CHAPTER 1 Introduction to
International Business
International Business
Law and its Environment
Ninth Edition
Schaffer / Agusti / Dhooge / Earle
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Economic Interdependence
•In the new global economy, almost no
businesses are purely “local.”
•Factors: technology, communication, natural resources,
move towards free markets, growing demand of Latin
America and Asia.
•Tremendous interdependance between countries.
•Almost all business is now international.
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Forms of International Business
●Trade – Distribution
●International licensing of technology and
intellectual property:
–Trademarks
–Patents
–Copyrights
●Foreign direct investment
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Forms of International Business
Trade
•Trade : The import and export of Goods and Services
●Goods (2015 WTO):
–U.S.A : Exports $1.505 Trillion – Imports $2.308 Trillion
–China : Exports $2.275 Trillion – Imports $1.682 Trillion
–Russia : Exports 0.340 Trillion – Imports 0.194 Trillion
–Services (2015 WTO) :
–U.S.A.: Exports $690 Billion , Imports $469.1 Billion
–China : Exports $285,5 Billion Import $466.3 Billion
–Russia : Exports $51 Billion , Import $87 Billion
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Forms of International Business
Trade
Exporting:
•shipment of goods or the rendering of
services to a foreign buyer
•Two ways to export:
1. Direct Exporting –
•manufacturer assumes responsibilities for all
aspects of export.
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Forms of International Business
Trade
Direct Export services may be provided by:
•Foreign Sales Agent
–Solicit orders on behalf of principal.
–Receives commission.
•Foreign Distributor
–purchase goods for resale to their local
customers
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Forms of International Business
Trade
2. Indirect Exporting (use intermediaries)
•Export Trading Companies (ETC):
•market products of several manufacturers in
foreign countries.
•Case study: Tarbert Trading Ltd vs Comentals,
Inc., US District Court (SDNY) 1987
•Export Management Companies:
•independent firms
assume export-related duties for
manufacturers, producers, or other exporters.
Tarbert Trading, Ltd. vs. Cometals, Inc. (1987)
Facts
•Cometals (ETC – NY) purchases Kenyan red beans
from Tarbert (ETC – UK). Beans shipped from
Rotterdam (Netherlands).
•Cometals purchased for resale to Columbian client.
•Client requires EEC certificate from Chamber of
Commerce. Tarbert provides cert. to Cometals.
•Later, Cometals refuses beans due to insect damage.
•Tarbert sued for non payment. Cometals seeks to
void agreement because agreement based on fraud.
Tarbert Trading, Ltd. vs. Cometals, Inc. (1987)
Analysis
Issue: May court enforce an agreement that was based on fraud?
Rule: No one shall be permitted to profit from his own fraud or
take advantage of his own wrong.
Apply rule to facts:
•Since the only way Tarbert could have obtained a certificate of
EEC origin for Kenyan beans was based on fraud
•Since the fraudulent certificate was critical to the contract
•Since a court will not enforce a contract based on fraud
Conclusion: Tarbert’s claim is dismissed.
Forms of International Business
Trade
•Importing :
•process of buying goods from a foreign supplier and
« entering » them into the customs territory of a
different country
•Global Sourcing
•Company attempts to locate and purchase goods on a
world-wide basis
