Chapter 06Chapter 06

International and International and Comparative LawComparative Law

Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

International Law (Definition):International Law (Definition):

Laws governing the conduct of states and Laws governing the conduct of states and international organizations and their international organizations and their relations with one another and natural relations with one another and natural and juridical personsand juridical persons

““International organizations” include the International organizations” include the United Nations, the International United Nations, the International Monetary Fund, the World Bank, and the Monetary Fund, the World Bank, and the World Trade OrganizationWorld Trade Organization

““Natural and juridical persons” include Natural and juridical persons” include individuals and businessesindividuals and businesses

6-2

Methods of International Business Methods of International Business InvolvementInvolvement

Export (including use of foreign sales Export (including use of foreign sales representative and/or distributors)representative and/or distributors)

Franchise AgreementFranchise Agreement

Joint VentureJoint Venture

Foreign Subsidiary/AffiliateForeign Subsidiary/Affiliate

6-3

Ethical Considerations in Ethical Considerations in International BusinessInternational Business

Whether to do business with “repressive” Whether to do business with “repressive” governmentsgovernments

Whether to provide products for the poor Whether to provide products for the poor at reasonable pricesat reasonable prices

Whether to treat workers according to Whether to treat workers according to local customs, or consistent with local customs, or consistent with international standards of humane international standards of humane treatmenttreatment

6-4

The General Agreement on The General Agreement on Tariffs and Trade (GATT)—Tariffs and Trade (GATT)—

Definition:Definition: A comprehensive, multilateral A comprehensive, multilateral

trading system designed to achieve trading system designed to achieve “distortion-free” international trade “distortion-free” international trade through minimization of tariffs and through minimization of tariffs and removal of artificial trade barriersremoval of artificial trade barriers

6-5

GATT Principles of Trade LawGATT Principles of Trade Law

Article I: Addresses the principle of “most favored Article I: Addresses the principle of “most favored nation” status (a.k.a. “normal trade relations”); nation” status (a.k.a. “normal trade relations”); requires that WTO members treat similar goods requires that WTO members treat similar goods coming from other WTO members on an equal basis coming from other WTO members on an equal basis (prohibits discrimination against like products on the (prohibits discrimination against like products on the basis of their country of origin)basis of their country of origin)

Article III: Establishes principles of “national Article III: Establishes principles of “national treatment” (prohibits WTO members from regulating, treatment” (prohibits WTO members from regulating, taxing or otherwise treating imported products any taxing or otherwise treating imported products any differently than domestically-produced products)differently than domestically-produced products)

Article VI: Prohibits certain types of dumping and Article VI: Prohibits certain types of dumping and subsidiessubsidies

Article XI: Prohibits quantitative restrictions on Article XI: Prohibits quantitative restrictions on importsimports

6-6

Regional Trade AgreementsRegional Trade Agreements

Free Trade Agreement: Two or more states Free Trade Agreement: Two or more states agree to reduce (and gradually eliminate) tariffs agree to reduce (and gradually eliminate) tariffs and other trade barriers)and other trade barriers)

Example: The North American Free Trade Example: The North American Free Trade Agreement (NAFTA)Agreement (NAFTA)

Bilateral Trade Agreement: Two states agree on Bilateral Trade Agreement: Two states agree on issues related to trade between themissues related to trade between them

Example: United States bilateral agreements with Example: United States bilateral agreements with Australia, Israel, Jordan, and SingaporeAustralia, Israel, Jordan, and Singapore

6-7

Comparative Law (Def.): Study of Comparative Law (Def.): Study of the legal systems of other statesthe legal systems of other states

Provides a better understanding of the Provides a better understanding of the general purpose of lawgeneral purpose of law

Assists in development of a critical Assists in development of a critical viewpoint of one’s own legal systemviewpoint of one’s own legal system

Demonstrates that one’s own legal system Demonstrates that one’s own legal system is only one of many alternativesis only one of many alternatives

Could lead to adoption of another state’s Could lead to adoption of another state’s law or method of resolving a disputelaw or method of resolving a dispute

6-8

Legal Systems and ProceduresLegal Systems and Procedures ““Civil law” systems: Consist of detailed national legal Civil law” systems: Consist of detailed national legal

codes, which serve as the sole official source of law codes, which serve as the sole official source of law (these represent the majority of the world’s legal (these represent the majority of the world’s legal systems)systems)

““Common law” systems: Based on constitutions, Common law” systems: Based on constitutions, legislation, regulations, and their interpretations by legislation, regulations, and their interpretations by court of lawscourt of laws

““Socialist law” systems: Rights of society outweigh Socialist law” systems: Rights of society outweigh individual rights, and that the state owns means of individual rights, and that the state owns means of production and propertyproduction and property

““Islamic law” systems: Law derived from and Islamic law” systems: Law derived from and interpreted consistent with Shari’a (God’s Law) and the interpreted consistent with Shari’a (God’s Law) and the KoranKoran

6-9

International Dispute Settlement International Dispute Settlement MethodsMethods

Litigation (Court must have personal Litigation (Court must have personal jurisdiction over parties involved in the jurisdiction over parties involved in the dispute, and subject matter jurisdiction dispute, and subject matter jurisdiction over the issues involved in the dispute)over the issues involved in the dispute)

Arbitration (Dispute submitted for Arbitration (Dispute submitted for resolution to an arbitrator, who renders resolution to an arbitrator, who renders decision based on determination of facts decision based on determination of facts involved in the dispute, and application of involved in the dispute, and application of the appropriate law)the appropriate law)

6-10