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INTERNATIONAL AND WORLD TRADE LAW

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CHAPTER 54 CHAPTER 54

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International Law

• Law that governs affairs between nations.

• Law that regulates transactions between individuals and businesses of different countries.

• No single source of international law.

• No world court responsible for interpreting all international law.

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The United States and Foreign Affairs

• The Constitution gives most power over foreign affairs to the federal government.– Foreign Commerce Clause– Treaty Clause

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Foreign Commerce Clause

• Article I, Section 8, Clause 3 vests Congress with the power “to regulate commerce with foreign nations.”

• Any state or local law that unduly burdens foreign commerce is unconstitutional under the Commerce Clause.

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Treaty Clause

• Article II, Section 2, Clause 2 states that the president “shall have power, by and with the advice and consent of the Senate, to make treaties, provided two-thirds of the senators present concur.”

• The president is the agent of the United States in dealing with foreign countries.

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Treaty Clause (continued)

• Under the Treaty Clause, only the federal government may enter into treaties with foreign nations.

• Under the Supremacy Clause of the Constitution:– Treaties become part of the “law of the land.”– Conflicting state or local law is void.

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United Nations

• International organization created by multinational treaty in 1945.

• Most countries are members.

• Goals of the United Nations (U.N.):– Maintain peace and security in the world.– Promote economic and social cooperation.– Protect human rights.

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Governance of the United Nations

• General Assembly– Composed of all member nations.– Legislative body of the U.N.– Adopts resolutions which have limited force.– Resolutions are usually enforced through

persuasion and sanctions.

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Governance of the United Nations (continued)

• Security Council– Composed of 15 member nations.

• Five permanent members (China, France, Russia, U.K., U.S.)

• Ten members chosen for two-year terms.– Primarily responsible for maintaining

international peace and security.– Has authority to use armed forces.

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Governance of the United Nations (continued)

• Secretariat– Administers the day-to-day operations of the

U.N.– Headed by the Secretary-General, who is

elected by the General Assembly.

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U.N. Agencies

• Various autonomous agencies:– UNESCO– UNICEF– IMF– World Bank– IFAD

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International Monetary Fund

• Established to promote the world economy.– Sound monetary, fiscal, and macroeconomic

policies worldwide.

• Provides assistance to needy countries.– E.g., short-term loans.

• Funded by monetary contributions of member nations, based on size of each nation’s economy.

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World Bank

• Provides money to developing countries to fund projects for humanitarian purposes and relieve poverty.

• Bank routinely grants debt relief for these loans.

• Financed by contributions from developed countries.

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International Court of Justice

• Judicial branch of the United Nations.

• Also called the World Court.

• Located in The Hague, the Netherlands.

• Only nations may have cases decided by this court.

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European Union (EU)

• Comprised of many countries of western and eastern Europe.

• Created to promote:– Peace and security.– Economic, social, and cultural development.– Open borders for trade.– Provide free flow of capital, labor, goods, and

services.

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EU (continued)

• Represents more than 500 million people.

• Gross community product exceeds U.S., Canada, and Mexico combined.

• Euro as single monetary unit.

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North American Free Trade Agreement

• Free-trade zone formed by the U.S., Canada, and Mexico.

• Eliminates or reduces most of the duties, tariffs, quotas, and other trade barriers between the members.

• Forms supernational trading region.

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Other Regional International Organizations

• Association of Southeast Asian Nations (ASEAN)

• Organization of the Petroleum Exporting Countries (OPEC)

• Dominican Republic-Central America Free Trade Agreement (DR-CAFTA)

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World Trade Organization (WTO)

• International organization of more than 130 member nations.

• Headquartered in Geneva, Switzerland.• Created under General Agreement on Tariffs

and Trade (GATT) to promote and enforce trade agreements among member nations.

• One of the primary functions of the WTO is to hear and decide trade disputes between member nations.

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WTO Dispute Resolution

• WTO hears and decides trade disputes between member nations.– 3-judge panel issues report.– Report referred to dispute settlement body.– Possibility of further appeal within WTO.– If violation found, offending nation ordered to

stop and to pay damages.

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National Courts Decide International Disputes

• The majority of commercial litigation involving international business transactions is heard by national courts.– Most disputes are between private parties.

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Judicial Procedure

• Choice of forum clause – designates the judicial or arbitral forum that hear and decide the case.– E.g., U.S. District Court.

• Choice of law clause – designates the law to be applied by the court or arbitrator in deciding the case.– E.g., French law.

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Act of State Doctrine

• A country has absolute authority over what transpires within its own territory.

• Judges of one country cannot question the validity of an act committed by another country within that other country’s borders.

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Doctrine of Sovereign Immunity

• Countries are granted immunity from suits in other countries.– E.g., U.S. citizen cannot sue the government

of China in U.S. court.• Some countries provide absolute immunity.• Some countries provide limited immunity.

– E.g., U.S.

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Exceptions to Sovereign Immunity

• Under U.S. Foreign Sovereign Immunity Act, foreign country not immune from suits in U.S. courts if:– Immunity waived, or– Suit is based on commercial activity in U.S. by

foreign country, or directly affecting U.S.

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Religion and Law

• Jewish Law and the Torah– Legal principles of Torah coexist with secular laws

of Jew’s home countries.

• Islamic Law and the Koran– Shari’a is sole law in Saudi Arabia; in other Islamic

countries, coexists with national laws.

• Hindu Law and Dharmasastra– Religious laws based on works of private scholars.– May affect codified law.