Businesses are constantly growing outside of their national borders to take advantage of new markets, resources, and possibilities in a world that is becoming more and more linked. But along with this growth comes a complicated network of international rules and regulations that need to be scrupulously followed. In order to ensure that cross-border transactions are both successful and legal, international business law is essential.
Overcoming the intricate landscape of global corporate expansion necessitates a systematic approach to cross-border transactions. Businesses are looking beyond their home markets more and more in this era of globalization to take advantage of chances for expansion, increased revenue, and competitive positioning internationally. This article is an overview of legal issues in cross-border transactions relating to international trade agreements. Import-export regulations and dispute resolution mechanisms for international business disputes, which serve as the foundation for the growth of global company endeavours.
- INTERNATIONAL TRADE AGREEMENTS
Majority of nations impose onerous trade restrictions, such as tariffs, nontariff barriers, and outright bans on international trade. One method of lowering these obstacles and enabling all parties to gain from greater commerce is through trade agreements.
Some common features of trade agreements are 1) Reciprocity 2) a most-favoured-nation clause 3) national treatment of non-tariff barriers[i]. We shall briefly discuss each feature:
Reciprocity: This is a necessary feature of any agreement. If each required party does not gain by the agreement as a whole, there is no incentive to agree to it. If agreement takes place, it may be assumed that each party to the agreement expects to gain at least as much as it loses.
The most-favoured-nation clause: This prevents one of the parties to the current agreement from further lowering barriers to another country.
A national treatment of nontariff restrictions clause: This is necessary because most of the properties of tariffs can be easily duplicated with an appropriately designed set of nontariff restrictions. These can include discriminatory regulations, selective excise or sales taxes, special “health” requirements, quotas, “voluntary” restraints on importing, special licensing requirements, etc., not to mention outright prohibitions. Instead of trying to list and disallow all of the possible types of nontariff restrictions, signatories to an agreement demand treatment similar to that given to domestically produced goods of the same type.
B) IMPORT-EXPORT REGULATIONS
Different countries have their own import and export regulations. However, in this article we shall briefly discuss import-export regulations in Nigeria:
KEY REGULATORY BODIES AND AUTHORITIES
Nigerian import laws are upheld by a number of governmental organizations. It is essential that they comprehend their tasks and obligations in order to guarantee compliance. Among the principal organizations involved are:
· Nigerian Customs Service (NCS): The NCS, by virtue of the Customs and Excise Management Act [ii]is responsible for monitoring and regulating the movement of goods in and out of the country. It enforces import duties, levies, and trade restrictions.
· National Agency for Food and Drug Administration and Control (NAFDAC): NAFDAC is the Nigerian federal agency under the Federal Ministry of Health established under the National Agency for Food and Drug Administration and Control Act[iii] and is responsible for regulating and controlling the manufacture, importation, exportation, advertisement, distribution, sale, and use of food, drugs, cosmetics, medical devices, chemicals, and packaged water.
· Standards Organization of Nigeria (SON): The Standards Organization of Nigeria (SON) is a Nigerian federal agency under the Nigerian Ministry of Industry, Trade, and Investment. It was established by the Standards Organization of Nigeria Act[iv]. SON is responsible for setting and enforcing standards for products and services in Nigeria. The agency’s primary objective is to ensure that all products and services in Nigeria meet the required standards for quality, safety, and performance.
· Central Bank of Nigeria (CBN): The CBN is Nigeria’s apex financial institution, responsible for controlling the monetary policies of the country. The CBN is empowered by the CBN Act[v] and the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act (FEMMP Act) to oversee foreign exchange controls, making it essential for importers to understand the foreign exchange regime as well as the legal requirements for making payments for imports.
IMPORT DOCUMENTATION REQUIREMENTS
Importers need to submit a range of documents to ensure the smooth processing of goods at customs. Key import documentation includes[vi]:
- Bill of Lading: This document contains the details of the transportation agreement and acts as a receipt for the goods. It attests to the fact that the products are in transit after being put aboard a ship or other kind of transportation. Tracking and claiming the products upon arrival are crucial.
- Commercial Invoice: The products being imported are described in full in the commercial invoice, together with their quantity, value, and terms of sale. It is used to compute import taxes and charges as well as for customs clearance.
- Certificate of Origin: The country of origin of the items is verified by this document. It’s significant because tariff rates are influenced by the origin of commodities, and certain trade agreements may stipulate that a product must have a specific proportion of local origin in order to be eligible for preferential treatment.
- Import License or Permit: The importation of some products could need specific permissions or permits. These licenses, which must be secured from the appropriate government bodies, are required to guarantee that the imported items fulfil quality, safety, and other regulatory requirements.
- Packing List: Each package in a shipment is listed with its contents in the packing list. It contains information on the kind and amount of items in each package, as well as information on their size and weight. This document is used by customs officers to confirm the cargo and make sure the data it contains matches that on other documents, such as the business invoice.
IMPORT LICENSING AND PERMITS
Certain goods cannot be imported without the necessary licenses and permits, including chemicals, weapons, and medications. It is essential to know which items need these permits and to get them ahead of time to prevent delays and legal problems.
CUSTOMS PROCEDURES AND CLEARANCE
It can be difficult to navigate the customs clearance process. The Nigerian Customs Service has developed regulations that importers are required to follow. This could entail paying import taxes, according to regulations, and making sure all paperwork is accurate. Hiring a certified customs broker can improve compliance and significantly streamline the customs clearance procedure.[vii].
C) DISPUTE RESOLUTION MECHANISMS FOR INTERNATIONAL BUSINESS DISPUTES
Fair trade practices and the resolution of trade disputes depend on efficient systems. When nations disagree on a range of trade-related issues, including tariffs, subsidies, intellectual property rights, or trade agreements, international trade disputes result. These disagreements may have a big impact on consumers, businesses, and international relations from an economic and political standpoint. In order to resolve these conflicts, parties frequently turn to trade agreements’ specified dispute resolution procedures, such as arbitration, diplomatic talks, mediation by the World Trade Organization, or other international bodies. Disputes arising from international business transactions may require a complicated and drawn-out resolution process. Choosing which conflict resolution procedures, like international arbitration or litigation, to use is crucial to handling these problems. Many international agreements include dispute resolution provisions to provide a structured framework for resolving conflicts.
GLOBAL RULES: LEGAL FRAMEWORKS GOVERNING INTERNATIONAL TRADE DISPUTES
The laws applicable to international trade disputes depend on various factors, including the nature of the dispute, the parties involved, and the governing agreements or organizations. Here are some key laws and legal instruments that commonly apply to international trade disputes[viii]:
- World Trade Organization (WTO) Agreements: The WTO offers the fundamental legal framework that regulates trade internationally, including intellectual property rights, tariffs, subsidies, and dispute resolution. The General Agreement on Tariffs and Trade (GATT), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and the Agreement on Subsidies and Countervailing Measures (SCM Agreement) are important accords that are part of the WTO framework.
- Bilateral and Regional Trade Agreements: Particular clauses regulating trade interactions between parties can be found in bilateral and regional trade agreements. According to the requirements and preferences of the participating nations, these agreements may cover tariffs, rules of origin, customs processes, investment protection, and dispute resolution systems.
- International Convention and Treaties: Aspects of international trade such as transportation, arbitration, and the acceptance and implementation of decisions made in other countries and by arbitrators are all covered by international conventions and treaties. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the United Nations Convention on Contracts for the International Sale of Goods (CISG) are two examples.
- National laws and regulations: International trade relations are significantly shaped by country laws and regulations. Customs’ tariffs, import/export restrictions, product standards, intellectual property rights, competition law, and consumer protection are a few examples of the topics that these laws may address. Both domestic companies and foreign organizations involved in international trade must adhere to domestic legislation.
D) CONCLUSION
It is common knowledge that cross-border transactions promote international corporate cooperation, investment, and trade. Because of this, parties must consider the considerable hurdles that come with conducting business across borders and their respective regulatory frameworks when embarking cross-border transactions.
It is likely that cross-border commerce will increasingly become the norm for buyers in almost all markets. A seamless cross-border supply chain strategy can help broaden the client base, increase sales and heighten global awareness.
This kind of global business development might be intimidating, but the payoffs can be enormous. In order to boost international expansion, businesses should concentrate on establishing a network of reliable suppliers, customers, and supply chain partners who can offer specialized support and help develop resilience against cross-border obstacles.
[i] https://www.britannica.com/money/trade-agreement
[ii] Customs and Excise Management Act 2004 (CEMA)
[iii] (Cap N1 LFN 2004)
[iv] Standards Organization of Nigeria Act of 1971
[v] CBN Act of 2007
[vi] https://www.cbn.gov.ng/out/2014/ted/ted.fem.fpc.gen.01.012.pdf
[vii] https://www.cradvocatesllp.com/mastering-arena-strategic-guide-resolving-lnternational-trade-disputes/
[viii] https://law.gwu.libguides.com/c.php?g=737677&p=5286372
Written by Olufe Popoola for The Trusted Advisors
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