Key Regulations and Treaties

Why This Matters

International trade law isn't just a collection of acronyms to memorize—it's the operating system that makes global commerce possible. When you're tested on this material, you're being asked to demonstrate understanding of how nations balance competing interests: protecting domestic industries vs. promoting free trade, enforcing intellectual property rights vs. ensuring access to innovation, and preventing corruption vs. facilitating international business relationships. These tensions drive every regulation and treaty you'll encounter.

The regulations and treaties in this guide fall into distinct categories based on what problem they solve: reducing trade barriers, standardizing commercial practices, protecting intellectual property, or preventing unfair competition. Don't just memorize that GATT exists—know that it represents the foundational shift toward multilateral trade liberalization. Understanding the function of each regulation will help you tackle FRQ scenarios where you must apply these frameworks to real business situations.

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Multilateral Trade Frameworks

These agreements establish the foundational rules that govern how nations trade with each other. The core principle is reciprocity—countries agree to lower barriers in exchange for similar treatment from trading partners.

General Agreement on Tariffs and Trade (GATT)

• Foundational 1947 treaty that established the modern multilateral trading system—the first major post-WWII effort to reduce protectionism
• Most-favored-nation (MFN) principle requires that any trade advantage given to one country must extend to all GATT members
• National treatment doctrine prohibits discriminating against foreign goods once they've entered the domestic market

World Trade Organization (WTO) Agreements

• Successor to GATT (1995) that expanded trade rules to cover services, intellectual property, and investment—not just goods
• Dispute Settlement Body provides binding arbitration when member nations accuse each other of violating trade commitments
• Monitors compliance through regular trade policy reviews, creating accountability mechanisms GATT lacked

Free Trade Agreements (e.g., NAFTA, USMCA)

• Regional agreements that go beyond WTO commitments by eliminating tariffs entirely among member nations
• USMCA (2020) replaced NAFTA with updated provisions on digital trade, labor standards, and automotive rules of origin
• Addresses non-tariff barriers including customs procedures, regulatory harmonization, and market access for services

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Contract and Transaction Standards

These frameworks solve the practical problem of doing business across different legal systems. Without standardized terms and rules, every international contract would require extensive negotiation over basic definitions.

Incoterms

• Standardized commercial terms (published by the International Chamber of Commerce) that define exactly when risk and responsibility transfer from seller to buyer
• Common terms like FOB and CIF specify who pays for shipping, insurance, and customs clearance at each stage of delivery
• Reduces contract disputes by providing universally understood shorthand—essential for interpreting international sales agreements

United Nations Convention on Contracts for the International Sale of Goods (CISG)

• Default contract law for international sales when both parties are from member nations (unless they opt out)
• Covers formation, performance, and breach but excludes consumer sales, services, and certain goods like securities
• Gap-filler function—when contracts are silent on an issue, CISG provides the governing rules automatically

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Intellectual Property Protection

TRIPS represents the globalization of IP enforcement, requiring all WTO members to meet minimum protection standards. The underlying tension is between rewarding innovation and ensuring public access to knowledge.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

• Minimum protection standards for patents (20 years), copyrights, trademarks, and trade secrets that all WTO members must implement
• Enforcement mechanisms require member nations to provide civil and criminal remedies for IP violations
• Flexibilities for developing nations include compulsory licensing provisions—critical in debates over pharmaceutical access

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Anti-Corruption and Fair Competition

These regulations address market distortions caused by bribery and predatory pricing. Both aim to ensure that competitive success reflects genuine business merit rather than corrupt payments or artificially low prices.

Foreign Corrupt Practices Act (FCPA)

• Prohibits bribing foreign officials to obtain or retain business—applies to U.S. companies, their subsidiaries, and foreign firms listed on U.S. exchanges
• Accounting provisions require accurate books and records plus internal controls, even without a proven bribe
• Joint enforcement by DOJ (criminal) and SEC (civil) with penalties reaching hundreds of millions of dollars for major violations

Anti-Dumping Laws

• Protects domestic industries from foreign competitors selling goods below fair market value (dumping)
• Requires injury determination—regulators must prove both that dumping occurred and that it harmed domestic producers
• Countervailing duties are tariffs imposed to offset the unfair price advantage, restoring competitive balance

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Government Controls on Trade

These regulations reflect national sovereignty concerns—governments retain authority to restrict trade for security, revenue, or policy reasons. Even in a free-trade world, certain controls remain non-negotiable.

Export Control Regulations

• Restricts sensitive exports including military technology, dual-use items, and goods with national security implications
• Licensing requirements administered by the Bureau of Industry and Security (BIS) determine what can be shipped and to whom
• Entity lists identify foreign parties subject to heightened restrictions—violations can result in criminal prosecution and debarment

Customs Regulations and Tariffs

• Tariffs serve dual purposes: protecting domestic industries from foreign competition and generating government revenue
• Classification and valuation determine how much duty is owed—disputes often center on which tariff category applies
• Compliance failures can result in seizure of goods, penalties, and delays that disrupt supply chains

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Quick Reference Table

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Self-Check Questions

1. Both GATT and regional FTAs aim to reduce trade barriers—what distinguishes their scope and depth of commitments?

2. A U.S. company is drafting an international sales contract with a German buyer. Which two frameworks (one for delivery terms, one for contract law) should they consider, and what does each govern?

3. How does TRIPS balance the interests of intellectual property holders against public access concerns, and what flexibility does it provide developing nations?

4. Compare the FCPA and anti-dumping laws: what type of unfair competitive advantage does each address, and how do their enforcement mechanisms differ?

5. FRQ-style prompt: A U.S. technology company wants to sell software with encryption capabilities to a customer in a country subject to trade restrictions. Identify which regulatory frameworks apply and explain the compliance steps required before the sale can proceed.