INTERNATIONAL BUSINESS TRANSACTION

SALE OF SERVICES

Gatot Soemartono, Ph.D

Mariske Myeke Tampi, S.H., M.H.

STAY INFORMED!

• www.oecd.org – Organization for Economic Cooperation and Development

(OECD)

• www.gats-info.eu.int – Text and Guide to GATS

• www.ilo.org – International Labor Organization

• www.aia.org.uk – Association of International Accountants

Which one is more potential to be sold

abroad?

Ford? Lawyering Skill?

INTRODUCTION

• International business law courses have focused on sale of good rather than

sale of service

• Focus on sale of service and the licensing of technology

• Generally effectuated through employment and consulting contracts

• Provides examples of foreign regulations that the international employer,

principal, agent, consultant, and employee will need to become accustomed

with

• Reviews the generic ways people sell services

Figure 1. Significant interregional gap within countries in wealth and life expectancy

Source: OECD Regional Outlook 2016

THE MEANS FOR SELLING SERVICES INTERNATIONALLY

• International consulting

• Services related to the export of goods

• Electronic transfers of knowledge and data

• Licensing agreements

• Franchising services

• Tourism services

The real world innovation dilemma:

think like a startup but don't take any risks, and submit to mediocracy

THE MAIN FACTORS TO INCREASE PRODUCTIVITY IN ALL SEGMENTS OF BUSINESS

Innovation

Information

Knowledge

Communication Technology

THE MAIN FACTORS TO INCREASE PRODUCTIVITY IN ALL SEGMENTS OF BUSINESS

Innovation

InformationKnowledge

Communication Technology

Innovation distinguishes between a leader and a follower.

THE RULE BASED MULTILATERAL TRADING SYSTEM

• General Agreement on Trade in Services (GATS) – targeted to reducing

obstacles to trade in services

• Mutual Recognition Agreements (MRA) – USA and EU bilateral agreements

reducing barriers in specific industries

• Trans-Atlantic Business Dialogue (TABD) – non-governmental level, endorsed

bilateral and multilateral cooperation in area of electronic commerce and

identified 5 priority issues: (1) protection of personal data and privacy; (2)

digital signatures and harmonized legal framework; (3) encryption; (4) tax,

tariff and customs; (5) intellectual property, protection, and associated liability.

GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)

• Framework Agreement

• A most-favored-nation obligation

• Transparency

• Recognition requirements

• National treatment

HIRING FOREIGN PERSONNEL

• Foreign sales representative: agent who distributes, represents, services or

sells goods on behalf of foreign sellers

• Principal/agent: the person being hired while the party doing the hiring

• Dependent Agent: employee

• Independent Agent: consultant

FOREIGN COMPETITION LAW

• EU Regulation 1983/83 deals with the legality of exclusive distribution

agreements.

• Generally disfavors clauses that prohibit a distributor from selling within

the territory of another distributor

• Block exemption can be utilized to defend against such challenges

• Price fixing and tying clauses are illegal

• Noncompetition clause are susceptible to nonenforcement

LOGISTICAL SERVICES

• Freight forwarders

• Cargo consolidator

• Multimodal transport

ADVERTISING SERVICES AND LAW

• Federal Trade Commision (FTC)

• Lanham Act

• American Association of Advertising Agencies

• Heritage Mutual Insurance Case

• Advertising injury

• Duty to defend

CROSS-BORDER SECURITY OFFERINGS

• Securities and Exchange Commision (SEC)

• International Organization of Securities Commision (IOSCO)

• Materiality

INTERNATIONALIZATION OF ACCOUNTING AND TAXATION

• Transfer pricing

• Unitary taxation

• Association of International Accountants

• A Framework for Electronic Commerce

• International Accounting Standards (IAS)

MAIN SOURCES

• Dimatteo, Larry A. The Law of International Business Transactions. 2003.

Ohio: Thomson – South Western

• Poole, Jill. Textbook on Contract Law. 9th edition. 2008. New York: Oxford