International Business
Law
International trade is an important part
of the U. S. economy. As our economy becomes more international, so do U.S.
businesses. Most U.S. businesses will find themselves involved in the
international environment at some point in their future, and they must be aware
of the legal environment of international business.
There are many forms that an
international business can take. International business can be simply an
import/export operation, it can hire a sales representative or sales agent to
sell their product in the foreign country, or a licensing arrangement may be used.
These methods do not call for a significant investment. However, as the
international business market share increases, it may be more effective to
invest directly in the host country. This investment may take the form of
setting up a branch or subsidiary to manufacture the product or provide the
services in the host country. Some international business take the form of a
joint venture.
Multinational corporations have
manufacturing or service facilities in the host country. Because of their large
size and unique character, special problems arise. These problems include the
ability of the multinational corporation to gain a significant share of the
markets for labor, raw materials, and finish products. Another issue of concern
is the real or perceived power of the multinational corporation, and the final
issue involved is the worldwide profit-maximizing point of view of the
multinational.
One way in which the United States has
sought to regulate the conduct of multinational corporations in general, and
U.S. companies in particular, is the Foreign Corrupt Practices Act of 1977. The
Foreign Corrupt Practices Act (1) prohibits giving anything of value to a
foreign official in order to influence a discretionary decision and (2)
provides for accounting procedures for all U. S. companies governed by the
Securities Exchange Act of 1934.
All international businesses deal with
various aspects of contract law. An international business must be aware of the
host country's different customs and legal systems. Of special concern are
issues of payment, choice of law, and choice of forum. Although disputes
involving contracts can be settled in a variety of ways, international
arbitration is becoming increasingly important.
At the international level,
organizations seek to regulate the conduct of international businesses in a
variety of ways. The U. N. Convention of Contracts for the International Sale
of Goods is an important step in the process of private international law. The
General Agreement on Tariffs and Trade is an international body that seeks to
eliminate trade restrictions between trading nations. An international body at
the regional level is the European Economic Community. The impact of the EEC on
European countries and their trading partners is significant.
The debate continues over the ideals of
free trade and the consequences of restrictions. Import regulations and export
controls, are viewed by the United States as necessary for protecting our
domestic economy. These restrictions, however, impact the economic realities
and benefits of free trade.
One way the United States does seek to
maintain free competition at the international level is through antitrust
enforcement. Thus, the United States will enforce its antitrust laws outside
the United States if the impact can be felt by U. S. consumers or other U. S.
exporters.
The legal environment of international
business is highly complex due to the different levels of regulations that can
take place, as well as the numerous actors involved. International business is
a reality of business life, and managers must be prepared to deal with this legal environment.
