Key Concepts in International Trade and Customs Law
Contract Law Principles
Preemptive Right: The right to purchase something before others have the opportunity.
Undue Influence: Occurs when one party to a contract exploits the weaker position of another party during contract formation.
Contractual Asymmetry: Refers to the unequal bargaining power between parties, where one party is better informed than the other. This asymmetry can potentially increase the economic efficiency of the transaction for the more informed party.
Prescription/Statute of Limitations: A legal standard that limits the time period during which legal proceedings can be initiated, thus regulating the legal consequences of the passage of time.
Pacta Sunt Servanda: Contracts are to be fulfilled; however, illegal contracts are not enforceable.
Rebus Sic Stantibus: A principle allowing a state to avoid fulfilling its obligations if there is a fundamental change in circumstances.
Duty to Disclose: The obligation to inform the other party of any material facts or circumstances during contract negotiations.
Good Faith: Acting according to established rules and respecting the rights of other parties. This concept is primarily used in civil law, commercial law, and family law.
Forum Shopping: A litigant’s practice of choosing the most favorable court to hear their case.
Competition Law
Cartels: Anticompetitive agreements between companies, including price fixing, market sharing, bid rigging, and agreements to limit production or supply.
Mergers: When two companies merge or form a joint venture, it may reduce competition.
World Trade Organization (WTO)
The WTO is an organization that aims to supervise and liberalize international trade. It regulates trade between participating countries, providing a framework for negotiating and formalizing trade agreements. WTO agreements are negotiated and signed by the majority of the world’s trading nations. Its headquarters are located in Switzerland.
Goals of the WTO:
- To assist producers of goods and services, exporters, and importers in conducting their business.
- To maintain trade barriers in some circumstances, ensuring that individuals, companies, and governments worldwide are aware of the trade rules, which are transparent.
- To resolve trade disputes through a neutral procedure, as trade relations often involve conflicting interests.
The WTO is run by its member governments, and major decisions are made by the membership, either by ministers or ambassadors.
World Customs Organization (WCO)
The World Customs Organization (WCO) is an independent intergovernmental body that aims to enhance the effectiveness and efficiency of Customs administrations.
Goals of the WCO:
- International cooperation and information sharing.
- Harmonization and simplification of Customs systems and procedures.
- Compliance and enforcement.
- Trade facilitation.
- Supply chain security and facilitation.
Other Important Concepts
Mergers and Acquisitions (M&A): Business transactions where the ownership of companies, business organizations, or their operating units are transferred to or consolidated with another company or business organization.
Authorized Economic Operator (AEO): A party involved in the international movement of goods, approved by a national Customs administration for complying with WCO or equivalent supply chain security standards.
Duty Relief: While Common Customs Tariff duties apply to all goods imported into the EU, in certain well-defined circumstances, such taxation is not justified, depending on the special conditions or the nature of the imported goods.
Customs Valuation: The value of imported goods is one of the three ‘elements of taxation’ that forms the basis for assessing the customs debt (the amount of duty to be paid). The others are the origin of the goods and the customs tariff. The agreement provides a set of valuation rules:
- Transaction Value
- Transaction Value of Identical Goods
- Tariffs & Customs Procedures
- Transaction Value of Similar Goods
- Deductive Value
- Computed Value
- Residual Method