Question: The global economy has changed the way we do business and made us all realize the importance of having at least a passing understanding of international law. Increasingly, U.S. businesses are establishing production facilities in other countries. They do this because of fewer government regulations and taxes and, of course, lower labor costs. U.S. businesses also contract to buy directly from foreign manufacturers. Often, U.S. firms have their branded products manufactured outside the United States (outsourcing). Any U.S. business that engages in outsourcing, however, faces a risk of uneven quality, even if it is outsourcing services, such as call centers. Thus, every U.S. firm must have in place a mechanism to protect the goodwill generated by its brand even when the product (or service) is made entirely at a foreign facility. Other Risks Involved A U.S. firm that does business internationally may also face other risks. Products manufactured or purchased abroad may T Issues and Risks in International Transactions.

This Application is not meant to substitute for the services of an attorney who is licensed to practice law in your state. be subject to import quotas and to tariffs (taxes on the imported goods). These quotas and tariffs may change during the course of a manufacturing cycle or a selling season. Contract interpretation is always a potential problem. Thus, it is important to make sure that both parties understand all contract terms. You are well advised to include a choice-of-language clause in every contract. Nevertheless, even when two countries have a common language, such as England and the United States, a word or phrase may still have different meanings. For example, a lamp in England is a flashlight in the United States. A choice-of-law clause and a forum-selection clause should be included in every contract involving international transactions. These clauses should be very specific, stating where any arbitration or litigation will take place. Legal systems around the world vary significantly, even in regard to simple sales transactions. International Treaties and Agreements International treaties and agreements continue to have as their goal the promotion of trade. Consequently, anyone contemplating doing business globally should become familiar with these laws. Numerous international organizations also seek to facilitate international business. Some of them can provide assistance in settling disputes.

CHECKLIST FOR DOING BUSINESS INTERNATIONALLY

1 Be aware that the law governing your transactions in another country may be different from U.S. domestic law.

2 Always include choice-of-language and forumselection clauses in your contracts, and try to ensure that these clauses are as favorable as possible to you.

3 Consider adding an arbitration clause to your contract to avoid the expenses of a trial if a dispute arises.

4 Become familiar with treaties and international agreements that might affect your international business dealings.