question archive Legal Barriers
Subject:BusinessPrice:3.87 Bought7
Legal Barriers.
The company or its counsel must research tax laws, customs laws, import restrictions, corporate organization, and agency/liability laws.
Domestic legislation needs to be examined as well for issues arising under labor law, immigration law, customs law, tax law, agency law, and other producer/distributor liability provisions.
Antitrust, employment and economic-espionage laws. The second category includes laws targeted more specifically to international business. One example is the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign government officials and officials of public international organizations. Under the FCPA, a U.S. company can be held liable for the activities of its consultants, joint venture partners, or a recently acquired subsidiary.
ii) Property rights - patents, trademarks.
iii) Taxation - what taxation schemes will be faced abroad?
iv) Recourse - possibility and length of action with the possibility of image damaging necessitating arbitration.
v) Movement of equity and expropriation threats - often necessitating protocols or the signing of trade frameworking agreements.
Answer:
Scenario
You are working for a major U.S. corporation that wants to expand its reach globally and has narrowed the search to either Mexico or Japan. Your supervisor has asked you to prepare a memo that analyzes potential compliance issues with respect to aspects of law and ethics that are specific to one of the two countries. You will choose to prepare your memo for either Mexico or Japan and address the critical elements below. This will help inform the final executive decision.
Because you have some fluency with domestic laws, and given your background and history with the corporation, you have been asked to assess the pros and
cons of the decision, and to provide your insights with respect to the ethical and legal implications of the expansion.
Specifically, the following critical elements must be addressed:
I. What pertinent aspects of U.S. law should the company be aware of in its goal to do business internationally?
The company or its counsel must research tax laws, customs laws, import restrictions, corporate organization, and agency/liability laws.
Domestic legislation needs to be examined as well for issues arising under labor law, immigration law, customs law, tax law, agency law, and other producer/distributor liability provisions.
Antitrust, employment and economic-espionage laws. The second category includes laws targeted more specifically to international business. One example is the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign government officials and officials of public international organizations. Under the FCPA, a U.S. company can be held liable for the activities of its consultants, joint venture partners, or a recently acquired subsidiary.
Property rights - patents, trademarks.
Taxation - what taxation schemes will be faced abroad?
Recourse - possibility and length of action with the possibility of image damaging necessitating arbitration.
Movement of equity and expropriation threats - often necessitating protocols or the signing of trade frameworking agreements.
II. Assess the legal implications of moving business abroad specific to your chosen
country. What are the advantages and disadvantages?
Once the decision has been made to do business abroad, the form of your overseas operation will be determined by your business objectives, available resources and other tax and legal considerations. Keep in mind, however, that no single form may satisfy all of your company's needs. To select the arrangement that is most compatible with your objectives, become familiar with the advantages and disadvantages of the principal forms of doing business overseas and the major legal issues arising from each one.
Direct Exporting
Cooperative Relationship
Distributor or Sales Representative
Branch Office
Joint Venture
Wholly Owned Corporation
Standards of Behavior and Performance
Now that you've found a suitable partner, distributor or franchisee and decided on the corporate structure your company will use in the country or countries into which you're expanding, you're ready to climb the mountain of paperwork involved in setting up contractual obligations. In drawing up the actual documents, carefully consider the structure of the relationship, the terms of the agreement and the scope and length of non-disclosure and non-compete clauses. These provisions and their enforceability will take on increased importance when complicated by distance and differences in legal systems.
Labor agreements should be reviewed for acceptability in both cultures. A traditional practice in one country may be discriminatory in another. Make sure you won't get into trouble overseas by imposing U.S. standards on local employees. But, also beware of allowing practices in your overseas branch, franchise or partner's office that would be considered unfair or illegal in the United States.
Establish and communicate your standards for international business activities. One way to do that is to establish a code of conduct based on the company's values and objectives. This code should be distributed to all company employees, agents, and business partners. You can also print a pamphlet or an employee handbook, which provides more details and identifies instances when employees should seek further guidance from company lawyers, compliance officials or supervisory personnel. Compliance materials should be carefully written to take into account the company's specific operations, practices, personnel, corporate culture and history.
Trademark Protection
Generally, trademark laws and rights are based on actual (or bona fide intent to) use in a given country. Unlike international copyright, your properly-registered domestic trademark does not automatically confer any trademark rights in other countries. Take steps to ensure the availability and registration of your trademarks in all targeted markets.
Also, make sure your trademark translates effectively in the targeted country and native language. Many growing businesses have had to modify their names, designs or slogans because of translation or pirating problems in new markets. For example, many U.S. automotive services franchisors had to retool trademarked brands that over-emphasized speed, because automobile owners overseas valued attentive, quality service over fast service.
Compliance Programs
Many U.S. and foreign laws regulate the international business activities of U.S. companies. If your company does or plans to do business overseas, put an updated compliance program in place to address the legal issues that arise from such activities.
Two categories of laws govern the international business activities of U.S. companies. The first consists of laws that can also be applied in a domestic context, such as antitrust, employment and economic-espionage laws. The second category includes laws targeted more specifically to international business. One example is the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits bribery of foreign government officials and officials of public international organizations. Under the FCPA, a U.S. company can be held liable for the activities of its consultants, joint venture partners, or a recently acquired subsidiary.
Imports and exports are subject to customs laws and regulations. The U.S. government has also imposed export and import controls as sanctions against certain countries. Be aware of these laws and restrictions as they relate to your business, and make sure your company's practices comply with them.
Try to establish an environment in which employees and agents recognize that the company is serious about compliance. Hire competent and honest personnel to start with, then be able and willing to conduct an internal investigation if any violations are suspected.
The adverse consequences arising from an unlawful transaction can be substantial, including revocation or suspension of export or import privileges, debarment from government contracts, negative publicity, plus the expense and disruption of responding to a government investigation. Paying attention to compliance is a necessary step toward the success of your global expansion.