An international business transaction is the type of agreement between parties of two or more countries, these transactions include sale, purchase, licensing and investment etc.; the parties to international business agreement include individuals, small and large multinational corporate entities and even governments.
In order to understand the international business transactions, it is important to understand international business law which examines and sets boundaries with regard to the rules that govern international economic relations and transboundary economic conduct by states, international organizations as well as private sectors at the international level.
International business transactions involve cross-border transactions in goods, services, and monetary relations. Furthermore, it plays a prime role in analyzing public international law that directly governs economic relations between states or international organizations, coupled with examining the law of international business.
UNDERSTANDING THE INTERNATIONAL ECONOMIC LAW IN PAKISTAN
Before digging further, it should be made clear and precise that international business transactions come under the ambit of international economic law, and to further understand this law, the clear definition of the same should be understood. “International” refers to the matters of cross-border transactions which basically affect more than one country. “Economic” refers to the economy itself by considering factors of production and economics becomes international when it considers external influences on a domestic economy.
The narrow concept of ‘international economic law’ only refers to the segment of public international law directly governing economic relations between States or international organizations focusing on world trade law, international investment law, and international monetary law.
A broader understanding also reflects the role of private sector or hybrid entities administering public goods of major relevance to the international community and more adequately pays tribute to the interplay between international and domestic law in a transboundary economic context. To understand the norms of public international law addressing cross-border activities of private undertakings by international agreements as well as issues of jurisdiction of States and the hotly debated ‘extraterritorial’ legislation also comes under the ambit of international business transactions.
OBJECTIVES OF INTERNATIONAL BUSINESS TRANSACTIONS
For a better understanding, do consider, if any foreign country offers to, or can, supply with commodities which cost less than we ourselves can make it, better buy it off with some part of the produce of our own industry, employed in a way in which we have some advantage.
SOURCES OF INTERNATIONAL ECONOMIC LAW
Article 38(1) of the Statute of the International Court of Justice enumerates the widely recognized sources of public international law: also, international conventions, whether general or particular, establishing rules expressly recognized by the contesting States. In addition, International Custom, as evidence of a general practice accepted as law.
Looking at the General Principles of Law they are recognized by civilized nations whereas Judicial Decisions and the teachings of the most highly qualified publicists of the various nations act as subsidiary means for the determination of rules of law. In addition, Customary International law is constituted by the practice of States and international organizations and a corresponding legal opinion (sense of obligation or right).
INTERNATIONAL ORGANIZATION- 3 PILLARS OF ECONOMIC ORDER
INTERNATIONAL MONETARY FUND (IMF)
Formed under the Bretton Woods Conference to monitor exchange rate changes and to aid Member States with serious financial problems (balance of payments deficit).
WORLD BANK (IBRD)
Programme-based lending. Lends for development through its subsidiaries.
WORLD TRADE ORGANIZATION (WTO)
The foundation of the World Trade Organization (WTO) in 1994, vested the world trade order with a new and solid institutional basis.
AREAS OF INTERNATIONAL ECONOMIC LAW
INTERNATIONAL TRADE LAW
International trade law includes the appropriate rules and customs for handling trade between countries. Looking at the General Principles of Law they are recognized by civilized nations whereas Judicial Decisions and the teachings of the most highly qualified publicists of the various nations act as subsidiary means for the determination of rules of law. In addition, Customary International law is constituted by the practice of States and international organizations and a corresponding legal opinion (sense of obligation or right).
The international agreements on the exchange of goods and services across borders are based on the reciprocal character of the respective rights and obligations of the parties and purport to achieve mutual benefits for all of them. Moreover, the World Trade Organization (WTO) provides the institutional basis for global trade relations and is built on pre-existing structures under the General Agreement on Tariffs and Trade (GATT, 1947).
INTERNATIONAL INVESTMENT LAW
Investment is essential for economic development. It covers the promotion of foreign investments and their protection against undue interference by the host State. By establishing standards for legal stability, predictability of State action, adequate protection, and due process, particularly through the guarantee of ‘fair and equitable treatment’ and ‘full protection and security’, international investment law has intense repercussions on the legal system of the host State and enhances the rule of law and the better working of international business transaction.
INTERNATIONAL MONETARY LAW
Monetary relations between countries are governed by this area. The Statute of the International Monetary Fund (IMF) provides rules for the surveillance of currency arrangements and assistance to Member States in case of balance of payment deficits. In addition, the European Union is a pioneer in having created a monetary union through the creation of the Eurozone.
INTELLECTUAL PROPERTY LAW
When we look at this particular law its main areas are Copyright, Patent, and Trademark. Protection of intellectual property includes copyright, design protection, and patents, including for example bio-patents on DNA-sequences, new trademarks, and topographies of integrated circuits. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPR) marks a significant step towards universal standards of efficient protection in international business transactions.
INTERNATIONAL COMMERCIAL LAW
The international law governing commercial transactions between private actors. International agreements like the United Nations Convention on Contracts for the International Sale of Goods (CISG) are directed to harmonize commercial laws. E- commerce has also increased the need for uniform rules across different countries.
Dispute settlement between different States or foreign corporations.
INTERNATIONAL COMPETITION LAW
Competition law, known as antitrust law in the U.S., seeks to maintain the integrity of the marketplace by prohibiting anti-competitive practices and by subjecting corporate mergers and acquisitions to regulatory review if they have the potential to significantly reduce competition. It has 3 main pillars: Anti-competitive agreements, Abuse of dominance, and Merger Control.
In a state like Pakistan, the growth of the economy is dependent upon its exports. The state’s economy through such export gains accesses to Foreign Exchange, helping it finance its imports. This not only helps in gaining better imports but also, aids in stabilizing the currency devaluation along with the matter of resolving the balance of payment deficit. Pakistan has been facing issues in its international business transactions and trade due to the instability of political and domestic uncertainty. Pakistan has always faced challenges related to international business as it has countless barriers to international trade and the only way for it to take the ride of betterment major trade ports are to be linked in order to reduce the domestic trade costs. Therefore, work is needed in order to bring Pakistan on the road to successful international business transactions.