Chapter 8 International Law 91
Suggested Additional Assignments
Research, Read and Write: WTO Cases
Using newspapers and/or the Internet, students should find a recent World Trade Organization (WTO) case, and write a short paper that explains: (1) Which nations were the parties? (2) What was the trade issues involved? (3) What were the respective arguments for the two countries? (4) What was the resolution of the case? (5) Do the students agree or disagree with the decision, and why?
Read, Research, and Write:
This assignment can be either individual writing assignments, or collaborative class projects, with students in groups doing one of the three scenarios, presenting orally their findings to the class, and turning in their commentary for grading and comment from the instructor.
A) Students should locate the Arms Export Control Act (AECA). The students should read the provisions and note sections they consider key. They should retain a copy in the PRJ for easy access in this lesson and others later in the course.
Students should write a brief summary of the history, key provisions, and recent revisions to the Act. They should discuss the purpose and their position as to the efficacy of the Act, and any recommendations to enhance the utility and enforcement.
B) Students should locate the Foreign Corrupt Practices Act (FCPA). The students should read the provisions and note key sections. They should retain a copy in the PRJ for easy access in this lesson and others later in the course. Students should write a brief summary of the history, key provisions, and recent revisions to the Act. They should discuss the purpose and their position as to the efficacy of the Act, and any recommendations to enhance the utility and enforcement.
C) Students should locate the United Nations Convention on Contracts for the International Sale of Goods (CSIG). The students should read the provisions and note sections they consider key. They should retain a copy in the PRJ for easy access in this lesson and others later in the course.
Students should be encouraged to write a brief summary of the history, key provisions, and recent revisions to the Act. They should discuss the purpose and their position as to the efficacy of the Act, and any recommendations to enhance the utility and enforcement.
Pair Project:
Divide class into two sections, one of which should read United States vs. Mandel, 696 F. Supp 505, 1988 U.S. Dist. LEXIS 10781 (E.D. Cal. 1988), and the other U.S. vs. Reyes, 270 F.3d 1158, 2001 U.S. App. LEXIS 24031 7 (Circuit Court of Appeals 2001)
Ethics: The Foreign Corrupt Practices Act
We have found that the Lugubria Convention Center exercise gives students a good chance to apply the Foreign Corrupt Practices Act (FCPA) to a typical contemporary situation. The exercise offers an excellent chance to apply Chapter Ethics checklist. The checklist question “Is it legal?” of course raises the FCPA issues, so the two points go handily together.
Net Research Exercise:
To explore the Foreign Corrupt Practices Act, including legislative history, revisions click on the following:
http://www.usdoj.gov/criminal/fraud/fcpa.html
Locate the Arms Export Control Act (AECA) at:
http://straylight.law.cornell.edu/uscode/html/uscode22/usc_sup_01_22_10_39.html
Locate information and commentary on the United Nations Convention on Contracts for the International Sale of Goods (CISG) at:
http://www.cisg.law.pace.edu/
http://www.lawschool.cornell.edu/library/Finding_the_Law/Guides_by_Topic/cisg.htm
Students should be encouraged to save copies of relevant sections and/or their notes and comments in their PRJ for future ease of reference.
Chapter Overview
Chapter Theme
The world is one economy, with every country linked in countless financial ways to almost every other. To conduct business today is very often to engage in international commerce, and that makes it important to understand the basics of international law.
Quotes of the Day
“What affects men sharply about a foreign nation is not so much finding or not finding familiar things; it is rather not finding them in the familiar place.” –G. K. Chesterton (18741936), British author. “The greatest meliorator of the world is selfish, huckstering Trade.” –Ralph Waldo Emerson (18031882), American philosopher and poet.
Trade Regulation
Key Issue: Import Controls
Case Summary: Marubeni America Corp. v. United States, p. 114
Facts: Nissan took its “Hardbody” truck line and used it as the basis for designing and building its “Pathfinder” sport utility vehicle. The Pathfinder incorporated the Hardbody's frame side rails, front cab, and front suspension. The tariff schedule gave the Customs Service two possible tariff classifications: motor vehicle for the transport of goods, or one for the transport of persons.
The “transport of persons” tariff was 2.5 percent, but the “transport of goods” duty was exactly 10 times higher. The Customs Service declared the car a “transport of goods” vehicle, and imposed the 25 percent duty, ruining Nissan's hope for profits. The Court of International Trade (CIT) reversed, and the Customs Service appealed to the court of appeals.
Issue: Is the Pathfinder a vehicle for passengers or for the transport of goods?
Decision: The CIT’s decision is affirmed.
Reasoning: The Pathfinder is principally designed for the transport of passengers, and the lower tariff applies. The fact that the vehicle was derived from a truck design is not the end of the inquiry. Nissan made substantial structural changes to meet the design it wanted. All of the changes were made to make the vehicle more comfortable for passengers. The CIT was correct.
Question: What is a tariff?
Answer: A tariff is a duty imposed on goods entering a nation.
Question: Who imposes tariffs on goods entering the United States?
Answer: The U.S. Customs Service imposes tariffs at the point of entry.
Question: What steps does the Customs Service take in imposing tariffs?
Answer:
· First, the Service classifies the goods, by deciding exactly what they are.
· Then the Service imposes the appropriate duty ad valorem, meaning according to the value of the goods.
Question: What action by the Service was at issue in this case?
Answer: Classification. The Customs Service classified the Nissan vehicle as one for the transport of goods, rather than as one for the transport of people.
Question: Who cares which it is?
Answer: Nissan cares, as well it ought. The duty on a delivery vehicle is exactly 10 times higher than that for a passenger car.
Ethics: Child Labor p.116
The International Labor Organization estimates that there are 250 million child laborers under the age of 15, worldwide. Some are as young as 7 or 8 years old. Some receive a pittance, working long hours in hideous conditions, while others are slaves, paid nothing at all.
The ILO provides these estimated percentages of children who work full or part-time in various countries. Notice that while the percentage for certain nations is not especially high, the actual number of children may still be extremely high.
Kenya / 42% / India / 14Bangladesh / 30 / China / 11
Haiti / 25 / Egypt / 11
Turkey / 24 / Indonesia / 10
Pakistan / 17 / Vietnam / 9
Brazil / 16 / Phillippines / 8
Guatemala / 16 / Mexico / 7
Thailand / 16 / Malaysia / 3
Question: In some carpet factories, children as young as 5 years old are shackled to looms and forced to work. They receive little food and no pay. How can their parents permit this to happen?
Answer: The exact story varies from child to child, but the root cause is always the same: life-threatening poverty. Sometimes a factory owner will appear in an impoverished village and promise parents that their children will receive an excellent education and comfortable living, in exchange for a few hours of work per day. The parents, often naive, uneducated, and desperate to provide for their families, permit the child to be taken away, little understanding the brutal reality that awaits their youngster. At other times, a businessperson may offer a modest “loan” to the parents, which the child will pay off. The loan may be only $10 or $15, but that may be a year’s income to some families. Tragically, the child is taken away, forced to work extraordinarily long hours in appalling conditions, and frequently fined each time he or she makes even a tiny error, ensuring that the parents’ debt increases, with the child’s exploitation extending indefinitely.
General Question: Is it ethical to import merchandise manufactured by child labor?
General Questions: If you believe it is ethical to import such merchandise:
· Do you think there are any limits on what children can be forced to do?
· Should carpet factories be allowed to employ 10yearolds? 8 yearolds? 6yearolds?
· Should the factories be permitted to pay subhuman wages? No wages at all?
· If you acknowledge that there are some limits to what a factory may do, what should the United States government do, if anything, about importing products that violate the standards? What, if anything, should consumers do?
General Questions: If you believe it is not ethical to import such merchandise:
· How do you respond to charges that the United States has no right to impose its “morality” in a part of the world where poverty is overwhelming?
· Isn't an impoverished village in India better off with a few factories than it would be with no industry at all?
· If local officials force factories to hire only adults, won't the cost of the goods increase so much that Western consumers will refuse to buy them?
Export Controls
Pair Project:
Divide class into two sections. One should read United States vs. Mandel, 696 F. Supp 505, 1988 U.S. Dist. LEXIS 10781 (E.D. Cal. 1988). This case was later reversed. 914 F.2d 1215 (9th Cir.). The second section should read U.S. vs. Reyes, 270 F.3d 1158, 2001 U.S. App. LEXIS 24031 7 (Circuit Court of Appeals 2001). Each group will discuss the case and prepare a brief summary of the case facts, and respond to the questions suggested. Following oral presentation of both cases, the class should be encouraged to discuss the rationale, efficacy of the Act and recommendations they may have regarding any aspect of the laws.
Mandel discussion points.
The only items that the federal government may place on the list are exports that would (1) endanger national security, (2) harm foreign policy goals, or (3) drain scarce materials. Mandel cares very much, whether these electronic goods appear on the list, because he has been charged with a criminal violation of the Export Administration Act of 1985. After failing to convince the court that the goods were wrongfully listed, he faces a prison term. United States v. Mandel, 696 F. Supp. 505, 1988
The team reading Mandel should research the development of case law subsequent to the reversal. Included in the presentation they make to the class should be a brief statement from the opinion explaining why the trial court decision was reversed. The students should also discuss the state of the law subsequent to the reversal.
Lastly, the team should formulate a statement of their position on the issue of regulation. Should it be more stringent or less? Should the exporters be required to submit documentation, and if so, what should it contain In light of the current state of international affairs regarding terrorism, is the present state of the law adequate to ensure maximum protections, understanding that no system could possibly eliminate any and all threat. They should also opine on why it is appropriate for the federal government to regulate exports (The constitutional provision delegating that power to the government should be included in response to this inquiry.
Reyes discussion points:
After reading the case, the students should discuss the following questions among themselves, and prepare to present their responses to the remaining class members.
Discussion Questions: Was there sufficient evidence to prove that Reyes violated the AECA and related regulations?
Holding: Affirmed. Yes, there was sufficient evidence to convict. There was substantial evidence, both from phone calls and faxes, that Reyes knew it was illegal to export without a license, knew it was illegal to export to Iran, and knew that Texam intended to ship Siraj’s goods from Geneva to Iran.
Question: Why does the United States have statutes such as the Arms Export Control Act?
Answer: Although the nation believes in free trade, national security is a vital, competing policy. For its security, the United States depends in part on advanced technology, and it is not in the national interest to share all advanced ideas and goods with foreign powers.
Question: During the next decade, is the United States likely to increase or decrease its vigilance concerning exported technology?
Answer: Increase, and the reason can be stated in two words: September 11.
Question: Is it really fair to assume that all business people are aware of these rules about exporting controlled items? What if an honest businessperson actually does not know about the laws?
Answer: Tough luck If you are in this business, you are expected to know the law. The government makes a substantial effort to inform exporters of their obligations, but it is ultimately up to all citizens to know the laws and regulations that apply to their industry.