Laws Affecting International Business and Travel Chapter 12

Chapter 12

Laws Affecting
International
Business and Travel
Intercultural Business Communication, 4th ed., Chaney & Martin

Topics
 Home-Country and Host-Country
Laws
 International Laws
 Contracts
 Global Patents
 Nonwritten Law
 Ethics and the Law
 International Travel and Law

The world has numerous laws
that affect international
business.

When a company is engaged in
international business, what
the company representatives
can legally do is controlled by
both their nation and the
foreign nation with which they
wish to conduct business.

Terms
 Act of State Doctrine - Each country can do as it
wishes within its own boundaries.
 Home Country Laws - Laws, treaties, or acts that
govern business within your own country (and
those governing business with other countries).
 Host Country Laws - Laws, treaties, or acts that
govern business within the foreign country with
which you wish to conduct business.


Legal Requirements that Govern
U.S. Citizens' Actions During
Negotiations

 Antidiversion Requirement - Bill of
lading and invoice must clearly
display that the carrier cannot
divert the shipment to a country the
U.S. government considers
restricted.

 Antiboycott Regulations - Prohibits U.S.
companies from participating in boycotts
between two foreign countries by refusing to
do business with a friendly nation to comply
with a foreign boycott.
 Antitrust Laws - Designed to ensure fair
competition and low prices to U.S. consumers;
they affect exporters in such areas as mergers
and acquisitions of foreign firms, raw material
procurement agreements, knowledge licenses,
distribution channels, etc .


Written Information Laws
 The Export Administration Act of 1985 - requires
federal licensing of technical information in
business correspondence.
 The Arms Export Control Act of 1968 and Trading
with the Enemy Act of 1917 - prohibit the
transfer of information on military material or
defense-related materials.
 The International Emergency Economic Powers
Act of 1977 - governs information that is
research oriented from being communicated to
foreigners.

Technology Laws

 The World Intellectual Property
Organization (WIPO) of the United
Nations promotes intellectual
property rights worldwide and
currently administers 22 treaties
for 181 member nations.


Technology Laws
 Berne Convention Implementation Act
of 1988 - recognized the copyrights
of all the signatory nations to the act;
157countries were signatories in
2004.
 Madrid Convention - trademarks are
protected by the 34 countries that
are signatories (U.S. and China,
however, are not signatories).


Employment Laws
 Most nations have legislation
governing wages, hours, union-
management relations, residence
visas, and work permits.
 Some nations require a certain ratio
of nationals to foreigners.
 Legal questions that may be asked
of a potential employee differ by
country.

Maquiladora Law

Presidential Decree for the Development
and Operation of the Maquiladora
Industry Program of 1983

 International maquiladora program in
Mexico allows the duty-free import of
equipment, machinery, and materials
to assemble parts of products that are
then returned to the home country.


 The U.S. Tariff Code allows the final product to
be brought into the country with only the final
value added to the goods being taxed.
 An important consideration in this program is
the difference in form of law. The U.S. (except
Louisiana) practices common law (based on
what has been traditionally accepted as right
over many years); Mexico practices civil law
(body of laws of a state or nation related to
private matters). The difference is that civil law
rather than precedent is considered during
litigation.


International Law
 International Court of Justice (also known as the
World Court) - body of the United Nations that
provides a way to settle international
disagreements between countries rather than
corporations.
 The three legal bodies in the United Nations
are: United Nations Commission on
International Trade Law (UNCITRAL), The
International Commission, and the Sixth
Committee of the General Assembly.


A movement by institutions concerned with
international business has encouraged the
development of agreements and laws that are
uniformly accepted in world trade. These
institutions are:
 International Chamber of Commerce
 International Commercial Terms
(Incoterms)
 ECE Standard Conditions
 The Hague Convention
 The Vienna Agreement


 Quasi-international Law - rules for the
relationship between legal entities and
states that do not have national status,
such as private corporations.
 Sanctions – prohibit U.S. companies from
doing business in targeted countries.
When the U.S. government does not
approve of a country’s policies, they
implement sanctions to try to reform the
country.


 Macaulay's Thesis - considers long-
term relationship more important
than contracts.
 Thematization - process by which a
framework for mutual
communication and satisfaction is
reached; process could be related to
the law, economies, power, or
religion.

Governance Structures
 Market governance - contract based
 Trilateral governance - adds an arbitrator
 Bilateral governance - may not spell
everything out but implies a continuing
relationship
 Unified governance – no details are
negotiated in advance; maximum
flexibility is provided - only one party
sets terms for both parties; appropriate
for subsidiaries of a single
organization.

Contracts
 Contract - an agreement between
parties to do something that is oral,
written, or implied through conduct.
 How are contracts viewed in the
U.S.? Very important; oral contract
is legally enforceable.


 How are contracts viewed in Japan?
May be made verbally, in writing, or by
conduct but are always open to
renegotiation.
 How are contracts viewed by the
Russian Federation?
In the past little need existed for
contracts; goods were allocated and
firms accepted what was sent. This
practice is now changing, but they still
have problems with the concept.

Global Patents
 Company files patent application with the U.S.
Patent Office; limitation to file abroad is one year
from the date of the U.S. application.
 Patent Cooperation Treaty - when patents are
filed in other countries, the new patents claim
priority to the date on the U.S. patent thus
prevailing over competing rights of other
investors.
 Treaties override all other domestic laws; nations
need to be aware of their sovereignty and
remember that treaties should be based on good
science, rather than on wishful thinking or bad
politics.

Unwritten Law
 Unwritten business laws are called drawer
regulations in Brazil because they operate from
unwritten operational codes rather than laws.
Many drawer regulations are disappearing with
countries joining free trade markets.
 In high-context cultures (Japan), little emphasis
is given to the written word; the situation would
determine whether to adhere to the law. Oral
agreements would be considered binding, and
written contracts would be considered flexible.


Ethics and the Law
Four motivations for unethical
conduct in business:

 profit
 competition
 justice
 advertising


The three dimensions of negotiation
ethics are:
 Means/ends – measured by utility
 Relativism/absolutism – considers two
extremes: either everything is relative
or everything is without deviation from
the rule
 Truth telling – considers whether
concealing information, conscious
misstatements, exaggeration, or
bluffing during negotiations is
dishonest

Laws Related to Ethics in Business

 Foreign Corrupt Practices Act of 1977 -
requires U.S. companies to account for
and report international transactions
accurately and prohibits bribes
(including gifts and entertainment) that
are used to gain a business advantage.


 The Doctrine of Sovereign Compliance - an
international legal principle that can be used as
a defense in your home country for work carried
out in a host country when the two countries'
legal positions are different.
 Export Trading Company Act of 1982 - allows
companies that normally would not be allowed to
participate in joint ventures to develop trading
companies similar to those in Britain and Japan
(e.g., GM, Ford, and Chrysler make parts with
European and Japanese car manufacturers to
jointly produce and sell cars).


Legal and Ethical Practices are
Viewed Differently
The word "contraband" in the U.S.
suggests breaking the law by smuggling.
In Latin America, however, the Spanish
word is contrabando (from the word
contrabandido, which means "against
the bandits,") and is viewed in a positive
way.


International Travel and Law
 A Passport - your proof of citizenship;
need a copy of your birth certificate and
current photos.
 Citizenship - the state of being vested with
certain rights and duties as a native or
naturalized member of a country.
 Visa - gives you the right to enter and
stay in a country for a period of time for a
specific purpose.

 Consulate - made up of individuals sent
by the government to other countries to
promote the commercial interests of
their home country.
 Customs Agents - enforce export and
import laws of the country; have the
right to search and confiscate anything
you may have with you.
 Duties - import taxes

Suggestions for International
Travel
 Register with the U.S. embassy or
consulate when you arrive.
 Turn to the embassy or consulate for
legal, medical, or financial problems.
 Contact the American Consul for a list of
attorneys, to notify your family, and to
protest any mistreatment. The Consul
can visit you in jail but cannot get you
released or provide for bonds or fines.
Axtell, Do's and Taboos of Hosting International Visitors

 Remember that you are subject to the
laws of the country while you are there.
 Register with the local authorities if you
plan a prolonged visit. You may be
asked to leave your passport overnight
or to complete certain forms.
 Use authorized outlets for cashing
checks and buying airline tickets; avoid
the black market or street money
changers that you will see in many

 Ask before you photograph anything to be sure it
is permissible.
 Avoid these common infractions of the law: trying
to take historical artifacts or antiquities out of the
country, customs violations, immigration
violations, drunk or disorderly conduct, and
business fraud.
 Obtain an international driver’s license if you need
to drive. Travel agents can assist with this. Many
countries require proof of insurance while driving.


 Do not deal in drugs; this is a serious
offense in all countries, and penalties
can be much more serious than in the
U.S., including death.
 Keep a list of credit card/traveler’s check
numbers in a safe place in case they are
lost or stolen.
 Obtain a copy of Safe Trip Abroad.


 Make a list of such useful telephone
numbers as the U.S. State Department,
Amnesty International (New York), and
the International Legal Defense
Counsel (Philadelphia).
 Your health should be a concern; get a
copy of Health Information for
International Travel by the Center for
Disease Control and Prevention.
 Be trustworthy, helpful, kind, friendly,
courteous, obedient, cheerful, brave,
and reverent.

Country-Specific Travel Tips
 Canada – Since 9/11/01, passports for U.S.
citizens entering from the U.S. or another
country are required. Hotel accommodations
in large cities are similar to those in the U.S.
Public transportation systems in Montréal and
Québéc City are very good.
 England – Passport required; U.S citizens do
not need a visa for visits up to six months; no
vaccinations are required. Continental
breakfast included in the room price in larger
hotels. Public transportation includes the
underground and taxis.

 China – U.S. citizens need a passport and a visa. Hotel
accommodations in large cities are available. Public
transportation systems exist throughout the country.
Bicycles are the main mode of transportation.
 France – Passport required, but U.S. citizens may travel
in France without a visa for up to three months. No
vaccinations are required. Hotels do not always have a
bath in the room nor are they always air conditioned.
Public transportation includes the Métro (subway),
buses, streetcars, taxis, and the TGV (a high-speed
train connecting 36 European cities). Use only
“official” taxis; unauthorized taxis have no meters and
charge whatever they wish.



 Germany – Passport required, but U.S.
citizens do not need a visa to travel in
Germany for up to three months. No
vaccinations are required. Hotel price
generally includes a continental
breakfast, but heat may be an extra
charge. Not all hotel rooms have a bath
inside the room. Public transportation
includes buses, streetcars, subways,
trains, and taxis.


 Japan – Passport needed, but no visa is
needed for visits of less than 90 days.
No vaccinations are required. Large
cities have numerous Western-style
hotels with private baths. Restroom
facilities are usually unisex. Public
transportation includes trains, subways,
and buses. The “bullet train,” which
runs between major cities, offers regular
and first-class accommodations.


 Mexico – Proof of citizenship needed; U.S.
citizens may stay up to three months in
Mexico with no visa. No vaccinations are
required but may be advisable when
traveling in certain parts of the country.
Resort towns and larger cities have
numerous excellent hotel accommodations.
Public transportation varies greatly from
crowded buses to the subway of Mexico City.
Driving in many parts of Mexico is not
advisable.

 The Netherlands – U.S. citizens need a passport but
no visa. Hotels are comfortable. Public
transportation is very good.
 South Korea – U. S. citizens need a passport but no
visa for 30 days or less. Public transportation is
very good. No vaccinations required. Both western
and yogwan hotels are available.
 Taiwan – U. S. citizens need a valid passport and a
visa after 30 days. Public transportation is very
good. No vaccinations are required. Hotels are very
western and comfortable.


Travel Advice

 Obey the laws of the host country.
 Be courteous and helpful.
 Remember that it is their country.
 If you cannot speak positively about
the country, remain silent.


Laws Affecting International Business and Travel Chapter 12

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