright©2014PearsonEducation,Inc.33MakealistofsuchusefultelephonenumbersastheU.S.StateDepartment,AmnestyInternational(NewYork),andtheInternationalLegalDefenseCounsel(Philadelphia).Yourhealthshouldbeaconcern;getacopyofHealthInformationforInternationalTravelbytheCenterforDiseaseControlandPrevention.Betrustworthy,helpful,kind,friendly,courteous,obedient,cheerful,brave,andreverent.2021/5/933Copyright©2014PearsonEducation,Inc.34Country-SpecificTravelTipsBrazil–Passportsarerequiredandshouldbevalidforsixmonthsfromthedateofentry.Sincehotelaccommodationsvarywidely,amenitiesshouldbeconfirmed.Publictransportationincludessubwaysinlargercitiesaswellasbusesandtaxis.Canada–Since9/11/01,passportsforU.S.citizensenteringfromtheU.S.oranothercountryarerequired.HotelaccommodationsinlargecitiesaresimilartothoseintheU.S.PublictransportationsystemsinMontréalandQuébecCityareverygood.2021/5/934Copyright©2014PearsonEducation,Inc.35Country-SpecificTravelTipsChina–U.S.citizensneedapassportandavisa.Hotelaccommodationsinlargecitiesareavailable.Publictransportationsystemsexistthroughoutthecountry.Bicyclesarethemainmodeoftransportation.Germany–

Passportrequired,butU.S.citizensdonotneedavisatotravelinGermanyforuptothreemonths.Novaccinationsarerequired.Hotelpricegenerallyincludesacontinentalbreakfast;heatmaybeanextracharge.Notallhotelroomshaveabathinsidetheroom.Publictransportationincludesbuses,trains,streetcars,subways,andtaxis.2021/5/935Copyright©2014PearsonEducation,Inc.36Country-SpecificTravelTipsJapan–Passportneeded,butnovisaisneededforvisitsoflessthan90days.Novaccinationsarerequired.LargecitieshavenumerousWestern-stylehotelswithprivatebaths.Restroomfacilitiesareusuallyunisex.Publictransportationincludestrains,subways,andbuses.The“bullettrain,”whichrunsbetweenmajorcities,offersregularandfirst-classaccommodations.2021/5/936Cop

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