International Contracts Slide Set 1a The Legal Environment of International Markets Matti Rudanko

2 1. INTERNATIONAL TRADE POLICY Starting point: closed (national) markets National market (State A) B C D int’l market International Contracts 1a

3 The Goal: Global Free Trade Integrated national and international market A C B D International Contracts 1a

4 Free trade: advantages/drawbacks economic growth (efficiency; the Coasian model) –global welfare and the interests of developing countries ? political/cultural influence and added economic resources help to strengthen democracy and improve social structures ”race to the bottom” in social protection free trade tends to bring welfare especially to those who are already well off –multinationals –industrialized countries –(non-democratic) governments of developing countries cf. the Rawlsian concept of justice International Contracts 1a

5 Importance to companies level playing field global markets –reduced risks related to foreign markets market strategies, e.g. –pricing policies –marketing –establishing abroad International Contracts 1a

6 Commercial policy instruments I Reaction by: government (the state) WTO : harmonization of national (and EU) measures –EU: replaces national norms allowed grounds: –market disruptions: GATT art. XI, XIX –COUNCIL REGULATION (EC) No 260/2009 on the common rules for imports barriers to trade dumping International Contracts 1a

7 Commercial policy instruments II Purposes aimed at: –equilibrium of the balance of payments –ensuring foreign trade –other national economic goals: economic growth, production, employment Measures: –trade monitoring; licenses, import permits –price undertakings / anti-dumping duties International Contracts 1a

8 Rules for Imports GATT art. XI, XIX, COUNCIL REGULATION (EC) No 260/2009 on the common rules for imports reactions: surveillance, safeguard measures (including import quotas under auspices of WTO) allowed grounds: –domestic agricultural overproduction –balance of payment problems –foreign trade of developing countries International Contracts 1a

Rules for Imports, cont. Examination of the trend in imports and of serious injury or threat of serious injury to Community producers resulting from such imports shall cover in particular: –(a) the volume of imports, –(b) the price of imports, –(c) the consequent impact on Community producers as indicated by trends in certain economic factors such as: production, capacity utilisation or stocks, sales or market share, prices, profits or cash flow, employment International Contracts 1a 9

10 Control of Barriers to Trade target: public commercial policy measures –conflicting with international law and rules of international trade such as: –duties and other payments –quantitative restrictions (EU Regulation 260/2009, GATT XIX) –technical barriers (safety and other regulations) –state subsidies –diskrimination in public procurement –divergent IPR protection reaction: counter-measures (e.g. EU Reg. 260/2009) International Contracts 1a

11 normal value = selling price on the home market of the export country or the export price to another country Imposing anti-dumping duties export price Dumping Control Requirements for imposing anti-dumping duties (EU regulation): –a realized / imminent substantial damage to corresponding EU production –causal relationship to the export –interest of the Community anti-dumping duty International Contracts 1a

12 Allowed protection/protectionism National Supporting and Protective Measures Allowed interests Prohibited protectionis m National safety Protection of health Consumer protection National culture etc. International Contracts 1a

13 Pricing on International Markets The Legal Framework of International Pricing Commercial Policy Instruments Competition Law Marketing Law Antí- dumping Norms Market Disruption Norms Cartels Treaty art. 101 Dominant Market Position 102 Trade Barrier Norms Merger Control Marketing Norms International Contracts 1a

14 Impact of Competition Law Both public and private interests –sound and efficient competition –the interests of customers and consumers (sometimes those of a competitor) initiative to reactions comes from private actors / supervision authorities the sanctions are effected by authorities –prohibitions, economic sanctions –damages liability, nullity of illegal transactions of cartels and monopolies (decided in national general courts) International Contracts 1a

15 Impact of Marketing Law Private interests –legal protection of consumers / competitors –Consumer Protection Act / Act on Improper Business Practices the reaction follows on the initiative of a private actor or an authority the reaction is effected by the authority –a ban on the marketing practice International Contracts 1a

16 Common Policies of the EU Trade Policy –harmonized with WTO Rules Development cooperation policy –Treaty on the functioning of the European Union TFEU 2008 replacing the Treaty Establishing the EEC 4(4), 208, 214, Treaty on the European Union TEU or Maastricht Treaty 3(5), 21 –sustainable development –interests of developing countries –eradication of poverty International Contracts 1a

17 Actors and Structures of World Trade World Trade WTO Actors OECD UNCTAD Etc. Industrialized countries Multinationals Smaller companies Developing countries “Nations” Government s Citizens’ organizations Trade unions International Contracts 1a

18 WTO and OECD The pivotal groupings of world trade USA JAPAN EU Outside countries WTO (159 members) OECD (34 members) International Contracts 1a