The International Trade Law
Before engaging in trading overseas, as a business person you must know that the international trade law is a sum up of the appropriate rules and customs for handling trade between nations. However, these rules of trading overseas are also used in legal writings as trade between private sectors. This is now considered illegal, that is why this particular branch has been made independent due to the fact that most nations have become part of the world trade, thus the development of the rules of trading overseas.
Trading overseas; what you should know
Over the years, there have been unprecedented changes in country regimes and legal systems. These changes, that together make the rules of trading overseas made other aspects also change and some develop.
1) The world business
For instance, the growth in the world merchandise exports has brought about the complete outpacing of growth in the world output. The merchandise trade increased almost 18 times, while the world merchandise output grew 8-fold. Now, looking at companies at these cross-border times they face a legal problem which might just be bad for business.
2) The business laws
As a result, the businesses have no option but to cope with a much more complex legal mosaic now. This was not the case decades ago. Such events were unprecedented and could not be predicted to come to be. There is no systematic way to cope with transborder trade law was now brought into play. You as a business person tend to believe that lawyers complicate matters, however, you should understand that in the event there is an absence of an international legislature, there is no such thing as international law.
About two decades ago, the business law was essentially in the mind of the business people with a particular nation. With that, every business person in the export niche has to realise that this is no longer the case. There are several international rules that are often outside the scope of any national law that is shaping the manner in which trade is conducted. Even though some legal systems have the international business more complex, the legal so bleak as you might imagine it.
3) Reconciliation of the Rules of Trading Overseas
It has been through the trial and error process that at least six different processes have been developed to reconcile the conduct of international business. Let us take a look at some of the international trade rules and practices. Essentially, there are six new types, and these are International Trade Usages, Commercial Treaties, Model Contracts, Model Laws, Regional Trade Laws, and Out-of-court Dispute Settlements.
The International Trade Rules have depicted a trending escalation of a long list of guidance for you as a business exporter or as a businessman or woman.
4) International Trade Usages
The International Commercial Terms also referred to as Incoterms, are the first major successful achievement in standardising the trade practices. First developed in the 1930s by the International Chamber of Commerce, the Incoterms guiding principles to the buyer and seller by allocating the transport costs and risks, not to forget determining responsibility for insurance and customs. The banking sector has also not been left behind in this, as the International Chamber of Commerce commonly referred to as ICC has also standardised the prices for International letters of credit through the Uniform Customs and Practice for Documentary Credits, abbreviated as UCP 500 rules. The highlighted is only two of the standardised trade practices developed by the International Chamber of Commerce. The said practices are being extensively used by international buyers and sellers.
5) Model contracts
These act to standardise legal approaches across nations and cultures. They answer the frequently asked questions when drafting international business agreements. Over the years they have grown in numbers and usage. Before, standard contracts were used mainly in the commodity sector, where they are a mandatory part of daily practice. There were non-specialised areas that had scarce model contracts, but if you happen to have a small and medium-sized enterprise, you could enter it into the International contracts. But for that, you can do so without legal assistance time and time again. That was before, now there has been the development of model contracts as a resulting of a developing need to counter the ever-growing circle of activities. From then, there were proposals of almost every sale including; the International Sale of Manufactured Goods, International Sale of Perishable Goods and much more.
6) The Trade Treaties
There is a third piece of common rules of trading overseas found in trade treaties. Nations and the national trade promotion organisations, or the business people including you should understand which are the most basic treaties that a nation should ratify to facilitate trading activities. These particular treaties set out the basics for international sales, patents, transport, trademarks, among other issues. Giving them a formal consent sends a signal that the nation is adopting an internationally recognised, safe and legal rules of trading overseas in which they can conduct trade.
7) Model laws
Most of the times treaties tend not to be quite as flexible. That is mainly because a treaty is drafted by means of a lengthy diplomatic conference meeting, and it only comes to be enforced when a certain number of nations have made it officially valid. Furthermore, it is not easily modified when necessary. For this reason, the United Nations Commission on International Trade Law has developed a process to standardise the rules of trading overseas through Model Laws of their respective nations.
8) Harmonisation of Regional rules of Trading
Harmonising the trade laws on a regional basis can bring about the stimulation of intra-regional as well as trading overseas. This is quite evident in Africa, the harmonisation of regional laws of trade have been successful in this continent that is most often considered as a recipient of foreign aid. It has set a pattern for most countries to follow;
1) One business law,
2) One company law, one accountancy law and
3) One supreme court
All of which are used by the set of nations. This implies that there is a considerable economy of scale, and they actually work!
Out of court settlement is another trending aspect in the modern business. Most nations are creating arbitration centers within various chambers of commerce for various pragmatic if not the impressive backlog of cases that are received from obstruction of the rules of trading overseas or regionally. From courts to arbitration is based on the idea that the best way to escape a problem is to solve it there and then.
Contracts – contracts have now been developed to help the business take care of the most urgent aspects. It serves to standardise the legal trial cases and cater to the most common questions asked when drafting a business agreement.
10) Regulation of trading overseas
Speaking of the Rules of Trading Overseas, a formal international organisation (World Trade Organization) has been tasked to regulate the trading overseas. It has been recognised as the most important development in the history of international trade law since its’ inception. The organisation is governed by the Agreement Establishing the World Trade Organisation which gives the purposes and structure of the organisation.
The organisation does not specify the actual rules of trading overseas in specific areas; these are found separate treaties. Let us take a look at the scope of the World Trade Organisation;
1) Provision of a framework for administration and implementation of agreements,
2) Review of trade policies mechanism,
3) Make forums for further negotiations, and
4) Promotion of more coherence among the members of economic policies
In addition to that, the organisation is bound by some principles of the rules of trading overseas, these are;
I. The principle of non-discrimination, that is; the most favored nation treatment obligation and the national treatment obligation in the rules of overseas trading.
II. Access to market – this touch on the reduction of tariff and non-tariff barriers to trade,
III. Balance of trade liberalisation and other interests,
IV. And, harmonisation of the national regulation on agreements as per the rules of trading overseas.
These are just some of the highlights you as a business person should understand. Now you are in the know, you can start finding out more and continue to develop your business.
At Linguist Point, we specialise in translation, localisation and transcreation services.
We also know that a team of five can’t understand every international market. That’s why we have an international network of professional translators, native speakers in over 100 languages providing professional document translation services for businesses trading overseas on a daily basis.
There’s a huge amount of opportunity in international trade, but to bypass all of the potential hurdles and focus on what you do best, the most tried and tested route is to work with professionals like us today.
Why not give us a call and see how our specialised team of experts can help your business make the most of growing international markets and keep it innovative enough to thrive in the future.