Identify and briefly explain six different forms of international business transaction (a phrase or sentence identifying the primary

business mechanism so as to distinguish from other forms). Include a/the major form of contract(s) required. (12 pts.) 1. Cross border sales (sales agreement with shipping of goods). Cross-Border Purchase Agreement. 2. Agency (local agent being used). Agency Agreement 3. Joint Venture (joinder of assets/resources for common business purpose). JVA (or Shareholders) and Operating Agreement 4. Merger & Acquisition (merging with a strategic partner or buying the entire business) (buying of company or merger of company). Merger with or Acquisition of Business Entity contract & Key Employee(s) Employment contract(s) 5. Asset Purchase (buying desired assets of whatever nature). Asset Purchase Agreement 6. Licensing/Franchising (leasing intellectual property rights patents, trademarks or trade names, design, copyright, business secret). Licensing/Franchising Agreement. Briefly explain the international comparative advantage business model and the key element for its proper functioning. (5 pts.) The idea is to have nations produce what they are best at to increase the basket of good available worldwide, and let them flow to the purchasers of highest marginal value (willing to pay highest price). The key is unrestricted movement of goods, services, people (factors of production, finished items, etc.)

Name two non-private players in international trade from each of the following three categories: global regimes, regional regimes, and private (but international) regimes. In one phrase or sentence per player or regime, identify their respective raisons detre (i.e., what are they intended to do?). (6 pts.) Global regimes: o UNCITRAL - provide mechanisms for dealing with cases of cross-border insolvency by facilitating cooperation between countries, fairness in administration, certainty of trade, and protection of assets. o WTO - ensuring governments afford fair trading standards for private business; loans for infrastructure and other important projects of improvement many to improve trade, standards of living, etc Regional regimes:

o EU (customs union) provide economic and political cooperation between European countries to facilitate trade, democracy, and human rights. o NAFTA (FTA) - reduce trading costs, increase business investment, and help North America be more competitive in the global marketplace International Private regimes: o International Chamber of Commerce develops a knowledge database to facilitate international trade o ISO provides voluntary principles of standardization of international business.

Explain what is meant by the phrase The UNCITRALs Convention on Contracts for the International Sale of Goods covers cross-border sales transactions in the executory phase. When is it applied? (5 pts.) - Executory phase is contract formation, shipping/delivery/perfomance phase it does not deal with payment terms, breaches, remedies). - Parties may adopt the CISG in a choice of law clause, or also as a gap filler where chosen (local) laws are silent. It is not mandatory. What is a documents package? What is its purpose? What are six of its required documents (note that the example in the case book makes clear five, but one of them has two elements, both of which should be listed). (6 pts.) - Documents package is made of documents evidencing a transaction. Its purpose is to simplify payment systems such as letters of credit, and facilitate the importing/exporting of goods. It includes: o Full set of on-board negotiable documents o Insurance policy or certificate for the shipping o Packing list given to bailee/shipper o Commercial invoice o IMPORT LICENSE o Shippers export declaration What are INCOTERMS? What is their source? How are they used? Provide two clear examples of INCOTERMS and indicate their coverage. (7 pts.) - These are shipping rules for international sales of goods transactions; - Created by the International Chamber of Commerce; - To facilitate common terminology and used as law when local laws not a good fit, or as gap-fillers; - Examples - Clean on Board which shows that the goods are without any defects (any deviations from the description in the bill of lading are noted on the bill of lading), F.O.B. (free on board) covers buyer/seller rights/duties in terms of risk allocation. In a typical cross-border sale of goods transaction, what is the sellers main risk (noting that there are several forms that the deal could take, each with the same main risk)? What are the buyers main risks? - Seller risks getting paid properly. Seller keeps title until acceptance by buyer and so can get shipped goods back, etc. - Buyer risks:

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Goods lost or stolen (does not have them to sell, time lost, etc.) Goods damaged. Goods that were shipped non-conforming. Bill of lading forged seller collects and buyer has no goods Bill of lading stolen and submitted by other than the seller Transmitting bank goes insolvent no funds

With regard specifically to bills of lading in a cross-border sales transaction, list three international regimes. According to the casebook authors and generally speaking, what is their main difference (highly relevant in case of disputes)? What does the United States do/adopt for U.S.-based transactions? What does England use? (6 pts.) - Three international regimes for regulation of bills of lading: o The Hague rules Introduced to expand carrier liability while the goods were in their control. general rule is to require the carrier to bear the responsibility for their own negligence. o The Hague/Visby rules Must be applied to a bill of lading that has been negotiated and involves a third party May be applied to a non-negotiable bill of lading or any other contract for carriers o The Hamburg rules An attempt to form a uniform legal base for the transportation of goods on oceangoing ship. Much more stringent than Hague rules. When determining existence of fault and carrier responsibility, the burden of proof should be borne by the carrier to prove that he or his agents took all steps necessary and reasonable to avoid the accident/consequences - U.S. based transactions: o US has enacted the Hague rules into its domestic law as the carriage of goods by sea act (COGSA) o Also uses non-conforming pre-COGSA legislation (the Harter act) - England: o Based on Hague/Visby Rules What are three general types of legal regimes that states may have, or respect, with regard to laws covering cross-border sales of goods, particularly with a view to their mandatory vs.- non-mandatory nature? Provide one clear example of each. (6 pts.) 1. Mandatory laws of the state which are binding on the parties and may not be set aside by contractual clauses a. COGSA b. Pomerene Act 2. Optional laws of a state which may be subject to contrary contractual agreement by the parties a. Most provisions of the UCC b. Common law of contract

3. Trade customs and usages which arise out of contractual terms and do not arise out of the law of a state a. I.C.Cs INCOTERMS. What does F.O.B. mean (the term, and what it means/how it works)? What are three kinds of F.O.B. contract in an American transactions using UCC 2-319? List and briefly explain three obligations (risks) in a cross-border sale other than risk of being paid, from a U.S. sellers perspective, in which the nature of the F.O.B. obligation may switch between seller and buyer. Contrast ex factory by brief explanation. (13 pts.) - Delivery term that means Free on board - Depending on the type of FOB, risk of loss is either placed on the buyer or the seller of goods. Delivery is made when the goods are delivered at the named place. From that point, the buyer has to bear the risk of loss or damage to the goods. - FOB term requires the seller to clear the goods for export. - Three types: o FOB place of shipment The seller must ship the goods from that place and bear the expenses and risks of placing the goods in possession of the carrier. o FOB place of destination The seller must at his own expense and risk, transport the goods to the place of destination and there tender delivery o FOB vessel Where the place of shipment or place of destination is also a vessel, like a ship, car, the seller must in addition at his own expense and risk, load the goods on board. - Ex factory applies to goods available only at the seller's premises. Buyer is responsible for loading the goods on truck or container at the seller's premises, and for the subsequent costs and risks. It is commonly used between the manufacturer (seller) and export-trader (buyer), and the export-trader resells on other trade terms to the foreign buyers. Here, the seller carries no risk of shipping. With regard to marine shipment in a cross-border sales transaction, what does C.I.F. mean? Please not only provide the words to this acronym, but also briefly describe the burden/risk issues that at some point shift from Seller to Buyer. (4 pts.) - The Cost, Insurance, and Freight term (CIF) - Under this term, the seller is obligated to arrange for both transportation and insurance to a named destination port and then to deliver the goods on board the ship arranged by the seller. - The seller completes its delivery obligations when the goods are on board the vessel at the port of shipment. From here, the buyer has the risk of loss even though the seller arranged for insurance during transportation to port of destination. - Seller must notify the buyer that the goods have been delivered on board and must provide a commercial invoice, any necessary licence, and the usual transport documents. Note, if the buyer does not have a right to possession of the goods, he may not carry the risk of loss.

Describe the nature of the contractual right of title that a seller must give to the buyer in an ordinary cross-border sales transaction with shipping. In such regard, and assuming that the parties are using INCOTERMS, which is the better option from the buyers perspective? A CIF term? Or a CIP term? Compare to a sea waybill. (And while at it, explain the main difference between these terms. (10 pts.) - Nature of the contractual right of title from seller to buyer: o The contract tendered must provide the buyer with continuous documentary cover against the carrier. The seller must provide the buyer with a document that gives the buyer a contact enforceable by him against the carrier. The cover afforded to the buyer by the contract of carriage must contain no gaps. - CIF or CIP or Seaway bill? o CIF Seller only pays for insurance up to the port named. Buyer pays for unloading charges on the import port, delivery charges and risks from port to destination, as well as any import customs clearance and import taxes. o CIP seller pays for insurance to the destination point buyer is only obligated for import customs clearance and import taxes o A seaway bill serves as a receipt of goods evidence of the terms of the contract of carriage. It is not a document of title so any consigned named in the seaway bill can take delivery by merely identifying himself. - The CIF or CIP terms require that the documents tendered to the buyer must enable him to claim the goods from the carrier and enable the buyer to be able to sell the goods in transit by transfer of the document to another buyer. A seaway bill, because it is not a title document, would not be able to give the buyer such liberty, therefore a CIF or CIP term would be better. CIP may be a little more expensive but it the better choice in terms of reducing risk of loss for the buyer. What are three different roles that bills of lading play? (3 pts.) 1. Best evidence for the existence of a contract 2. Serves as a receipt of goods 3. Document of title to property that can be endorsed and negotiated. Pursuant to the Berisford Metals Corp. case and 46 U.S.C. 1304(5), what is the general rule with regard to carrier liability for goods accepted for shipment and for which a bill of lading is issued? (And is this fair to buyers and sellers?). What was different in Berisford Metals? (7 pts.) - According to COGSA, the carrier is not liable for any loss in connection with the transportation of goods exceeding $500 per package unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. If the shipper has misstated the value of the goods in the bill of lading, knowingly and fraudulently, the carrier is not liable at all.

This is fair to the carrier in that if he knew the value of the goods, he would take more care of them. The buyers and sellers In Berisford, the court adds to the general rule that a carrier is responsible if it had knowledge or intent of the misdescription resulting in buyer/seller loss by holding that when a carrier misrepresents its own conduct on the bill of lading, it cant invoke COGSA limitations on carrier liability.

With regard to COGSA limitations (and similar), what kind of insurance would the buyer, seller, or even the carrier seek for something like the sinking of a ship (i.e., a natural disaster)? Would it be the same for a post-contractual ban on export/import or government take-over of a manufacturing plant, or even the closure of a critical international strait (waterway) due to hostilities, making it impossible to provide goods in time to honor contractual terms? How does a seller control this risk in the contract? How does the buyer (or seller, if seller has the risk) insure against loss? What is the most striking difference between UCC Art. 2-615 and CISG Art. 79? (12 pts) - Insurance to protect from natural disaster: o There are private and governmental insurance agencies that provide coverage o Natural disasters, injuries to third parties and even business risks can be covered to some extent by insurance. As insurance is market-driven, companies can make informed and quantifiable decisions about what risks they wish to shift to insurance companies. Governmental and private insurers offer policies designed to manage political risks, including the risk of expropriation and nationalisation. Many countries have governmental or quasigovernmental entities that provide political risk insurance for companies from that country when investing internationally, including: US Overseas Private Investment Corporation (OPIC); Japan Nippon Export and Investment Insurance (NEXI); UK Export Credits Guarantee Department (ECGD); France Compagnie Franc arise dAssurance pour le Commerce Extevieure (COFACE); Canada Export Development Canada (EDC); Australia Export Finance and Insurance Corporation (EXIC); and Germany German State Export Guarantee Scheme, managed by HERMES. o The Multilateral Investment Guarantee Agency (MIGA) is sponsored by the World Bank. MIGA offers guarantees of investments where the applicant is investing outside its home country. Guarantees are available for investments in countries that are members of MIGA. MIGA guarantees can be used to protect against expropriation, nationalisation and confiscation. In cases of creeping expropriation or partial confiscation, coverage may be limited. If a situation, not provided for by the parties in the contract, arises during performance, rendering it substantially different than that agreed upon, the contract is frustrated. - It would be the same for all types of disasters. You would pick which disasters you want protection against depending on which country you are shipping to

A seller can insure against this loss by adding force majeure clauses in the contract. This basically states that in the case of an event that makes the performance under this contract impracticable or impossible, the seller is not liable for damages resulting. UCC 2-615 states that a seller is excused for non-performance/delay in performance from the contract sale if there is an occurrence of an event that makes it impracticable. The contract must have been made in good faith compliance with any applicable governmental regulation, whether or not its later invalidated. CISG art 79 applies to agents/contractors of parties to the contract (could be seller or buyer). The party to the contract may be liable for the actions of their agents unless they meet the exemption requirements as listed under the article.

In the case of a complicated, multi-jurisdictional electronic contractual transaction involving software transfer, how would the applicable law of cross-border contracts determined? Discuss briefly three possibilities for determination of which law applies under international law, one set of regional laws (only the very basic aspects of same again three, and one unique Convention), and one national (federal) set of laws. Do not for purposes of this question discuss substantive law on formation or validity, but note information on their adoption including any limitations on their applicability. (14 pts.) In the case of a complicated, multi-jurisdictional electronic contractual transaction involving software transfer, how would the applicable law of cross-border contracts determined? - If there is no choice-of-law provision in the contract, there are three possibilities as to applicable law: international law, the law of the sellers country, and the law of the buyers country. - The Zaremba excerpt provides an overview of the various basic laws applicable to online transaction in the US and the EU, and provides the basic framework for the discussion of the private contractual issues. Discuss briefly three possibilities for determination of which law applies under international law, one set of regional laws (only the very basic aspects of same again three, and one unique Convention), and one national (federal) set of laws. - International Law: o The united nations convention on contracts for the sale of goods (CISG) Applies to all international sales contracts between parties that are located within states which signed the CISG. o UNCITRAL Model law on electronic commerce lays down principles for e-commerce in order to remove a number of legal obstacles and to create a more secure environment for electronic commerce. Information must not be denied legal effect, validity, or enforceability solely because it is on the form of a data message. o UNIDROIT principles Provide a complete set of contract rules. They are not applicable directly to contracts, they apply when parties to the contract agree to have their contract governed by UNIDROIT, and might apply when the parties agree to have their contract be governed by the general principles of law.

Cannot pre-empt mandatory national or super-national rules, which are applicable in accordance with the relevant rules of private international law. Regional Laws: o European Union Electronic Commerce Directive Seeks to contribute to the proper functioning of the internal market by ensuring free movement of information society services between member states. o EU electronic signatures directive Facilitate the use of electronic signatures and to contribute to their legal recognition. o EU distance contracts directive Approximate informational requirements of the member states laws concerning distance contracts between consumers and suppliers in order to protect the consumers o Rome convention Establish uniform European Community conflict of laws rules for contractual obligations. It applies to contractual obligations in any situation involving the choice of law between different countries. The convention applies any law that it specifies, whether or not it is the law of a contracting state. National Laws: o E-Sign Promote and facilitate the use of electronic records and signatures in interstate and foreign commerce. o UETA Validate the use of electronic media in contract law o UCITA Provides substantive contract law and establishes a legal framework for computer information transactions similar to the UCC article 2 sale of goods. o UCC Substantive contract rules that are the default rules if private contracts do not opt out or if other federal, of UCITA laws do not replace them o Common Law Common law applies in place of UCITA where UCITA has not been adopted and the court thinks that the UCC is not applicable.

Please describe and compare the nature of U.S. federal consumer protection for Internet or E-Commerce to that of the European Union. General policies and general rules or conventions will suffice; a description of specifics is not expected. (The question focuses more on the nature and extent of any legal regimes than on specifics of their protections). (12 pts.)

The Federal Trade commission has implemented a three pronged strategy aimed at protecting consumers from traditional fraud conducted in the cyber context: Aggressive enforcement of existing regulations, Consumer education, Business education o The US currently applies traditional laws to the internet and has not initiated much new legislation to protect consumers who purchase via the internet. The regulations are Advertising regulations (through statute), uniform codes (such as UCC, UCITA the uniform computer information transactions act), state and federal laws. The EU, along with its traditional enforcement rules for consumer protection, such as the Directive on Misleading Information, has also adopted: o The Directive on electronic commerce. This complements the existing advertising and communication regulations while adding regulations that are specifically geared toward electronic commerce. o The Distance Directive that ensures a lot more disclosure from e-tailers before conclusion of contract. o The Directive on Unfair Terms which implies that a consumer may not be bound to unfair terms in a contract that the consumer did not individually negotiate. o The Consumer Goods directive, which deals with the quality of goods purchased in the electronic market. In cases where a supplier is in another member state infringes consumer rights. Consumer interest groups may resort to the directive on injunctions for the protection of consumer interests. This directive proposes to codify the specific instances in which groups may bring cross-border injunction actions. The most positive aspect of the EU model is the country of origin principle in the Ecommerce directive, where the e-business only has to comply with the rules of its own country, not that of the whole EU. The EU model fosters consumer confidence through numerous protections. Their biggest flaw is their failure to address certain key principles of contract law. In contract, the US has UCITA, as well as the UCC which clearly outlines contract law.

What is the difference between a straight bill of lading and an order bill of lading? What is a major benefit of the bill of lading for a seller? Also, in 75 words or less for each case, please provide the law, reasoning, and holding of the Hual AS v Expert Concrete Co. and the Adel Precision Products Corp. v. Grand Trunk Western R. Co. cases. (7 pts.) - Straight bill of lading: o The title to the goods is conferred directly to a party named in the letter of credit (the importer usually) and so is not transferable to another party by endorsement. In other words, the bill of lading is not negotiable. - Order bill of lading: o The title to the goods is conferred to the order of shipper or to the order of a named party in the letter of credit (the issuing bank usually). The purpose of an order bill of lading is to protect the interest of the shipper or the named party to the title to the goods. The title to the goods is transferable to another party by endorsement. It is negotiable. - A bill of lading is beneficial because it is a document of title which is a symbol of the goods represented by the bill. By making a bill of lading negotiable, the cargo itself

becomes negotiable. The seller can retain control over the goods by requiring payment of the purchase price before the bill is delivered to the buyer. Hual AS v. Expert Concrete: o Law: One who has possession of a negotiable bill of lading has title to the shipped goods. Absent presentation of the original bill of lading, a buyer is not entitled to possession of the goods being delivered. D did not present the original bill of lading upon delivery (misdelivered). Hual (P) was holder of the original bill of lading, and so was able to assert the sellers rights to misdelivery. The court granted summary judgement and replevin for the plaintiff. Adel Precision Products Corp v. Grand Trunk Western: o An unauthorized, typewritten endorsement of an order bill of lading is not a proper endorsement under Federal Bill of Lading Act authorizing delivery of an interstate shipment by a carrier to the possessor of the bill of lading. Here, the goods were consigned to the order of P and so in order for P to pass title, he had to have endorsed it properly. There was no proper endorsement and so title to the goods could not pass to another person.

With regard to the U.S. Pomerene Act 80113, what are the rules (and the risks) on carriers for relying on shippers information to be included in a bill of lading? Also, in 75 words or less for each case, please provide the law, reasoning, and holding of the Jain Irrigation System Ltd. V. Chemcolit, Inc. and the Industria Nacional del Papel, CA. v. M/V Albert F cases. (9 pts.) - When the shipper loads the goods/cargo onto the ship, the carrier can indicate the contents, quantity, or condition of the goods are said to be, or are unknown. The carrier can write shippers weight, load, and count, or similar words, if the goods were in fact loaded and described by the shipper. - This act allows loss allocation to the carrier if any seal is broken at the time of delivery of a shipment that the shipper counted/weighed himself. Alternatively, if the seal is not broken, the carrier cant be liable for any loss because the shipper did the counting/weighing so he bears the risk of loss. - Jain case: o Carrier that issues bill of lading is not liable for misdescription of goods when 1) the goods are loaded by shipper, 2) bill of lading says said to contain, and 3) Carrier doesnt know whether any part of the goods was received or conform to the description. o Here, the bill of lading indicated who was shipper and carrier, it contained the phrase said to contain and description of goods was provided by the seller. The carrier didnt know the container contents except for the description on the bill of lading. So, carrier was not liable for the misdesription of the goods. Defendants motion for summary judgement granted. - Industria case: o A carrier issuing a bill of lading will be liable to a good faith holder of an order bill, who gave value and relied on the description of the goods on the bill of lading, for damages caused by non-receipt or misdecription of all or part of the goods received by the carrier. A carrier can limit its liability by placing language

on the bill of lading showing that the shipper assumed risk of loss but here, the words particulars furnished by shipper were insufficient because they do not indicate that the shipper loaded the cargo or that the carrier did not have knowledge of the contents of the container, as is required by the Pomerene Act. With regard to intermediary (usually a bank) liability for a forged or fraudulent bill of lading that it transfers to another party, what is the basic rule from both the U.C.C. and the Federal Bills of Lading Act (FBLA)? (3 pts.) - Under the FBLA, the intermediary, by holding a bill of lading as a security for a debt and in good faith demanding or receiving payment of the debt from another person does not warrant genuineness of the bill of lading or the quality or quantity of the goods described in the bill. - Under UCC, the intermediary only warrants its own good faith and authority with regard to the document. Describe briefly the nature of independent foreign agents and foreign distributors with their principals in a cross-border sale of goods, including identification of the differences between payment, binding authority on behalf of the principal, the taking title to the goods being sold, and risk of sales. (8 pts.) - Independent foreign agent: o Does not take title to the goods o Usually paid in some combination of salary and commissions. o Does not bear the risk that the buyer might not pay; the risk remains with the US supplier. o Usually does not have the power to bind the US supplier but may be given express or implied authority to do so. o Obtains orders for sales abroad and sends the orders back to the US seller so there is no need for the agent to store goods in its nation. - Independent foreign distributor: o Buys the US companys products and resells them though the distributors network. o Takes title to the goods and so assumes such risk of not being able to resell them. o Paid by the purchaser and so the distributor is also at risk for nonpayment. o Must find storage for the goods prior to the final sale and distribution. o Does not have the power to bind the supplier. What are probably the three main areas of (potentially mandatory) substantive law, from the perspective of the country of ultimate sale, that impact a decision whether to use a foreign agent or a foreign distributor in a cross-border sales arrangement, including some of the issues that arise under these two areas of law? Can you think of any other areas of substantive law that may impact the decision? (12 pts.) - Suppliers decision to employ an agent or distributor is impacted by laws designed to: o Benefit local agents/distributors, especially in the area of termination; o Restrict or prohibit the use of agents/distributors, essentially to protect the public from unfair agents/distributors; or

o Apply domestic labor laws to the distribution agreement, in addition to any special laws applicable to the distribution agreement. Issues that arise under agency law: o A supplier may want control over establishing the price of goods and so might choose an agency relationship instead of relinquishing control to an agent, who would buy the goods outright and establish his own price. With an agent, a supplier can limit the appointment of sub-agents by the agent but if the agent is an actual employee of the US company, the employer may become subject to labor laws of the host nation. This could create problems such as being unable to terminate the employee at will without having to pay through the nose. Issues that arise under distributorship law: o Choosing a distributor over an agent may create antitrust problems. The distributorship agreement becomes an agreement between two different entities and provisions such as exclusivity may conflict with local laws. Antitrust issues may also exist where a distributor is prohibited from selling competing products. This would create problems in US law in that it may foreclose other US companies from entering the foreign market or conflict with the host nations antitrust principles as well. So, establishing a distributorship agreement would involve a deep understanding of the laws of both the US and the host nation. The choice of law of the host country common law vs. Civil law could also affect the companys freedom to contractually create the full terms of agreement. Civil law traditions usually include statutory restraints on the freedom to contract.

What are three forms of agency recognized by Mexicos commercial Code? How do they differ? (6 pts.) - Mediation contract (contrato de mediacion) under this form of agency, there is no representation of the principal and so no tax impact in Mexico. This relationship is established when mediators go around with catalogs, talking to managers in Mexico and providing the sellers contact information to the manager. Payment is in the form of a fee, not a commission. - Commission contract (contrato de comision) the commission agent receives two commissions the mandate to sell the goods and payment of a given fee. This relationship can be revoked at any time, the agent can choose to disclose the principal or act in his own name. The title of goods does not pass to the agent. - Distribution contracts (contrato innominado) here the title to the goods generally passes to the distributor who may or may not hold a mandate. Generally, there is a mandate that the parties can revoke at will. Briefly describe the counter-purchase, compensation, and switch trading forms of counter-trade and explain generally their purpose in cross-border sales transactions as well as the parties typically involved. (10 pts.) - Countertrade: o Generally, countries will engage in countertrade to gain access to technology without the use of scarce hard currency. Countries may require a company to accept part of its production in return for granting permission for the establishment of foreign direct investment.

Counter-purchase o Private firm agrees to sell products to a sovereign nation and to purchase from the nation goods which are unrelated to the items which it is selling. o Each party is paid in currency upon the delivery of the products to the other party. For example, buy my bananas and I will sell your CDs. Compensation o Private firm will sell equipment, technology, or even an entire plant to a sovereign nation and agree to purchase a portion of the output produced from the use of the equipment or technology. o For example, a US company may sell software to Mexico and purchase some of the output that Mexico generates from the use of that software. Switch trading o Device used to balance a bilateral clearing agreement (an agreement between country A and B that they will purchase a certain number of goods from each other). o In a switch trade, country A can locate a third party that is interested in purchasing from the country that country A is in a bilateral agreement with country B. The third partys purchase will count towards country As purchase obligations under the bilateral agreement. o Country A can also use a trading intermediary (a switch trader) to locate the third party purchaser.

Briefly explain the main difference between ordinary letters of credit and revolving letters of credit. (2 pts.) (Note: focus is on the frequency of payment). - Ordinary o Letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. o In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. o It is for one-time use. - Revolving o Single L/C that covers multiple-shipments over a long period. o Instead of arranging a new L/C for each separate shipment, the buyer establishes a L/C that revolves either: in value (a fixed amount is available which is replenished when exhausted) or in time (an amount is available in fixed installments over a period such as week, month, or year). Two types: Cumulative - the sum unutilized in a period is carried over to be utilized in the next period; Non-cumulative, it is not carried over. List the basic documents required for a simple letter-of-credit transaction and its documents package involving cross-border sale of goods, such as electric lamps. When does the paying bank pay? What is the nature of the compliance generally required for the documents in the package? (10 pts.)

A standard letter of credit contains party names, payment amount, expiration date, and description of the merchandise, and specifies the documents, special conditions, and instructions that it requires for payment. This document package has to match exactly with the information provided on the letter of credit in order for the bank to pay on it. Documents required to be presented to the bank in order for the seller to be paid on the letter of credit: Bill of lading or any proof that seller has shipped the goods Financial documents such as the bill of exchange Commercial documents such as invoice and packing list Official documents such as licenses and inspection certificates Three transactions that create a letter of credit: o Underlying contract between buyer and seller o Agreement between issuer and customer o Banks obligation to pay seller under letter of credit itself.

What are the three basic contractual relationships in a standard commercial letter of credit-backed cross-border transaction? What is the difference between an issuing bank, an advising bank, and a confirming bank? (6 pts.) - Three contractual relationships in standard commercial letter of credit: o The buyer and seller. o The buyer and the bank. o The seller and the bank. - Issuing bank is the one that issues the letter of credit for the seller. - The advising bank gives advice/opinion on the letter of credit to the beneficiary/buyer - Confirming bank guarantees payment of the letter of credit to the beneficiary/buyer From the Voest-Alpine Trading USA Corp. case, what are the three basic standards on an issuing banks duty to accept the tender of documents (i.e., consider them conforming) and what did the Court ultimately apply? What are the reasons for the Courts rejection of the earlier standards? Why is the one chosen a better than the others? Prior to UCP 600s standardization of the review and right to reject, what four different standards did US courts develop in interpreting the UCP 500 version? (12 pts.) - 3 basic standards on an issuing banks duty to accept the tender of documents o Mirror-image standard - Require that the presentation documents be a mirror image of the requirements o Minor variance - Follow strict compliance but support rejection only when the discrepancies are such that would create risks for the issuer if the bank were to accept the presentation documents o Risk-analysis - Analyze the documents for risk to the applicant a discrepancy should not warrant dishonor unless it reflects an increased likelihood of defective performance or fraud on the part of the beneficiary - Courts application: o Consistency standard the whole of the documents must obviously relate to the same transaction on its face. The bank is required to examine a particular document in light of all documents presented and use common sense but is not required to evaluate risks or go beyond the face of the documents.

Why is this approach better: o A common-sense, case-by-case approach would permit minor deviations of a typographical nature because such a letter-for-letter correspondence between the letter of credit and the presentation documents is virtually impossible. o The mirror image approach is problematic because it absolves the bank reviewing the documents of any responsibility to use common sense to determine if the documents, on their face, are related to the transaction or even to review an entire document in the context of the others presented to the bank. o The second and third approaches employ a determination-of-harm standard that is too unwieldy. Such analysis would improperly require the bank to evaluate risks that it might suffer or that might be suffered by the applicant and could undermine the independence of the three contracts that underlie the letter of credit payment scheme by forcing the bank to look beyond the face of the presentation documents. 4 standards of compliance developed in courts prior to UCP 600: o Strict compliance o Flexible strict compliance o Substantial compliance o Reasonable compliance.

Generally, what is the difference between documentary letters of credit and standby letters of credit? (Include discussion of what each one guarantees and what the beneficiary presents for payment, and how fraud is treated for each). (7 pts.) - Documentary letters of credit: o arise out of documentary transactions o require the issuer to pay against documents of title for example, a bill of lading. o Are in favour of the seller. o Presentment places obligation on the bank to honour a draft on a credit when it is accompanied by documents which appear to be in accordance with the terms of the credit prima facie. This obligation is independent of the performance of the underlying contract for which the credit was issued. The credit issuer doesnt care that the beneficiary may practice fraud. o The issuer only guarantees that the documents conform prima facie. o Customer bears costs of fraud - the only way that a bank will be held liable in the case of fraud is if it had clear notice before making payment to the beneficiary. - Standby letter of credit: o Issued by sellers bank and runs in favour of the buyer o Payable against a writing which certifies that the seller has not performed its promises. o Used as a guarantee, or as insurance of the sellers performance. o Fraud claims are common for this letter of credit because the document, which gives structure to the transaction, becomes a mere allegation by one party that the other party did not perform properly under the contract.

A guarantee is contrasted with a documentary letter of credit in that where the bank must examine the documents relating to the basic transaction for a documentary letter of credit, for a guarantee, the documents are replaced by a unilateral statement of the beneficiary.

Specifically with regard to German courts, how may applicants of a standby letter of credit (or bank guarantee) stop payment of a request by the beneficiary, and how easy is it to secure a remedy? (4 pts.) - Applicants can stop payment by filing for preliminary injunction. German courts issue preliminary injunctions on rare cases of manifest abuse or fraud. This manifest abuse is established only if the absence of any entitlement on the basis of the underlying contract is irrefutably proven. So it is very difficult to obtain a remedy. Specifically with regard to the United Nations Convention on International Standby Letters of Credit, what are its disclaimer and choice of law ruleswhat are the possibilities for its signatories with regard to disclaimer of the Convention and application of one or other jurisdictions substantive laws? (5 pts.) - Art. (1) allows exclusion, even by parties in signatory countries - However, Art. 1(3) is independent, so general exclusion of UNCISLC is not effective must be specific inclusion of another jurisdiction. - Art. 21 allows for choice of law (this is the way to get around the Art. 1(3) aspect - Art. 22 is the default, calling for the law of the place where the credit was issued to control - In order for the default rule to be ineffective, the parties must designate a jurisdiction. Rule 22 can be avoided by using rule 21 but it cannot be avoided by saying that the convention does not apply to the credit. From the American Bell Intl Inc. v Islamic Republic of Iran case, please briefly but accurately explain the factual underpinnings (the guarantee and the parties obligations and rights), the standard under U.S. 2d Circuit law for the granting of preliminary injunction against payment of a demand letter of credit, and the ruling of the Court on each element of this standard. (13 pts.) - Factual fucking underpinnings: o Contract between P and D provided that D make a down payment to P but retain a right to demand return of the down payment minus 20% of the amounts invoiced by P. Ps liability for the down payment was reduced as the contract played out. In order to secure the return of the down payment, P established an unconditional and irrevocable letter of guaranty from bank Iranshahr. The bank required P to obtain a standby letter of credit from manufacturer in favour of the bank in case the bank was required to pay D under its letter of guaranty. In the application for the letter of credit, P agreed guaranteed by AT and T to immediately reimburse manufacturers for all amounts paid by manufacturers to the bank pursuant to the letter of credit. The contract provided that it was to be governed by the laws of Iran and all disputes arising are to be resolved in Iranian courts. D breached and repudiated, P stopped services. D tried to collect the remaining balance on the down payment and manufacturer declined payment saying that the

demand did not conform to the letter of credit. P responded by filing this action for preliminary injunction. Standard for granting preliminary injunction: Caulfield test, must show: o possible irreparable injury and either o probable success on merits, or o serious question of merits to make the case fair ground for litigation and balance of hardships in Ps favor Courts ruling on each element: o P did not show irreparable injury because even though any attempts at seeking remedy in the courts of Iran would have been futile, P still could have sought remedy in this court invoking the Sovereign immunity act which it is invoking in this case as well. o P did not show probable success on the merits of its claim of fraud. Under the facts, fraud could be a possibility but it is not established as a probability. The terms of the contract stated that D would be repaid upon demand, without regard to cause. o P did not establish that the balance of hardships tip toward P. Even though P faces substantial hardships if manufacturer pays the demand, P would still face the same hardships if the court allowed the injunction. The bank could file suit on the letter of credit and attach manufacturers assets in Iran. It could seek to hold manufacturer liable for consequential damages. Manufacturer also faces a loss of credibility in the international banking community for not honoring its commitment. o Therefore, P is denied preliminary injunctive relief.

How does the preliminary injunction standard set out in the Harris Corp. v National Iranian Radio and Television case differ from the standard set out in the American Bell Intl Inc. v Islamic Republic of Iran case? If there is the difference, why? With regard to likely success on the merits, what were Harris arguments and how did that court decide them? (8 pts.) - 4 prerequisites for injunction: o Substantial likelihood that the plaintiff will prevail on the merits o Substantial threat that the plaintiff will suffer irreparable injury if the injunction is not granted o Threatened injury to the plaintiff must outweigh the threatened harm that the injunction will cause the defendant o Granting the preliminary injunction must not disservice public interest. - This case also includes public policy as part of the test whereas the Bell case did not. This is added to ensure that American litigants are able to have their day in court where international regulations might not always allow for it. - Success on the merits argument: o Harris asserted two arguments to show that the case is likely to succeed on the merits. First, he states that the independence principle was modified by the parties here. The court rejected this argument. The contract said that upon termination, NIRT shall release all guarantees. While parties are free to modify the independence principle by drafting letters of credit to contain such provisions,

Harris was not able to show that his documents had such provisions. Secondly, Harris asserted that the doctrine of fraud in the transaction applied to this case. Under this doctrine, a court can enjoin payment on a letter of credit, despite the independence principle, where there is shown to be fraud by the beneficiary of the letter of credit. Harris says that NIRT intentionally misrepresented the quality of Harriss performance in order to collect on the letter of credit. This is fraud in the traditional sense and so the court, using a broad definition of fraud instead of a narrow one, finds that there is sufficient evidence to sustain a likelihood that Harris would prevail on the merits. For purposes of GATT-related rights and duties, what is most-favored-nation (MFN) status and national treatment? (4 pts.) - General Agreement on Tariffs and Trade is based on the most favoured nation principle which is a status or level of treatment accorded by one state to another in international trade. - The country which is the recipient of this treatment must, nominally, receive equal trade advantages as the "most favoured nation" by the country granting such treatment. - Trade advantages include low tariffs or high import quotas. - A country that has been accorded MFN status may not be treated less advantageously than any other country with MFN status by the promising country. Briefly describe the accession process for membership into the WTO and the major components of such steps. (8 pts.) - Accession is a three-step process. o First, the applicant must negotiate bilateral concession agreements with each WTO member that asks for one. The bilateral deals embody the applicants promises to individual members about opening its market on a government-to-government basis. This is different from any previously negotiated deals that the applicant may have made with particular members. These new agreements are the price for admission into the GATT-WTO system. The agreements made by applicants with members need not be identical they are based on each countrys separate needs. o Second, the WTO as a whole must make the decision whether to allow the applicant as a member. o Third step is the negotiation of a protocol of accession with all WTO members with the WTO as a whole. The protocol represents the terms of entry into the WTO. Contract between the acceding party and the members in their joint capacity. The members in their joint capacity form a separate legal entity under international law. Many of the bilateral agreements made becomes multilateral through protocol.

The protocol outlines the applicants current trade laws and policies, while noting the differences between that regime and the minimum WTO requirements. The protocol explains when and how the applicant needs to correct these differences. Some applicants may want the protocol to indicate their status as a developing, or least developed, country to take advantage special and differential treatments that may be afforded them, such as low or no tariffs.

Very briefly, what are the five stages of WTO dispute settlement? What is inverted consensus for WTO purposes? What are the three remedies available to a prevailing party in a WTO proceeding? (12 pts.) - Five stages of dispute settlement: o Consultation o Panel establishment, investigation and report o Appellate review of the panel report o Adoption of the panel and appellate decision o Implementation of the decision adopted - Inverted consensus: o The adoption of panel reports and appellate decisions happens automatically and without amendment unless they are rejected by a consensus of all members. This consensus inverted consensus - requires all members of the DSB, including the member who prevailed in the dispute, to decide to reject the dispute resolution decision; and that no member formally favours the decision. - 3 remedies available to prevailing party if mutually satisfactory conclusion cannot be reached: o Respondent bring the measure found to violate a covered agreement into conformity with the agreement o Prevailing member receive compensation from the respondent which both parties agree is sufficient for any injury caused by the measure found to violate a covered agreement o If no agreement can be reached, a prevailing party can be authorized to suspend some of its concessions under the covered agreements to the respondent. These suspensions are called retaliation and can be authorized within the same trade sector or across trade sectors and agreements. Briefly but fully describe the concept of liquidation for purposes of customs, including information on when a liquidation becomes final in the case of protests. (5 pts.) - Liquidation is the point at which CBPs ascertainment of the rate and amount of duty becomes final for most purposes it is appealable. - Liquidation is based on the classification and valuation of the goods imported as provided by the importer. o CBP officers evaluate these classifications and valuations for correctness and conformity to the goods actually imported.

o Based on this evaluation, they can either ascertain without making changes or they can determine that an entry cannot be liquidated as entered. o This happens when the classification is not correct or does not conform to the established and uniform classification practice. o The importer would then be required to change the classification and the liquidation is entered accordingly. Liquidation is accomplished by posting a notice on a public bulletin board at the customhouse. An importer may receive an advance notice stating when and in what amount duty will be liquidated. This advance notice is not the liquidation. Protest rights do not accrue until the notice is posted publicly. Time limits for protesting do not start until the date of posting. A liquidation is not final until any protest that has been filed against it has been decided. The administrative decision issued on a protest is not final until any litigation filed against it has become final. Entries must be liquidated within one year of the date of entry unless the liquidation needs to be extended for another one-year period not to exceed a total of four years from the date of entry. CBP will suspend liquidation of an entry when required by statute or court order. The suspension will remain in effect until the issue is resolved.

From the Better Home Plastics Corp v. United States case, what is the rule of relative specificity and its (main) exception? How was it applied in the case and what was the reason for the argument? (7 pts.) - Rule of relative specificity: o Where the merchandise at issue consists of more than one material, such as textile curtain and an inner plastic liner, as here, they are classifiable under two or more headings and the court must classify the merchandise pursuant to the heading that provides the most specific description. - The exception: o When two or more headings each refer to only part of the items in a set put up for retail sale, those headings are to be regarded as equally specific even if one heading provides a more complete or precise description of the goods. So, the rule of relative specificity does not apply when two of the headings each refer only to part of the items within the set, not all of it. - The applicable portions of the two competing headings refer to curtains and toilet articles, of plastics. Neither heading encompasses all the parts of the shower curtains the classification of curtains only applies to textile fabric and so would not include plastic liner and the classification of which encompasses the plastic liner specifically excludes textiles. Because the two competing headings only refer to part of the items in the set, the rule of relative specificity does not apply. Very briefly, what case? (3 pts.) - Merchandise duty-free, is recognizable was the main idea and holding in the Amoco Oil Co. v. United States imported that is a mixture of two items that, when imported separately are still dutiable. This is because the duty-free items lose their status as a product when any ingredient exceeds 50%. At that point it becomes a

mixture of its chemical components which act as compounds to make this new product. This product is therefore a single tariff entity. List and briefly explain the workings of six ways that country-of-origin requirements affect international trade, with a view to how they may matter for purposes of domestic import laws. (6 pts.) - The country of origin of merchandise can affect: o The rate of duty o The eligibility for special programs o Admissibility into the country o Quota o Procurement by government agencies o Marking requirements - The import laws applied to goods are based on preferential and non-preferential rules of origin. If the country from where the goods originate has a bilateral/multilateral agreement, the goods are subject to special treatment under various trade agreements or special legislation. What is the substantial transformation test for a rule of origin, and what are its basic factors to determine whether there has been one? (This from the Superior Wire case). (6 pts.) - A product would be considered the manufacture or product of a specific country if it was transformed into a new and different article that has a distinctive name, character, or use. The factors for determination are: o Change of name o Change in tariff classification o Significant value added or costs incurred by the process of change Value added Labor costs Capital investment What are four methods for determining the origin of a product for import? For each, include not only a brief explanation and a positive attribute (i.e. the reason for its existence), but also at least one reason why it may not work in all cases. (12 pts.) - Last substantial transformation rule: o For a product to be from a particular state or trading area, it must be substantially transformed there into a new and different article having a distinctive name, character or use Benefit flexibility of the last substantial transformation rule enables customs authorities and courts to look beyond the form of the transaction to see if a substantial transformation actually occurred. Drawback can lead to unpredictable and arbitrary results that undermine the certainty that firms require for strategic planning. - Value-added percentage test: o This test defines the degree of transformation required to confer origin on the good in terms of the minimum percentage of its value that must come from the

originating country or the maximum about of its value that may come from the use of imported parts and materials. Benefit simple and precise calculation of ceiling and floor of the production process Drawback because it is a bright-line rule, the results are often arbitrary in borderline cases. For example, if the rules require 50% local value added to confer origin, a good with 49% local value added will be denied origin. Specified processes test: o Also known as a technical test, prescribes certain production processes that may (positive test), or may not (negative test) confer originating status. Benefit useful supplemental test of origin because it can easily be tailored to meet a specific situation in a clear and precise manner. Drawback as a primary test of origin, it is unsatisfactory because it would be extremely difficult to define a process test for each of the enormous array of products on the international market and to update these rules as new products and technological advances in production are made. Change in tariff classification: o This method specifies the change in tariff classification required to confer origin on a good under the Harmonized Commodity Description and Coding System. Benefit the hierarchical framework of the harmonized system, its division by industry, and its systematic arrangement of headings by ascending degrees of technical sophistication and economic effort provide an easy to use underlying structure for origin determinations. The structure also provides the drafters of rules of origin with flexibility to define changes precisely, without sacrificing objectivity, certainty, or identity. Drawback the system was not designed to be used for origin determination so changes in classification under the system are not always an appropriate or effective test of origin and must be supplemented by other tests such as value-added test to make a correct determination. Further, products are not always categorized in a uniform manner, despite substantial efforts by the drafters.

Pursuant to US Congressional standards from the Trade Agreements Act of 1979, what are the transaction value standards for determining the price on import from which to calculate the duty by applying the percentage of duty? Explain each one briefly to indicate understanding of its mechanics. Is there a hierarchy? Why is there a need for a hierarchy? ( 8 pts.) - The act sets forth six different methods of appraisement and their order of preference. o Transaction value: - highest preference The price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts equal to the packing costs incurred by the buyer, any selling commission incurred by the buyers, the value of any assist, any royalty or licence fee the buyer is required to pay

as a condition for the sale, the proceeds, accruing to the seller, of any subsequent resale, disposal, or use of the imported merchandise. This is the primary test to be used. If the merchandise cant be appraised based on the transaction value, other methods are used. o Transaction value of identical merchandise: - 2nd preference If the transaction value of the imported merchandise cannot be determined, then the customs value of the imported goods being appraised is the transaction value of identical merchandise. o Transaction value of similar merchandise: - 3rd preference If merchandise identical to the imported goods cant be found or doesnt exist, then the customs value is the transaction value of similar merchandise. o Deductive value: - lower preference It is the resale price in the United States after importation of the goods, with deduction for certain items in order to arrive at an import price. Generally, the deductive value is calculated by starting with a unit price and making certain additions to and deductions from that price. Packing costs are also added to the deductive value. o Computed value: - lower preference The last basis of appraisement is to be used if customs valuation cannot be computed based on any other value. This value is also one the importer can select at entry summary to precede deductive value as a basis of appraisement. Computed value consists of the sum of the following: Materials, fabrication, and other processing used in producing the imported merchandise Profit and general expenses Any assist, if not included in the first two listed Packing costs This is a hierarchical system so that importers cant shop for the best price for them

What is the basic burden of proof in a WTO Dispute Panels proceeding, as determined by the WTO Appellate Body, and what unique aspect to this law did the EC Measures Concerning Meat and Meat Products ruling add? What is the standard for an appellate body to review a panels decision? (5 pts.) - The initial burden lies on the complaining party which must establish a prima facie case of inconsistency with a particular provision of the SPS agreement on the part of the defending party. - When that prima facie case is made, the burden shifts to the defending party which must counter or refute the claimed inconsistency. - The panel ruled that the SPS agreement allocated the evidentiary burden to the member imposing the SPS measure. But this court found that there is no logical connection between the undertaking of the members to ensure the application of SPS measures and the allocation of burden of proof in a dispute settlement agreement. - The standard of review is objective assessment of the facts which involves an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with relevant covered agreements.

Briefly explain the mechanics and justification for GATT Art. XXIV (and GATS Art. V, for services) regional arrangements (how do they work/what do they allow, and why is it permitted) and explain the customs union dilemma including its two primary effects (one good, one not so good). (7 pts.) - Mechanics and justification: o Article 24 permits contracting parties to enter into free trade areas and customs union agreements of a fixed or evolutionary nature. The purpose of this article is to facilitate trade among the GATT contracting parties and not raise trade barriers. The premise here is that regional economic groups can be viewed as gradual steps (second-best alternatives) along the road to freer, less discriminatory world trade. All regional forms of economic integration are inherently discriminatory in their trade impact. o For example, the rules of origin in free trade area treaties keep third-party imports from seeking the lowest tariff or highest quota state and then exploiting the trade advantages within the free trade areas. This causes the member states to be preferred over other states. o As non-universalized trade preferences, they tend to simultaneously create trade among member states and divert trade between member states and the rest of the world. - Customs union dilemma o Trade diversion is more obvious given a common trade policy for third-party states. In these circumstances the resulting trade creation and trade diversion effects are known generally in economic literature as the customs union dilemma. What are the minimum requirements to establish a GATT Art. XXIV regional arrangement? (2 pts.) - A free trade or customs union agreement of a fixed or evolutionary nature between regional economic groups and - Formal GATT approval procedure for proposals and conformity to the binding recommendations by the GATT that article 24 requires. What do the EU Treatys Arts. 28 and 29 require. In both, what is the most complicated potential problem that they seek to prohibit? What is the rule of reason applied to these in EU jurisprudence? What does Art. 30 provide (and list its elements) and how does it compare to Arts. 28-29? (10 pts.) - Requirements of article 28 and 29 o Article 28 requires quantitative restrictions on imports and all measures having equivalent effect to be prohibited between member states o Article 29 requires quantitative restrictions on exports, and all measures having equivalent effect to be prohibited by member states. - Potential problem they seek to prohibit o They seek to prevent restrictions on trade between member states, such as customs duties and facilitate trade by having a common customs tariff for all

countries. These restrictions can be hidden within regulations that prima facie are not restrictive but have the same effect. Rule of reason o The rule of reason is essentially the proposition that a proportionality exercise must be performed by the Court to determine whether the effects of Member State legislation on the free movement of goods is justified in light of the legislation's stated goals. o Any national rule directly, or indirectly, actually or potentially capable of hindering internal trade is generally forbidden as a measure of equivalent effect to a quota. However, if European law has not developed appropriate rules in that area concerned, the member states may enact reasonable and proportional regulations to ensure that the public is not harmed. o Distinctly applicable measures in conflict with EU regulations are prohibited by article 28 but have defences available under article 30 only. o Indistinctly applicable measures in conflict with EU regulations (so the measures that have equal effect according to article 28 and 29) may be prohibited through a rule of reason analysis. The defences lie in the Cassis case or article 30. Article 30 requirements and comparison to 28 and 29 o Article 30 says that 28 and 29 cant prevent prohibitions or restrictions on imports, exports, or goods in transit justified on: grounds of public morality, public policy or security, the protection of health and life of humans, animals or plants, protection of national treasures possessing artistic, historical or archaeological value, or the protection of industrial and commercial property. o These prohibitions or restrictions cant be an arbitrary way of discriminating or a disguised restriction on trade between member states (good faith) o So articles 28 and 29 provide a broad prohibition against restrictions on imports and exports and article 30 provides the specific exceptions to the prohibition.

Briefly describe the nature of the EUs efforts to set standards for products on the basis of concerns over environmental, health and safety issues. What is the basic standard, and are derogations from it permitted? What are the two main approaches to standardization? (6 pts.) - When a common European standard is adopted by members states, legislation by member states adopts that standard. People are then required to meet those standards in order to be able to conduct free trade in the common market. Once adopted, these standards (harmonized standards) must be followed. - These standards are based on two approaches: o High levels of protection, which lists broad minimum requirements that must be met members in order participate in the common market; and o Principle of mutual reciprocity, which requires member states to recognize the laws of other member states and deem them acceptable for purposes of the operation of the common market.

Briefly explain the NAFTA Chapter 9 Standards-Related Measures (SRMs) and the duty(ies) with regard to the use thereof in the context of sustainable development, safety, health, environmental protection, and consumer protection, as well as major exceptions to SRMs. Are derogations permitted from SRMs, and if so, are derogations in some way limited? (3 pts.) - SRM embrace standards, technical regulations and conformity assessment procedures. Standards are voluntary, technical regulations are mandatory, and conformity assessment procedures determine if standards or technical regulations have been fulfilled. - Article 904 recognizes the right of each country to adopt, maintain or apply SRMs based on legitimate objectives. These objectives include sustainable development as well as safety, health, environmental and consumer protection. These objectives cant be based on the protection of domestic industries. - SRM must be administered without discrimination under national and most-favourednation treatment rules. Derogation of SRMs would only occur if inappropriate or ineffective to meet a nations legitimate regulatory objective. What is the GATT enabling clause and to what does it relate what does it do and who is effected? Provide two examples of the result of the enabling clause. (4 pts.) - The enabling clause was adopted in order to permit trading preferences targeted at developing and least developed countries which would otherwise violate Article I of the GATT. Article I stipulates that no GATT contracting party must be treated worse than any other (this is known as most favoured nation treatment). - The enabling clause permits developed countries to discriminate between different categories of trading partners (in particular, between developed, developing and least developed countries). - This allows developed countries to give preferential treatment to poorer countries, particularly to least developed countries. Paragraph 2(c) permits developing countries to enter into preferential trade agreements which do not meet the strict criteria laid out in GATT Article 24 for regional free-trade agreements. It allows developing countries to enter into agreements which may be non-reciprocal, or cover a very limited range of products (which would otherwise contravene the GATT). - For example, the enabling clause would allow the US to increase its quotas of a certain product from Pakistan without having to increase quotas in all countries that it buys the product from. - Another example would be an agreement between two developing countries that only allows for the import of certain items, while placing restrictions on others without violating article 24. Very generally, what are five examples of discriminatory procurement practices in addition to explicitly buy local preferences in government procurement? (5 pts.) - Selective tender procedures where only a selected group of suppliers are sent invitations to bid - Single tender procedures where only one supplier is contacted for procurement - Limited publicity on public offers - Requirements that bidders must have established branch within the country - Vesting of broad discretion in procurement officers to ignore foreign bids.

What are the basic economic and special interest reasons behind restricting government procurement to domestic sources? What are two potential, negative effects of same to the comparative advantage theory of international law? Are there any natural barriers that would not constitute disfavored domestic preference? (6 pts.) - Facilitating the domestic economy because government contracts mean jobs and money - Practical factors that lead to discrimination against foreign bidders like lack of uniformity in specifications, language barriers, familiarity and ease of dealing with local suppliers, easy availability of service, maintenance and repair parts when dealing with domestic companies, greater facility to legal recourse against a domestic company when dealing with default. - Negative effects in comparison with international law: o Domestic producer who cant compete with a foreign producer in a free economy is in effect subsidized and so the government and taxpayer pay a higher price for the goods o The barrier prevents the reallocation of that domestic producers work force and resources. A reallocation would result in the production of goods able to compete more effectively in a foreign market - There can be natural barriers where goods arent available anywhere else or cannot be imported, or there are trade restriction agreements etc. Briefly what is the difference between the rulings in the Crosby case (Massachusetts Burma law) and the K.S.B. Technical Sales Corp. case? What main idea or issue does the SelfPowered Lighting, Ltd. case add to this area of international law and policy? (6 pts.) - Crosby case: o Where a state act conflicts with the presidents discretion to limit a sanction with regard to specific actors or scope, and with direction to develop a multilateral strategy under a federal act, the state act is pre-empted under the supremacy clause. Case deals with buy American procurement - KSB case: o A state buy-American statute that requires only domestic materials be used in public works does not violate the commerce clause, unless doing so would be contrary to public interest or too expensive. State law must yield where it conflicts of impairs the policies of GATT. - Self-powered case: o Government agencies are required to purchase for public only American products unless the head of the department concerned determines that it would be contrary to public interest or the cost would be unreasonable. - The Crosby case would allow for firms in the US to contract in foreign nations if the president allowed it in his discretion. The KSB case allows for the federal government to regulate interstate commerce and get around domestic-only policies by making the purchase of expensive goods a violation of the commerce clause. The Self-powered case adds to this restriction of buying only domestic products by placing discretion within government so that the reasonable standard can be broad and not a bright line rule.

Describe briefly but fully the nature of the authority behind export control laws, from constitutional authorization to regulatory controls. (6 pts.) - The constitution authorizes the federal congress the power to regulate commerce with foreign nations. Congress has exercised this power to control exports and re-exports of US technology and products. - Regulatory controls come from acts such as: o Export Administration Act of 1979 (EAA), o the Arms Exports Controls Act (AECA), o the International Emergency Economic Powers Act (IEEPA), and o the Trading with the Enemy Act (TWEA). - Many other statutes are passed from time to time that are tailored to the specific political needs regarding security and trade. Each of these statutory regulations supplement the presidents inherent authority in the area of foreign relations derived from his power to make treaties with the consent of the senate. Describe the Cold War approach to export restrictions, and how it is changed in emphasis. Include discussion of product (& destination) eligibility and customer eligibility, as well as the two triggers of customer eligibility restrictions. (7 pts.) - Cold war and products eligibility o The cold war approach to export restrictions had a purpose of preventing the sale of weapons, or technology to an enemy during wartime. These objectives have now been included in the current regulations themselves. Exporters are required to obtain export licenses based on the products they are exporting. There are certain exceptions which are put in place to balance security requirements with trade facilitation. The process to obtain a licence is now considered to be product eligibility controls, as licensing depends on whether a product is eligible to be sent to a particular destination. - Post cold war and customer eligibility o In the post cold war era, the aims and techniques used in export regulations have changed dramatically. Todays export controls attempt to address diverse regional issues by emphasizing an approach which depends on broad legal prohibitions in lieu of licences. So, the exporter today is not subject to as many products eligibility controls; a government licence is required only if the importer or customer is involved in one of the types of activities which causes government concern. The burden has shifted from the government officials making complex regulations and control lists to the exporter, who has to assess the particular facts of their individual transaction. These controls are known as consumer-eligibility controls. - So, even if no licence is required based on the product being exported or its destination, a licence may still be required if the customer is ineligible because he is involved in activities relating to the proliferation of weapons of mass destruction, or has been blacklisted based on government intelligence. - So, both the product-eligibility and customer eligibility based licensing requirements must be met for the exporters transaction to be in compliance with the regulations.

What are the four main questions to ask before exporting goods that may violate export restriction rules and regulations? Describe briefly rather than simply list them in order to indicate understanding of the nature of each. What are restrictions on re-export? (10 pts.) - What are you exporting: o The proper classification of your item is essential to determining any licensing requirements under EAR. - Do you need a license for that product: o You find out by cross-referencing the ECCN with the Commerce Country chart. These two define which items are subject to export controls based solely on the technical parameters of the item and the country of ultimate destination. These first two questions basically help you to meet the products eligibility test. - Who will receive the item: o There are certain lists available to cross-reference your customer with. If he is on that list, you will need a license. It does not matter what item you are exporting to that customer, if that customer is on any list, you will need a licence. - What will your item be used for: o Some customers are prohibited while others need a licence. If your customer has any link to weapons of mass destruction, you will not be able to export to them, these two questions make up the customer-eligibility test. - Re-export restrictions: o Re-export is an actual shipment or transmission of an item subject to the EAR from one foreign country to another. o The EAR maintains controls on the re-export of U.S.-origin goods using the same system to classify and control the export of items from the U.S. If a license would be required to export the item from the U.S. directly to the new country, then a reexport approval would be required to re-export the U.S.-origin item from the first foreign country to the second. Briefly identify the main holding/rules in the Trane v. Baldrige and U.S. v. Meyer cases. (7 pts.) - Trane: o Regulations that make it a criminal offence for any United States person to take any boycott-related actions with respect to his activities in United States commerce are not unconstitutional because the legislation doesnt prohibit interaction in the normal commercial context it only prohibits providing information that is given for boycott-related purposes. - Meyer: o Although an individual does not violate section 369.2(d) if he takes a prohibited action inadvertently, the regulations expressly state that an individual who does an act knowing that it was required for boycott reasons will be deemed to have acted with intent to comply with an unsanctioned foreign boycott. Intent in this context means the reason or purpose for one's behavior. It does not mean that one has to agree with the boycott in question or desire that it succeed or that it be furthered or supported. Briefly but clearly, what were the main issues (one issue each) in the United States v. Liebo and the United States v. Kay cases? (6 pts.)

Liebo: o Was there sufficient evidence to sustain a conviction for violating the bribery provisions of Foreign Corrupt Practices Act such that both elements for the crime were met: value given to obtain or retain business, and value was given corruptly. Kay: o Whether payments made to foreign officials to obtain unlawfully reduced customs duties violated the FCPA and are they considered to be bribery?

What are the five main substantive amendments to the FCPA made in 1988? (10 pts.) - Anti-bribery provision changes: o Those attempting to clarify the types of payments which are illegal under the act o Those which go to the question of who should be liable under the act and under what circumstances o Those which attempt to provide better guidance and uniform treatment to the business community - Accounting provision changes: o Clarification of the terms reasonable assurances and reasonable detail o Defining the responsibilities of an issuer over accounting practices of a subsidiary in which it owns a minority share o No criminal liability shall be imposed for violating the accounting provisions, unless the violation is done knowingly - Amendments which affect the definition of prohibited payments: o Prohibition against giving anything of value to certain persons for the purpose of influencing their actions in their official capacity o Expanding the business purpose test: Reference to corrupt payments for retaining business is not limited to renewal of contracts or other business, it also includes a prohibition of payment related to the execution/performance of contracts or carrying out of existing business, such as paying official to receive favorable tax treatment o Prohibited payment law does not apply to any facilitating or expediting payment to a foreign official, political party, official, for the purpose of expediting/securing performance of a routine governmental action by that official. o Creation of affirmative defence that the lawfulness of a payment to a foreign official must be shown to exist in statutory law or specific regulations of that country o Payments should be reasonable and bona fide purchases. What five basic changes were required in the 1998 amendment of the FCPA to accommodate the rules of the OECD Convention on Bribery? (10 pts.) - Amendment clarifying that the scope of the FCPA includes payments made to secure any improper advantage, in order to obtain or retain business. - Amendment expanding the scope of of the FCPA covering acts prohibited by the convention of persons other than issuers or domestic concerns, committed while in the territory of the Unites States, regardless of whether the mails or a means or instrumentality of interstate commerce are used, in furtherance of the prohibited areas.

Amendment giving jurisdiction over the acts of US businesses and nationals, in furtherance of unlawful payments, that take place wholly outside of the US. Amendment expanding the definition of foreign official to include officials of public international organizations. Amendment ensuring that penalties for non-U.S. citizen employees and agents of issuers and domestic concerns are the same as the ones for U.S. citizen employees and agents.