How to structure an International Trade deal, Documents, and Terms used in the Documents and why
In developing a structure of international trade, it is essential to consider the economic provisions. An assessment of the economic provisions of international trade focuses on tariff agreements that cover trade in commodities that explain the General Agreement on Tariffs And Trade (GATT) (Schaffer et al ., 2011). The initial consideration would involve the determination of whether tariffs are applicable in the market since they cannot be applied in the services market. However, when creating a structure for international trade, it is vital to consider several documents that are financial and commercial, including insurance, transport, and other documents related to international trade. For instance, when processing export consignments, it would be possible to execute documentation in contracts that are inclusive of export sales, carriage contract, cargo insurance, as well as the contract of finance.
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The identified documents are indicative of the idea that the documentation needed for international trade are numerous. To ensure the success of the international business, it is vital to ensure that the documents are precise since slight discrepancies or omissions can prevent the traded commodity from being exported (Schaffer et al ., 2011). As a result, the exporter might not receive payments from the consignment. In some circumstances, the discrepancies or omissions might result in the seizure of the product by customs authorities in the importing nation. For this reason, it is essential to take note of the provision that the collection documents, such as the letters of credit, are subject to precise time limits, which might not be honored by a nominated bank when the documents are not submitted within the stipulated period (Hoekman & Mavroidis, 2007). However, the variation of the number of documents applicable to international trade varies depending on the destination of the commodities being exported. Just as all good compliance programs, the decision-making process of the international trade should also be documented. The reason for ensuring that this provision is met emanates from the idea that it is essential to demonstrate due diligence to provide proof that the trader made an effort to comply with the available regulations whenever something goes wrong.
A Description of the European Union and its comparison with other IGOs or Types of States
The European Union is an intergovernmental organization (IGO) that comprises of 28 countries operating as a unified economic and political block (Mechi, Migani & Petrini, 2014). The IGO was developed from the desire of the countries to form on European political organization that would end the long years of war among the different European countries that ended with the First World War and destroyed the continent. Nineteen of the countries in the IGO use the euro as the official currency. However, 12 of the countries in the IGO established the European Single market to create freedoms in different sectors such as the movement of goods and services, money and individuals (Mechi, Migani & Petrini, 2014). The IGO focuses on achieving different goals that include the promotion of peace within the different countries, combating discrimination and social exclusion, enhancing the economic, social and territorial cohesion among the constituent countries, respecting the rich cultural diversity, and establishing an economic and monetary union between the different countries (Mechi, Migani & Petrini, 2014). The goals form the foundation of the IGO and are provided for in the Lisbon Treaty as well as the EU Charter of fundamental rights.
A comparison between the European Union and other IGOs such as the United Nations (UN) reveals both IGOs have a common desire that emanates from the destruction of the two world wars. In this regard, both entities are putting in place measures that would ensure the avoidance of another devastating conflict. The different countries within the different entities are representative of the nations that have come together to follow shared objectives. However, the European Union is representative of different countries that focus on the economic issues of the member states. In contrast, the UN focuses on expanded provisions that are inclusive of not only economic issues, but political and social issues as well (Mechi, Migani & Petrini, 2014). Even though both IGOs cover the same issues, the UN exists to promote international cooperation the stability, and the security needed in the world. Compared to the European Union, the UN does not have actual jurisdiction in all the countries involved in the organization.
Jus Cogens, its importance, and effects on International Law
Jus Cogens refers to the principle of international law that focuses on the values considered as essential to the international community and cannot be set aside by provisions that are inclusive of a treaty ( Thouvenin & Tomuschat, 2006) . Jus Cogens’ rules emanate from the customary international rule that binds different states and inhibits any exceptions. In this light, the international communities of states accept and recognize the importance of the rules, consequently providing the leeway of modification that can only occur as a subsequent norm of the general international law that has similar characteristics (Schaffer et al ., 2011). Jus Cogens is important to international law in the sense that the laws contained therein protect essential interests of the international community. In this case, jus cogens exist to protect as well as uphold the dignity of individuals, including their rights. The rules are in place to trigger the fiduciary principle that focuses on the idea that any entity or states that absorb the unilateral administrative power over individuals are obligated to honor fundamental provisions of dignity. The provisions are inclusive of the peremptory norms that characterize jus cogens. In this light, any activities or treaties that the state or international organizations implement should be in line with the concept of jus cogens, which means that contradictory activities will be considered as invalid ( Thouvenin & Tomuschat, 2006) .
How the International law is made, and the sources of International Law
International law is formed through the mutual consent of different nations that are given by international practices or through treaty agreements. The practices might either involve bilateral agreements of they might be multilateral (Schaffer et al ., 2011). In this light, the nations can decide on the manner in which it could act to ensure that its rights are respected under the international law. According to Schaffer et al . (2011), customary international law occurs when different states choose to follow particular practices due to obligation. Even though the different countries follow the identified laws, the customary international laws are made by international agreements, such as the agreements passed by the UN. In this regard, the public or private parties involves can assign high priority to one of the sources of law through agreement. The law constitutes rules developed from generally accepted practices, which might be either written or unwritten. However, for the rules to constitute international law, they have to contribute to the international concept of justice. These laws have equal authority as international laws.
Is International Law Really Law? Why or why not
When considering whether international law can be viewed as law, it is essential to consider the several ways through which individuals think about the concept of law. When thinking of laws, individuals usually consider legislations interpreted by the judiciary and enforced by the executive as essential rules (Bjorgvinsson, 2015). The police are responsible for enforcing such laws.
For this reason, it is possible to consider law as a provision that is acceptable to individuals when there is a central authority that could be responsible for ensuring that collective agreements are observed. For this reason, international law cannot be considered as law based on the fact that no overall authority can force compliance with agreements. However, in such settings, Bjorgvinsson (2015) note that the law still exists, even though it might be practiced and enforced in various ways, therefore, it is possible to consider international law as law because it has different characteristics from the law that is practiced domestically. In this regard, international law can be considered as law because there are proper systems of enforceable sanctions that provide essential enforcement mechanisms.
How and why Letters of Credit and other Trade Documents are used in an International Trade Transaction.
International trade transactions are characterized by payments to sellers as well as the shipping and delivery of merchandise. In international transactions, the seller might require payment in advance. However, if the seller ships commodities to the buyer in trust, there is an attached risk related to the provision that the seller might not pay for the commodities. For this reason, the seller might use banks as an intermediary to provide financing since the provision can assist in addressing the concerns of the buyer as well as the seller (Schaffer et al ., 2011). In this light, the buyer’s bank provides a letter of credit to the seller, thereby providing payment after the presentation of specific documents that are inclusive of the bill of trading. The seller’s bank can make a loan through the advancement of funds to the seller based on the sales contract in place (Schaffer et al ., 2011). For this reason, it is possible to determine that a letter of credit focuses on comforting buyers as well as sellers engaged in international trade transactions through the replacement of the buyer’s credit with the financial backing provided by a bank. The two letters of credit that might be used are inclusive of the commercial and standby letters of credit, which are governed by the International Chamber of Commerce Uniform Customs as well as the Practice for Documentary Credits (Schaffer et al ., 2011).
An international trade financing process that considers involving the bank in the purchaser’s country acts as a fiduciary on the seller’s behalf. In this regard, the financing procedure involves the collection and remitting payment for the shipment of goods (Schaffer et al ., 2011). The seller is required to present the required shipping as well as collection documents to a local bank, which sends the documents to the correspondent financial institution in the purchaser’s country. The presenting bank will then be responsible for delivering the required documents to the importer in exchange for the payment to be made. This procedure applies to the case of a document against payment transaction (Schaffer et al , 2011). Conversely, the banks that are involved in the transaction activity in the capacity of a fiduciary for payment collection without guarantees. The banks are only liable for undertaking the exporter's collection instructions. For this reason, they can carry out instructions such as suing nonpaying or the non-accepting importer on behalf of the seller or exporter.
Meaning of "Rise of the IGO" and its Significance on the Creation and Implementation of International Law. The historical event(s) that ushered in the Rise.
The “Rise of the IGO” primarily refers to the rapid increase of intergovernmental organizations because of globalization. According to Mechi, Migani, and Petrini (2014), since the fundamental emphasis of a considerable number of non-governmental organizations is to provide individual states with information that can assist IGOs, there is a possibility of viewing a significant number of fluctuations in the spheres of global economic consolidations as correlating to the main intergovernmental organizations. IGOs such as the UN have gained significant influence internationally due to the idea that they have taken part in the development of governmental agencies with particular autonomy from different states (Mechi, Migani & Petrini, 2014). The rise of IGOs is significant in the sense that the IGOs are created from treaties.
These organizations are subject to international, including the fact that the organizations can enter into enforceable agreements among the constituent nations or other states. Based on the provision that treaties establish IGOs, including other agreements, they have to commit to policy positions, including the collection of customary as well as international law since the provisions are essential for their cause. For instance, the International Committee of the Red Cross arose from the need to observe customary law on the laws developed for realizing peace. In this light, it is vital to consider that international political events led to the rise of IGOs (Mechi, Migani & Petrini, 2014).
Risks Involved in Setting up Operations or Investing in a Foreign Country and how to minimize and Control the Risks.
Some of the risks involved in investing in a foreign country include high transaction costs, the volatility of international currencies, and liquidity risks. The biggest barrier to international investments is high transaction costs that are characterized by brokerage commissions. In this light, the costs are frequented by charges that are inclusive of levies, taxes, exchange fees, and stamp duties, among other charges. One way through which investors could minimize the transaction costs could be through using the American depositary receipts since they are likely to ensure that U.S. exchanges are bought with similar transaction costs as the costs listed on the U. S. exchanges. As for the solutions of mitigating currency risks, international investors can hedge their currency exposure using tools that include currency futures, options, as well as forwards (Taoka & Beeman, 1991). However, the tools can be complicated for normal investors. When mitigating liquidity risks, investors can observe the bid-ask spread of a particular asset over time to prevent possible risks (Taoka& Beeman, 1991). This measure can assist an investor to create a picture of the liquidity of an asset.
The Factors to consider when Setting up a Business in another Country
Setting up a business in a foreign country can hold a variety of benefits concerning financial resources, labor, and workforce issues that are inclusive of the quality of life. Even though it might be difficult to determine the most appropriate location for international business, one of the most important considerations involves the need to research the business practices in the host country. Before making a move of setting up a business, it is essential to study the laws and the requirements for the particular county, including the provision of the incorporation, property acquisition and the working costs of the particular nation. Conversely, an understanding of the culture and political climate of the particular nation is essential. In this case, the culture and political climate determine the bearings necessary for interacting with the local community, which is a provision that creates mechanisms needed to direct the most appropriate dimension of business. In addition to the assessment of the cultural and political climate, seeking local guidance is essential. Legal advice can assist the investor to determine the manner in which an investor can navigate the foreign environment ( Ertürk, 2015) . These provisions are essential for determining the essential things to consider when selecting the best location for investing in a foreign country.
When setting up a business in another country, the format to be used is also essential. In this case, since the investor might not be well versed with the different dynamics of the foreign country, it would be vital to consider collaborating with investors in the host country. Grassroots business organizers usually consider their businesses as cooperatives, collective, or a group of businesses. However, based on the provision that such entities are informal, the investors interested in starting up a business in another country should select an appropriate business structure for the entity. Generally, the investor should consider selecting traditional business formats such as partnerships, limited liability companies (LLCs), or corporations ( Ertürk, 2015) . However, when selecting the most suitable business format to use, the investor should follow the laws in the host nation. Setting up an LLC might not be as complicated as setting up and operating a corporation. The business format selected should also consider the different forms of taxes to be incurred. In this case, an international investor can decide to set up a business in another country based on the notion that the business formats can be set up in a way that allows the investor to enjoy more favorable tax rates. The tax considerations are among the important elements that an individual should consider before investing in another country since the tax regimes are different in various countries.
Describe what the WTO does. Do you think that it is Effective?
The World Trade Organization (WTO) is an entity that deals with trade regulations between different nations. The international organization deals with international rules of trade, which are guided by negotiations and signatories within the bulk of global trading nations that are ratified with the constituent nation's parliaments (Hoekman & Mavroidis, 2007). The fundamental objective of the organization is to assist the producers of commodities, exporters, and importers to conduct their businesses smoothly. WTO provides different governments with a platform through which they can negotiate trade agreements, consequently settling possible trade disputes. According to Hoekman and Mavroidis (2007), WTO provides different governments with a platform through which they can sort out trade issues that they might be facing.
It is possible to consider the organization as an effective entity base on the fact that it follows legal texts that cover different activities. In this light, the organization follows principles that govern multilateral trading systems. In assessing the effectiveness of the organization regarding dispute settlement, it is also possible to posit that it is useful. In this regard, the dispute settlement provisions characterizing the operations of the organization follow a structured and formal process that involves defined stages as well as a disciplined timetable for resolving disputes efficiently (Hoekman & Mavroidis, 2007). The dispute settlement process provides a platform for the automatic adoption of panel rulings. The respondent that loses a case can block the adoption if it can successfully persuade the members of the organization not to adopt the rulings. In this light, the legal basis of the organization’s dispute settlement system provides members with the principles and procedures by which they could resolve trade disputes to the multilateral trade regime.
Extra Credit: Favorite Concept in International Law
My favorite concept in international law is sovereign immunity, which is also known as jurisdiction immunity. Sovereign immunity is a concept of international law which states that a sovereign country cannot be sued before the court of another independent nation without its prior consent ( Yang, 2012) . In other words, no sovereign state has the power to rely on its laws to sue another independent country. The concept is important because it helps in maintaining the independence of sovereign states, especially in instances when there is a conflict of interests. Sovereign immunity will ensure that countries use international law to solve their disputes. As a result, international law will remain relevant in addressing global issues.
References
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Yang, X. (2012). Sovereign Immunity . Oxford University Press.
